--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
                          COMMISSION FILE NO. 001-31256

                                   CLARK, INC.
             (Exact name of Registrant as specified in its charter)

                 DELAWARE                              52-2103926
        (State of Incorporation)           (I.R.S. Employer Identification No.)

     102 SOUTH WYNSTONE PARK DRIVE
       NORTH BARRINGTON, ILLINOIS                        60010
(Address of principal executive offices)               (Zip code)

                  Registrant's telephone number: (847) 304-5800




Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

         As of August 1, 2004, the registrant had outstanding 18,638,942 shares
of common stock.


<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
PART I - FINANCIAL INFORMATION

Forward-Looking Statements................................................... 3

Item 1. Financial Statements (Unaudited)..................................... 4
     Condensed Consolidated Balance Sheets as of June 30, 2004
           and December 31, 2003............................................. 4
     Condensed Consolidated Statements of Income for the Three
          Months and Six Months Ended June 30, 2004 and 2003................. 5
     Condensed Consolidated Statements of Cash Flows for the
           Six Months Ended June 30, 2004 and 2003........................... 6
     Notes to Condensed Consolidated Financial Statements.................... 7

Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations.............................17

Item 3. Quantitative and Qualitative Disclosures About Market Risk...........27

Item 4. Controls and Procedures..............................................27

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings....................................................27

Item 2. Changes in Securities and Use of Proceeds, and Issuer Purchases
               Of Equity Securities..........................................28

Item 3. Defaults Upon Senior Securities......................................29

Item 4. Submission of Matters to a Vote of Security Holders..................29

Item 5. Other Information....................................................29

Item 6. Exhibits and Reports on Form 8-K.....................................29

SIGNATURES...................................................................30

EXHIBITS

     Index to Exhibits.......................................................31


                                       2
<PAGE>


                           FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements are identified by words such
as "anticipate," "believe," "estimate," "expect," "intend," "predict,"
"project," and similar expressions. When we make forward-looking statements, we
are basing them on management's beliefs and assumptions, using information
currently available to us. These forward-looking statements are subject to
risks, uncertainties, and assumptions, including but not limited to, risks,
uncertainties, and assumptions related to the following:

         o        changes in tax legislation;

         o        federal and state regulations;

         o        general economic conditions;

         o        competitive factors and pricing pressures;

         o        our dependence on key consultants and services of key
                  personnel;

         o        our dependence on persistency of existing business;

         o        our ability to achieve our earnings projections;

         o        risks associated with acquisitions;

         o        significant intangible assets;

         o        our dependence on a select group of insurance companies; and

         o        our dependence on information processing systems and risk of
                  errors or omissions.

If one or more of these or other risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may vary materially
from those anticipated. Any forward-looking statements you read in this Form
10-Q reflect our current views with respect to future events and are subject to
these and other risks, uncertainties, and assumptions relating to our
operations, results of operations, growth strategy, and liquidity. You should
specifically consider the factors identified in our Form 10-K for the year ended
December 31, 2003, included under the caption "Risk Factors," or in the
documents incorporated by reference in our Form 10-K, which could cause actual
results to differ materially from those indicated by the forward-looking
statements. In light of the foregoing risks and uncertainties, you should not
unduly rely on such forward-looking statements when deciding whether to buy,
sell, or hold any of our securities. We disclaim any intent or obligation to
update or alter any of the forward-looking statements whether in response to new
information, unforeseen events, changed circumstances, or otherwise.


                                       3
<PAGE>


PART 1. FINANCIAL INFORMATION

<TABLE>
ITEM 1. FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                               CLARK, INC. AND SUBSIDIARIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                       AS OF JUNE 30, 2004 AND DECEMBER 31, 2003
                                                      (UNAUDITED)
                                (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

                                                                                      JUNE 30,         DECEMBER 31,
                                                                                        2004               2003
                                                                                    -------------     ---------------
                                     ASSETS
<S>                                                                                       <C>                <C>
CURRENT ASSETS
   Cash and cash equivalents                                                              $ 5,513            $  3,156
   Restricted cash                                                                         12,625              18,966
   Accounts and notes receivable, net                                                      38,666              47,478
   Prepaid income taxes                                                                     4,361               2,931
   Deferred tax assets                                                                        253                 253
   Other current assets                                                                     2,478               3,149
                                                                                    -------------     ---------------
      TOTAL CURRENT ASSETS                                                                 63,896              75,933
                                                                                    -------------     ---------------
INTANGIBLE ASSETS, NET
   Net present value of inforce revenue                                                   447,941             455,495
   Goodwill                                                                               134,585             126,888
   Non-compete agreements                                                                   6,590               7,420
                                                                                    -------------     ---------------
      TOTAL INTANGIBLE ASSETS, NET                                                        589,116             589,803
                                                                                    -------------     ---------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET                                                  12,203              13,284
CASH SURRENDER VALUE OF LIFE INSURANCE                                                      6,777               4,944
OTHER ASSETS                                                                               12,897              15,339
                                                                                    -------------     ---------------
      TOTAL ASSETS                                                                       $684,889            $699,303
                                                                                    =============     ===============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                                       $ 3,832             $ 8,129
   Accrued liabilities                                                                     44,986              46,648
   Deferred income                                                                          4,020               1,980
   Recourse debt maturing within one year                                                   1,233               8,120
   Non-recourse debt maturing within one year                                              10,064               8,433
                                                                                    -------------     ---------------
      TOTAL CURRENT LIABILITIES                                                            64,135              73,310
TRUST PREFERRED DEBT                                                                       45,000              27,000
LONG-TERM RECOURSE DEBT                                                                     4,091              28,672
LONG-TERM NON-RECOURSE DEBT                                                               269,154             280,296
DEFERRED TAX LIABILITIES                                                                   19,163              14,057
DEFERRED COMPENSATION                                                                       8,628               6,563
INTEREST RATE SWAP                                                                              -                 157
OTHER NON-CURRENT LIABILITIES                                                               8,485              10,980
                                                                                    -------------     ---------------
      TOTAL LIABILITIES                                                                   418,656             441,035
                                                                                    -------------     ---------------
STOCKHOLDERS' EQUITY
   Preferred stock
          Authorized - 1,000,000 shares; $.01 par value, none issued                            -                   -
   Common stock
          Authorized - 40,000,000 shares; $.01 par value, issued and outstanding -
          18,638,942 shares at June 30, 2004 and 18,515,203 shares at December 31,
          2003                                                                                187                 186
   Paid-in capital                                                                        192,630             190,876
   Retained earnings                                                                       75,718              69,643
   Other comprehensive loss                                                                  (110)               (245)
   Treasury stock, at cost - 65,171 shares at June 30, 2004 and at December 31,
   2003                                                                                    (2,192)             (2,192)
                                                                                    -------------     ---------------
TOTAL STOCKHOLDERS' EQUITY                                                                266,233             258,268
                                                                                    -------------     ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $684,889            $699,303
                                                                                    =============     ===============
</TABLE>

  See accompanying notes to these condensed consolidated financial statements.


                                       4
<PAGE>


<TABLE>
<CAPTION>
                                             CLARK, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                      (UNAUDITED)
                                (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

                                                            THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                 JUNE 30,                          JUNE 30,
                                                      -------------------------------   --------------------------------
                                                          2004             2003              2004             2003
                                                      --------------   --------------   ---------------  ---------------

<S>                                                         <C>              <C>              <C>              <C>
REVENUE
   First year commissions and related fees                  $20,573          $29,961          $ 53,771         $ 57,522
   Renewal commissions and related fees                      33,403           34,763            71,857           77,071
   Consulting fees                                           14,906           11,066            26,418           24,322
   Reimbursable expenses                                      1,667            1,468             3,206            2,981
                                                      --------------   --------------   ---------------  ---------------
TOTAL REVENUE                                                70,549           77,258           155,252          161,896
                                                      --------------   --------------   ---------------  ---------------

OPERATING EXPENSES
   Commissions and fees                                      14,809           21,716            38,028           46,822
   General and administrative                                41,473           41,861            82,537           82,897
   Reimbursable expenses                                      1,667            1,468             3,206            2,981
   Amortization                                               4,564            5,197             9,106           10,375
   Settlement of litigation                                       -           (1,500)                -           (1,500)
                                                      --------------   --------------   ---------------  ---------------
TOTAL OPERATING EXPENSES                                     62,513           68,742           132,877          141,575
                                                      --------------   --------------   ---------------  ---------------
OPERATING INCOME                                              8,036            8,516            22,375           20,321
OTHER INCOME (EXPENSE), NET                                       3               94            (1,465)             181
INTEREST, NET
   Income                                                        49               52               106              152
   Expense                                                   (5,537)          (6,164)          (11,138)         (12,167)
                                                      --------------   --------------   ---------------  ---------------
TOTAL INTEREST, NET                                          (5,488)          (6,112)          (11,032)         (12,016)
                                                      --------------   --------------   ---------------  ---------------
Income before taxes                                           2,551            2,498             9,878            8,487
Income taxes                                                   (890)            (506)           (3,803)          (2,914)
                                                      --------------   --------------   ---------------  ---------------
NET INCOME                                                 $  1,661         $  1,992          $  6,075         $  5,573
                                                      ==============   ==============   ===============  ===============

Basic Earnings per Common Share                               $0.09            $0.11             $0.33            $0.31
Weighted average shares outstanding - Basic              18,569,701       18,325,747        18,530,412       18,221,031

Diluted Earnings per Common Share                             $0.09            $0.11             $0.32            $0.30
Weighted average shares outstanding - Diluted            18,880,476       18,509,674        18,877,991       18,553,033
</TABLE>

  See accompanying notes to these condensed consolidated financial statements.


