SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**








**QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


**For
      the quarterly period ended March 31, 2006**


**Commission
      File No. 001-31256**





**CLARK,
      INC.**


(Exact
      name of Registrant as specified in its charter)








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





**102
                South Wynstone Park Drive****North
                Barrington, Illinois**
            **60010**(Address
                of principal executive offices)
            (Zip
                code)





Registrant’s
      telephone number: **(847)
      304-5800**








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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer  ̈   Accelerated
      filer x   Non-accelerated
      filer  ̈





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).      Yes  ̈   No x





As
      of
      March 31, 2006, the registrant had outstanding 17,531,085 shares of common
      stock.


Table
          of Contents


TABLE
      OF CONTENTS





PAGEForward-Looking
                Statements
            3PART
                I - FINANCIAL INFORMATIONItem
                1. Financial Statements (Unaudited)
            4Condensed
                Consolidated Balance Sheetsas of March 31,
                2006and
                December 31, 2005
            4Condensed
                Consolidated Statements of Incomefor the
                ThreeMonths
                Ended March 31, 2006 and 2005
            5Condensed
                Consolidated Statements of Cash Flowsfor
                theThree
                Months Ended March 31, 2006 and 2005
            6Notes
                to Condensed Consolidated Financial
                Statements
            7Item
                2. Management’s Discussion and Analysis of
                FinancialCondition
                and Results of Operations
            17Item
                3.Quantitative and Qualitative Disclosures
                About Market Risk
            24Item
                4. Controls and Procedures
            25PART
                II - OTHER INFORMATIONItem
                1.Legal Proceedings
            25Item
                1A.Risk Factors
            25Item
                2.Unregistered Sales of Equity Securities
                and Use of Proceeds
            25Item
                3. Defaults Upon Senior
                Securities
            25Item
                4.Submission of Matters to a Vote of
                Security Holders
            25Item
                5. Other Information
            25Item
                6. Exhibits
            25SIGNATURES
            26EXHIBITSIndex
                to Exhibits
            27


2
 Table
          of Contents


**FORWARD-LOOKING
      STATEMENTS**





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





Ÿ
            changes
                in tax legislation;





Ÿ
            other
                federal and state laws and
                regulations;





Ÿ
            general
                economic conditions;





Ÿ
            competitive
                factors and pricing pressures;





Ÿ
            our
                dependence on services of key
                personnel;





Ÿ
            our
                dependence on persistency of existing
                business;





Ÿ
            our
                ability to achieve our earnings
                projections;





Ÿ
            risks
                associated with acquisitions;





Ÿ
            significant
                intangible assets;





Ÿ
            our
                dependence on a select group of insurance
                companies;





Ÿ
            supplemental
                compensation arrangements with certain insurance companies;
                and





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





If
      one or
      more of these or other risks or uncertainties materialize, or if our underlying
      assumptions prove to be incorrect, actual results may vary materially from
      those
      anticipated. Any forward-looking statements you read in this Form 10-Q reflect
      our current views with respect to future events and are subject to these and
      other risks, uncertainties, and assumptions relating to our operations, results
      of operations, growth strategy, and liquidity. You should specifically consider
      the factors identified in our Form 10-K for the year ended December 31, 2005,
      included under the caption “Risk Factors,” or in the documents incorporated by
      reference in our Form 10-K, which could cause actual results to differ
      materially from those indicated by the forward-looking statements. In light
      of
      the foregoing risks and uncertainties, you should not unduly rely on such
      forward looking statements when deciding whether to buy, sell, or hold any
      of
      our securities. We disclaim any intent or obligation to update or alter any
      of
      the forward-looking statements whether in response to new information,
      unforeseen events, changed circumstances, or otherwise.


3
 Table
          of Contents


**ITEM
      1. FINANCIAL STATEMENTS**





**CLARK,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**As
      of March 31, 2006 and December 31, 2005**


**(Unaudited)**


**(Dollars
      in thousands except share and per share data)**





**March
                31,**
            
            **December
                31,****2006**
            
            **2005****ASSETS****Current
                Assets**Cash
                and cash equivalents
            
            $
            5,639
            
            $
            5,077Restricted
                cash
            
            
            5,828
            
            
            7,799Accounts
                and notes receivable, net
            
            
            33,142
            
            
            36,893Prepaid
                income taxes
            
            
            3,898
            
            
            3,845Other
                current assets
            
            
            3,413
            
            
            3,527**Total
                Current Assets**
            
            
            51,920
            
            
            57,141**Intangible
                Assets, net**
            
            
            580,543
            
            
            582,544**Equipment
                and Leasehold Improvements, net**
            
            
            11,724
            
            
            12,276**Cash
                Surrender Value of Life Insurance**
            
            
            12,056
            
            
            11,336**Other
                Assets**
            
            
            11,757
            
            
            11,216**Total
                Assets**
            
            $
            668,000
            
            $
            674,513**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Accounts
                payable
            
            $
            3,842
            
            $
            4,243Accrued
                liabilities
            
            
            26,652
            
            
            40,051Deferred
                revenue
            
            
            5,538
            
            
            2,469Deferred
                tax liabilities
            
            
            186
            
            
            186Recourse
                debt maturing within one year
            
            
            13,966
            
            
            3,730Non-recourse
                debt maturing within one year
            
            
            15,151
            
            
            16,299**Total
                Current Liabilities**
            
            
            65,335
            
            
            66,978**Trust
                Preferred Debt**
            
            
            45,000
            
            
            45,000**Long-Term
                Recourse Debt**
            
            
            1,618
            
            
            1,998**Long-Term
                Non-Recourse Debt**
            
            
            232,063
            
            
            238,296**Deferred
                Tax Liabilities**
            
            
            33,637
            
            
            33,022**Deferred
                Compensation**
            
            
            12,196
            
            
            11,443**Other
                Non-Current Liabilities**
            
            
            7,614
            
            
            7,758**Total
                Liabilities**
            
            
            397,463
            
            
            404,495**Stockholders'
                Equity**Preferred
                stockAuthorized
                - 1,000,000 shares; $.01 par value, none issued
            
            
            -
            
            
            -Common
                stockAuthorized
                - 40,000,000 shares; $.01 par value, 18,905,016 shares atMarch
                31, 2006 and 18,892,516 shares at December 31, 2005
            
            
            189
            
            
            189Paid-in
                capital
            
            
            195,653
            
            
            195,531Retained
                earnings
            
            
            93,697
            
            
            94,103Other
                comprehensive income (loss)
            
            
            626
            
            
            383Deferred
                compensation - 219,309 shares at March 31, 2006 and 181,418 shares
                at
              December
                31, 2005
            
            
            3,193
            
            
            2,746Treasury
                stock, at cost - 1,373,931 shares at March 31, 2006 and 1,383,195
                shares
                at
              December 31,2005
            
            
            (22,821
            )
            
            (22,934
            )**Total
                Stockholders' Equity**
            
            
            270,537
            
            
            270,018**Total
                Liabilities and Stockholders' Equity**
            
            $
            668,000
            
            $
            674,513








See
      accompanying notes to these condensed consolidated financial
      statements.


4
 Table
          of Contents


**CLARK,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME**


**(Unaudited)**


**(Dollars
      in thousands except share and per share data)**








**Three
                Months Ended****March
                31,****2006**
            
            **2005****Revenue**First
                year commissions and consulting fees
            
            $
            31,621
            
            $
            29,220Renewal
                commissions and related fees
            
            
            35,850
            
            
            36,105Reimbursable
                expenses
            
            
            2,005
            
            
            1,623**Total
                Revenue**
            
            
            69,476
            
            
            66,948**Operating
                Expenses**Commissions
                and fees
            
            
            14,521
            
            
            13,802General
                and administrative
            
            
            42,816
            
            
            40,466Reimbursable
                expenses
            
            
            2,005
            
            
            1,623Amortization
            
            
            3,757
            
            
            3,844**Total
                Operating Expenses**
            
            
            63,009
            
            
            59,735**Operating
                Income**
            
            
            6,377
            
            
            7,213**Other
                Income (Expense), net**
            
            
            1
            
            
            -**Interest,
                net**Income
            
            
            159
            
            
            164Expense
            
            
            (5,470
            )
            
            (5,552
            )**Total
                Interest, net**
            
            
            (5,311
            )
            
            (5,388
            )Income
                before taxes
            
            
            1,067
            
            
            1,825Income
                taxes
            
            
            (434
            )
            
            (723
            )**Net
                Income**
            
            $
            633
            
            $
            1,102Basic
                Earnings per Common Share
            
            $
            0.04
            
            $
            0.06Weighted
                Average Shares Outstanding - Basic
            
            
            17,650,834
            
            
            18,315,144Diluted
                Earnings per Common Share
            
            $
            0.04
            
            $
            0.06Weighted
                Average Shares Outstanding - Diluted
            
            
            17,742,529
            
            
            18,482,923Cash
                dividends:Paid
            
            $
            0.06
            
            $
            -Declared
            
            $
            0.06
            
            $
            0.06











See
      accompanying notes to these condensed consolidated financial
      statements.


