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                                                  SECURITES 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 March 31, 2002
                                                     Commission File No. 000-24769

                                                          CLARK/BARDES, 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
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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days. Yes[X] No [ ] 

As of May 1, 2002 there were 16,861,859 shares of common stock outstanding.

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TABLE OF CONTENTS

                                                                                                 PAGE
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.....................................................................   4
     Condensed Consolidated Balance Sheets at March 31, 2002
           and December 31, 2001.................................................................   4
     Condensed Consolidated Statements of Income for the three
          months ended March 31, 2002 and 2001...................................................   5
     Condensed Consolidated Statements of Cash Flows for the
           three months ended March 31, 2002 and 2001............................................   6
     Notes to Condensed Consolidated Financial Statements........................................   7

Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations.................................................  13

Item 3. Quantitative and Qualitative Disclosures About Market Risk...............................  28

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings........................................................................   28

Item 4. Submission of Matters to a Vote of Security Holders......................................   28

Item 6. Exhibits and Reports on Form 8-K.........................................................   28

SIGNATURES.......................................................................................   29

EXHIBITS
     Index to Exhibits...........................................................................
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FORWARD-LOOKING STATEMENTS

This Form 10-Q and thedocuments incorporated by reference in this Form 10-Q may containforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of1934, as amended. Such statements are identified by words such as“anticipate,” “believe,” “estimate,”“expect,” “intend,” “predict,”“project,” and similar expressions, as they relate to us or ourmanagement. When we make forward-looking statements, we are basing them on ourmanagement’s beliefs and assumptions, using information currently availableto us. These forward-looking statements are subject to risks, uncertainties andassumptions, including but not limited to, risks, uncertainties and assumptionsrelated to the following: 

- changes in tax legislation;         federal and state regulations;        general economic conditions;
-         competitive factors and pricing pressures;         our dependence on key consultants and services of key personnel;        our dependence on persistency of existing business;
-         our ability to achieve our earnings projections;         risks associated with acquisitions;        significant intangible assets;
-         our dependence on a select group of insurance companies; and         our dependence on information processing systems and risk of errors or omissions.
If one or more of these orother risks or uncertainties materialize, or if our underlying assumptions proveto be incorrect, actual results may vary materially from those anticipated. Anyforward-looking statements you read in this Form 10-Q or the documentsincorporated herein by reference reflect our current views with respect tofuture events and are subject to these and other risks, uncertainties andassumptions relating to our operations, results of operations, growth strategyand liquidity. You should specifically consider the factors identified in ourForm 10-K for the year ended December 31, 2001, included under the caption“Risk Factors,” which could cause actual results to differ materiallyfrom those indicated by the forward-looking statements. In light of theforegoing risks and uncertainties, you should not unduly rely on such forwardlooking statements when deciding whether to buy, sell or hold any of oursecurities. We disclaim any intent or obligation to update or alter any of theforward-looking statements whether in response to new information, unforeseenevents, changed circumstances or otherwise. 
PART 1. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS                                        CLARK/BARDES, INC. AND SUBSIDIARIES                                       CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                March 31,            December 31,                                                                                   2002                  2001                                                                                Unaudited               Audited                                                                                     (dollars in thousands)                                                      ASSETSCurrent Assets   Cash and cash equivalents                                                          $12,659               $10,207   Accounts and notes receivable - billed and unbilled, net of allowancesof   $971 and $946, respectively                                                         42,086                50,927   Other current assets                                                                 2,449                 2,384   Deferred tax assets                                                                    957                   690                                                                             -----------------      ----------------      Total Current Assets                                                             58,151                64,208Intangible Assets - Net                                                               190,284               187,728Equipment and Leasehold Improvements - Net                                             10,892                11,005Other Assets                                                                            6,600                 6,990                                                                             -----------------      ----------------      Total Assets                                                                   $265,927              $269,931                                                                             =================      ================                                       LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities   Accounts payable                                                                    $3,837                $4,767   Income taxes                                                                         3,476                 3,451   Accrued liabilities                                                                 27,443                46,086   Deferred revenue                                                                     2,271                   520   Interest rate swap payable                                                               -                 2,043   Debt maturing within one year                                                        1,072                 1,046                                                                             -----------------      ----------------      Total Current Liabilities                                                        38,099                                                                                                             57,913Deferred Tax Liabilities                                                                7,234                 7,146Deferred Compensation                                                                   3,047                 2,601Long Term Debt                                                                         10,801                 6,079Stockholders' Equity   Preferred stock          Authorized - 1,000,000 shares; $.01 par value, none issued                        -                     -   Common stock          Authorized - 20,000,000 shares; $.01 par value          Issued and outstanding - 16,752,881 at March 31, 2002 and16,524,070          at December 31, 2001                                                            168                   165    Paid in capital                                                                   161,890               156,394    Retained earnings                                                                  44,688                39,633                                                                             -----------------      ----------------Total Stockholders' Equity                                                            206,746               196,192                                                                             -----------------      ----------------Total Liabilities and Stockholders' Equity                                           $265,927              $269,931                                                                             =================      ================
See accompanying notes to condensed consolidated financial statements
                              CLARK/BARDES, INC. AND SUBSIDIARIES                             CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                                         Three Months Ended                                                                             March 31,                                                                   2002                    2001                                                                 Unaudited               Unaudited                                                              (dollars in thousands except share and                                                              per share amounts)Revenue    First year commissions and related fees                           $23,874                 $36,161    Renewal commissions and related fees                               35,463                  25,905    Consulting fees                                                     5,031                   3,971                                                              ----------------        ----------------                                                              ----------------        ----------------Total Revenue                                                          64,368                  66,037Operating Expense  Commission and fee expense                                           24,054                  26,956  General and administrative                                           28,671                  24,650   Amortization                                                         1,831                   2,799                                                              ----------------        ----------------                                                              ----------------        ----------------Total Operating Expense                                                54,556                  54,405                                                              ----------------        ----------------Operating Income                                                        9,812                  11,632Non-operating Income                                                        -                     191Interest   Income                                                                  88                     138   Expense                                                              (382)                 (1,429)                                                              ----------------        ----------------                                                                        (294)                 (1,291)                                                              ----------------        ----------------Income before taxes                                                     9,518                  10,532Income taxes                                                            3,940                   4,318                                                              ----------------        ----------------Income, before cumulative effect of change in accountingprinciple, net of tax                                                   5,578                   6,214Cumulative effect of change in accounting principle, net oftax (Note 2)                                                              523                       -                                                              ----------------        ----------------                                                              ----------------        ----------------Net Income                                                             $5,055                  $6,214                                                              ================        ================Basic Earnings per Common Share, before cumulative effect ofchange in accounting principle                                        $  0.34                 $  0.49     Cumulative effect of change in accounting principle                 0.03                       -                                                              ----------------        ----------------                                                              ----------------        ----------------Basic Earnings per Common Share                                         $0.31                   $0.49                                                              ================        ================Weighted average shares outstanding - Basic                        16,595,880              12,696,032                                                              ----------------        ----------------Diluted Earnings per Common Share, before cumulative effectof change in accounting principle                                     $  0.33                $   0.49     Cumulative effect of change in accounting principle                 0.03                       -                                                              ----------------        ----------------                                                              ----------------        ----------------Diluted Earnings per Common Share                                       $0.30                   $0.49                                                              ================        ================Weighted average shares outstanding - Diluted                      17,156,050              12,783,715                                                              ----------------        ----------------
See accompanying notes to condensed consolidated financial statements
                                        CLARK/BARDES, INC. AND SUBSIDIARIES                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                       Three Months Ended                                                                                            March 31,                                                                                 2002                      2001                                                                              Unaudited                  Unaudited                                                                                     (dollars in thousands)Net Cash From Operating Activities                                                    $5,426                $    13,492Investing Activities   Purchases of businesses                                                           (5,098)                   (16,166)   Purchases of equipment - net                                                        (791)                      (953)                                                                          -------------------       --------------------                                                                          -------------------       --------------------          Net Cash from Investing Activities                                         (5,889)                                                                                                               (17,119)                                                                          -------------------       --------------------Financing Activities   Proceeds from borrowings                                                            5,000                     12,500   Repayment of borrowings                                                             (252)                    (8,780)   Settlement of interest rate swaps                                                 (2,043)                          -   Issuance of common stock - net                                                        210                       (31)                                                                          -------------------       --------------------                                                                          -------------------       --------------------          Net Cash from Financing Activities                                           2,915                      3,689                                                                          -------------------       --------------------Net Increase in Cash                                                                   2,452                         62   Cash and Cash Equivalents at Beginning of Period                                   10,207                      7,598                                                                          -------------------       --------------------   Cash and Cash Equivalents at End of Period                                         12,659                 $    7,660                                                                          ===================       ====================Supplemental Non-Cash Information:Financing Activity:     Common stock issued in connection with acquisition earn-out payments             $5,289                       $504                                                                          ===================       ====================                                                                          ===================       ====================
See accompanying notes to condensed consolidated financial statements
CLARK/BARDES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUnauditedMarch 31, 2002
(Tables shown in thousands of dollars, except share and per share amounts)
1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of Clark/Bardes, Inc. ("CBI") and its wholly ownedsubsidiaries.  Through our six operating segments, Compensation Resource Group, Banking Practice, Healthcare Group, Pearl Meyer &Partners, Rewards & Performance and Federal Policy Group, we design, market and administer compensation and benefit programs toU.S. corporations, banks and healthcare organizations.   We design programs for supplementing and securing benefits for their keyemployees and provide executive compensation and related consulting services.  We assist our clients in using customized lifeinsurance products to finance their long-term benefit liabilities.  In addition, we own Clark/Bardes Financial Services, Inc., aregistered broker-dealer through which we sell all our securities products and receive a commission.  All inter-company amounts andtransactions have been eliminated in the accompanying consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally acceptedaccounting principles for interim financial information and 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 generally accepted accounting principles forcomplete financial statements.  In our opinion, all adjustments, including normal recurring accruals, considered necessary for a fairpresentation have been included.  Operating results for the three-month period ended March 31, 2002 are not necessarily indicative ofthe results that may be expected for the year ended December 31, 2002 or any other period.