                                       5
<PAGE>


<TABLE>
<CAPTION>
                                               CLARK, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (UNAUDITED)
                                                  (DOLLARS IN THOUSANDS)

                                                                                    SIX MONTHS ENDED JUNE 30,
                                                                          ----------------------------------------------
                                                                                 2004                      2003
                                                                          -------------------       --------------------

<S>                                                                                  <C>                        <C>
Net Cash from Operating Activities                                                   $27,130                    $30,801
                                                                          -------------------       --------------------
INVESTING ACTIVITIES
   Purchases of businesses, net of cash acquired                                      (6,994)                    (4,468)
   Purchases of fixed assets                                                          (1,879)                    (2,903)
                                                                          -------------------       --------------------
Cash used in investing activities                                                     (8,873)                    (7,371)
                                                                          -------------------       --------------------
FINANCING ACTIVITIES
   Proceeds from borrowings                                                           67,060                     23,500
   Repayment of borrowings                                                           (90,039)                   (48,703)
   Cash restricted for the repayment of non-recourse notes                             6,341                        633
   Exercise of stock options                                                             738                        517
                                                                          -------------------       --------------------
Cash used in financing activities                                                    (15,900)                   (24,053)
                                                                          -------------------       --------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   2,357                       (623)
   CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    3,156                     14,524
                                                                          -------------------       --------------------
   CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $5,513                    $13,901
                                                                          ===================       ====================

Supplemental Disclosure for Cash Paid during the Period:
-------------------------------------------------------
   Interest                                                                          $10,480                    $11,122
   Income taxes, net of refunds                                                           94                      1,067

Supplemental Non-Cash Information:
---------------------------------
   Fair value of common stock issued in connection with acquisitions,
   including contingent payments on prior acquisitions                               $ 1,005                    $ 3,054
</TABLE>















  See accompanying notes to these condensed consolidated financial statements.


                                       6
<PAGE>

                          CLARK, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED
                                  JUNE 30, 2004

   (Tables shown in thousands of dollars, except share and per share amounts)



1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The condensed consolidated financial statements include
the accounts of Clark, Inc. ("the Company") and its wholly owned subsidiaries.
Through the Company's six operating segments, Executive Benefits Practice,
Banking Practice, Healthcare Group, Pearl Meyer & Partners, Human Capital
Practice, and Federal Policy Group, the Company designs, markets, and
administers compensation and benefit programs for companies supplementing and
securing employee benefits and provides executive compensation and related
consulting services to U.S. corporations, banks, and healthcare organizations.
The Company assists its clients in using customized life insurance products to
finance their long-term benefit liabilities. In addition, the Company owns Clark
Securities, Inc. ("CSI"), a registered broker-dealer through which it sells all
its securities products and receives related commissions. All significant
intercompany amounts and transactions have been eliminated in the accompanying
condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP") for interim financial information in
accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the Company's opinion, all
adjustments, including normally recurring accruals, considered necessary for a
fair presentation have been included. Operating results for the three and six
months ended June 30, 2004, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2004, or any other period.

The balance sheet at December 31, 2003 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by GAAP for complete financial statements.

For further information, including a summary of significant accounting policies,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 2003.

Stock-Based Compensation - Statement of Financial Accounting Standard ("SFAS")
No. 123, Accounting for Stock-Based Compensation, established accounting and
disclosure requirements using a fair value based method of accounting for
stock-based employee compensation plans. The Company has elected to remain on
the method of accounting as described in Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, for employees and directors.
However, the Company accounts for stock options granted to non-employees under
the provisions of SFAS No. 123.

The pro forma information regarding net income and earnings per share required
by SFAS No. 123 has been determined as if the Company accounted for its
stock-based compensation plans under the fair value method. The fair value of
each option grant was estimated at the date of grant using the Black-Scholes
option pricing model with the following weighted average assumptions used for
grants in 2004 and 2003, respectively:

                                                   JUNE 30,
                                         ----------------------------
                                             2004           2003
                                         ------------- --------------
Dividend yield                               None           None
Volatility                                   61.3%          64.8%
Risk-free interest rates                      5.2%           5.2%
Expected life (years)                         5              5


                                       7
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


Had compensation cost for the Company's stock-based compensation plans been
determined in accordance with SFAS No. 123, as amended by SFAS No. 148,
Accounting for Stock-Based Compensation - Transition and Disclosure - An
Amendment of FASB Statement No. 123, its net income and earnings per share would
have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED      SIX MONTHS ENDED
                                                                  JUNE 30,               JUNE 30,
                                                            ---------- ----------   ---------- ---------
                                                              2004       2003         2004       2003
                                                            ---------- ----------   ---------- ---------
<S>                                                            <C>        <C>          <C>       <C>
NET INCOME
  As reported                                                  $1,661     $1,992       $6,075    $5,573
  Add: stock-based employee compensation expense
  included in reported net income, net of related tax
  effect                                                            -          -            -       206

  Deduct: stock option compensation expense, net of tax         (588)      (197)      (1,338)     (615)
                                                            ---------- ----------   ---------- ---------
Pro forma                                                      $1,073     $1,795       $4,737    $5,164
                                                            ========== ==========   ========== =========

BASIC EARNINGS PER COMMON SHARE

 As reported                                                    $0.09      $0.11        $0.33     $0.31

 Pro forma                                                      $0.06      $0.10        $0.26     $0.28

DILUTED EARNINGS PER COMMON SHARE

  As reported                                                   $0.09      $0.11        $0.32     $0.30

  Pro forma                                                     $0.06      $0.10        $0.25     $0.28
</TABLE>

2.  HUMAN CAPITAL PRACTICE

In the fourth quarter of 2003, the Company reorganized its executive
compensation consulting practices. As part of the reorganization, certain of the
operations and employees of the Human Capital Practice were transferred to the
Pearl Meyer & Partners practice. In addition, four partners and six staff
members were terminated resulting in the Company exiting certain activities of
the practice and creating unused leased office space in numerous cities. The
Company recorded a charge of $7.5 million in the fourth quarter of 2003 relating
to the reorganization of which $4.4 million remains accrued on the condensed
consolidated balance sheet as of June 30, 2004. In the second quarter of 2004,
the Company adjusted its estimate of net future lease costs based upon changes
in sublease income expectations and other lease related costs. The net expense
of $265 thousand is included in general and administrative expenses in the
condensed consolidated statement of income for the three months ended June 30,
2004. During the six months ended June 30, 2004, the Company recorded net
expense of approximately $50 thousand, which is included in general and
administrative expenses in the condensed consolidated statement of income for
the six months ended June 30, 2004.

The remaining business of the Human Capital Practice consists of
actuarial/retirement planning and investment advisory services.


                                       8
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


The Company will continue to evaluate the remaining restructuring reserve as
plans are being executed. As a result, there may be additional charges or
reversals in future periods. A summary of the activity in the reserve account as
of June 30, 2004, is as follows:

<TABLE>
<CAPTION>
                                             RESERVE BALANCE       CASH                       RESERVE BALANCE
                                             JANUARY 1, 2004     PAYMENTS     ADJUSTMENTS       JUNE 30, 2004
                                          --------------------- ------------ --------------- ------------------
<S>                                              <C>              <C>             <C>              <C>
Employee termination costs                       $1,049           ($ 256)         $   -              $ 793
Lease costs                                       4,732           (1,326)           165              3,571
Bonus payments                                    1,027           (1,027)             -                  -

Other                                               147              (21)          (115)                11
                                          --------------------- ------------ --------------- ------------------
Total                                            $6,955          ($2,630)         $  50             $4,375
                                          ===================== ============ =============== ==================
</TABLE>


3.  EXECUTIVE BENEFITS PRACTICE RESTRUCTURING COSTS

During the first quarter of 2003, the Company committed to a plan to consolidate
the business support services of the Executive Benefits Practice in Dallas,
Texas. As a result, the Company intends to significantly reduce operations in
the Los Angeles, California and Bethesda, Maryland offices. The move from Los
Angeles was substantially completed by July 31, 2004 and Bethesda is expected to
be substantially completed by September 30, 2004. There were 68 employees
notified of the restructuring with some being offered relocation packages and
others being terminated with severance packages that include varying retention
bonus incentives. The total expected cost of this restructuring (approximately
$1.6 million) is being recognized ratably starting in March 2003. During the six
months ended June 30, 2004 and June 30, 2003, the Company recorded expense of
approximately $445 thousand and $335 thousand, respectively. In the second
quarter of 2004, there were adjustments to the reserve related to employees who
forfeited severance by not staying through their retention date. The above
amounts are included in general and administrative expenses on the condensed
consolidated statement of income for the six months ended June 30, 2004 and
2003. A summary of the activity in the reserve account as of June 30, 2004 is
follows:

<TABLE>
<CAPTION>
                       RESERVE BALANCE      YEAR TO DATE        CASH                              RESERVE BALANCE
                       JANUARY 1, 2004         EXPENSE         PAYMENTS       ADJUSTMENTS          JUNE 30, 2004
                      ------------------    --------------    -----------    --------------    ---------------------
<S>                         <C>                 <C>             <C>              <C>                   <C>
Employee
 termination benefits       $ 145               $445            ($296)           ($11)                 $283
</TABLE>


4.  FINANCING COSTS

For the six months ended June 30, 2004, the Company wrote off approximately $1.5
million of costs associated with the prospective securitization financing that
the Company is no longer pursuing. These costs are included in other income
(expense), net in the condensed consolidated statement of income for the six
months ended June 30, 2004.


                                       9
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


5.  CONTINGENT CONSIDERATION

As a result of the Company's acquisition program, the Company has approximately
$21.5 million of potential additional consideration issuable over the next three
and one half years to the former owners of the Company's acquired entities. Of
this amount, approximately $10.9 million that has been earned and is accrued on
the balance sheet as of June 30, 2004. If and when the acquired entities meet
certain criteria stipulated in the purchase agreements, these amounts are
payable as additional consideration. A summary of the amounts payable if the
criteria are met is as follows for acquisitions that were completed as of June
30, 2004:


<TABLE>
<CAPTION>
POTENTIAL AMOUNTS PAYABLE IN            CASH                  SHARES (1)                 SHARE VALUE
                                  ------------------    -----------------------    ------------------------
<S>        <C>                        <C>                       <C>                         <C>
           2005                       $10,668                   82,602                      $1,500
           2006                         4,225                   20,216                         400
           2007                         3,602                        -                           -
           2008                         1,102                        -                           -
                                  ------------------    -----------------------    ------------------------
                                      $19,597                  102,818                      $1,900
                                  ==================    =======================    ========================

<FN>
(1)      Shares determined based upon the closing price of the Company's common
         stock at June 30, 2004 of $18.55 per share.
</FN>
</TABLE>


6.  ACCOUNTS RECEIVABLE

Major categories of accounts receivable are as follows:


<TABLE>
<CAPTION>
                                                                AS OF                          AS OF
                                                            JUNE 30, 2004                DECEMBER 31, 2003
                                                       -----------------------        -----------------------
<S>                                                                  <C>                             <C>
     Accounts receivable - trade                                     $40,178                         $48,467
     Loans receivable                                                    246                             307
     Accounts receivable allowance                                    (1,758)                         (1,296)
                                                       -----------------------        -----------------------
                                                                     $38,666                         $47,478
                                                       =======================        =======================
</TABLE>


A summary of the activity in the allowance for uncollectible accounts
receivables is as follows:


<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED                  YEAR ENDED
                                                           JUNE 30, 2004                DECEMBER 31, 2003
                                                       -----------------------        -----------------------
<S>                                                                   <C>                            <C>
     Beginning balance                                               ($1,296)                        ($1,089)
     Write offs                                                          308                             999
     Expense                                                            (770)                         (1,206)
                                                       -----------------------        -----------------------
     Ending balance                                                  ($1,758)                        ($1,296)
                                                       =======================        =======================
</TABLE>

As of June 30, 2004 and December 31, 2003, there were approximately $4.2 million
and $2.3 million, respectively, of unbilled receivables included in accounts
receivable on the condensed consolidated balance sheets. These unbilled amounts,
the majority of which relate to in-process consulting projects, are typically
billed during the quarter immediately following the reporting period.