5
 Table
          of Contents


**CLARK,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH
      FLOWS**


**(Unaudited)**


**(Dollars
      in thousands)**








**Three
                Months Ended****March
                31,****2006**
            
            **2005****Net
                Cash from Operating Activities**
            
            $
            813
            
            $
            695**Investing
                Activities**Purchases
                of businesses, net of cash acquired
            
            
            (3,106
            )
            
            (8,843
            )Purchases
                of equipment
            
            
            (658
            )
            
            (1,103
            )Cash
                used in investing activities
            
            
            (3,764
            )
            
            (9,946
            )**Financing
                Activities**Proceeds
                from borrowings
            
            
            28,700
            
            
            -Repayment
                of borrowings
            
            
            (26,225
            )
            
            (12,320
            )Dividends
                paid
            
            
            (1,046
            )
            
            -Cash
                restricted for the repayment of non-recourse notes
            
            
            1,971
            
            
            4,939Employee
                benefit plans
            
            
            113
            
            
            1,227Repurchase
                of company stock
            
            
            -
            
            
            (739
            )Cash
                (used in) provided by financing activities
            
            
            3,513
            
            
            (6,893
            )**Net
                Increase (Decrease) in Cash and Cash Equivalents**
            
            
            562
            
            
            (16,144
            )**Cash
                and Cash Equivalents at Beginning of Period**
            
            
            5,077
            
            
            23,199**Cash
                and Cash Equivalents at End of Period**
            
            $
            5,639
            
            $
            7,055*Supplemental
                Disclosure for Cash Paid during the Period:*Interest
                paid
            
            $
            5,354
            
            $
            5,434Income
                taxes, net of refunds
            
            
            8
            
            
            (374
            )*Supplemental
                Non-Cash Information:*Fair
                value of common stock issued in connection with acquisitions and
                acquisition
              contingent
                payouts
            
            $
            -
            
            $
            539











See
      accompanying notes to these condensed consolidated financial
      statements.






6
 Table
          of Contents




**CLARK,
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**(Unaudited)** ****


**March
      31, 2006**





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





**1.
      NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





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





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in conformity with U.S. generally accepted accounting principles
      (“GAAP”) for interim financial information in accordance with the instructions
      to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
      all of the information and footnotes required by GAAP for complete financial
      statements. In the Company’s opinion, all adjustments, including recurring
      accruals, considered necessary for a fair presentation have been included.
      Operating results for the three months ended March 31, 2006, are not necessarily
      indicative of the results that may be expected for the year ending December
      31,
      2006, or any other period.





The
      balance sheet at December 31, 2005 has been derived from the audited financial
      statements at that date but does not include all of the information and
      footnotes required by GAAP for complete financial statements.





For
      further information, including a summary of significant accounting policies,
      refer to the consolidated financial statements and footnotes thereto included
      in
      the Company’s annual report on Form 10-K for the year ended December 31,
      2005.





Certain
      2005 amounts have been reclassified **** to
      conform with the 2006 presentation due to the combination of Executive Benefits
      Practice, Banking Practice, and Insurance Company Practice into Corporate
      Solutions, which was effective January 1, 2006.





**2.
      SHARE BASED COMPENSATION**





On
      January 1, 2006, the Company adopted SFAS 123(R), “ *Share-Based
      Payment* ,”
which
      requires the measurement and recognition of compensation expense, based on
      estimated fair values, for all share-based awards, made to employees and
      directors, including stock options, restricted stock, restricted stock units,
      and performance share units. In March 2005, the Securities and Exchange
      Commission issued Staff Accounting Bulletin (SAB) No. 107 relating to SFAS
      123(R). The Company has applied the provisions of SAB 107 in its adoption of
      SFAS 123(R).





The
      Company adopted SFAS 123(R) using the modified prospective application
      transition method, as of January 1, 2006, the first day of the Company’s fiscal
      year 2006. The condensed consolidated financial statements, as of and for the
      first quarter of fiscal 2006, reflect the impact of SFAS 123(R). In accordance
      with the modified prospective application transition method, the Company’s
      condensed consolidated financial statements for prior periods have not been
      restated to reflect, and do not include, the impact of SFAS 123(R).





7
 Table
          of Contents
 **CLARK,
              INC. AND SUBSIDIARIES**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**





Prior
      to
      the adoption of SFAS 123(R), the Company accounted for share-based awards to
      employees and directors using the intrinsic value method in accordance with
      Accounting Principles Board (APB) Opinion No. 25, “ *Accounting
      for Stock Issued to Employees* ”.
      Additionally, prior to January 1, 2006, the Company provided pro forma
      disclosure amounts in accordance with SFAS No. 148, “ *Accounting
      for Stock-Based Compensation - Transition and Disclosure* ,”
as
      if
      the fair value method defined by SFAS 123 had been applied to stock-based
      compensation. Under APB Opinion No. 25, the exercise price of the Company’s
      stock options granted to employees and directors equaled the fair market value
      of the underlying stock at the grant date, therefore, no share-based
      compensation expense was recognized in the Company’s condensed consolidated
      statement of income.





SFAS
      123(R) requires companies to estimate the fair value of share-based awards
      on
      the date of grant using an option-pricing model, where applicable. Share-based
      compensation expense recognized in the Company’s condensed consolidated
      statement of income for the first quarter of fiscal 2006 includes compensation
      expense for share-based awards granted (i) prior to, but not yet vested as
      of
      December 31, 2005, based on the grant date fair value estimated in accordance
      with the original provisions of SFAS 123, and (ii) subsequent to December 31,
      2005, based on the grant date fair value estimated in accordance with the
      provisions of SFAS 123(R). The Company recognizes these compensation costs
      net
      of a forfeiture rate and recognizes the compensation costs for only those shares
      expected to vest on a straight-line basis over the requisite service period
      of
      the award, which is generally the option vesting term of three to four years
      for
      restricted stock and performance share units and four years for stock options,
      respectively. SFAS 123(R) requires forfeitures to be estimated at the time
      of
      grant and revised, if necessary, in subsequent periods if actual forfeitures
      differ from those estimates. In the Company’s pro forma information required
      under SFAS 123 for periods prior to fiscal 2006, the Company accounted for
      forfeitures as they occurred.





As
      a
      result of adoption SFAS 123(R), the impact to the condensed consolidated
      financial statements for income before income taxes and net income for the
      three
      months ended March 31, 2006 was $139 thousand and $82 thousand lower,
      respectively, than if we continued to account for stock-based compensation
      under
      APB 25. In addition, prior to the adoption of SFAS 123(R), the Company presented
      the tax benefit of stock option exercises as operating cash flows. Upon adoption
      of SFAS 123(R), tax benefits resulting from tax deductions in excess of
      compensation cost recognized for those options are classified as financing
      cash
      flows.





As
      of
      March 31, 2006, $1.2 million of total unrecognized compensation cost related
      to
      stock based compensation is expected to be recognized over a weighted-average
      period of 2 years. The total unrecognized stock based compensation cost to
      be
      recognized in future periods as of March 31, 2006 does not consider the effect
      of stock options that may be issued in subsequent periods.