The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include allof the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form10-K for the year ended December 31, 2001.
2.  RECENT ACCOUNTING PRONOUNCEMENTS
*FASB Accounting Standard - Business Combinations and Goodwill*

In June 2001 the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 141, BusinessCombinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS 141 requires that the purchase method of accounting beused for all business combinations initiated after June 30, 2001.  SFAS 141 also includes guidance on the initial recognition andmeasurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001.  SFAS 142eliminates the amortization of goodwill and intangible assets with indefinite useful lives.  SFAS 142 requires that these assets bereviewed for impairment at least annually.  Intangible assets with determinable lives will continue to be amortized over theirestimated useful lives.

We adopted SFAS 142 beginning the first quarter of 2002.  We test goodwill for impairment using the two-step process prescribed inSFAS 142.  The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any.We performed the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002 in the firstquarter of 2002.  An after-tax impairment charge of  $523,000 resulting from these impairment tests is reflected as the cumulativeeffect of a change in accounting principle in the first quarter of 2002.

In accordance with SFAS 142, we discontinued the amortization of goodwill effective January 1, 2002.  A reconciliation of previouslyreported net income and earnings per share to the amounts adjusted for the exclusion of goodwill amortization, net of the relatedincome tax effect, follows:
                                                              2002                 2001         Reported income, before cumulative effect of         change in accounting principle, net of tax               $5,578                $6,214            Add:  Goodwill amortization, net of tax                    -                   523         Adjusted income, before cumulative effect of         change in accounting principle, net of tax               $5,578                $6,737         Basic earnings per common share, before         cumulative effect of change in accounting         principle, net of tax                                     $0.34                 $0.49            Add:  Goodwill amortization, net of tax                    -                  0.04         Adjusted basic earnings per common share,         before cumulative effect of change in         accounting principle, net of tax                          $0.34                 $0.53         Diluted earnings per common share, before         cumulative effect of change in accounting         principle, net of tax                                     $0.33                 $0.49             Add:  Goodwill amortization, net of tax                   -                  0.04         Adjusted diluted earnings per common share,         before cumulative effect of change in         accounting principle, net of tax                          $0.33                 $0.53
*FASB Accounting Standard - Accounting for the Impairment or Disposal of Long-Lived Assets*

On January 1, 2002, weadopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-LivedAssets. This statement supersedes SFAS No. 121. Most of the provisions of SFASNo. 121 have been retained; however, SFAS No. 144 removes goodwill from itsscope and it establishes a primary asset approach to determine the cash flowestimation period for a group of assets. The adoption of this statement did nothave a material impact on our condensed consolidated financial statements. 
3.  ACQUISITION OF FEDERAL POLICY GROUP
On February 25, 2002, weacquired the Federal Policy Group of PricewaterhouseCoopers LLP. Based inWashington, D.C., Federal Policy Group is a consulting practice representingFortune 500 companies, trade associations and other businesses before thegovernment on legislative and regulatory policy matters. This acquisition allowsus to continue to expand our service offerings to the corporate market. Thepurchase price was $11.0 million before expenses consisting of a cash payment atclosing of $5.0 million and $6.0 million of contingent payments consisting ofcash and stock over the next four years based upon attainment of establishedperformance criteria. If earned, the contingent payments will consist of 70%cash and 30% CBI common stock. 

The allocation of the purchase price is preliminary pending completion of a valuation by an independent valuation firm.  Uponcompletion of such valuation, the allocation of purchase price will be finalized in accordance with the provisions of SFAS No. 141,Business Combinations.