                                       10
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


7.   GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended June 30,
2004, by reporting units are as follows:

<TABLE>
<CAPTION>
                                   BALANCE          ACQUIRED                               BALANCE
                                  JANUARY 1,         DURING                                JUNE 30,
                                     2004          THE PERIOD       EARNOUTS/ETC.            2004
                                  ------------     ------------    ---------------     ---------------
<S>                                   <C>            <C>                   <C>               <C>
Executive Benefits Practice          $ 16,438          $     -             $3,000            $ 19,438
Banking Practice                       44,723                -              4,697              49,420
Healthcare Group                       14,076                -                  -              14,076
Management Science Associates           5,010                -                  -               5,010
Pearl Meyer & Partners                 36,981                -                  -              36,981
Human Capital Practice                    864                -                  -                 864
Federal Policy Group                    8,766                -                  -               8,766
Corporate                                  30                                   -                  30
                                  ------------     ------------    ---------------     ---------------

     TOTAL                           $126,888          $     -             $7,697            $134,585
                                  ============     ============    ===============     ===============
</TABLE>


    Information regarding the Company's other intangible assets follows:


<TABLE>
<CAPTION>
                                          AS OF JUNE 30, 2004                       AS OF DECEMBER 31, 2003
                                ----------------------------------------    -----------------------------------------
                                   GROSS        ACCUMULATED                     GROSS      ACCUMULATED
                                   AMOUNT      AMORTIZATION      NET           AMOUNT      AMORTIZATION       NET
                                ------------- -------------- -----------    ------------ --------------- ------------

<S>                                 <C>            <C>         <C>             <C>             <C>          <C>
Inforce  revenue                    $500,522       ($52,581)   $447,941        $499,800        ($44,305)    $455,495

Non-compete agreements                10,669         (4,079)      6,590          10,669          (3,249)       7,420
                                ------------- -------------- -----------    ------------ --------------- ------------

     Total                          $511,191       ($56,660)   $454,531        $510,469        ($47,554)    $462,915
                                ============= ============== ===========    ============ =============== ============
</TABLE>


Amortization expense of other intangible assets was $4.6 million and $5.2
million for the three months ended June 30, 2004 and June 30, 2003,
respectively, and $9.1 million and $10.4 million for the six months ended June
30, 2004 and June 30, 2003, respectively.

The Company estimates that its amortization for 2004 through 2008 for intangible
assets related to all acquisitions consummated through June 30, 2004 will be
approximately as follows:

                       Year                    Amount
                       ----                    ------
                       2004                   $18,158
                       2005                    15,247
                       2006                    14,657
                       2007                    14,269
                       2008                    13,909


                                       11
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


8.   EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
common share:


<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                           JUNE 30,                            JUNE 30,
                                               ----------------------------------  ---------------------------------
                                                    2004              2003              2004              2003
                                               ---------------- -----------------  ---------------   ---------------
<S>                                                   <C>              <C>               <C>               <C>
Numerator for basic and diluted earnings per
common share                                          $1,661           $ 1,992           $6,075            $5,573
                                               ================ =================  ===============   ===============

DENOMINATOR:
Basic earnings per common share -
   weighted average shares outstanding            18,569,701        18,325,747       18,530,412        18,221,031
Effect of dilutive securities:
   Stock options                                     265,525           119,046          277,910           170,198
   Contingent shares earned not issued                45,250            64,881           69,669           161,804
                                               ---------------- -----------------  ---------------   ---------------
Diluted earnings per share - weighted
   average shares plus assumed conversions        18,880,476        18,509,674       18,877,991        18,553,033
                                               ================ =================  ===============   ===============

Basic Earnings per Common Share                        $0.09             $0.11            $0.33             $0.31
                                               ================ =================  ===============   ===============

Diluted Earnings per Common Share                      $0.09             $0.11            $0.32             $0.30
                                               ================ =================  ===============   ===============
</TABLE>


For both the three and six months ended June 30, 2004, there are approximately
737 thousand of outstanding stock options which are not included in the
computation of diluted earnings per share because the exercise prices of the
options were greater than the average market prices of the Company's common
shares during the respective periods. For the three and six months ended June
30, 2003, there are approximately 1.1 million and 1.0 million, respectively, of
outstanding stock options which are not included in the computation of diluted
earnings per share because the exercise prices of the options were greater than
the average market prices of the Company's common shares during the respective
periods. The range of exercise prices for these antidilutive stock options was
between $17.79 and $30.30 at June 30, 2004, and $13.06 and $30.30 at June 30,
2003.

9.  TRUST PREFERRED DEBT

On May 26, 2004, the Company raised approximately $18 million from its
participation in a pooled trust preferred transaction, in which it issued
long-term subordinated debt securities with a floating rate based on three month
LIBOR plus a spread of 380 basis points (5.09% as of June 30, 2004). The Company
used the net proceeds of approximately $17.5 million to pay down its revolving
credit facility. The pooled trust preferred debt principal is payable in one
payment due in 30 years with interest paid quarterly.


                                       12
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


10.  INTEREST RATE SWAPS

The Company has limited transactions that fall under the accounting rules of
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137 and SFAS No. 138. From time to time, the Company uses
financial instruments, including interest rate swap agreements, to manage
exposure to movements in interest rates. On May 18, 2004, the Company entered
into an interest rate swap with a non-amortizing notional value of $7 million to
hedge outstanding three-month LIBOR-based debt. This swap and an interest rate
swap entered into in 2003 have been designated as cash flow hedges. As such, the
changes in the fair value of the interest rate swaps are recorded in other
comprehensive income ("OCI") for the effective portion of the hedge, while the
ineffective portion is recorded immediately in earnings. Amounts are
reclassified from OCI to earnings as the interest rate swaps affect earnings.
There have been no charges to earnings for ineffectiveness of interest rate
swaps for the three or six months ended June 30, 2004. The fair value of
interest rate swap agreements, based upon bank quotes, was an asset of
approximately $32 thousand at June 30, 2004. The terms of these interest rate
swaps are as follows (fair value in thousands):

<TABLE>
<CAPTION>
     EFFECTIVE                                NOTIONAL AMOUNT    FIXED RATE TO    VARIABLE RATE     FAIR VALUE AS
       DATE            MATURITY DATE          AT JUNE 30, 2004      BE PAID      TO BE RECEIVED    OF JUNE 30, 2004
---------------------------------------------------------------------------------------------------------------------
<S>     <C>                   <C> <C>          <C>                   <C>                                 <C>
January 7, 2003      December 31, 2007         $19.6 million         2.85%            LIBOR              $125
May 18, 2004         March 31, 2009            $ 7.0 million         4.44%            LIBOR              ( 93)
                                                                                                         ----
                                                                                        Total            $ 32
                                                                                                         ====
</TABLE>


11.  STATEMENT OF COMPREHENSIVE INCOME

Under SFAS No. 130, Comprehensive Income, the comprehensive income for the
Company consists of net income and changes in fair value, net of tax, of
interest rate swaps. Shown below is the Company's comprehensive income:

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED JUNE           SIX MONTHS ENDED
                                                        JUNE 30,                       JUNE 30,
                                                -------------------------     --------------------------
                                                   2004          2003              2004         2003
                                                -------------------------     --------------------------
<S>                                                <C>          <C>               <C>          <C>
Net income                                         $1,661       $1,992            $6,075       $5,573
Change in fair value of interest rate  swap,
net of tax                                            205         (593)              115         (593)
                                                -------------------------     --------------------------
Comprehensive income                               $1,866       $1,399            $6,190       $4,980
                                                =========================     ==========================
</TABLE>

12.  CARRIER INCENTIVE CONTRACTS

During the first quarter of 2004, the Company completed agreements with two of
its insurance carriers, which will generate additional revenue on its existing
blocks of business and future business. The length of one of the contracts is
three years and the other contract is one year. The agreements resulted in
revenue of approximately $350 thousand for the first quarter of 2004 and
approximately $490 thousand for the second quarter of 2004. The two new
agreements provide for minimum revenue of $175 thousand per quarter and include
a variable element tied to the Company's quarterly sales of the carrier's
products. Future payment amounts would be negatively impacted by potential
future surrenders of the inforce business or non-renewal of the agreements and
positively impacted by asset growth of these contracts.


                                       13
<PAGE>


                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


13.   SEGMENTS AND RELATED INFORMATION

The Company has six reportable segments:

         o        Executive Benefits Practice - markets, designs, implements,
                  administers, and finances non-qualified benefit plans for
                  companies of all sizes including Fortune 1000 companies and
                  other companies which can benefit from the Company's products
                  and services.

         o        Banking Practice - offers compensation consulting, executive
                  and director benefit programs, and bank-owned life insurance
                  to the bank market.

         o        Healthcare Group - provides specialized compensation and
                  benefit services for large and medium sized not-for-profit
                  healthcare organizations.

         o        Pearl Meyer & Partners - specializes in executive compensation
                  and retention programs.

         o        Human Capital Practice - provides actuarial/retirement
                  planning and investment advisory services.

         o        Federal Policy Group - provides a variety of legislative and
                  regulatory strategic services.


The segment information as of, and for the periods ended June 30, 2004 and 2003,
for the Pearl Meyer & Partners segment reflects the results of, and information
related to, the Rewards and Performance Group and certain Human Capital Practice
employees, who were transferred to Pearl Meyer & Partners as of October 1, 2003.

The six reportable segments operate as independent and autonomous business units
with a central corporate staff in North Barrington, Illinois responsible for
finance, strategic planning, human resources and company-wide policies. Each
segment has its own client base as well as its own marketing, administration,
and management.