The
      fair
      value of each option grant was estimated at the date of grant using the
      Black-Scholes option pricing model with the following weighted average
      assumptions used for grants in 2006 and 2005, respectively:





**March
                31,****2006**
            
            **2005**Dividend
                yield
            2.2%
            
            NoneVolatility
            57.3%
            
            57.1%Risk-free
                interest rates
            4.6%
            
            4.2%Expected
                life (years)
            5
            
            5





8
 Table
          of Contents
 **CLARK,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**


The
      pro
      forma information regarding net income and earnings per share required by SFAS
      No. 123 has been determined as if the Company accounted for its stock-based
      compensation plans under the fair value method. Had compensation cost for the
      Company’s stock-based compensation plans been determined in accordance with SFAS
      No. 123, as amended by SFAS No. 148, *Accounting
      for Stock-Based Compensation - Transition and Disclosure - An Amendment of
      FASB
      Statement No. 123* ,
      the
      Company’s net income and earnings per share would have been reduced to the pro
      forma amounts indicated below:





**Three
                Months Ended****March
                31, 2005****Net
                Income**As
                reported
            
            $
            1,102Deduct:
                stock option compensation expense, net of tax
            
            
            (545
            )Pro
                forma
            
            $
            557**Basic
                Earnings per Common Share**As
                reported
            
            $
            0.06Pro
                forma
            
            $
            0.03**Diluted
                Earnings per Common Share**As
                reported
            
            $
            0.06Pro
                forma
            
            $
            0.03





*Stock
      Option Plan* .
      The
      Company has various stock options plans for both employees and non-employee
      directors which have been approved by the Board of Directors. Vesting of stock
      options is generally between three to five years and expires ten years from
      the
      grant date. For the three months ended March 31, 2006, there is approximately
      $90 thousand of expense included in the condensed consolidated statement of
      income associated with this plan. There are no expenses for this plan for the
      three months ended March 31, 2005. As
      of
      March 31, 2006, approximately 3.1 million options have been granted under these
      programs and a total of approximately 2.5 million shares of the Company’s common
      stock remain available for grant for all active plans.





The
      following table summarizes the combined status of all of the Company’s stock
      option plans:





**Options**
            
            **Weighted
                Average**
              **Exercise
                Price****Outstanding
                at January 1, 2004**
            
            
            1,585,272
            
            $
            15.41Granted
            
            
            330,000
            
            
            19.36Exercised
            
            
            (153,500
            )
            
            10.02Forfeited
            
            
            (323,636
            )
            
            20.39**Outstanding
                at December 31, 2004**
            
            
            1,438,136
            
            
            17.02Granted
            
            
            182,000
            
            
            15.03Exercised
            
            
            (64,100
            )
            
            11.02Forfeited
            
            
            (118,549
            )
            
            18.02**Outstanding
                at December 31, 2005**
            
            
            1,437,487
            
            
            16.82Granted
            
            
            196,430
            
            
            12.20Exercised
            
            
            (12,500
            )
            
            9.00Forfeited
            
            
            (13,933
            )
            
            15.36**Outstanding
                at March 31, 2006**
            
            
            1,607,484
            
            $
            16.34**Exercisable
                at March 31, 2006**
            
            
            1,331,490**Exercisable
                at December 31, 2005**
            
            
            1,308,077**Exercisable
                at December 31, 2004**
            
            
            1,194,587


9
 Table
          of Contents
 **CLARK,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**


The
      following table summarizes the stock options outstanding and exercisable as
      of
      March 31, 2006:





**Options
                Outstanding**
            
            **Options-Exercisable****Range
                of**
              **Exercise
                Prices**
            
            **Number**
              **Outstanding**
            
            **Weighted
                Average Remaining**
              **Contractual
                Life(years)**
            
            **Weighted
                Average**
              **Exercise
                Price**
            
            **Number**
              **Exercisable**
            
            **Weighted
                Average Exercise Price**$4.80
                - $7.00
            
            
            61,101
            
            
            0.7
            
            $
            5.70
            
            
            61,101
            
            $
            5.70$9.00
            
            
            83,416
            
            
            1.9
            
            
            9.00
            
            
            83,416
            
            
            9.00$9.94
                - $11.50
            
            
            188,630
            
            
            6.8
            
            
            10.58
            
            
            102,000
            
            
            10.47$11.60
                - $14.40
            
            
            302,300
            
            
            8.3
            
            
            13.58
            
            
            112,936
            
            
            13.34$14.75
                - $15.96
            
            
            214,600
            
            
            6.5
            
            
            15.27
            
            
            214,600
            
            
            15.27$16.65
                - $18.13
            
            
            138,102
            
            
            5.6
            
            
            17.19
            
            
            138,102
            
            
            17.19$18.49
                - $19.70
            
            
            314,000
            
            
            7.5
            
            
            19.28
            
            
            314,000
            
            
            19.28$20.30
                - $22.90
            
            
            100,335
            
            
            7.0
            
            
            21.72
            
            
            100,335
            
            
            21.72$23.24
                - $25.28
            
            
            195,000
            
            
            5.7
            
            
            25.12
            
            
            195,000
            
            
            25.12$27.49
            
            
            10,000
            
            
            6.1
            
            
            27.49
            
            
            10,000
            
            
            27.491,607,484
            
            
            
            
            
            
            
            
            1,331,490




*Performance
      Share Award (“Restricted Stock”).* On
      July
      26, 2005, the Compensation Committee of the Board of Directors approved a Long
      Term Incentive Compensation Plan. One of the components of this plan is
      restricted stock. There are five approved participants in this plan. Restricted
      stock is awarded based upon achievement of three-year performance targets for
      cumulative earnings per share for the period 2005 through 2007 and will
      cliff-vest effective December 31, 2007. Restricted stock awards for 2007 will
      be
      made as determined by the Compensation Committee with cliff vesting effective
      December 31, 2007. For the three months ended March 31, 2006, there is
      approximately $24 thousand of expense included in the condensed consolidated
      statement of income associated with this plan. There was no expense for this
      plan for the three months ended March 31, 2005.





*Stock
      Purchase Plan.* On
      January 28, 2003, the Board of Directors adopted the amended and restated
      Employee Stock Purchase Plan (“ESPP”), under which a total of 400 thousand
      shares of common stock have been reserved for issuance. Any employee who has
      been employed for 30 days is eligible to participate in offerings under the
      Stock Purchase Plan. During the three months ended March 31, 2006 and 2005,
      the
      Company’s employees purchased 14,148, and 9,321 shares, respectively of common
      stock at an average cost to employees of $10.04, and $13.16 per share,
      respectively. For the three months ended March 31, 2006, there is approximately
      $25 thousand of expense included in the condensed consolidated statement of
      income associated with this plan. There was no expense for this plan for the
      three months ended March 31, 2005.





**3.
      RESTRUCTURING**





In
      the
      fourth quarter of 2003, the Company reorganized its executive compensation
      consulting practices and recorded a charge of $7.5 million relating to the
      reorganization, of which $2.6 million remains accrued on the condensed
      consolidated balance sheet as of March 31, 2006. Effective January 1, 2005,
      the
      Human Capital Practice was merged into Executive Benefits Practice which, as
      of
      January 1, 2006, is part of the Corporate Solutions Practice. In the first
      quarter of 2006, the Company adjusted its estimate of net future lease costs
      based upon accretion. The adjustment of $7 thousand is included in general
      and
      administrative expenses in the condensed consolidated statement of income for
      the three months ended March 31, 2006.