The results of the Federal Policy Group are included as of March 1, 2002.
4.       GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carryingamount of goodwill for the three months ended March 31, 2002, by reporting unitsare as follows: 
Balance as ofDecember 31, 2001        $14,930    $35,768    $14,968     $5,010    $21,753    $11,313         $-        $26  $103,768Goodwill acquiredduring the period              -          -          -                     -          -      3,373          -      3,373Earnouts / others              -         54          -                    35        130          -          -        219Impairment charge                                               -                                           -      (892)                               -          -      (892)                     -          -          -Balance as of March31, 2002                 $14,930    $35,822    $14,076     $5,010    $21,788    $11,443     $3,373        $26  $106,468- Compensation Resource Group Banking PracticeHealthcare Group
- Management Science Associates Pearl Meyer & PartnersRewards & Performance
- Federal Policy Group Corporate
Information regarding our other intangible assets follows:
                     Carrying Amount    Accumulated                        Carrying       Accumulated                                       Amortization          Net            Amount        Amortization         NetPresent value ofinforce revenue              $98,936        ($17,435)          $81,501          $98,936       ($15,693)          $83,243Non competeagreements                     1,750          (1,094)              656            1,750         (1,033)              717Other intangibles                               1,686             (27)            1,659                -               -                -     Total                  $102,372        ($18,556)          $83,816         $100,686       ($16,726)          $83,960
Amortization expense ofother intangible assets was $1.8 million and $1.9 million for the three monthsended March 31, 2002 and March 31, 2001, respectively. 

We estimate that ouramortization for 2002 through 2006 for intangible assets related to allacquisitions consummated to date will be as follows: 
                                  2003                     6,082                                  2004                     5,267                                  2005                     4,485                                  2006                     3,7105.       ACCOUNTS RECEIVABLE
As of March 31, 2002, there were approximately $1.8 million of unbilled receivables included in accounts receivable on the condensedconsolidated balance sheet.
6.       EARNINGS PER SHARE
The following table setsforth the computation of historical basic and diluted earnings per common share: 
                                                                             March 31,                                                                      2002                2001                                                                      (dollars in thousands)         Numerator:         Net income for basic earnings per common share                    $ 5,055            $ 6,214                                                              --------------------- ------------------         Numerator for diluted earnings per common share                   $ 5,055            $ 6,214                                                              ===================== ==================         Denominator         Denominator for basic earnings per common share -            weighted average common shares                              16,595,880         12,696,032         Effect of dilutive securities:            Stock options                                                  560,170             87,683                                                              --------------------- ------------------         Denominator for diluted earnings per common share-            weighted average common shares - diluted                    17,156,050         12,783,715                                                              ===================== ==================         Per Common Share         Basic earnings                                                     $ 0.31             $ 0.49                                                              ===================== ==================         Diluted earnings                                                   $ 0.30             $ 0.49                                                              ===================== ==================7.  RISKS AND UNCERTAINTIES
Federal tax laws createcertain advantages for the purchase of life insurance products; therefore thelife insurance products underlying the benefit programs marketed by us arevulnerable to adverse changes in laws and enforcement. Any proposal or enactmentof changes in federal tax laws, that would reduce or eliminate such advantagescould result in the surrender of existing policies. As a result of any suchchange, we could lose a substantial amount of renewal revenue and our ability towrite new business could be curtailed. 

In recent years, theInternal Revenue Service (“IRS”) began two major enforcementinitiatives.  The first initiative is to disallow the interest deductionson certain leveraged business-owned life insurance programs sold during or priorto 1995.  The IRS has prevailed on the majority of cases it has litigatedrelated to this initiative.  While we stopped selling leveragedbusiness-owned life insurance programs after 1995 and we do not expect anymaterial adverse impact on our revenue from this enforcement initiative, it isimpossible to determine the impact of this initiative on a client’sdecision to continue or surrender an existing leveraged business-owned lifeinsurance program.  

The second initiativerelates to the tax treatment accorded split dollar life insurancearrangements.  A recent IRS Notice and forthcoming Treasury regulationschange the manner in which split dollar arrangements will be taxed in thefuture.  The new treatment will be, in certain respects, less attractivethan the historical tax treatment of split dollar arrangements. Consequently, this initiative could result in reduced revenue from split dollararrangements.  

Legislation may beintroduced in the near future which would increase the disclosure requirementsrelated to insurance placed on employees. We do not expect any material adverseimpact on our revenue if this legislation is enacted. 