The Company has disclosed income from operations as the primary measure of
segment earnings (loss). This is the measure of profitability used by the
Company's chief operating decision-maker and the most consistent with the
presentation of profitability reported within the condensed consolidated
financial statements. The accounting policies of the reporting segments are the
same as those described in Note 1 "Nature of Operations and Summary of
Significant Accounting Policies" in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003.

The Company evaluates performance and allocates resources based on operating
income before income taxes, interest, and corporate administrative expenses.
There are no inter-segment revenues or expenses.

Segment information for the three and six month periods ended June 30, 2004 and
2003, is as follows:


                                       14
<PAGE>
                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004
<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED            SIX MONTHS ENDED
                                                          JUNE 30,                     JUNE 30,
                                                 ---------------------------- ---------------------------
                                                        2004          2003           2004         2003
                                                 ---------------------------- ---------------------------
<S>                                                    <C>           <C>           <C>          <C>
REVENUES FROM EXTERNAL CUSTOMERS
     Executive Benefits Practice                       $12,768       $14,203       $ 39,575     $ 41,483
     Banking Practice                                   31,870        42,016         65,654       74,462
     Healthcare Group                                    9,406         8,606         19,399       18,517
     Pearl Meyer & Partners                              9,183         4,153         15,773       10,616
     Human Capital Practice                              2,195         5,176          4,332        8,074
     Federal Policy Group                                4,311         2,406          7,766        6,997
                                                 ---------------------------- ---------------------------
            Total segments - reported                   69,733        76,560        152,499      160,149
     Corporate/CSI                                         816           698          2,753        1,747
                                                 ---------------------------- ---------------------------
            Total consolidated - reported              $70,549       $77,258       $155,252     $161,896
                                                 ============================ ===========================
OPERATING INCOME (LOSS) AND INCOME BEFORE TAXES
     Executive Benefits Practice                      ($ 1,399)     ($ 1,141)      $  6,056     $  3,973
     Banking Practice                                    8,760        13,185         15,349       19,132
     Healthcare Group                                    1,235         1,035          3,544        2,466
     Pearl Meyer & Partners                              1,954           706          2,485        1,173
     Human Capital Practice                                (68)       (1,592)          (139)      (2,143)
     Federal Policy Group                                1,925           466          2,591        3,252
                                                 ---------------------------- ---------------------------
            Total segments - reported                   12,407        12,659         29,886       27,853
     Corporate/CSI                                      (4,371)       (4,143)        (7,511)      (7,531)
     Other income (expense)                                  3            94         (1,465)         181
     Interest - net                                     (5,488)       (6,112)       (11,032)     (12,016)
                                                 ---------------------------- ---------------------------
            Income before taxes                        $ 2,551       $ 2,498       $  9,878     $  8,487
                                                 ============================ ===========================
DEPRECIATION AND AMORTIZATION
     Executive Benefits Practice                       $ 1,165       $ 1,249       $  2,252     $  2,485
     Banking Practice                                    3,473         4,022          6,961        8,017
     Healthcare Group                                      687           736          1,374        1,462
     Pearl Meyer & Partners                                178            84            367          242
     Human Capital Practice                                 19           159             51          234
     Federal Policy Group                                  102           100            205          200
                                                 ---------------------------- ---------------------------
            Total segments - reported                    5,624         6,350         11,210       12,640
     Corporate/CSI                                         387           215            735          412
                                                 ---------------------------- ---------------------------
            Total consolidated - reported              $ 6,011       $ 6,565       $ 11,945     $ 13,052

                                                 ============================ ===========================
CAPITAL EXPENDITURES
     Executive Benefits Practice                       $   437       $   412       $    526     $    833
     Banking Practice                                      233           431            469          801
     Healthcare Group                                      171            (9)           313          417
     Pearl Meyer & Partners                                144             9            250           19
     Human Capital Practice                                  -            88              -          204
     Federal Policy Group                                    -             -              -            -
                                                 ---------------------------- ---------------------------
            Total segments - reported                      985           931          1,558        2,274
     Corporate/CSI                                         199           171            321          629
                                                 ---------------------------- ---------------------------
            Total consolidated - reported              $ 1,184       $ 1,102       $  1,879     $  2,903
                                                 ============================ ===========================
</TABLE>

<TABLE>
<CAPTION>
                                                                                 JUNE 30,   DECEMBER 31,
IDENTIFIABLE ASSETS                                                                2004         2003
                                                                              ---------------------------
<S>                                                                              <C>          <C>
     Executive Benefits Practice                                                 $ 77,023     $ 72,867
     Banking Practice                                                             486,225      509,370
     Healthcare Group                                                              31,015       32,996
     Pearl Meyer & Partners                                                        45,050       47,362
     Human Capital Practice                                                         4,784        5,282
     Federal Policy Group                                                          11,272       11,893
                                                                              ---------------------------
            Total segments - reported                                             655,369      679,770
     Deferred tax assets                                                              253          253
     Corporate/CSI                                                                 29,267       19,280
                                                                              ---------------------------
            Total consolidated - reported                                        $684,889     $699,303
                                                                              ===========================
</TABLE>
                                       15
<PAGE>

                          CLARK, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                    UNAUDITED
                                  JUNE 30, 2004


14.  LITIGATION AND CONTINGENCIES

From time to time, the Company is involved in various claims and lawsuits
incidental to its business, including claims and lawsuits alleging breaches of
contractual obligations under agreements with its consultants. The following is
a summary of the current material legal proceedings pending against the Company.


WILLIAM L. MACDONALD, SR. V. CLARK/BARDES CONSULTING, INC.

On April 10, 2003, William L. MacDonald, Sr., the former Chairman of the
Executive Benefits Practice, filed suit in Los Angeles, California Superior
Court alleging wrongful termination and seeking damages of $10.1 million and a
declaration that all of his non-competition and non-solicitation provisions were
unenforceable. On April 11, 2003, the Company filed proceedings in the Circuit
Court of Cook County, Illinois to enforce the non-competition and
non-solicitation covenants agreed to by Mr. MacDonald when the Company purchased
Mr. MacDonald's business, Compensation Resource Group, Inc., in September of
2000 and for other relief. In light of the California suit, the Illinois
litigation was stayed pending the outcome of proceeding in the California court.

The Company responded to Mr. MacDonald's suit by requesting the California court
to transfer the matter to arbitration as provided for in several of the
contracts at issue, and to enter a temporary restraining order prohibiting Mr.
MacDonald from competing with the Company and contacting its clients, in aid of
and pending the outcome of the arbitration. On May 1, 2003, the Court granted
the Company's motion and entered a temporary restraining order prohibiting Mr.
MacDonald from contacting certain clients of the Company. On June 5, 2003, the
court entered a preliminary injunction, which prohibited Mr. MacDonald and
persons acting in concert with him from soliciting clients of the Company's
Executive Benefits Practice. On July 24, 2003, the court issued its order
granting the Company's Motion to Compel Arbitration. The matter was settled by
the parties, and on June 30, 2004, the Arbitration Panel incorporated the
settlement in an Award which provides that Mr. MacDonald will not solicit and
will do no business with the Company's Executive Benefits Practice clients until
September 5, 2005.

INDEPENDENT SALES CONSULTANTS' DISPUTES

In March 2004, two of the Company's independent sales consultants exercised
their termination rights under their agreement(s) with the Company. Included in
the Company's consolidated balance sheets is a receivable of approximately $1.4
million from these two consultants and their employee related to certain
chargeback commissions to be repaid to the Company from the surrender of a
policy in 2003. Upon termination, the consultants have disputed the chargeback
and asserted other miscellaneous claims. The Company and the consultants have
agreed to go to binding arbitration to resolve all such disputes. The Company
intends to vigorously defend its characterization of the chargeback and its
right to the repayment of the commissions related to the surrendered case
through the arbitration. While it is not possible to predict with certainty the
outcome, the Company does not believe resolution will have a material adverse
effect on its financial position or results of operations.


                                       16
<PAGE>


                                      *****
ITEM     2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

   (Tables shown in thousands of dollars, except share and per share amounts)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements, the
notes thereto and other information appearing elsewhere in this Form 10-Q.

OVERVIEW

We design, market, and administer compensation and benefit programs for
companies supplementing and securing employee benefits and provide executive
compensation and related consulting services to U.S. corporations, banks, and
healthcare organizations. We generally compete with regional firms while we
market our products and services nationwide. A majority of our revenues result
from commissions paid by insurance companies that underwrite the insurance
policies used to finance our clients' benefit programs. Most of our clients'
benefit programs are financed by business-owned life insurance and other
financial products. We pay commissions to employee and independent consultants
based upon a percentage of our commission revenue. We work closely with clients
to design customized products that meet the specific organizational needs of the
client and with insurance companies to develop unique policy features and
competitive pricing.

A significant portion of our growth has been acquisition related. Business-owned
life insurance programs have tax advantages associated with products that are
attractive to our clients. A portion of our product offerings are interest rate
sensitive. Changes in tax and legislative laws can have an affect on our
business, as seen over the last several years with our Executive Benefits
Practice. We have been expanding our compensation consulting practices to
diversify our product offerings. The largest component of our general and
administrative expense is salary and other benefit-related costs.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The Securities and Exchange Commission ("SEC") has defined a
company's most critical accounting policies as those that are most important to
the portrayal of its financial condition and the results of operations, and
which require us to make difficult and subjective judgments, often as a result
of the need to make estimates of matters that are inherently uncertain. Although
we believe that our estimates and assumptions are reasonable, they are based
upon information available when they are made. Actual results may differ
significantly from these estimates under different assumptions and conditions.

REVENUE SOURCES AND RECOGNITION

Our operating segments derive their revenue primarily from:

         o        commissions paid by the insurance companies issuing the
                  policies underlying our benefit programs;

         o        program design and administrative service fees paid by our
                  clients;

         o        executive compensation and benefit-related consulting fees;
                  and

         o        fees for legislative liaison and related advisory services.


                                       17
<PAGE>


Our commission revenue is normally recurring, is typically paid annually, and
usually extends for a period of twenty years or more after the sale. Commissions
paid by insurance companies vary by policy and by program and typically
represent a percentage of the premium or the cash surrender value of the
insurance policies underlying the program.

First Year Commission Revenue and Related Fees. First year commission revenue
and related fees are derived from two principal sources; (a) the commission we
earn when the client first purchases the policies, which revenue is recognized
at the time the application is substantially completed, the client is
contractually committed to purchase the insurance policies and the premiums are
paid by the client to the insurance company; and (b) fees for the services
related to the enrollment and initial administration of the benefit programs and
underlying policies.