The
      Company will continue to evaluate the remaining restructuring reserve as plans
      are being executed. As a result, there may be adjustments to the reserve in
      future periods. A summary of the activity in the reserve account as of March
      31,
      2006, is as follows:





**Reserve
                Balance**
              **January
                1, 2006**
            
            **Cash**
              **Payments**
            
            **Adjustments**
            
            **Reserve
                Balance******
              **March
                31, 2006**Employee
                termination costs
            
            $
            325
            
            $
            -
            
            $
            -
            
            $
            325Lease
                costs
            
            
            2,400
            
            
            (123
            )
            
            7
            
            
            2,284Total
            
            $
            2,725
            
            $
            (123
            )
            $
            7
            
            $
            2,609


10
 Table
          of Contents
 **CLARK,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**


**4.
      ACCOUNTS RECEIVABLE**





Major
      categories of accounts receivable are as follows:





**As
                of**
              **March
                31, 2006**
            
            **As
                of**
              **December
                31, 2005**Accounts
                receivable - trade
            
            $
            34,979
            
            $
            38,747Accounts
                receivable allowance
            
            
            (1,837
            )
            
            (1,854
            )$
            33,142
            
            $
            36,893





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





**Three
                Months Ended March 31, 2006**
            
            **Year
                Ended**
              **December
                31, 2005**Beginning
                balance
            
            $
            (1,854
            )
            $
            (1,467
            )Write
                offs
            
            
            188
            
            
            661Expense
            
            
            (171
            )
            
            (1,048
            )Ending
                balance
            
            $
            (1,837
            )
            $
            (1,854
            )





As
      of
      March 31, 2006, and December 31, 2005, there were approximately $1.2 million
      and
      $670 thousand, respectively, of unbilled receivables included in accounts
      receivable on the condensed consolidated balance sheets. These unbilled amounts,
      the majority of which relate to in-process consulting projects, are typically
      billed during the quarter immediately following the reporting
      period.





**5.
      GOODWILL AND OTHER INTANGIBLE ASSETS**





Changes
      in the carrying amount of goodwill for the three months ended March 31, 2006
      by
      reporting units are as follows:





**Balance**
              **January
                1, 2006**
            
            **Acquired**
              **During
                Period**
            
            **Earnouts/**
              **Other**
            
            **Balance**
              **March
                31, 2006**Corporate
                Solutions
            
            $
            81,986
            
            $
            -
            
            $
            1,750
            
            $
            83,736Healthcare
                Group
            
            
            14,076
            
            
            -
            
            
            -
            
            
            14,076Management
                Science Associates
            
            
            5,010
            
            
            -
            
            
            -
            
            
            5,010Pearl
                Meyer & Partners
            
            
            36,981
            
            
            -
            
            
            -
            
            
            36,981Federal
                Policy Group
            
            
            8,766
            
            
            -
            
            
            -
            
            
            8,766Corporate
            
            
            4,090
            
            
            5
            
            
            -
            
            
            4,095Total
            
            $
            150,909
            
            $
            5
            
            $
            1,750
            
            $
            152,664





Information
      regarding the Company’s other intangible assets follows:





**As
                of March 31, 2006**
            
            **As
                of December 31, 2005****Gross**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
            
            **Gross**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**Inforcerevenue
            
            $
            500,555
            
            $
            (77,998
            )
            $
            422,557
            
            $
            500,555
            
            $
            (74,691
            )
            $
            425,864Non-competeagreements
            
            
            12,199
            
            
            (6,877
            )
            
            5,322
            
            
            12,199
            
            
            (6,428
            )
            
            5,771Total
            
            $
            512,754
            
            $
            (84,875
            )
            $
            427,879
            
            $
            512,754
            
            $
            (81,119
            )
            $
            431,635





Amortization
      expense of other intangible assets was $3.8 million for both the three months
      ended March 31, 2006, and March 31, 2005.





The
      Company estimates that its amortization for 2006 through 2010 for intangible
      assets related to all acquisitions consummated through March 31, 2006 will
      be
      approximately as follows:


11
 Table
          of Contents
 **CLARK,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**





**Year**
            
            **Amount**2006
            
            $
            15,0182007
            
            
            14,6302008
            
            
            14,1902009
            
            
            13,3382010
            
            
            13,795





**6.
      CONTINGENT CONSIDERATION**





As
      a
      result of the Company’s acquisition program, there is $8.7 million of contingent
      consideration potentially due to the former owners of its acquired entities,
      including $2.9 million that has been earned and is accrued on the condensed
      consolidated balance sheet as of March 31, 2006. If and when the acquired
      entities meet certain criteria negotiated at the time of the purchase, these
      amounts are payable as additional consideration. A summary of the amounts
      payable if the criteria are met is as follows for acquisitions that were
      completed as of March 31, 2006:





**Potential
                Amount Payable In**
            
            **Cash**2006
            
            $
            1,1032007
            
            
            4,0002008
            
            
            -2009
            
            
            6002010
            
            
            6002011
                and later
            
            
            2,400$
            8,703





**7.
      STATEMENT OF COMPREHENSIVE INCOME**





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





**Three
                Months Ended**
              **March
                31,****2006**
            
            **2005**Net
                income
            
            $
            633
            
            $
            1,102Change
                in fair value of interest rateswap,
                net of tax
            
            
            243
            
            
            235Comprehensive
                income
            
            $
            876
            
            $
            1,337





**8.
      EARNINGS PER SHARE**





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





**Three
                Months Ended**
              **March
                31,****2006**
            
            **2005**Numerator
                for basic and diluted earnings per common share
            
            $
            633
            
            $
            1,102**Denominator:**Basic
                earnings per common share - weighted average shares
                outstanding
            
            
            17,650,834
            
            
            18,315,144Effect
                of dilutive securities:Stock
                options
            
            
            91,695
            
            
            141,777Contingent
                shares earned not issued
            
            
            -
            
            
            26,002Diluted
                earnings per share - weighted average shares plus assumed
                conversions
            
            
            17,742,529
            
            
            18,482,923Basic
                earnings per common share
            
            $
            0.04
            
            $
            0.06Diluted
                earnings per common share
            
            $
            0.04
            
            $
            0.06




12
 Table
          of Contents **CLARK,
            INC. AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**




For
      the
      three months ended March 31, 2006 and 2005, there were approximately 1.2 million
      and 860 thousand, respectively, of outstanding stock options, which are not
      included in the computation of diluted earnings per share because the exercise
      prices of the options were greater than the average market prices of the
      Company’s common shares during the respective periods. The range of exercise
      prices for these antidilutive stock options was between $13.37 and $27.49 at
      March 31, 2006 and $15.51 to $27.49 at March 31, 2005.




**9.
      FINANCIAL INSTRUMENTS**





The
      Company has limited transactions that fall under the accounting rules of SFAS
      No. 133, *Accounting
      for Derivative Instruments and Hedging Activities* ,
      as
      amended by SFAS No. 137, SFAS No. 138 and SFAS No. 149. From time to time,
      the
      Company uses financial instruments, including interest rate swap agreements,
      to
      manage exposure to interest rates. On November 15, 2005, we entered into an
      interest rate swap with an initial notional amount of $4.8 million and an
      effective date of January 1, 2006, which increases $1.4 million each calendar
      quarter until December 31, 2007, and then remains at $16 million until maturity.
      During 2005, 2004, and 2003, the Company entered into several other interest
      rate swaps to hedge its LIBOR-based debt. These swaps have been designated
      as
      cash flow hedges. As such, the changes in the fair value of the interest rate
      swaps are recorded in other comprehensive income (“OCI”) for the effective
      portion of the hedge, while the ineffective portion is recorded immediately
      in
      earnings.  Amounts are reclassified from OCI to earnings as the interest
      rate swaps effect earnings.  There
      have been no charges to earnings for ineffectiveness of interest rate hedges
      for
      the three months ended March 31, 2006. The fair value of these interest rate
      swap agreements, based upon bank quotes, was an asset of approximately $1.2
      million at March 31, 2006. The terms of these interest rate swaps are as follows
      (fair value in thousands):





**Effective
                Date**
            
            **Maturity
                Date**
            
            **Notional
                Amount at**
              **March
                31, 2006**
            
            **Fixed
                Rate to be Paid**
            
            **Variable
                Rate**
              **to
                be Received**
            
            **Fair
                Value as of**
              **March
                31, 2006**January
                1, 2006
            
            
            December
                31, 2015
            
            $
            6.2
                million
            
            
            5.26
            %
            
            LIBOR
            
            $
            27June
                3, 2005
            
            
            December
                31, 2009
            
            $
            12.0
                million
            
            
            4.05
            %
            
            LIBOR
            
            
            475February
                25, 2005
            
            
            December
                31, 2009
            
            $
            10.0
                million
            
            
            4.31
            %
            
            LIBOR
            
            
            300May
                18, 2004
            
            
            March
                31, 2009
            
            $
            7.0
                million
            
            
            4.44
            %
            
            LIBOR
            
            
            142January
                7, 2003
            
            
            December
                31, 2007
            
            $
            9.8
                million
            
            
            2.85
            %
            
            LIBOR
            
            
            220**Total**
            
            
            
            
            $
            45.0
                million
            
            
            
            
            
            
            
            $
            1,164





**10.
      DIVIDENDS**





On
      April
      25, 2006, the Board of Directors authorized a dividend of $0.06 per share
      (approximately $1.1 million) to stockholders of record as of June 1, 2006,
      payable on July 1, 2006. On February 1, 2006, the Board of Directors authorized
      a dividend of $0.06 per share (approximately $1.1 million) to stockholders
      of
      record as of March 1, 2006, payable on April 1, 2006.