For more information about additional risks and uncertainties related to our company, see "Risk Factors" in Item 1 of our AnnualReport on Form 10-K for the year ended December 31, 2001.
8.  SEGMENTS AND RELATED INFORMATION
We have six reportable segments:
- Compensation Resource Group Banking PracticeHealthcare Group
- Pearl Meyer & Partners Rewards & PerformanceFederal Policy Group
The six reportable segments operate as independent and autonomous business units with a central corporate staff responsible forfinance, strategic planning, and human resources.   Each segment has its own client base as well as its own marketing,administration, and management.
We evaluate performance andallocate resources based on income from operations before income taxes,interest, or corporate administrative expenses. The accounting policies of thereporting segments are the same as those described in the summary of significantpolicies as disclosed in Form 10-K as of December 31, 2001. There are nointer-segment revenues or expenses. 
                                                 March 31,                                         ---------------------------                                             2002          2001                                         ---------------------------Revenues from External Customers     Compensation Resource Group               $35,942      $39,621     Banking Practice                           13,860       16,613     Healthcare Group                            9,535        5,832     Pearl Meyer & Partners                    2,666        3,115     Rewards & Performance                     1,487          856     Federal Policy Group                          878            -                                         ---------------------------              Total segments reported -         64,368       66,037     Reconciling items                               -            -                                         ---------------------------            Total consolidated reoprted -      $64,368      $66,037                                         ===========================Operating Income     Compensation Resource Group                $8,542       $9,128     Banking Practice                              917        4,563     Healthcare Group                            2,174          508     Pearl Meyer & Partners                      319          798     Rewards & Performance                       106          379     Federal Policy Group                          360            -                                         ---------------------------                Total segments reported -       12,418       15,376     Corporate overhead                        (2,606)      (3,744)     Non-operating income                            -          191     Interest - net                              (294)      (1,291)                                         ---------------------------                      Income before taxes       $9,518      $10,532                                         ===========================Depreciation and Amortization     Compensation Resource Group                $1,170       $1,383     Banking Practice                              508          737     Healthcare Group                              741          759     Pearl Meyer & Partners                      154          377     Rewards & Performance                        42           39     Federal Policy Group                           29            -                                         ---------------------------               Total segments reported -         2,644        3,295     Reconciling items                              91           58                                         ---------------------------           Total consolidated reported -        $2,735       $3,353                                         ===========================Capital Expenditures     Compensation Resource Group                  $292         $349     Banking Practice                              102          119     Healthcare Group                               73          304     Pearl Meyer & Partners                      170          177     Rewards & Performance                        37            -    Federal Policy Group                            25            -                                         ---------------------------                                         ---------------------------               Total segments reported -           699          949     Reconciling items                              92            4                                         ---------------------------                                         ---------------------------           Total consolidated reported -          $791         $953                                         ===========================                                         ===========================                                             March 31,   December 31,Identifiable Assets                             2002          2001     Compensation Resource Group               $84,949     $ 93,743     Banking Practice                           75,393       79,720     Healthcare Group                           42,016       41,520     Pearl Meyer & Partners                   32,491       31,670     Rewards & Performance                    16,131       16,364     Federal Policy Group                        7,524            -                                         ---------------------------                                         ---------------------------           Total segments reported -           258,504       263,017     Deferred tax asset                            957          690     Corporate                                   6,466        6,224                                         ---------------------------                                         ---------------------------          Total consolidated reported -       $265,927     $269,931
9.   SUBSEQUENT EVENTS
On April 30, 2002, our shareholders approved increasing the authorized commonstock shares to 40 million shares.
On April 26, 2002, we acquired the assets of Comiskey Kaufman, Inc.  Comiskey Kaufman specializes in executive benefits consultingfor major companies in the Southwest, primarily in Texas. Total purchase price, excluding acquisition expenses, is $9.2 million withan initial payment of $5.2 million in cash and stock.  Included in the total purchase price are contingent payments of $4.0 millionin cash and stock payable over three years based on achieving certain revenue targets.   Comiskey Kaufman will become part of ourCompensation Resource Group.
On April 25, 2002, we acquired the assets of Hilgenberg and Associates.  Hilgenberg and Associates, located in Minneapolis, MN,specializes in providing compensation, benefit and business-owned life insurance ("BOLI") consulting services to banks located in theMidwest.  Total purchase price, excluding acquisition expenses, is $2.4 million with an initial payment of $950,000 in cash andstock.  Included in the total purchase are contingent payments of $1.5 million in cash and stock payable over three years, based uponachieving certain revenue targets.  Hilgenberg and Associates will become part of our Banking Practice.
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 ourfinancial statements, the notes thereto and other information appearing elsewhere in this Form 10-Q.
**Overview**
Net income, after an impairment charge of $523,000 net of taxes from the adoption of SFAS 142, for the quarter ended March 31, 2002was $5.1 million or $0.30 per diluted share representing a 38.8% decrease over net income of $6.2 million or $0.49 per diluted sharein the comparable quarter of 2001.
*Quarter ended March 31, 2002 compared to quarter ended March 31, 2001*
*Revenue*.  Total revenues for the quarter ended March 31, 2002 were $64.4 million, a decrease of 2.5% from revenues of $66.0 millionin first quarter 2001. We experienced lower than anticipated revenues primarily from our Banking Practice, in which several largecases that were anticipated to close in the first quarter were not completed. These cases are still in process.  CompensationResource Group had an outstanding first quarter 2001 which translated into more renewal revenue in the first quarter 2002.Compensation Resource was in line with management's expectations.  Consulting revenue was slightly below expectations, reflecting thegeneral economic climate.
*Commission and fee expense*.  Commission and fee expense was lower for first quarter 2002 at $24.1 million, versus $27.0 million infirst quarter 2001. There were an unusual number of cases split with outside parties in the first quarter of 2001, resulting inhigher commission expense.  The reduced commission expense in our Compensation Resource Group for the first quarter 2002 waspartially offset by higher commission in our Banking Practice due to mix of business.
*General and administrative expense*.  General and administrative expense for the three months ended March 31, 2002 was $28.7 millionor 44.5% of total revenue compared to $24.7 million or 37.3% of total revenue for the three months ended March 31, 2001.   Theincrease can be attributed to the increased investments in staffing of sales consultants and support services in our BankingPractice, expenses related to Management Science Associates that was acquired in July, 2001, inclusion of Rewards & Performance forthe entire quarter and the addition of Federal Policy Group as of February 25, 2002.  Due to lower revenue in first quarter 2002,this temporarily resulted in general and administrative expense being a higher percentage of revenue.
*Amortization*.  Amortization expense for the quarter was $1.8 million compared to $2.8 million in the prior year.  We ceasedamortization of goodwill effective January 1, 2002 under the adoption of SFAS 142.  In 2001, amortization expense included $900,000attributed to goodwill amortization.
*Non-operating income*.  In the first quarter of 2001, we received $191,000 of life insurance proceeds as the result of the death ofone of our employees.
*Interest expense - net*.  Net interest expense for the three months ended March 31, 2002 was $294,000 compared to $1.3 million in2001.  Interest expense has decreased since last year due to a  lower outstanding debt balance.  Total debt at March 31, 2002 was$11.9 million compared to $68.3 million at March 31, 2001.
*Income taxes*.  Income taxes for the three months ended March 31, 2002 were $3.9 million at an effective tax rate of 41.4% compared to$4.3 million at an effective tax rate of 41.0% for the three months ended March 31, 2001.
*Net Income*.  Net income for the first quarter 2002 was $5.1 million, or $0.30 per diluted common share versus net income of $6.2million or $0.49 per diluted share for the same period last year.
**Acquisitions**
On February 25, 2002, we acquired the Federal Policy Group of PricewaterhouseCoopers LLP.  Based in Washington, D.C., Federal PolicyGroup is a consulting practice representing Fortune 500 companies, trade associations and other businesses before the government onlegislative and regulatory policy matters.  This acquisition allows us to continue to expand our service offerings.  The purchaseprice was $11.0 million before expenses consisting of a cash payment at closing of $5.0 million and $6.0 million of contingentpayments consisting of cash and stock over the next four years based upon attainment of established performance criteria.  If earned,the contingent payments will consist of 70% cash and 30% CBI common stock.
The allocation of the purchase price is preliminary pending completion of a valuation by an independent valuation firm.  Uponcompletion of such valuation, the allocation of purchase price will be finalized in accordance with the provisions of Statement ofFinancial Accounting Standard ("SFAS") No. 141, Business Combinations.
The results of the Federal Policy Group are included as of March 1, 2002.
**Earnings Guidance**
Set forth below is a comparison of our actual results for the three months ended March 31, 2002 compared to the guidance previouslyprovided.
                                                                          March 31, 2002                                                              -------------------------------------                                                                    Actual           Guidance                Revenue                     First year commissions and consulting fees    $   28,905       $    38,140                     Renewal commissions and related fees              35,463            30,360                         Total                                         64,368            68,500                Earnings before interest, taxes and                amortization                                           11,643            16,280                Net income                                        $     5,055       $     8,675                                                              =====================================                Diluted shares outstanding                         17,156,050        17,250,000                Diluted earnings per common share                 $      0.30       $      0.50(1)      Earnings before interest, taxes and amortization ("EBITA") is not a GAAP measurement of earnings.  EBITA is management's              proxy for measuring pretax cash flow.
Set forth below is anupdate of our previously published forecasts of our expected results ofoperations for the quarter ending and the years ending December 31, 2002. Thedata in the following table constitute forward-looking information within themeaning of Section 27A of the Securities Acts of 1933 and Section 21E of theSecurities Exchange Act of 1934. These forward looking statements are subject tothe risks, uncertainties and assumptions described on page 11 hereof and underthe caption “Risk Factors” in our Annual Report on Form 10-K for theyear ended December 31, 2001. 
                                         -----------------------------------------------------------                                          March 31 (A)      June 30     September 30   December 31       2002Revenue     First year commissions and  consulting fees                            $ 28,905      $  39,000    $   36,670     $   54,020      $ 158,595     Renewal commissions and related fees      35,463         17,000        17,300         27,320         97,083            Total                              64,368         56,000         53,970        81,340        255,678Earnings before interest, taxes and   amortization                                11,643          7,200          7,380        22,980         49,203Net income                                  $   5,055     $    3,150      $   3,200    $   12,250      $  23,655Diluted shares outstanding                    17,156,050     17,250,000    17,250,000     17,300,000     17,225,000Diluted earnings per common share             $  0.30       $   0.18      $  0. 19       $   0.71        $  1.37(A)  Represents the actual unaudited operating results for the quarter.
The above forward-lookingstatements are based on the good faith beliefs of management and informationcurrently available and are not an assurance of future performance. Suchforward-looking statements are based on a number of assumptions by management,including, without limitation: 
that there will be no change in tax laws, regulations or enforcement policies of the Internal Revenue Service;
- that our recently completed acquisitions will be successful, and such statements do not give effect to any futureacquisitions; that general economic conditions will not decline from current levels; andthat our overall persistency rates will remain at levels consistent with historic levels.
The foregoing assumptionsare inherently subject to significant business, economic, competitive,regulatory and other risks and uncertainties, many of which are beyond ourcontrol, and upon assumptions with respect to future business decisions that aresubject to change. Forecasts are necessarily speculative in nature, and it canbe expected that some or all of the assumptions underlying the forecasts willnot materialize. We cannot assure you that the forecasts will be realized, andactual results may be materially higher or lower than the forecasts.Consequently, the inclusion of the forecasts in this 10-Q should not be regardedas a representation by us or any other person that the forecasted results willbe achieved. Because of such risks and uncertainties and the possibility thatone or more of our assumptions may be incorrect, you should not rely on theabove forward-looking statements in making any investment decision whether tobuy, hold or sell any of our securities. 
**Revenue Sources and Recognition**
Our operating segments derive their revenue primarily from:
commissions paid by the insurance companies issuing the policies underlying our benefit programs;
- program design and administrative service fees paid by our clients; and executive compensation and benefit consulting fees.
Our commission revenue isnormally long term and recurring, is typically paid annually and usually extendsfor a period of ten years or more after the sale. Commissions paid by insurancecompanies vary by policy and by program and represent a percentage of thepremium or the cash surrender value of the insurance policies underlying theprogram. 
- First Year Commission Revenue and Related Fees . First year commission revenue isderived from two principal sources; (a) the commission we earn when the clientfirst purchases the policies. It is the financial result of our sales effortsand revenue is recognized at the time the application is substantiallycompleted, the client is contractually committed to purchase the insurancepolicies and the premiums are paid, by the client, to the insurance company; and(b) fees for the services we perform in advising our clients on their executivecompensation programs. These fees are based on a rate per hour arrangement andare earned when the service is rendered and billed to the client. Our first year commission revenue is subject to charge-back, which means thatinsurance companies retain the right to recover commissions paid in the eventpolicies prematurely terminate. The charge-back schedules differ by product andusually apply to first year commission only. A typical charge-back schedule,based on a percent of first year commission, is year 1 – 100%; year 2 and 3– 50%; year 4 – 25%; and year 5 and beyond 0%. Charge-backs,cancellations or other adjustments are accounted for in the period determinedand are not significant.Renewal Commission Revenue and Related Fees
. Renewal commission revenue is thecommission we earn based on the premiums on the policies underlying the benefitprograms we have sold in prior years. Renewal revenue is recognized on the datethat the renewal premium is due or paid to the insurance company depending onthe type of policy.
- Consulting revenue . Consulting fee revenue consists of fees for the services weperform in advising our clients on their executive compensation programs andrelated consulting services. These fees are based on a rate per hour arrangementand are earned when the service is rendered. *Other Revenue*.  Other revenue consists mostly of fees we charge our clients for the administration of their benefit programs.
        Allfees are recorded as revenue as they are earned in accordance with the governingagreement. 