Our first year commission revenue is frequently subject to chargeback, which
means that insurance companies retain the right to recover commissions in the
event policies prematurely terminate. The chargeback schedules differ by product
and usually apply to first year commission only.

A typical chargeback schedule, based on a percent use of first year commission,
is as follows:

           Year 1                                                100%
           Years 2 and 3                                          50%
           Year 4                                                 25%
           Year 5 and beyond                                       0%

Given the homogenous nature of such cases and historical information about
chargebacks, we believe we are able to accurately estimate the revenue earned.
We currently maintain a chargeback allowance, which is monitored on a quarterly
basis for adequacy. The chargeback allowance is calculated based on the average
percentage rate of the last two years of chargebacks multiplied by first year
revenue for the trailing twelve months.

Renewal Commission Revenue and Related Fees. Renewal commission revenue is the
commission we earn on the policies underlying the benefit programs we have sold
in prior years. Renewal revenue is recognized on the date that the renewal
premium is due or paid by the client to the insurance company depending on the
type of policy. In the case of single pay policies, renewal revenue is
recognized on the date of the renewal and calculated based on a percentage of
the asset value or based on a percentage of the original premium paid.

Consulting Fee Revenue. Consulting fee revenue consists of fees charged by Pearl
Meyer & Partners, Human Capital Practice, and Federal Policy Group for the
services we perform in advising our clients on their executive compensation
programs and related consulting services, retirement, benefit, actuarial,
pension savings plan design and management, people strategy, compensation
surveys, institutional registered investment advisory services, and fees from
legislative and regulatory policy matters. These fees are generally based on a
rate per hour arrangement or a fixed monthly fee and are earned when the service
is rendered. Consulting fee revenue generated by the Executive Benefits
Practice, Banking Practice, and Healthcare Group is included in the first year
revenue line on our condensed consolidated statement of income.

Administrative Service Fee Revenue. Administrative service fee revenue consists
of fees we charge our clients for the administration of their benefit programs
and are earned when services are rendered. These revenues are mainly included in
our renewal revenue line in our condensed consolidated statement of income.

Carrier Incentive Contracts. Carrier incentive contracts consist of revenue we
receive from certain carriers under the terms of specific arrangements. Revenue
is recognized in the period in which it has been earned.

We record revenue on a gross basis when we are the primary obligors in the
arrangement or when we bear the credit risk in the arrangement. We record
revenue on a net basis when another party is the primary obligor in the
arrangement or when another party bears the credit risk.


                                       18
<PAGE>


INTANGIBLE ASSETS

Intangible assets represent the excess of the costs of acquired businesses over
the fair values of the tangible net assets associated with an acquisition.
Intangible assets consist of the net present value of future cash flows from
policies inforce at the acquisition date, non-compete agreements with the former
owners, other identifiable intangibles, and goodwill. Non-compete agreements are
amortized over the period of the agreements and other identifiable intangibles
are amortized over their useful lives.

The net present value of inforce revenue is typically amortized over 30 years
(the expected average policy duration). The determination of the amortization
schedule involves making certain assumptions related to persistency, expenses,
and discount rates that are used in the calculation of the carrying value of
inforce revenue. If any of these assumptions change or actual experience differs
materially from the assumptions used, it could affect the carrying value of the
inforce revenue.

We are required to assess potential impairments of long-lived assets in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
Accounting for the Impairment of Long-Lived Assets, if events or changes in
circumstances indicate that the carrying amount of a long-lived asset may not be
recoverable. In assessing the recoverability of goodwill in accordance with SFAS
No. 142, Goodwill and Other Intangible Assets, and the net present value of
future cash flows from policies inforce, we must make assumptions regarding
estimated future cash flows, mortality, lapse, and other factors to determine
the fair value of the respective assets. If these estimates and related
assumptions change in the future, we may be required to record impairment
charges.

INCOME TAXES

Significant judgement is required in determining the provision for income taxes
and related accruals, deferred tax assets and liabilities, and any valuation
allowance recorded against the deferred tax assets. In the ordinary course of
business, there are transactions and calculations where the ultimate tax outcome
is uncertain. Additionally, our tax returns are subject to audit by federal and
various state authorities. Although we believe our estimates are reasonable, no
assurance can be given that the final tax outcome will not be materially
different from that which is reflected in our historical income tax provisions
and accruals. In assessing the realizability of deferred tax assets, we consider
the likelihood that some portion or all of the deferred tax assets may not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which the temporary
differences become deductible. We consider the scheduled reversal of deferred
tax liabilities, projected future taxable income, and tax planning strategies in
making this assessment.

RESTRUCTURING COSTS

We make provisions for restructuring costs in accordance with SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. To determine
the amounts expensed in any period, we estimate the amounts we will receive in
the future for subleasing office space that is no longer required for our
existing operations. Should these estimates not reflect actual results in future
periods, we adjust the provision through the income statement.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED JUNE 30,                SIX MONTHS ENDED JUNE 30,
                                         ------------------------------------     ------------------------------------
                                           2004        2003       % CHANGE          2004        2003       % CHANGE
                                         ------------------------------------     ------------------------------------
<S>                                      <C>           <C>         <C>            <C>           <C>          <C>
TOTAL REVENUE                              $70,549      $77,258       (8.7%)       $155,252     $161,896       (4.1%)

OPERATING EXPENSE
    Commissions and fees                    14,809       21,716      (31.8%)         38,028       46,822      (18.8%)
     % of revenue                            21.0%        28.1%                       24.5%        28.9%
    Other operating expenses                47,704       47,026         1.4%         94,849       94,753         0.1%
     % of revenue                            67.6%        60.9%                       61.1%        58.5%
                                         ---------- ------------ ------------     ---------- ------------ ------------
OPERATING INCOME                           $ 8,036      $ 8,516       (5.6%)       $ 22,375     $ 20,321        10.1%
                                         ========== ============ ============     ========== ============ ============
</TABLE>

                                       19
<PAGE>

Quarter ended June 30, 2004 compared to quarter ended June 30, 2003.

Revenue. Total revenue for the three months ended June 30, 2004 was $70.5
million, a decrease of 8.7% from revenues of $77.3 million in second quarter
2003. First year revenues for the three months ended June 30, 2004 were $20.6
million compared to $30.0 million in the second quarter of 2003. Banking
Practice's first year revenue in second quarter of 2003 ($19.6 million) was a
record for the second quarter with more than two times as much premium sold in
the three months ended June 30, 2003 than in the three months ended June 30,
2004 due to clients' efforts in 2003 to lock in interest rates prior to
anticipated reductions in interest rates later in the year. In addition, Banking
Practice revenue for the three months ended June 30, 2004 and 2003 included
approximately $1.8 million and $500 thousand, respectively, related to carrier
incentive contracts. Renewal revenue for the three months ended June 30, 2004,
was $33.4 million compared to $34.8 million in 2003 due to the loss of three
large clients ($890 thousand) and overfunding of certain corporate plans.
Consulting revenue for the three months ended June 30, 2004 was $14.9 million
compared to $11.1 million in the second quarter of 2003. Second quarter 2004
consulting revenue for Federal Policy Group included a $1 million success fee
and executive compensation consulting services have seen an increase in demand
over the prior year.

Commissions and fees expense. Commissions and fees expense for the three months
ended June 30, 2004, was $14.8 million, or 21.0% of total revenue, compared to
$21.7 million or 28.1% of total revenue in second quarter 2003. The percentage
paid in commission expense declined primarily due to an increasing percentage of
sales by employee consultants who have a lower commission rate than independent
consultants and the mix between first year and renewal revenues. Renewal
revenues generally have lower commissions than first year revenues. In September
2003, Banking Practice acquired two of its former independent consultant
organizations. Some of the commission savings from sales by employees is spent
in the form of increased operating expenses. Independent consultants cover their
operating expenses out of their commissions. In addition, carrier incentive
revenues and consulting revenues have no related commission expense.

General and administrative expense. General and administrative expense for the
three months ended June 30, 2004 was $41.5 million, or 58.8% of total revenue,
compared to $41.9 million, or 54.2% of total revenue, for the three months ended
June 30, 2003. The decrease in general and administrative expenses was
attributable to good cost containment offset by expenditures associated with
Sarbanes-Oxley compliance ($650 thousand) and approximately $1.0 million of
legal fees associated with the MacDonald litigation. This litigation was settled
with no cash being exchanged during the three months ended June 30, 2004.

Amortization. Amortization expense decreased approximately $600 thousand to $4.6
million for the three months ended June 30, 2004, from $5.2 million for the
three months ended June 30, 2003, based on the timing of scheduled amortization
of our inforce revenue.

Other operating expenses. The three months ended June 30, 2003 results included
a $1.5 million favorable settlement of pending litigation that reduced operating
expenses.

Interest expense. Interest expense for the three months ended June 30, 2004 was
$5.5 million compared to $6.2 million for the three months ended June 30, 2003.
The decrease relates to lower borrowing levels in 2004 compared to 2003.

Income taxes. Income taxes for the three months ended June 30, 2004 were $890
thousand, an effective tax rate of 34.9%, compared to $506 thousand, an
effective tax rate of 20.3%, for the three months ended June 30, 2003. The
effective tax rate for the three months ended June 30, 2003 reflected an
anticipated $509 thousand of net state tax refunds from 2000 and 2001 amended
returns.

Net Income. Net income for the three months ended June 30, 2004 was $1.7
million, or $0.09 per diluted common share, versus net income of $2.0 million,
or $0.11 per diluted share, for the same period last year.

                                       20
<PAGE>

Six months ended June 30, 2004 compared to six months ended June 30, 2003.

Revenue. Total revenues for the six months ended June 30, 2004 were $155.3
million, a decrease of 4.1% from revenues of $161.9 million for the six months
ended June 30, 2003. First year revenues for the six months ended June 30, 2004
were $53.8 million compared to $57.5 million for the six months ended June 30,
2003. First year revenue of the Banking Practice was $8.6 million less in the
six months ended June 30, 2004 when compared to the six months ended June 30,
2003 due to clients' efforts in 2003 to lock in interest rates prior to
anticipated interest rate reductions later in the year. First year revenue
included $9.3 million for a large case that closed during the six months ended
June 30, 2004. Banking Practice revenue for the six months ended June 30, 2004
and 2003 included approximately $3.4 million and $1.0 million, respectively,
related to carrier incentive contracts. Renewal revenue for the six months ended
June 30, 2004, was $71.9 compared to $77.1 million for the six months ended June
30, 2003. The decrease in renewal revenue is primarily the result of the loss of
three large clients ($2.3 million) and overfunding of certain corporate plans.
For the six months ended June 30, 2004, executive compensation consulting
services have seen an increase in demand over the prior year. Federal Policy
Group consulting revenue for the six months ended June 30, 2004 included a $1.0
million success fee. Federal Policy Group consulting revenue for the six months
ended June 30, 2003 included a $2.8 million success fee.