During
      each of its 2005 quarterly Board of Directors meetings, the Board authorized
      the
      Company to pay a quarterly dividend of $0.06 per share (approximately $1.1
      million). The dividends were paid on January 1, 2006, October 1, 2005, July
      1,
      2005, and April 1, 2005 to stockholders of record as of December 1, 2005,
      September 1, 2005, June 1, 2005, and March 1, 2005, respectively.





**11.
      SEGMENTS AND RELATED INFORMATION**





The
      Company has four reportable segments:





·
            Corporate
                Solutions - provides strategic investment solutions, consulting,
                and
                administrative services to clients.





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





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





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





13
 Table
          of Contents **CLARK,
            INC. AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**




The
      segment information as of, and for the periods ended, March 31, 2005 for the
      Corporate Solutions segment reflects the results of, and information related
      to,
      the Executive Benefits Practice, the Banking Practice, and the Insurance Company
      Practice, which were combined into one segment effective January 1, 2006. The
      Corporate/CSI segment includes the results of Clark Benson and MedEx for the
      three months ended March 31, 2006.





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





The
      Company has disclosed income from operations as the primary measure of segment
      earnings (loss). This is the measure of profitability used by the Company’s
      chief operating decision-maker and the most consistent with the presentation
      of
      profitability reported within the condensed consolidated financial statements.
      The accounting policies of the business segment reports are the same as those
      described in Note 1 “ *Nature
      of Operations and Summary of Significant Accounting Policies* ”
in
      the
      Company’s Annual Report on Form 10-K for the year ended December 31,
      2005.





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





14
 Table
          of Contents **CLARK,
            INC. AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**




Segment
      information for the three month periods ended March 31, 2006 and 2005, is as
      follows:





**Three
                Months Ended**
              **March
                31,****2006**
            
            **2005****Revenues**Corporate
                Solutions
            
            $
            44,693
            
            $
            44,501Healthcare
                Group
            
            
            11,452
            
            
            10,180Pearl
                Meyer & Partners
            
            
            8,022
            
            
            8,254Federal
                Policy Group
            
            
            2,949
            
            
            2,900Total
                segments - reported
            
            
            67,116
            
            
            65,835Corporate/CSI
            
            
            2,360
            
            
            1,113Total
                consolidated - reported
            
            $
            69,476
            
            $
            66,948**Operating
                Income (Loss) and Income Before Taxes**Corporate
                Solutions
            
            $
            6,222
            
            $
            7,107Healthcare
                Group
            
            
            2,725
            
            
            2,186Pearl
                Meyer & Partners
            
            
            1,274
            
            
            937Federal
                Policy Group
            
            
            560
            
            
            281Total
                segments - reported
            
            
            10,781
            
            
            10,511Corporate/CSI
            
            
            (4,404
            )
            
            (3,298
            )Other
                income (expense)
            
            
            1
            
            
            -Interest,
                net
            
            
            (5,311
            )
            
            (5,388
            )Income
                before taxes
            
            $
            1,067
            
            $
            1,825**Depreciation
                and Amortization**Corporate
                Solutions
            
            $
            4,011
            
            $
            4,140Healthcare
                Group
            
            
            411
            
            
            534Pearl
                Meyer & Partners
            
            
            121
            
            
            126Federal
                Policy Group
            
            
            100
            
            
            101Total
                segments - reported
            
            
            4,643
            
            
            4,901Corporate/CSI
            
            
            314
            
            
            337Total
                consolidated - reported
            
            $
            4,957
            
            $
            5,238**Capital
                Expenditures**Corporate
                Solutions
            
            $
            600
            
            $
            730Healthcare
                Group
            
            
            17
            
            
            352Pearl
                Meyer & Partners
            
            
            20
            
            
            92Federal
                Policy Group
            
            
            -
            
            
            -Total
                segments - reported
            
            
            637
            
            
            1,174Corporate/CSI
            
            
            21
            
            
            (71
            )Total
                consolidated - reported
            
            $
            658
            
            $
            1,103**March
                31,**
            
            
            **December
                31,****Identifiable
                Assets**
            
            
            **2006**
            
            
            **2005**Corporate
                Solutions
            
            $
            543,744
            
            $
            551,509Healthcare
                Group
            
            
            30,474
            
            
            30,336Pearl
                Meyer & Partners
            
            
            47,971
            
            
            48,100Federal
                Policy Group
            
            
            12,014
            
            
            10,891Total
                segments - reported
            
            
            634,203
            
            
            640,836Corporate/CSI
            
            
            33,797
            
            
            33,678Total
                consolidated - reported
            
            $
            668,000
            
            $
            674,513





15
 Table
          of Contents
 **CLARK,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**
 **(Unaudited)**





**12.
      LITIGATION AND CONTINGENCIES**





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








**Independent
      Sales Producers’ Disputes**





In
      March
      2004, two of the Company’s independent sales producers exercised their
      termination rights under their agreement(s) with the Company. Included in the
      Company’s condensed consolidated balance sheets is a receivable of approximately
      $1.4 million from these two producers and a related salesperson with respect
      to
      certain chargeback commissions to be repaid to the Company from the surrender
      of
      policies in 2003. Upon termination, the producers disputed the chargeback and
      asserted other miscellaneous claims. The producers entered into an arbitration
      agreement with the Company, dated May 23, 2005, in order to resolve the dispute
      regarding chargebacks with an arbitration hearing scheduled for the third
      quarter of 2006. While it is not possible to predict with certainty the outcome
      of the disputes, the Company does not believe resolution will have a material
      adverse effect on its financial position or results of operations.





**epicRealm
      Licensing**





On
      August
      8, 2005, an action was commenced by epicRealm in the U.S. District Court,
      Marshall, Texas, in which epicRealm claims that the Company and five other
      unrelated entities have infringed two epicRealm patents relating to online
      generation of dynamic web pages. The Plaintiff seeks unspecified actual and
      enhanced (based on asserted willful infringement) damages, attorneys fees and
      costs, and injunctive relief. The Company has filed its Answer and Counterclaim.
      The Company has denied any infringement or liability and challenges the validity
      and enforceability of epicRealm’s patents. Management believes that the Company
      has meritorious defenses and it intends to vigorously defend all
      allegations.








16
 Table
          of Contents


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





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





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





***Overview***





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





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





***Recent
      Events***





**Clark
      Benson LLC Acquisition**





On,
      April
      21, 2006, we announced a minority interest (10%) purchase in the insurance
      platform and broker dealer of ValMark Securities, Inc. for $1.5 million cash
      and
      $1 million of Clark, Inc. common stock. The ValMark Group of companies also
      includes ValMark Insurance Agency, LLC, Executive Insurance Agency, Inc., and
      ValMark Advisers, Inc., which specialize in wealth transfer products and
      planning services for independent wealth management firms. Combined, these
      companies represent a continuum of broker dealer, insurance, and advisory firm
      services for the Clark Benson financial and estate planning
      subsidiary.





***Critical
      Accounting Policies***





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


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          of Contents


**Revenue
      Sources and Recognition**





Our
      operating segments derive their revenue primarily from:





·
            commissions
                and other compensation paid by insurance companies issuing the policies
                underlying our client’s benefit
                programs;





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





·
            executive
                compensation and benefit related consulting fees;
                and





·
            fees
                for legislative liaison and related advisory
                services.





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





*First
      Year Commissions and Consulting Fees* .
      First
      year commissions and consulting fees are derived from three principal sources;
      (a) the commission we earn when the client first purchases the policies, which
      revenue is recognized at the time the application is substantially completed,
      the client is contractually committed to purchase the insurance policies and
      the
      premiums are paid (which is the effective date of the insurance policy), by
      the
      client, to the insurance company or, in certain instances, when cash is
      received; (b) fees for the services related to the enrollment and initial
      administration of the benefit programs and underlying policies; and (c)
      consulting fees.