**Other Significant Accounting Policies**

**Intangible assets**

We have intangible assetsrepresenting the excess of the costs of acquired businesses over the fair valuesof the tangible net assets associated with the acquisition. Intangible assetsconsist of the net present value of future cash flows from existing business atthe acquisition date, non-compete agreements with the former owners andgoodwill. Non-compete agreements are amortized over the period of theagreements. 

The net present value ofinforce revenue is amortized over 20 to 30 years (the expected average policyduration). There are certain assumptions related to persistency, expenses, anddiscount rates that are used in the calculation of inforce revenue. If any ofthese assumptions change, it could affect the carrying value of the inforcerevenue. Under generally accepted accounting principles, we annually review andtest the recoverability of these assets. 
                                                                  Three months ended                                                                      March 31,                                                           2002          2001          Change              Revenue                        First year commissions and                        related fees                         $23,874        $36,161       (34.0%)                        Renewal commissions and                        related fees                          35,463         25,905         36.9%                        Consulting fees                        5,031          3,971         26.7%                                                      ------------------------------                              Total                           64,368                       (2.5%)                                                                             66,037              Commission and fee expense                      24,054         26,956       (10.8%)                                % of revenue              37.4%          40.8%                  -              General and administrative expense              28,671         24,650         16.3%                        % of revenue                      44.5%          37.3%                  -               Amortization                                    1,831          2,799       (34.6%)                                                      ------------------------------              Operating income                                                            (15.7%)                                                               9,812         11,632                        % of revenue                      15.2%          17.6%                  -              Non-operating income                                 -            191      (100.0%)              Interest income                                     88            138       (36.2%)              Interest expense                                 (382)        (1,429)       (73.2%)                                                      ------------------------------              Income before taxes                              9,518         10,532        (9.6%)              Income taxes                                     3,940          4,318        (8.8%)                                                      ------------------------------                                                      ------------------------------              Income, before cumulative effect of                                         (10.2%)              change in accounting, net of tax                $5,578         $6,214                   Cumulative effect of change in                    accounting principle                         523              -        100.0%                                                      ------------------------------                                                      ------------------------------              Net Income                                      $5,055         $6,214       (18.7%)                                                      ==============================                                                      ==============================              Per common share - diluted                         et income                              $             $                        N                                       0.30           0.49       (38.8%)                        Weighted average shares           17,156,050     12,783,715         34.2%
The tables that follow present the operating results of our five major operating groups for the three months ended March 31, 2002 and2001.
                                                           Three Months Ended                                                               March 31,                                                       2002            2001         Revenue              First year commissions and related         fees                                             $  10,276       $  21,861              Renewal commissions and related fees           25,666          17,760                                                   ---------------------------------                  Total                                      35,942          39,621              Commission expense                             17,778          21,184                 % of revenue                           49.5%           53.5%              General and administrative                      8,685           8,138                  % of revenue                          24.2%           20.5%              Amortization of intangibles                       937           1,171                                                   ---------------------------------                                                   ---------------------------------         Operating income                                  $  8,542        $  9,128                  % of revenue                          23.8%           23.0%                                                   =================================
CRG had an outstandingfirst  quarter  2001 that  translated  into more  renewal  revenue  in the firstquarter of 2002.  Renewal revenue also increased due to higher than  anticipatedpremium payments related to our variable life insurance  policies in first threemonths of 2002.  Consulting  revenue,  included  in first year  commissions  andrelated  fees,  increased  due to the  addition of Coates  Kenney in late fourthquarter of 2001.
                                                          Three Months Ended                                                              March 31,                                                         2002            2001         Revenue              First year commissions and related         fees                                              $  6,996       $  10,291              Renewal commissions and related fees            6,864           6,322                                                   ---------------------------------                 Total                                       13,860          16,613               Commission expense                             5,450           5,161                 % of revenue                           39.3%           31.1%              General and administrative                      7,120           6,242                 % of revenue                           51.4%           37.6%              Amortization of intangibles                       373             647                                                   ---------------------------------                                                   ---------------------------------         Operating income                                    $  917        $  4,563                  % of revenue                           6.6%           27.5%                                                   =================================
First-year commissions revenue in 2002 was lower than 2001 first year commission revenuedue to significantly lower large-case BOLI revenue and lower community bankrevenue from employee offices. The first three months of 2001 included twoindividually significant cases that totaled over $4 million. In the first threemonths of 2002, large-case BOLI results were below expectations, as the closingof several cases were delayed. These cases are still in process. The highervolume of sales successfully closed in the fourth quarter 2001 also affected thefirst quarter of 2002 results.