Commissions and fees expense. Commissions and fees expense for the six months
ended June 30, 2004 was $38.0 million, or 24.5% of total revenue compared to
$46.8 million, or 28.9% of total revenue, for the six months ended June 30,
2003. The percentage paid in commission expense declined primarily due to an
increasing percentage of sales by employee consultants who have a lower
commission rate than independent consultants. In September 2003, Banking
Practice acquired two of its former independent consultant organizations. Some
of the commission savings from sales by employees is spent in the form of
increased operating expenses. Independent consultants cover their operating
expenses out of their commissions. Also impacting commission percentage to
revenue is the fact that carrier incentive revenues and consulting revenues have
no related commission expense.

General and administrative expense. General and administrative expense for the
six months ended June 30, 2004 was $82.5 million, or 53.2% of total revenue,
compared to $82.9 million, or 51.2% of total revenue for the six months ended
June 30, 2003. The decrease in general and administrative expenses was
attributable to good cost containment, particularly at Executive Benefits
Practice, offset by expenditures associated with Sarbanes-Oxley compliance ($860
thousand) and approximately $1 million of legal fees associated with MacDonald
litigation. This litigation was settled with no cash being exchanged during the
six months ended June 30, 2004.

Amortization. Amortization expense decreased approximately $1.3 million to $9.1
million for the six months ended June 30, 2004, from $10.4 million for the six
months ended June 30, 2003, based on the timing of scheduled amortization of our
inforce revenue.

Other operating expenses. The six months ended June 30, 2003 results included a
$1.5 million favorable settlement of pending litigation that reduced operating
expenses.

Other income (expense). Other income (expense) for the six months ended June 30,
2004, includes a $1.5 million write-off of costs associated with a prospective
securitization financing that we are no longer pursuing.

Interest expense. Interest expense for the six months ended June 30, 2004 was
$11.1 million compared to $12.2 million for the six months ended June 30, 2003.
The decrease relates to lower borrowing levels in 2004 compared to 2003.

Income taxes. Income taxes for the six months ended June 30, 2004 were $3.8
million, an effective tax rate of 38.5%, compared to $2.9 million, an effective
tax rate of 34.3%, for the six months ended June 30, 2003. The effective tax
rate for the six months ended June 30, 2003 reflects $509 thousand of net state
tax refunds relating to amended returns for 2000 and 2001.

Net Income. Net income for the six months ended June 30, 2004 was $6.1 million,
or $0.32 per diluted common share, versus net income of $5.6 million, or $0.30
per diluted share, for the same period last year.

                                       21
<PAGE>

The tables that follow present the operating results of our six segments for the
three and six months ended June 30, 2004 and 2003.

         EXECUTIVE BENEFITS PRACTICE
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                    JUNE 30,                 JUNE 30,
                                                            ------------------------- -----------------------
                                                                2004        2003         2004       2003
                                                            ------------------------- -----------------------
         <S>                                                <C>           <C>         <C>          <C>
         TOTAL REVENUE                                          $12,768    $14,203        $39,575    $41,483
         OPERATING EXPENSES
              Commissions and fees                                5,016      5,865         15,857     17,910
              Other operating expenses                            9,151      9,479         17,662     19,600
                                                            -----------------------   -----------------------
         OPERATING (LOSS) INCOME                               ($ 1,399)   ($1,141)       $ 6,056    $ 3,973
                  % of revenue                                  (11.0%)     (8.0%)          15.3%       9.6%
                                                            =======================   =======================
</TABLE>

         First year revenue for the three months ended June 30, 2004, was $4.6
         million compared to $4.3 million for the three months ended June 30,
         2003. Renewal revenue for the three months ended June 30, 2004, was
         $8.1 million compared to $9.9 million for the three months ended June
         30, 2003. The decrease in renewal revenue is primarily the result of
         the loss of three large clients ($890 thousand) and overfunding of
         certain corporate plans. Commission expense as a percentage of total
         revenue declined to 39.3% for the three months ended June 30, 2004,
         from 41.3% for the three months ended June 30, 2003, due to the mix of
         sales by employee consultants who are paid a lower commission,
         partially offset by the mix between first year versus renewal revenue.
         General and administrative expense for the three months ended June 30,
         2004, was lower than the three months ended June 30, 2003, due mainly
         to lower headcount (239 for 2004 and 283 for 2003) and facility costs,
         partially offset by $1.0 million of legal costs for the MacDonald
         settlement reached in late June, 2004.

         Trends in the six-month results ended June 30, 2004 as compared to the
         period in 2003 were generally the same as those experienced for the
         quarter. First year 2004 revenue for the six months ended June 30, 2004
         included $8.6 million for one large case. The increase in first year
         revenues was more than offset by decreases in renewal revenues relating
         to the loss of three large clients ($2.3 million) and overfunding of
         certain corporate plans. General and administrative expense for the six
         months ended June 30, 2004 includes a charge of $1.0 million for legal
         costs associated with the MacDonald settlement.

         BANKING PRACTICE
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                    JUNE 30,                 JUNE 30,
                                                            ------------------------- -----------------------
                                                                2004        2003         2004       2003
                                                            ------------------------- -----------------------
         <S>                                                <C>           <C>         <C>          <C>
         TOTAL REVENUE                                        $31,870    $42,016       $65,654    $74,462
         OPERATING EXPENSES
              Commissions and fees                              8,814     15,017        20,389     26,772
              Other operating expenses                         14,296     13,814        29,916     28,558
                                                            -------------------------  ----------------------
         OPERATING INCOME                                     $ 8,760    $13,185       $15,349    $19,132
                  % of revenue                                  27.5%      31.4%         23.4%      25.7%
                                                            =========================  ======================
</TABLE>

         Total first year revenue decreased 51.1% to $9.6 million for the three
         months ended June 30, 2004, from $19.6 million for the three months
         ended June 30, 2003. First year revenues for the three months ended
         June 30, 2003 were a record for the second quarter due to clients'
         efforts in 2003 to lock in interest rates prior to anticipated interest
         rate reductions later in the year. In addition, revenue for the three
         months ended June 30, 2004 and 2003 included approximately $1.8 million
         and $500 thousand, respectively, related to carrier incentive
         contracts. Renewal revenue for the three months ended June 30, 2004 and

                                       22
<PAGE>

         June 30, 2003, was $22.3 million in both periods. Commission expense
         for the three months ended June 30, 2004, was $8.8 million, or 27.7% of
         revenue, compared to $15.0 million, or 35.7% of revenue, for the same
         period in 2003. The commission expense as a percentage of revenue
         continues to decrease as a result of a higher percentage of first year
         revenue produced by employee consultants versus independent producers
         and the fact that the carrier incentive revenues have no related
         commission expense. In September 2003, Banking Practice acquired two of
         its former independent consultant organizations. General and
         administrative expense for the three months ended June 30, 2004, was
         $11.2 million, or 35.2% of revenue, compared to $10.2 million or 24.3%
         of revenue, for the comparable period in 2003. The higher percentage of
         general and administrative expenses to revenue reflects increased
         headcount and operating expenses relating to former independent
         consultants. Amortization expense for the three months ended June 30,
         2004 and 2003, was $3.1 million and $3.6 million, respectively. The
         decrease is based on the timing of scheduled amortization of our
         inforce revenue.

         Trends in the six-month results ended June 30, 2004 as compared to the
         period in 2003 were generally the same as those experienced for the
         quarter. Banking Practice revenue for the six months ended June 30,
         2004 and 2003 included approximately $3.4 million and $1.0 million,
         respectively, related to carrier incentive contracts. We do not pay
         commission expense on the revenue associated with the carrier incentive
         contracts.

         Richard Chapman, president of the Banking Practice, left Clark
         Consulting in the second quarter to pursue leadership development
         initiatives. Effective May 6, 2004, James Bean replaced Richard Chapman
         as president of the Banking Practice. In May of 2004, certain sales
         consultants of the South Central Region resigned. New leadership has
         been identified to assist with rebuilding the sales organization for
         that region. In July of 2004, an independent Banking Practice
         consultant became the subject of an SEC inquiry into possible insider
         trading transactions related to several financial institutions, mainly
         in California. The independent consultant, age 68, decided to retire as
         an independent consultant and terminate his Sales Representative
         Agreement with the Banking Practice. As a result of the retirement, we
         are in the process of transitioning existing clients to other Clark
         employees or independent representatives along with restaffing the
         territory. These developments are not expected to cause a significant
         loss of existing clients, but may affect future revenue opportunities
         as we transition to new sales teams.


         HEALTHCARE GROUP
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                    JUNE 30,                 JUNE 30,
                                                            ------------------------- -----------------------
                                                                2004        2003         2004       2003
                                                            ------------------------- -----------------------
         <S>                                                <C>           <C>         <C>          <C>
         TOTAL REVENUE                                          $9,406     $8,606         $19,399    $18,517
         OPERATING EXPENSES
              Commissions and fees                                 925        834           1,631      2,140
              Other operating expenses                           7,246      6,737          14,224     13,911
                                                            ------------------------- -----------------------
         OPERATING INCOME                                       $1,235     $1,035         $ 3,544    $ 2,466
                  %  of revenue                                  13.1%      12.0%           18.3%      13.3%
                                                            ========================= =======================
</TABLE>

         Healthcare Group revenues were higher for the three months ended June
         30, 2004, compared to the prior year. First year revenue for the three
         months ended June 30, 2004, was slightly lower than the prior year due
         to a lower number of new projects and lower add-on commissions as a
         result of split dollar regulations. However, consulting revenue
         (included in first year revenue) increased over prior year due to
         growth in several services. Renewal revenue for the three months ended
         June 30, 2004 increased to $2.6 million compared to $2.0 million for
         the three months ended June 30, 2003 primarily due to more
         recordkeeping service revenues. General and administrative expenses as
         a percentage of revenue has declined to 72.9% for the three months
         ended June 30, 2004 from 73.3% for the three months ended June 30, 2003
         due to continued cost containment efforts.