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





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





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





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





Consulting
      fee revenue consists of fees for services we perform in advising our clients
      on
      their executive compensation programs and related consulting services,
      retirement, benefit, investment advisory services, people strategy, compensation
      surveys, and fees from legislative and regulatory policy matters. These fees
      are
      generally based on a rate per hour arrangement or a fixed monthly fee and are
      earned when the service is rendered.





*Renewal
      Commission Revenue and Related Fees* .
      Renewal
      revenue is recognized on the date that the renewal premium is due or paid by
      the
      client to the insurance company depending on whether a policy is considered
      fixed or variable. Fixed renewal policies have predictable set premium amounts.
      Revenue on these policies is recognized on the premium due date. Variable
      renewal policy premiums can be based upon such items as value of underlying
      investments in the policy, cash surrender value of the policy, or mutual fund
      values. In some cases, we are able to obtain information directly from the
      carriers allowing us to reasonably and reliably estimate the expected renewal
      premiums. Revenue is recognized based upon these estimates at a policy’s renewal
      date. For those policies where we are unable to obtain information to reasonably
      estimate the expected renewal premiums, revenue is not recognized until the
      confirmation has been received from the insurance carrier that the client’s
      premium payment has been received. We are notified in advance if a client plans
      to surrender, so adjustments in subsequent periods due to cancellations are
      infrequent and minor. Revenue associated with policies to be surrendered is
      not
      recognized.


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





*Supplemental
      Compensation Agreements.* A
      portion
      of our revenue is derived from certain supplemental compensation arrangements
      with insurance carriers. These arrangements generate additional revenue with
      respect to primarily existing and, to a lesser extent, new blocks of business.
      Payments under such arrangements are typically based on the cash value (or
      fair
      value) of our existing in-force business with these carriers at specified dates
      of measurement and, to a much lesser extent, based on the value of new business
      generated. We realized approximately $2.7 million and $3.2 million in revenue
      under such arrangements for the three months ended March 31, 2006, and 2005,
      respectively.





We
      record
      revenue on a gross basis when we:





·
            act
                as the principal in the transaction by helping clients select the
                right
                product or service;





·
            take
                responsibility for the acceptability of the products and
                services;





·
            provide
                services through employees and exclusive independent
                producers;





·
            have
                latitude in establishing the price the customer will
                pay;





·
            have
                discretion in carrier selection with multiple
                carriers;





·
            have
                chargeback and credit risk; and/or





·
            are
                viewed by the client as the administrator of the program once the
                product
                is sold.





We
      record
      revenue on a net basis when we provide a lead on a case (in the capacity of
      a
      finder) and another company has control of the case and bears the credit risk
      (i.e., working directly with a client to determine the product and design of
      the
      plan).





**Intangible
      Assets**





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





The
      net
      present value of inforce revenue is typically amortized between 20 and 30 years
      (the expected average policy duration). The determination of the amortization
      schedule involves making certain assumptions related to persistency, expenses,
      and discount rates that are used in the calculation of the carrying value of
      inforce revenue. If any of these assumptions change or actual experience differs
      materially from the assumptions used, it could affect the carrying value of
      the
      inforce revenue.





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





**Income
      Taxes**





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





19
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          of Contents




**Restructuring
      Costs**





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





***Results
      of Operations***





**Three
                Months Ended March 31,****2006**
            
            **2005**
            
            **%
                Change****Total
                Revenue**
            
            $
            69,476
            
            $
            66,948
            
            
            3.8
            %**Operating
                Expense**Commissions
                and fees
            
            
            14,521
            
            
            13,802
            
            
            5.2
            %*%
                of revenue*
            
            
            *20.9*
            *%*
            
            *20.6*
            *%*Other
                operating expenses
            
            
            48,578
            
            
            45,933
            
            
            5.8
            %*%
                of revenue*
            
            
            *69.9*
            *%*
            
            *68.6*
            *%***Operating
                Income**
            
            $
            6,377
            
            $
            7,213
            
            
            (11.6
            )%





*Quarter
      ended March 31, 2006 compared to quarter ended March 31, 2005.*





*Revenue.* Total
      revenue for the three months ended March 31, 2006, was $69.5 million, compared
      to revenue of $66.9 million in first quarter 2005. First year commission and
      consulting fees for the three months ended March 31, 2006, were $31.6 million
      compared to $29.2 million for the three months ended March 31, 2005. Most of
      the
      increase in first year commission and consulting fees relates to the fourth
      quarter 2005 acquisitions of Stratford and MedEx. In addition, Healthcare
      revenue increased reflecting growth in fee-based businesses. Renewal revenue
      for
      the three months ended March 31, 2006, was $35.9 compared to $36.1 million
      for
      the three months ended March 31, 2005. The decrease in renewal revenue was
      primarily the result of changes in contract renewal rates that carriers pay
      on
      certain cases as the policies age. Total revenue for the three months ended
      March 31, 2006 and 2005, included approximately $2.7 million and $3.2 million,
      respectively, related to supplemental compensation arrangements. We expect
      renewal revenue based on our inforce block of business to be less in 2006 than
      2005. In February 2006, we amended a supplemental compensation arrangement
      with
      one of our insurance carriers. In exchange for a longer term arrangement, the
      percentage used to calculate payments based on our inforce block of business
      was
      reduced. However, there are additional opportunities to earn revenue should
      we
      meet certain production targets for new business.





*Commissions
      and fees expense.* Commissions and fees expense for the three months ended March 31, 2006, was
      $14.5 million, or 20.9% of total revenue, compared to $13.8 million, or 20.6%
      of
      total revenue, in first quarter 2005. The slight increase in percentage is
      a
      result of the fourth quarter 2005 acquisition of MedEx whose commission
      percentages are higher than our core business. In addition, there is no
      commission expense associated with the supplemental compensation arrangements
      and consulting fees are typically not subject to commissions.





*General
      and administrative expenses* .
      General
      and administrative expenses were $42.8 million for the three months ended March
      31, 2006, compared to $40.5 million for the three months ended March 31, 2005.
      The increase in general and administrative expenses was attributable to $600
      thousand in Clark Benson start-up expenses, $139 thousand of SFAS 123(R) equity
      based compensation expenses, and $1.3 million of expenses related to our fourth
      quarter 2005 acquisitions. In addition, legal fees have increased approximately
      $500 thousand for the three months ended March 31, 2006 compared to March 31,
      2005 based upon the number of legal matters we are involved
      with.


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*Amortization
      expense.* Amortization
      expense for the three months ended March 31, 2006 and 2005, was $3.8
      million.





*Interest
      expense* .
      Interest expense for the three months ended March 31, 2006 was $5.5 million
      compared to $5.6 million for the three months ended March 31, 2005 based on
      lower borrowing levels mostly offset by higher interest rates.





*Income
      taxes.* Income
      taxes for the three months ended March 31, 2006, were $434 thousand, or 40.7%
      of
      income before taxes, compared to $723 thousand, or 39.6% of income before taxes
      for the three months ended March 31, 2005.





*Net
      income.* Net
      income for the quarter ended March 31, 2006, was $633 thousand, or $0.04 per
      diluted share, versus net income of $1.1 million, or $0.06 per diluted share,
      in
      the comparable quarter of 2005.





The
      tables that follow present the operating results of our four segments for the
      three months ended March 31, 2006 and 2005.





***Corporate
                Solutions*****Three
                Months Ended**
              **March
                31,****2006**
            
            **2005****Total
                Revenue**
            
            $
            44,693
            
            $
            44,501**Operating
                Expenses**Commissions
                and fees
            
            
            12,711
            
            
            12,572Other
                operating expenses
            
            
            25,760
            
            
            24,822**Operating
                Income**
            
            $
            6,222
            
            $
            7,107*%
                of revenue*
            
            
            *13.9*
            *%*
            
            *16.0*
            *%*





As
      of
      January 1, 2006, the Executive Benefits Practice, the Banking Practice and
      the
      Insurance Company Practice (previously included in Corporate/CSI segment) were
      combined into the Corporate Solutions Practice. As a result, all years presented
      have been reclassified to reflect this combination.