Renewal revenue is based upon business initially sold in the prior years and wasfavorably impacted by the strong first quarter of 2001.

Commission expense as a percentage of revenue, increased in the first quarter of 2002 as alarger percentage of first-year revenue was generated by independent salesconsultants, who receive a higher commission expense. The mix betweenindependents and employee sales consultants will vary quarter to quarter.

General and administrative expense grew 14.1% over the three months ended March 31,2001, with investments in staffing of sales consultants and support serviceareas to generate and manage the projected revenue goals for 2002. Compounded bythe lower first-year revenue, this resulted in general and administrativeexpense being a higher percentage of revenue.
                                               Three Months Ended                                                    March 31,                                               2002          2001Revenue    First year commissions and relatedfees                                              $6,602         $4,010    Renewal commissions and related fees           2,933          1,823                                          ------------------------------                   Total                           9,535          5,833       Commission expense                            826            610                            % of revenue       8.7%          10.5%     General and administrative                    6,083          4,125                  % of revenue                63.8%          70.7%     Amortization of intangibles                     452            589                                          ------------------------------                                                        ----------------Operating income                               $   2,174        $   509                  % of revenue                22.8%          8.7%                                          ==============================
The Healthcare Group acquired Management Science Associates (“MSA”) inJuly 2001 whose results were not included in the results of the three monthsended March 31, 2001. In the first quarter of 2002, MSA contributed $1.9 millionin revenue that is included in first year commissions and related fees revenueand $288,000 in operating income. During 2002, Healthcare Group started billingfor clients’ record keeping services, which contributed approximately$99,000 to revenue. The improvement in general and administrative expense as apercentage of revenue can be attributed to increased revenue during the firstquarter of 2002 combined with the elimination and reduction of various generaland administrative expenses.
                                               Three Months Ended                                                    March 31,                                              2002            2001 Revenue     Consulting fees                           $4,153          $3,971                                     ---------------------------------                Total                           4,153           3,971Expenses     General and administrative                 3,728           2,460                % of revenue              89.8%           61.9%     Amortization of intangibles                    -             334                                     ---------------------------------                                                     -----------------Operating income                                 $425                                                               $1,177                % of revenue              10.2%           29.6%                                     =================================
Compensation consultinggroup consists of Pearl Meyer & Partners and Rewards & Performance. Rewards& Performance was acquired on March, 2001. The three months ended March 31,2002 includes three months of activity of Rewards & Performance compared toless than one month of activity for the three months ended March 31, 2001. 

        PearlMeyer & Partners experienced a decrease in revenue from $3.1 million for thethree months ended March 31, 2001 to $2.7 million for the three months endedMarch 31, 2002 due to less billable hours in the first quarter of 2002 comparedto the activity for the three months ended March 31, 2001. Operating expensesincreased due to the increased headcount. 
                                   Three Months                                       Ended                                  March 31, 2002Revenue     Consulting fees                          $878                                 ------------------              Total                            878Expenses     General and administrative                491              % of revenue             55.9%     Amortization of intangibles                27                                 ------------------Operating income                              $360              % of revenue             41.0%                                 ==================
Federal Policy Group was acquired on February 25, 2002.
>
*Results Attributable to Acquisitions*

As an active acquirer, ouroperating results are significantly influenced by the contributions of ouracquired businesses. By definition, we consider any business not appearing infour full quarters of operating results as being from acquisitions. After that,they become part of existing business. Non-material acquisitions are notincluded in the acquisition column. An analysis of our operating results,separating acquisitions from existing businesses for the periods indicated is asfollows: 
                                             March 31, 2002                            March 31, 2001                                              Acquisitions                               Acquisitions                                  Existing       (1)         Combined       Existing       (2)         CombinedRevenue     First year commissionsand consulting fees                  $26,540        $2,365       $28,905        $17,510      $22,622       $40,132     Renewal commissions andrelated fees                          35,463             -        35,463         13,848       12,057        25,905                               -------------------------------------------------------------------------------------     Total                            62,003         2,365        64,368         31,358       34,679        66,037Commission expense                    24,054             -        24,054          9,514       17,442        26,956General and administrativeexpense                               26,799         1,872        28,671         17,407        7,243        24,650                               -------------------------------------------------------------------------------------Operating income before               11,150           493        11,643          4,437        9,994        14,431amortizationAmortization of intangibles            1,804            27         1,831          1,680        1,119         2,799                               -------------------------------------------------------------------------------------Operating income                      $9,346          $466        $9,812         $2,757       $8,875       $11,632                               =====================================================================================(1)includes operations of Rewards & Performance since March 12, 2001 and FederalPolicy Group since March 1, 2002.(2) includes the operations of CompensationResource Group since September 6, 2000, Pearl Meyer & Partners since June 21,2000, and Rewards & Performance since March 12, 2001.
Caution should be used inanalyzing and evaluating the foregoing. Acquisitions have made, and are expectedto make, a substantial contribution to our operating performance and growth;however, the resources dedicated to our acquisition program, if not used foracquisitions, would have been available to make an impact on the performance ofthe existing business. 