         Trends in the six-month results ended June 30, 2004 as compared to the
         period in 2003 were generally the same as those experienced for the
         quarter. However, for the six months ended June 30, 2003, commission
         and general and administrative expenses include approximately $435
         thousand and $335 thousand, respectively, for costs associated with a
         severance agreement.

                                       23
<PAGE>

         PEARL MEYER AND PARTNERS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                       JUNE 30,                 JUNE 30,
                                                              ------------------------- -----------------------
                                                                    2004        2003         2004       2003
                                                              ------------------------- -----------------------
         <S>                                                  <C>           <C>         <C>          <C>
         TOTAL REVENUE                                               $9,183     $4,153      $15,773    $10,616
         OPERATING EXPENSES                                           7,229      3,447       13,288      9,443
                                                              ------------------------- -----------------------
         OPERATING INCOME                                            $1,954       $706       $2,485     $1,173
                  %  of revenue                                       21.3%      17.0%        15.8%      11.0%
                                                              ========================= =======================
</TABLE>

         As of October 1, 2003, we transferred part of the operations of the
         Human Capital Practice to Pearl Meyer & Partners. As a result, all
         years presented have been reclassified to reflect this transfer.
         Executive compensation consulting services have seen an increase in
         demand over 2003, as companies and compensation committees increase
         their focus on executive compensation.

         HUMAN CAPITAL PRACTICE
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                       JUNE 30,                 JUNE 30,
                                                              ------------------------- -----------------------
                                                                    2004        2003         2004       2003
                                                              ------------------------- -----------------------
         <S>                                                  <C>           <C>         <C>          <C>
         TOTAL REVENUE                                               $2,195     $5,176         $4,332   $  8,074
         OPERATING EXPENSES                                           2,263      6,767          4,471     10,217
                                                              ------------------------- -------------------------
         OPERATING LOSS                                             ($  68)   ($1,591)        ($ 139)   ($ 2,143)
                  %  of revenue                                      (3.1%)    (30.7%)         (3.2%)     (26.5%)
                                                              ========================= =========================
</TABLE>

         In the fourth quarter of 2003, we reorganized our executive
         compensation consulting practices. As part of the reorganization, some
         of the operations and employees of the Human Capital Practice
         (including the Rewards and Performance Group) were transferred to the
         Pearl Meyer & Partners practice. As a result, all periods presented
         have been reclassified to reflect this transfer. The Human Capital
         Practice exited certain revenue producing activities in connection with
         the fourth quarter 2003 reorganization. Headcount at June 30, 2004 was
         38 compared to 61 at June 30, 2003. Rent and facility costs were
         significantly lower based on the reduced headcount and vacated
         facilities as part of the fourth quarter 2003 reorganization.

FEDERAL POLICY GROUP

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                     JUNE 30,                 JUNE 30,
                                                            -------------------------  -----------------------
                                                                  2004        2003          2004       2003
                                                            -------------------------  -----------------------
                  <S>                                       <C>           <C>          <C>          <C>
         TOTAL REVENUE                                           $4,311     $2,406       $7,766     $6,997
         OPERATING EXPENSES                                       2,386      1,940        5,175      3,745
                                                            -------------------------- -----------------------
         OPERATING INCOME                                        $1,925       $466       $2,591     $3,252
                  %  of revenue                                   44.7%      19.4%        33.4%      46.5%
                                                            ========================== =======================
</TABLE>
         Results for the three months ended June 30, 2004 included approximately
         $383 thousand of additional revenue and approximately $111 thousand of
         additional operating expenses related to business generated by four
         employees hired during the second quarter of 2003. Federal Policy Group
         experienced good overall demand for its services and benefited from a
         success fee of $1.0 million that was earned during the three months
         ended June 30, 2004.

                                       24
<PAGE>

         Trends in the six-month results ended June 30, 2004 as compared to the
         period in 2003 were generally the same as those experienced for the
         quarter. For the six months ended June 30, 2003, revenue included a
         $2.8 million success fee.

LIQUIDITY AND CAPITAL RESOURCES

Selected Measures of Liquidity and Capital Resources

                                                       JUNE 30,     DECEMBER 31,
                                                         2004          2003
                                                    ------------- --------------
Cash and cash equivalents                               $5,513         $3,156
Working capital (1)                                      ($239)        $2,623
Current ratio - to one                                    .996           1.04
Shareholders' equity per common share (2)               $14.28         $13.95
Debt to total capitalization (3)                         55.3%          57.7%

(1) Includes restricted cash and current portion of debt associated with
    asset-backed non-recourse notes
(2) Total stockholders' equity divided by actual
    shares outstanding
(3) Current debt plus long term debt divided by current debt plus long term
    debt plus stockholders' equity

As a financial company with historically strong operating cash flow, we believe
we have little need to maintain substantial cash balances. To the extent we have
net cash from operating activities, we use it to fund capital expenditures and
service existing debt. We expect large cash outlays such as future acquisitions
will be financed primarily through externally available funds. However, we can
offer no assurance such funds will be available and, if so, on terms acceptable
to us.

Below is a table summarizing our cash flow:

                                            SIX MONTHS ENDED JUNE 30,
                                      --------------------------------------
                                             2004                2003
                                      ------------------   -----------------
Cash flows from (used in):
   Operating activities                   $27,130             $30,801
   Investing activities                   ( 8,873)             (7,371)
   Financing activities                   (15,900)            (24,053)

Cash Flows from Operating Activities

Our cash flows from operating activities were as follows:

                                            SIX MONTHS ENDED JUNE 30,
                                      --------------------------------------
                                             2004                2003
                                      ------------------   -----------------
Net income plus non-cash expenses          $23,383             $22,377
Changes in operating assets
  and liabilities                            3,747               8,424
                                      ------------------   -----------------
Cash flows from operating activities       $27,130             $30,801
                                      ==================   =================

Non-cash expenses include depreciation of equipment and leasehold improvements,
amortization of intangibles, charges for performance-based stock options issued
to non-employee producers, and deferred tax expense. The 2004 increase in cash
relating to changes in operating assets and liabilities relates primarily to the
collection of accounts receivable partially offset by payment of accounts
payable and accrued liabilities in the first six months of 2004.

                                       25
<PAGE>

Cash Used in Investing Activities

For the six months ended June 30, 2004, approximately $7.0 million of cash was
used in investing activities for earnout payments to prior owners of certain of
our acquired businesses and the purchase of inforce revenue from several
independents who are no longer associated with the Company. Approximately $1.9
million was used for the purchase of fixed assets.

A substantial amount of the purchase price of our acquisitions is paid in cash.
This is primarily due to our desire to avoid diluting our existing stockholders.
We expect acquisitions to continue to be financed primarily from available
credit lines and possible additional equity. However, we can offer no assurances
such will be the case.

Cash Flows from Financing Activities

For the six months ended June 30, 2004, approximately $23.0 million of cash was
used for the net repayment of borrowings. As of June 30, 2004, we had restricted
cash of approximately $12.6 million, a decrease of $6.3 million from December
31, 2003, which will be used to pay down the asset-backed notes issued to
finance the acquisition of LongMiller. This cash is not available for general
corporate purposes, but is solely to service securitization indebtedness
incurred to finance the acquisition of LongMiller.

On May 26, 2004, we raised approximately $17.5 million from our participation in
a pooled trust preferred transaction, in which we issued $18 million aggregate
principal amount of long-term subordinated debt securities with a floating rate,
currently around 5.1%. We used the net proceeds to pay down our revolving credit
facility. The pooled trust preferred debt principal is payable in one payment
due in 30 years with interest paid quarterly.

The restrictive covenants under the credit agreement with our syndicate of banks
provide for the maintenance of a minimum ratio of fixed charges, a maximum
allowable leverage ratio, a minimum amount of net worth (stockholders' equity),
and a maximum ratio of debt to capitalization. We were in compliance with all
our restrictive covenants as of June 30, 2004. Our restrictive covenants may
limit our borrowing ability under our credit line. We had $72.0 million
available under the credit line at June 30, 2004.

We believe that our cash flow from operating activities will continue to provide
sufficient funds to service our debt obligations. However, as our business
grows, our working capital and capital expenditure requirements will also
continue to increase. There can be no assurance that the net cash flow from
operations will be sufficient to meet our anticipated cash flow requirements or
that we will not require additional debt or equity financing in the future. We
may issue stock to finance future acquisitions.

OFF-BALANCE SHEET ARRANGEMENTS AND OTHER CONTRACTUAL OBLIGATIONS

We do not have any material off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenue or expenses, results of
operations, liquidity, capital expenditures, or capital resources. Set forth
below is a summary presentation of our contractual obligations as of June 30,
2004, which are expected to become due and payable during the periods specified.

<TABLE>
<CAPTION>
                             PAYMENTS DUE BY PERIOD
                                                       LESS THAN                      MORE THAN
CONTRACTUAL OBLIGATIONS                        TOTAL     1 YEAR  1-3 YEARS 3-5 YEARS   5 YEARS
-----------------------                        -----     ------  --------- ---------   -------

<S>                                          <C>        <C>       <C>       <C>       <C>
Long-term debt obligations                   $329,542   $11,297   $26,721   $27,291   $264,233
Operating lease obligations                    56,522    10,730    19,905    15,154     10,733
Contingent consideration for acquisitions      19,597    10,668     7,827     1,102         --
                                             --------   -------   -------   -------   --------
Total                                        $405,661   $32,695   $54,453   $43,547   $274,966
                                             ========   =======   =======   =======   ========
</TABLE>

We expect to make significant cash outlays in future years for interest, taxes,
and deferred compensation arrangements. However, due to their variable nature,
no amounts for these items have been included in the table above.