Total
      revenue for the three months ended March 31, 2006, was $44.7 million compared
      to
      $44.5 million for the three months ended March 31, 2005. First year commission
      and consulting fees for the three months ended March 31, 2006, was $12.9 million
      compared to $12.8 million for the three months ended March 31, 2005. First
      year
      commission and consulting fees included $1.2 million related to the fourth
      quarter 2005 acquisition of Stratford. Renewal revenue for the three months
      ended March 31, 2006, was $31.7 million compared to $31.6 million for the three
      months ended March 31, 2005. Total revenue for the three months ended March
      31,
      2006 and 2007 included approximately $1.3 million and $1.7 million,
      respectively, related to supplemental compensation arrangements. We expect
      renewal revenue based on our inforce block of business to be less in 2006 than
      2005. In February 2006, we amended a supplemental compensation arrangement
      with
      one of our insurance carriers. In exchange for a longer term arrangement, the
      percentage used to calculate future payments based on our inforce block of
      business was reduced. However, there are additional opportunities to earn
      revenue should we meet certain production targets for new business.





Commission
      expense as a percentage of total revenue was 28.4% for the three months ended
      March 31, 2006, and 28.3% for the three months ended March 31, 2005. General
      and
      administrative expense for the three months ended March 31, 2006 was $22.4
      million compared to $21.4 million for the three months ended March 31, 2005.
      These expenses increased primarily as a result of $230 thousand of severance
      expense, costs of temporary associates to assist with Section 409A of the
      Internal Revenue Code compliance, and $1.1 million of operating expenses
      associated with the fourth quarter 2005 Stratford acquisition. Amortization
      expense for the three months ended March 31, 2006 was $3.3 million compared
      to
      $3.4 million for the three months ended March 31, 2005. The decrease is based
      on
      the timing of scheduled amortization of our acquired inforce
      revenue.


21
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          of Contents





***Healthcare
                Group*****Three
                Months Ended**
              **March
                31,****2006**
            
            **2005****Total
                Revenue**
            
            $
            11,452
            
            $
            10,180**Operating
                Expenses**Commissions
                and fees
            
            
            1,282
            
            
            1,230Other
                operating expenses
            
            
            7,445
            
            
            6,764**Operating
                Income**
            
            $
            2,725
            
            $
            2,186*%
                of revenue*
            
            
            *23.8*
            *%*
            
            *21.5*
            *%*





Healthcare
      Group revenue for the three months ended March 31, 2006 was $11.5 million,
      compared to $10.2 million for the three months ended March 31, 2005. The
      increase in revenue is primarily a result of continued growth of consulting
      fee
      revenue from several services. Commission expense for the three months ended
      March 31, 2006 was $1.3 million compared to $1.2 million for the three months
      ended March 31, 2005. General and administrative expense for the three months
      ended March 31, 2006 was $7.2 million compared to $6.5 million for the three
      months ended March 31, 2005. The general and administrative expense increase
      is
      due to incremental costs associated with higher headcount of fee based revenue
      producing associates.





***Pearl
                Meyer & Partners*****Three
                Months Ended**
              **March
                31,****2006**
            
            **2005****Total
                Revenue**
            
            $
            8,022
            
            $
            8,254**Operating
                Expenses**
            
            
            6,748
            
            
            7,317**Operating
                Income**
            
            $
            1,274
            
            $
            937*%
                of revenue*
            
            
            *15.9*
            *%*
            
            *11.4*
            *%*





Pearl
      Meyer & Partners revenue for the three months ended March 31, 2006 was $8.0
      million compared to $8.3 million for the three months ended March 31, 2005.
      Due
      to involuntary and voluntary terminations which occurred in 2005, there are
      less
      revenue producing consultants in 2006 compared to 2005. Operating expenses
      were
      $6.7 million for the three months ended March 31, 2006 compared to $7.3 million
      for the three months ended March 31, 2005. The decrease in operating expenses
      is
      a result of lower headcount (84 in 2006 and 101 in 2005.)





***Federal
                Policy Group*****Three
                Months Ended**
              **March
                31,****2006**
            
            **2005****Total
                Revenue**
            
            $
            2,949
            
            $
            2,900**Operating
                Expenses**
            
            
            2,389
            
            
            2,619**Operating
                Income**
            
            $
            560
            
            $
            281*******************%
                of revenue*
            
            
            *19.0*
            *%*
            
            *9.7*
            *%*





Revenue
      for the three months ended March 31, 2006 and 2005 was $2.9 million. Operating
      expenses for the three months ended March 31, 2006 were $2.4 million compared
      to
      $2.6 million for the three months ended March 31, 2005. Operating expense for
      the three months ended March 31, 2005 included a $250 thousand payment as
      required by an employment agreement. No such payment was required in
      2006.


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Liquidity
      and Capital Resources





*Selected
      Measures of Liquidity and Capital Resources*





**March
                31,**
            
            **December
                31,****2006**
            
            **2005**Cash
                and cash equivalents
            
            $
            5,639
            
            $
            5,077Working
                capital(1)
            
            $
            (13,415
            )
            $
            (9,837
            )Current
                ratio - to one
            
            
            0.79
            
            
            0.85Stockholders’
                equity per common share(2)
            
            $
            15.43
            
            $
            15.42Debt
                to total capitalization(3)
            
            
            53.2
            %
            
            53.1
            %





(1) Includes
      restricted cash and current portion of debt associated with asset-backed
      non-recourse notes


(2) Total
      stockholders’ equity divided by actual shares outstanding


(3) Current
      debt plus long term debt divided by current debt plus long term debt plus
      stockholders’ equity





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





Below
      is
      a table summarizing our cash flow:





**Three
                Months Ended March 31,****2006**
            
            **2005**Cash
                flows from (used in):Operating
                activities
            
            $
            813
            
            $
            695Investing
                activities
            
            
            (3,764
            )
            
            (9,946
            )Financing
                activities
            
            
            3,513
            
            
            (6,893
            )





*Cash
      Flows from Operating Activities*





Our
      cash
      flows from operating activities were as follows:





**Three
                Months Ended March 31,****2006**
            
            **2005**Net
                income plus non-cash expenses
            
            $
            8,470
            
            $
            8,294Changes
                in operating assets and liabilities
            
            
            (7,657
            )
            
            (7,599
            )Cash
                flows from operating activities
            
            $
            813
            
            $
            695





Non-cash
      expenses include depreciation of equipment and leasehold improvements,
      amortization of intangibles, SFAS 123(R) equity based compensation expense,
      and
      deferred tax expense. The 2006 decrease in cash relating to changes in operating
      assets and liabilities relates primarily to the payment of accrued liabilities
      for 2005 bonuses and earnout payments.





*Cash
      Used in Investing Activities*





For
      the
      three months ended March 31, 2006, approximately $3.1 million of our cash was
      used for contingent consideration payments to prior owners of businesses we
      acquired and approximately $650 thousand of our cash was used for the purchase
      of fixed assets.





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


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Cash
      Flows from Financing Activities





For
      the
      three months ended March 31, 2006, approximately $3.5 million of cash was
      provided by financing activities. We had net proceeds of $2.5 million from
      borrowings. As of March 31, 2006, we had restricted cash of approximately $5.8
      million, a decrease of $2.0 million from December 31, 2005, which will be used
      to pay down the asset-backed notes issued to finance the acquisition of
      LongMiller. This cash is not available for general corporate purposes, but
      is
      solely to service securitization indebtedness incurred to finance the
      acquisition of LongMiller. For the three months ended March 31, 2006, we made
      cash dividend payments of approximately $1.0 million.





On
      August
      31, 2005, we added a participant bank to our senior credit facility ($10
      million) and one of the existing participants increased their commitment ($7
      million). As a result, the current amount available under this facility is
      $89
      million. As of March 31, 2006, there was $12.5 million outstanding on the
      facility. Our assets are pledged to the bank group as part of the credit
      facility except for cash flows from commissions to be received upon the renewals
      of specified inforce policies acquired in connection with the acquisition of
      LongMiller. In September 2004, we amended our credit agreement to allow for
      potential stock repurchases and dividend payments. The remaining provisions
      of
      the agreement remained substantively the same. Our credit facility expires
      on
      December 31, 2006. We expect the credit facility to be renewed on substantially
      similar terms.