For the three months endedMarch 31, 2002, approximately 3.7% of gross revenue and 4.7% of operating incomecame from acquisitions while 52.5% of gross revenue and 76.3% of operatingincome were from acquisitions during the same period in 2001. We do notattribute a great deal of significance to the above statistics for the followingreasons: 
- an acquisition's contribution to operating performance in any given period is considerably dependent on the timing of thetransaction; an acquisition, by our definition for this purpose, is one that has not yet appeared in four quarters' operating results.As the value of these acquisitions add to our existing business base, the relative contribution of any subsequentacquisition may diminish; andacquisitions have made, and are expected to make, a substantial contribution toour operating performance and growth; however, the resources dedicated to ouracquisition program would have been available to make an impact on theperformance of the existing business. 
**Quarterly Results**
The following tablepresents a summary of key revenue and expense statistics for the most recenteight calendar quarters. This information is not necessarily indicative ofresults for any full year or for any subsequent period. 
Our operating results canfluctuate considerably, especially when compared on a consecutive quarterlybasis. We have experienced and may continue to experience large increases inrevenue in the first and fourth quarters and our operating results may beaffected by a number of other factors, including: 
a significant portion of the financing for our bank-owned life insurance products occurs in the fourth calendar quarter; and
- a significant portion of the deferred compensation plans, marketed by ourCompensation Resource Group division, is financed in the first quarter.                                     --------------------------------------------------------------------------------------------------                                       Mar           Dec         Sep         Jun         Mar        Dec        Sep         Jun                                       2002         2001        2001        2001        2001       2000        2000        2000Revenue                              $  64,368     $ 77,264   $ 43,922     $ 43,468   $ 66,037   $ 57,457    $ 34,645    $ 24,364   % of annual                            28.1%        33.5%      19.1%        18.8%      28.6%      38.9%       23.5%       16.5%Operating expenses                      28,671       27,932     24,053       24,617     24,650     21,705      17,875      14,114Amortization                             1,831        2,934      2,887        2,940      2,799      2,540       1,933       1,329Operating income                         9,812       14,324      3,010        2,841     11,632     13,077       3,080         893   % of revenue                           15.2%        18.5%       6.9%         6.5%      17.6%      22.8%        8.9%        3.7%Non-operating income                         -         (21)          -         (72)        191      1,001           -           -Interest expense - net                     294        3,224      1,206        1,447      1,291      1,587       1,407         847Income taxes                             3,940        3,946         39          422      4,318      4,151         514       (113)                                  --------------------------------------------------------------------------------------------------Income, before cumulativeEffect in change in accountingprinciple, net of tax                    5,578        7,133      1,765          900      6,214      8,339       1,159         159Cumulative effect of change inaccounting principle, net of tax             523            -          -            -          -          -           -           -                                  --------------------------------------------------------------------------------------------------                                  --------------------------------------------------------------------------------------------------Net Income                             $ 5,055     $  7,133   $  1,765      $   900   $  6,214   $  8,339     $  1,159     $  159                                  ==================================================================================================                                  ==================================================================================================Per diluted common share                 $  0.30      $  0.48    $  0.13      $  0.07    $  0.49    $  0.65     $  0.11     $  0.02                                  ==================================================================================================  We expect that futurequarterly fluctuations in our total revenue will be mitigated, to some extent,by the addition of our Compensation Consulting Group whose revenue tends to bemore stable throughout the year. Our revenue is difficult to forecast, and webelieve that comparing our consecutive quarterly results of operations is notnecessarily meaningful, nor does it indicate what results we will achieve forany subsequent period. In our business, past operating results are not reliableindicators of future performance.   **Liquidity and Capital Resources**  *Selected Measures of Liquidity and Capital Resources*                                                                                                      Increase/                                                                    2002              2001         (Decrease)Cash and cash equivalents....................................     $12,659           $10,207          $2,452Working capital................................................   $20,052            $6,295         $13,757Current ratio - to one.........................................      1.53              1.11               -Shareholders' equity per common share (1)...............          $ 12.34            $11.87          $ 0.47Debt to total capitalization (2)...............................      5.4%              3.5%               ------------(1)  total shareholders' equity divided by actual shares outstanding(2)  current debt plus long term debt divided by current debt plus long term debt plus stockholders' equity  In addition to our tangible balance sheet assets and liabilities, we have an on going renewal revenue stream, estimated to be $601.0million over the next ten years.  As a financial company with historically strong operating cash flow, we believe we have little need to retain substantial cashbalances.  We use the net cash from operating activities to fund capital expenditures and small acquisitions and pay down our creditfacility.  We expect that large future acquisitions will be financed primarily through externally available funds.  However, we canoffer no assurance that such funds will be available and, if so, on terms acceptable to us.  Summarizing our cash flow, comparatively, for the year-to-date:                                                                                       March 31,                                                                                 2002             2001Cash flows from (used in):   Operations................................................................$5,426            $13,492    Investing................................................................ (5,889)           (17,119)    Financing................................................................  2,915             3,689  *Cash Flows from Operating Activities*  Our cash flow from operations for the three months ended March 31, 2002, compared with the same three-month period in 2001, was asfollows:                                                                              March 31,                                                                                                Increase/(Decrease)                                                                     2002              2001           In CashNet income plus non-cash expenses                                   $8,681           $ 9,665            ($984)Changes in operating assets and liabilities                         (3,255)            3,827           (7,082)Cash flow from operating activities                                 $5,426           $ 13,492         ($8,066)  As the above tableindicates, our lower cash flow from operations was due, in part, to our reducednet income in the first quarter 2002 compared with 2001. The most significantreduction comes from the payment of current liabilities, $19.2 million comparedwith $8.8 million collection of accounts receivable. In effect, we used our$10.2 million year-end cash balance, plus the $8.8 million from accountsreceivable to meet year-end obligations for commissions, taxes, employee bonusesand acquisition earn-out payments. In January 2002, we paid the cash to settleinterest rates swaps, which we had outstanding at December 31, 2001, for $2.0million.   The following tablerepresents the estimated gross renewal revenue associated with the businessowned life insurance policies, owned by our clients, as of March 31, 2002. Theprojected gross revenue is not adjusted for mortality, lapse or other factorsthat may impair realization. We cannot assure you that commissions under thesepolicies will be received. These projected gross revenues are based on thebeliefs and assumptions of management and are not necessarily indicative of therevenue that may actually be achieved in the future and we cannot assure youthat commissions under these policies will be received.                            Compensation           Banking           Healthcare                        Resource Group          Practice            Group             Total       2002                   $47,964           $33,143            $5,990           $87,097       2003                    40,225            25,489             5,549            71,263       2004                    32,423            25,768             5,135            63,326       2005                    28,548            26,266             4.794            59,608       2006                    25,937            25,210             4,442            55,589       2007                    23,807            25,676             3,802            53,285       2008                    23,473            26,133             3,085            52,691       2009                    22,918            26,755             2.371            52,044       2010                    23,145            27,580             1,638            52,363       2011                    23,839            28,494             1,444            53,777                    ------------------------------------------------------------------------       Total                 $292,279          $270,514           $38,250          $601,043  March 31, 2001             $285,785          $253,028           $39,697          $578,510  At March 31, 2002, our ten-year renewal projection amounted to $601.0 million.  