                                       26
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2004, we had total outstanding indebtedness of $329.5 million, or
approximately 95.3% of total market capitalization. Our outstanding debt
consists of the following:

<TABLE>
<CAPTION>
                                               OUTSTANDING AMOUNT AS OF         WEIGHTED AVERAGE INTEREST RATE AS
             TYPE OF DEBT                           JUNE 30, 2004                        OF JUNE 30, 2004
---------------------------------------- ------------------------------------- -------------------------------------
<S>                                      <C>                                   <C>
Non-recourse bonds                                   $279.2 million                            Fixed -  6.4%
Note to prior owner                                     5.3 million                            Fixed - 10.0%
Trust preferred                                        45.0 million                         Variable - 5.3%
</TABLE>

On May 14, 2004, we entered into an interest rate swap with a total
non-amortizing notional value of $7 million to hedge our LIBOR-based debt. The
notional amount of the existing interest rate swap amortizes at the rate of $1.4
million per quarter. The terms of the interest rate swaps are as follows:

<TABLE>
<CAPTION>
    EFFECTIVE                             NOTIONAL AMOUNT AT    FIXED RATE    VARIABLE RATE    FAIR VALUE AS OF
      DATE            MATURITY DATE         JUNE 30, 2004       TO BE PAID    TO BE RECEIVED    JUNE 30, 2004
------------------ --------------------- --------------------- -------------- --------------- -------------------
<S>                <C>                   <C>                   <C>            <C>             <C>
January 7, 2003    December 31, 2007           $19,600             2.85%          LIBOR                  $125
May 18, 2004       March 31, 2009              $ 7,000             4.44%          LIBOR                 (  93)
                                                                                                         ----
                                                                                  Total                  $ 32
                                                                                                         ====
</TABLE>

We have exposure to changing interest rates and will engage in hedging
activities, from time to time, to mitigate this risk. The interest rate swaps we
have entered into are used to hedge our interest rate exposure on the LIBOR
based variable rate debt outstanding at June 30, 2004. Interest on the remaining
$18.4 million of unhedged variable debt at June 30, 2004, bears weighted average
interest of LIBOR plus 400 basis points. At our current borrowing level, a 1%
change in the interest rate will have an effect of approximately $184 thousand
on interest expense on an annual basis.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")). Based upon, and as of
the date of that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded our disclosure controls and procedures were effective to
ensure information required to be disclosed by us in the reports filed or
submitted by us under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within time periods specified in
the rules and forms of the SEC and include controls and procedures designed to
ensure that information required to be disclosed by us in such reports is
accumulated and communicated to our management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosures.

The Chief Executive Officer and Chief Financial Officer have concluded that
there have been no significant changes to our internal control over financial
reporting identified in connection with the evaluation of our internal controls
performed during our last quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

From time to time, we are involved in various claims and lawsuits incidental to
our business, including claims and lawsuits alleging breaches of contractual
obligations under agreements with our consultants. The following is a summary of
the current material legal proceedings pending against us.

                                       27
<PAGE>

WILLIAM L. MACDONALD, SR. V. CLARK/BARDES CONSULTING, INC.

On April 10, 2003, William L. MacDonald, Sr., the former Chairman of the
Executive Benefits Practice, filed suit in Los Angeles, California Superior
Court alleging wrongful termination and seeking damages of $10.1 million and a
declaration that all of his non-competition and non-solicitation provisions were
unenforceable. On April 11, 2003, we filed proceedings in the Circuit Court of
Cook County, Illinois to enforce the non-competition and non-solicitation
covenants agreed to by Mr. MacDonald when we purchased Mr. MacDonald's business,
Compensation Resource Group, Inc., in September of 2000. In light of the
California suit, the Illinois litigation was stayed pending the outcome of
proceeding in the California court.

We responded to Mr. MacDonald's suit by requesting the California court to
transfer the matter to arbitration as provided for in several of the contracts
at issue, and to enter a temporary restraining order prohibiting Mr. MacDonald
from competing with us and contacting our clients, in aid of and pending the
outcome of the arbitration. On May 1, 2003, the Court granted our motion and
entered a temporary restraining order prohibiting

Mr. MacDonald from contacting certain clients of ours. On June 5, 2003, the
Court entered a preliminary injunction, which prohibited Mr. MacDonald and
persons acting in concert with him from soliciting clients of our Executive
Benefits Practice. On July 24, 2003, the Court issued its order granting our
Motion to Compel Arbitration. The matter was settled by the parties, and on June
30, 2004, the Arbitration Panel incorporated the settlement in an Award which
provides that Mr. MacDonald will not solicit and will do no business with our
Executive Benefits Practice clients until September 5, 2005.

ITEM 2.  CHANGES IN SECURITIES, USE OF PROCEEDS AND
         ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER PURCHASES OF EQUITY SECURITIES

The following table sets forth information in connection with purchases made by,
or on behalf of, us or any affiliated purchaser of ours, of shares of our common
stock during the quarterly period ended June 30, 2004.


<TABLE>
<CAPTION>

                            (a)            (b)                   (c)                             (d)
                           TOTAL         AVERAGE       TOTAL NUMBER OF SHARES            MAXIMUM NUMBER (OR
                          NUMBER          PRICE         PURCHASED AS PART OF        APPROXIMATE DOLLAR VALUE) OF
                         OF SHARES        PAID           PUBLICLY ANNOUNCED       SHARES THAT MAY YET BE PURCHASED
       PERIOD           PURCHASED(1)    PER SHARE        PLANS OR PROGRAMS           UNDER THE PLANS OR PROGRAMS
----------------------- ------------    ---------      ----------------------     --------------------------------
<S>                     <C>             <C>            <C>                        <C>
April 1, 2004 through
   April 30, 2004          8,000         $17.08                8,000                            34,000


 May 1, 2004 through
    May 31, 2004           8,000         $18.92                8,000                            26,000


June 1, 2004 through
    June 30, 2004          8,000         $17.87                8,000                            18,000 (2)
                          ------         ------               ------

TOTAL                     24,000         $17.96               24,000
                          ======         ======               ======
<FN>
(1)      In January 2003, our Board of Directors authorized the purchase of up
         to 400 thousand shares of our common stock to, among other things,
         fulfill our obligations under our Employee Stock Purchase Plan. The
         Employee Stock Purchase Plan consists of eight semi-annual offerings of
         common stock beginning on each January 1 and July 1 in each of the
         years 2003 to 2006, and terminating on June 30 and December 31 of each
         such year. The maximum number of shares issued in any of the semi
         annual offerings is 50 thousand.
(2)      For the period January 1, 2004 to June 30, 2004.
</FN>
</TABLE>

                                       28
<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) The Company's Annual Meeting of Stockholders was held on April 27, 2004.

(b) At the Annual Meeting, two uncontested nominees to the Board of Directors of
the Company were elected Class III directors for three-year terms expiring at
the 2007 Annual Meeting. The votes for the director nominees were as follows:

         Director Nominee                   For                 Withheld
         ----------------                   ---                 --------
         Tom Wamberg                    14,375,008               350,564
         Randolph A. Pohlman            14,151,025               564,547

In addition, George D. Dalton, Steven F. Piaker, Robert E. Long, Jr., L. William
Seidman, and William Archer continue to serve as directors of the Company after
the Annual Meeting.

(c) The results of stockholder voting on Proposal 2 were as follows:

Proposal 2 - A vote to ratify the appointment of Deloitte & Touche LLP as
independent public accountants for the year ending December 31, 2004.

                     For              Against           Abstain
                     ---              -------           -------
                 14,606,685           118,382             505

ITEM 5.  OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The list of exhibits required by this Item 6(a) appears on the
         Exhibit Index attached hereto.

         (b) Reports on Form 8-K.

We furnished the following Current Report on Form 8-K during the quarter ended
June 30, 2004. The information furnished under Item 12. Results of Operations
and Financial Condition is not deemed to be "filed" for purposes of Section 18
of the Securities Exchange Act of 1934:

Current Report on Form 8-K dated April 26, 2004, furnishing the financial
performance of the Registrant for the three months ended March 31, 2004.


                                       29
<PAGE>

SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                         CLARK, INC.



Date     August 5, 2004                    /s/ Tom Wamberg
     -------------------                   -------------------------------------
                                                        Tom Wamberg
                                           President and Chief Executive Officer


Date      August 5, 2004                   /s/ Jeffrey W. Lemajeur
     -------------------                   -------------------------------------
                                                    Jeffrey W. Lemajeur
                                                  Chief Financial Officer


                                       30
<PAGE>

                                  EXHIBIT INDEX

3.1      Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein
         by reference to Exhibit 3.1 of our Registration Statement on Form S-1,
         File No. 333-56799, filed with the SEC on July 15, 1998).

3.2      Certificate of Amendment of Certificate of Incorporation of
         Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.3 to
         Amendment No.1 to our Registration Statement on Form S-1, File No.
         333-56799, filed with the SEC on July 27, 1998).

3.3      Certificate of Amendment of Certificate of Incorporation (Incorporated
         herein by reference to Exhibit 5 of our Registration Statement on Form
         8-A, filed with the SEC on February 28, 2002).

3.4      Certification of Amendment of Certification of Incorporation
         (Incorporated herein by reference to Exhibit 3.6 of Clark's Quarterly
         Report on Form 10-Q, File No. 001-31256, filed with the SEC on August
         14, 2002).

3.5      Certificate of Amendment of Certificate of Incorporation (Incorporated
         herein by reference to Exhibit 4.5 of Clark's Registration Statement on
         Form S-8, File No. 333-106538, filed with the SEC on June 26, 2003).

3.6      Bylaws of Clark, Inc. (Incorporated herein by reference to Exhibit 4.6
         of Clark's Registration Statement on Form S-8, File No. 333-106538,
         filed with the SEC on June 26, 2003).

3.7      Certificate of Designation of Series A Junior Participating Preferred
         Stock (Incorporated herein by reference to Exhibit 3.4 to Amendment No.
         2 to Clark's Registration Statement on Form S-1, File No. 333-56799
         filed with the SEC on August 11, 1998).

4.1      Specimen Certificate for shares of Common Stock, par value $.01 per
         share, of Clark Holdings, Inc. (Incorporated herein by reference to
         Exhibit 4.1 of Clark's Amendment No. 1 to the Registration Statement on
         Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).

4.2      Rights Agreement, dated as of July 10, 1998, by and between Clark
         Holdings, Inc. and The Bank of New York (Incorporated herein by
         reference to Exhibit 4.4 of Clark's Quarterly Report on Form 10-Q, File
         No. 000-24769, filed with the SEC on November 16, 1998).

10.1     Employment Agreement, dated as of July 1, 2004, by and between Clark,
         Inc. and James C. Bean.*

10.2     Employment Agreement, dated as of July 16, 2004, by and between Clark,
         Inc. and Jeffrey W. Lemajeur.*

31.1     Certification of Chief Executive Officer pursuant to Section 302 of
         Sarbanes-Oxley Act of 2002.*

31.2     Certification of Chief Financial Officer pursuant to Section 302 of
         Sarbanes-Oxley Act of 2002.*

32.1     Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of Sarbanes-Oxley Act of 2002.*


                                       31