The
      restrictive covenants under the credit agreement provide for the maintenance
      of
      a minimum ratio of fixed charges, a maximum allowable leverage ratio, a minimum
      amount of net worth (stockholders’ equity), and a maximum ratio of debt to
      capitalization. We were in compliance with all restrictive covenants as of
      March
      31, 2006.





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








**ITEM
      3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK**





At
      March
      31, 2006, we had total outstanding indebtedness of $307.8 million, or
      approximately 148.7% of total market capitalization. Our outstanding debt
      consists of the following:





**Type
                of Debt**
            
            **Outstanding
                Amount as of**
              **March
                31, 2006**
            
            **Weighted
                Average Interest Rate****as
                of March 31, 2006**Non-recourse
                bonds
            
            $
            247.2
                million
            
            
            Fixed
                - 6.6
            %Note
                to prior owner
            
            
            3.1
                million
            
            
            Fixed
                - 10.0
            %Trust
                preferred
            
            
            45.0
                million
            
            
            Variable
                - 8.8
            %Credit
                facility
            
            
            12.5
                million
            
            
            Variable
                - 6.8
            %





On
      November 15, 2005, we entered into an interest rate swap with an initial
      notional amount of $4.8 million and an effective date of January 1, 2006, which
      increases $1.4 million each calendar quarter until December 31, 2007, and then
      remains at $16 million. The quarterly increase in the notional amount of this
      interest rate swap exactly offsets the amortizing notional amount of the January
      7, 2003 interest rate swap. The purpose of this swap is to hedge our remaining
      trust preferred LIBOR-based variable rate debt. The terms of the interest rate
      swaps as of March 31, 2006 are as follows:







**Effective
                Date**
            
            **Maturity
                Date**
            
            **Notional
                Amount at**
              **March
                31, 2006**
            
            **Fixed
                Rate to be Paid**
            
            **Variable
                Rate**
              **to
                be Received**
            
            **Fair
                Value as of**
              **March
                31, 2006**January
                1, 2006
            
            
            December
                31, 2015
            
            $
            6.2
                million
            
            
            5.26
            %
            
            LIBOR
            
            $
            27June
                3, 2005
            
            
            December
                31, 2009
            
            $
            12.0
                million
            
            
            4.05
            %
            
            LIBOR
            
            
            475February
                25, 2005
            
            
            December
                31, 2009
            
            $
            10.0
                million
            
            
            4.31
            %
            
            LIBOR
            
            
            300May
                18, 2004
            
            
            March
                31, 2009
            
            $
            7.0
                million
            
            
            4.44
            %
            
            LIBOR
            
            
            142January
                7, 2003
            
            
            December
                31, 2007
            
            $
            9.8
                million
            
            
            2.85
            %
            
            LIBOR
            
            
            220Total
            
            
            
            
            $
            45.0
                million
            
            
            
            
            
            
            
            $
            1,164





24
 Table
          of Contents


We
      have
      exposure to changing interest rates and will engage in hedging activities,
      from
      time to time, to mitigate this risk. The interest rate swaps we have entered
      into are used to hedge our interest rate exposure on the LIBOR based variable
      rate debt outstanding at March 31, 2006. Interest
      on the remaining $12.5 million of unhedged debt at March 31, 2006, bears
      interest at 30-day LIBOR plus a spread, prime and the bank’s overnight rate plus
      a spread. At our current borrowing level, a 1% change in the interest rate
      will
      have an annual effect of approximately $125 thousand.





**ITEM
      4.CONTROLS AND PROCEDURES**





Under
      the
      supervision and with the participation of our management, including our chief
      executive officer and chief financial officer, we conducted an evaluation of
      our
      disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
      Act). Based on this evaluation, our chief executive officer and our chief
      financial officer concluded that our disclosure controls and procedures were
      effective as of the end of the period covered by this quarterly
      report.








**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





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





**epicRealm
      Licensing**





On
      August
      8, 2005, an action was commenced by epicRealm in the U.S. District Court,
      Marshall, Texas, in which epicRealm claims that Clark Consulting and five other
      unrelated entities have infringed two epicRealm patents relating to online
      generation of dynamic web pages. The Plaintiff seeks unspecified actual and
      enhanced (based on asserted willful infringement) damages, attorneys fees and
      costs, and injunctive relief. We have filed our Answer and Counterclaim. We
      have
      denied any infringement or liability and challenge the validity and
      enforceability of epicRealm’s patents. Management believes that we have
      meritorious defenses and we intend to vigorously defend all
      allegations.





**ITEM
      1A. RISK FACTORS**





No
      changes from our Annual Report on Form 10-K for the year ended December 31,
      2005.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





None





**ITEM
      3. DEFAULTS UPON SENIOR
      SECURITIES**





None





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





None





**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





See
      accompanying Exhibit Index included after the signature page of this report
      for
      a list of the exhibits filed, furnished, or incorporated by reference in this
      report.


25
 Table
          of Contents


**SIGNATURES**





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








CLARK,
      INC.











Date:
            May
                3, 2006
            
            /s/
                Tom WambergTom
                WambergChairman
                of the Board and Chief Executive OfficerDate:
            May
                3, 2006
            
            /s/
                Jeffrey W. LemajeurJeffrey
                W. LemajeurChief
                Financial Officer


26
 Table
          of Contents


**EXHIBIT
      INDEX**








3.1
            
            Certificate
                of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference
                to Exhibit 3.1 of our Registration Statement on Form S-1, File No.
                333-56799, filed with the SEC on June 15, 1998).3.2
            
            Certificate
                of Amendment of Certificate of Incorporation of Clark/Bardes, Inc.
                (Incorporated herein by reference to Exhibit 3.3 to Amendment No.1
                to our
                Registration Statement on Form S-1, File No. 333-56799, filed with
                the SEC
                on July 27, 1998).3.3
            
            Certificate
                of Amendment of Certificate of Incorporation of Clark/Bardes, Inc.
                (Incorporated herein by reference to Exhibit 5 of our Registration
                Statement on Form 8-A, filed with the SEC on February 28,
                2002).3.4
            
            Certification
                of Amendment of Certification of Incorporation (Incorporated herein
                by
                reference to Exhibit 3.6 of our Quarterly Report on Form 10-Q, File
                No.
                001-31256, filed with the SEC on August 14, 2002).3.5
            
            Certificate
                of Amendment of Certificate of Incorporation (Incorporated herein
                by
                reference to Exhibit 4.5 of our Registration Statement on Form S-8,
                File
                No. 333-106538, filed with the SEC on June 26, 2003).3.6
            
            Bylaws
                of Clark, Inc. (Incorporated herein by reference to Exhibit 4.6 of
                our
                Registration Statement on Form S-8, File No. 333-106538, filed with
                the
                SEC on June 26, 2003).3.7
            
            Certificate
                of Designation of Series A Junior Participating Preferred Stock
                (Incorporated herein by reference to Exhibit 3.4 to Amendment No.
                2 to our
                Registration Statement on Form S-1, File No. 333-56799 filed with
                the SEC
                on August 11, 1998).4.1
            
            Specimen
                Certificate for shares of Common Stock, par value $.01 per share,
                of Clark
                Holdings, Inc. (Incorporated herein by reference to Exhibit 4.1 to
                Amendment No. 1 to our Registration Statement on Form S-1, File No.
                333-56799, filed with the SEC on July 27, 1998).4.2
            
            Rights
                Agreement, dated as of July 10, 1998, by and between Clark Holdings,
                Inc.
                and The Bank of New York (Incorporated herein by reference to Exhibit
                4.4
                of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with
                the
                SEC on November 16, 1998).10.1
            
            Form
                of Restricted Stock Agreement - Clark, Inc. Incentive Compensation
                Plan.*10.2
            
            Form
                of Incentive Stock Option Agreement - Clark, Inc. Incentive Compensation
                Plan.*31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley
                Act
                of 2002.*31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley
                Act
                of 2002.*32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of Sarbanes-Oxley Act of 2002.*





______





*
      filed
      herewith





27