This balance represents a 3.9% increase in ourresidual book of business over the March 31, 2001 balance.  Ten-year inforce revenues net of commission expense are $406.7 million and $404.6 million for the three months ended March 31, 2002and March 31, 2001, respectively.  As a fee based business, our Compensation Consulting and Federal Policy Group divisions do not have renewal revenues similar to thoseof our benefits practices.  *Cash Used in Investing Activities>*  The Federal Policy Group acquisition accounted for the $5.1 million used in investing activities and $791,000 was used for thepurchase of equipment.  A substantial amount of the purchase price is paid in cash. This is primarily due to our desire to avoid diluting our existingshareholders. We expect acquisitions to continue and be financed primarily from available credit lines and possible additionalequity. However, we can offer no assurances such will be the case.  *Cash Flows from Financing Activities*  In December 2001, we amended our Amended and Restated Credit Agreement dated December 28, 1999 to increase the amount available underthe revolving credit facility from $62.0 million to $103.2 million.  There is no longer a term loan balance of this facility.  Wepaid off the term portion under the old agreement in December 2001 with the proceeds from our November 2001 secondary offering.  Anyoutstanding debt on December 31, 2002 will convert from the revolving credit facility to term debt and will amortize over five yearsunder the term facility agreement.  We had $98.2 million available under our credit lines at March 31, 2002.  The restrictive covenants under the loan agreement provide for the maintenance of a minimum ratio of fixed charges, a maximumallowable leverage ratio, a minimum amount of stockholders' equity; and, a maximum ratio of debt to capitalization. We were incompliance with all restrictive covenants as of March 31, 2002.  We believe that our cash flow from operations will continue to provide sufficient funds to service our debt obligations. However, asour business grows, our working capital and capital expenditure requirements will also continue to increase. There can be noassurance that the net cash flows from operations will be sufficient to meet our anticipated requirements or that we will not requireadditional debt or equity financing.. We may continue to issue stock to finance future acquisitions.  The following table provides information about our debt obligations. The table presents principal cash flows and related interestrates by expected maturity dates totaling $11.9 million.                                                                                                                           Fair                             2002          2003         2004          2005         2006      Thereafter      Total       Value Liabilities Long term debt   Fixed rate                   $795       $1,154        $1,274       $1,407       $1,553          $690       $6,873        $6,873   Average interest     rate                      10.0%        10.0%         10.0%        10.0%        10.0%         10.0% Variable rate:   U.S. Prime                      -       $5,000             -            -            -             -       $5,000        $5,000   Average rate                    -        4.75%             -            -            -             -  *Intangible Assets and Renewal Revenue*  Intangible assets arise asa direct result of our acquisition program and said acquisitions have been animportant contribution to our past and expected future growth. In most of ouracquisitions, we acquire very little in the way of tangible assets, therefore asubstantial portion of the purchase price is typically allocated to intangibleassets. Two important elements of our intangible assets affect our cash flow:   the present value of inforce revenue is the net discounted cash flow from thebook of business of those companies having future renewal revenue at the time weacquired them; and
- a potential future tax benefit over the next fifteen years. The amortization ofapproximately $173.1 million of our gross intangible assets is expected to betax deductible.   Intangible assets, net ofamortization, arising from our purchased businesses consist of the following:                                                                              2002               2001               Present value of inforce revenue                           $81,501           $83,243               Goodwill                                                   106,468           103,768               Non-compete agreements                                         656               717               Other intangibles                                            1,659                 -                                                                         $190,284          $187,728               Total assets                                                 71.6%             69.5%               Stockholders' equity                                         92.0%             95.7%  The amounts allocated toinforce revenue are determined using the discounted cash flow of futurecommission adjusted for expected persistency, mortality and associated costs.The balance of the excess purchased price over the net tangible assets has beenallocated to goodwill. The inforce revenue is amortized over its period ofduration, which is normally twenty to thirty years. Many factors outside ourcontrol determine the persistency of our inforce business and we cannot be surethat the value we allocated will ultimately be realized.   Non-compete agreements are amortized over the period of the agreements.  On June 27, 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, Business Combinations.  The new rulesoutlined in this new standard affect the allocations between goodwill and other intangible assets.  On June 27, 2001, the FASBissued SFAS No. 142, Goodwill and Other Intangible Assets. Under this new rule,effective with the year beginning January 1, 2002, goodwill is no longer beamortized but will be subject to annual tests for impairment. The process forgoodwill impairment determination is a two-step method.   Step 1 – Compares the fair value of the reporting unit with its carryingvalue, including goodwill. If the carrying amount exceeds its fair value,impairment may exist.
- Step 2 – Compares the implied fair value of the reporting unit goodwillwith the carrying amount of that goodwill. If the carrying amount exceeds theimplied fair value, an impairment loss shall be recognized.   We have adopted SFAS 142.An impairment charge of $892,000 ($523,000 after-tax) resulting from theseimpairment tests is reflected as the cumulative effect of a change in accountingprinciple in the first quarter of 2002.   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  At March 31, 2002, we hadtotal outstanding indebtedness of $11.9 million, or approximately 2.5% of totalmarket value capitalization. Of the outstanding debt, $6.9 million was subjectto fixed rates of 10.0% at March 31, 2002. The remaining $5.0 million of debtwas borrowed during the first quarter of 2002 under our revolver, at a rate of4.75%. Payment of this amount is not due until 2003. We do not enter intoderivative or interest rate transactions for speculative purposes. As a resultof the reduction of the debt in November 2001 with the proceeds from thesecondary offering, we were unable to continue our hedging program. We recorded$2.0 million as interest expense for the year ended December 31, 2001 related tothe interest rate swaps. These interest rate swaps were settled in January 2002.   PART II OTHER INFORMATION  ITEM 1.  LEGAL PROCEEDINGS  None  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  None  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  The list of exhibits required by this Item 6(a) appears on the Exhibit Index attached hereto.
- Reports in Form 8-K.          On March 5, 2002, we filed a current report on Form 8-K pursuant to Item 4 thereof related to the resignation of ourindependent accountants.          On March 12, 2002, we filed a current report on Form 8-K pursuant to Item 4 thereof related to the engagement of ourindependent accountants.  SIGNATURES          Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.   Date              May 10, 2002                                         /s/ W.T. WAMBERG                                                                       W.T. Wamberg                                                              President and Chief Executive OfficerDate              May  10 , 2002                                       /s/  THOMAS M. PYRA                                                                       Thomas M. Pyra                                                              Vice President and Chief Financial Officer                                                              (Principal Financial Officer)  EXHIBIT INDEX         Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 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 the Clark/Bardes' 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 of Clark/Bardes, Inc. (incorporated herein by reference to Exhibit         5 of Clark/Bardes' Registration Statement on Form 8-A, filed with the SEC on February 28, 2002).3.4      Bylaws of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.2 of Clark/Bardes' Registration Statement on         Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).3.5      Certificate of Designation (Incorporated herein by reference to Exhibit 3.4 of Clark/ Bardes' Registration Statement on Form         S-1, File No. 333-56799).4.1      Specimen Certificate for shares of Common Stock, par value $.01 per share, of Clark/ Bardes Holdings, Inc. (Incorporated         herein by reference to Exhibit 4.1 of Clark/Bardes' 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/Bardes Holdings, Inc. and The Bank of New York (Incorporated         herein by reference to Exhibit 4.4 of Clark/Bardes’ Quarterly Report on Form 10-Q, File No.         000-24769, filed with the SEC on November 16, 1998).