SECURITIES AND EXCHANGE COMMISSION                                                        Washington, D.C. 20549

FORM 10-Q

QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d)

OF THESECURITIES EXCHANGE ACT OF 1934

For thequarterly period ended June 30, 2001

CommissionFile No. 000-24769

CLARK/BARDES, INC.

(Exact name of Registrant as specified in its charter)

Delaware

52-2103926

(State of Incorporation)

(I.R.S. Employer Identification No.)

102 South Wynstone Park Drive, North Barrington, Illinois 60010

(Address of principal executive offices and Zip code)

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

Securities Registered Pursuant to Section 12(g) of the Act:

Title of Securities Exchanges on which registered

None Not Applicable

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.01 per share

(Title of class)

Junior Participating Preferred Stock, Series A, Purchase Rights

Par value, $.01 per share

(Title of class)

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

As of July 26, 2001 there were 12,756,562 shares of common stock outstanding.

TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.....................................................................   4
     Condensed Consolidated Balance Sheets at June 30, 2001......................................   4
           and December 31, 2000
     Condensed Consolidated Statements of Operations for the three...............................   5
          months and six months ended June 30, 2001 and 2000
     Condensed Consolidated Statements of Cash Flows for the.....................................   6
           six months ended June 30, 2001 and 2000
     Notes to Condensed Consolidated Financial Statements........................................   7

Item 2. Management's Discussion and Analysis of Financial........................................  14
             Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk...............................  31

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings........................................................................   31

Item 4. Submission of Matters to a Vote of Security Holders......................................   32

Item 6. Exhibits and Reports on Form 8-K.........................................................   32

SIGNATURES.......................................................................................   33

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

     This Form 10-Q and the documents included or incorporated by reference in this Form 10-Q may contain forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.Such statements include statements as to expected renewal revenues, projected future results of operations, decreases in amounts ofamortization expense and other statements of a forward looking nature.  These statements are identified by words such as"anticipate", "believe", "estimate", "expect", "intend", "predict", or "project", and similar expressions, as they relate to us or ourmanagement.  When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, usinginformation currently available to us.  These forward-looking statements are subject to risks, uncertainties and assumptions,including but not limited to the following:

- ........changes in tax legislation;         federal and state government regulations;        dependence on a select group of insurance companies;
-         dependence on key producers and services of key personnel;         dependence on information processing systems and risk of errors or omissions;        dependence on persistence of existing business;
-         risks associated with acquisitions;         significant intangible assets;        competitive factors and pricing pressures; and
-         general economic conditions.       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 what we may have projected.  Any forward-looking statement you read in this Form 10-Qreflects our current views with respect to future events and are subject to these and other risks, uncertainties and assumptionsrelating to our business, results of operations, growth strategy and liquidity (including the risk and uncertainties described underthe caption "Risk Factors" in our Annual Report on form 10-K for the year ended December 31, 2000).  All subsequent written and oralforward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by thisparagraph.  We disclaim any responsibility to update or revise any of the forward looking statements, whether in response to newinformation, unforeseen events, changed circumstances or otherwise.  PART 1. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS----------------------------------------------------------------------------------------------------------------------------------                                               CLARK/BARDES, INC. AND SUBSIDIARIES                                              CONDENSED CONSOLIDATED BALANCE SHEETS                                                                               June 30,                   December 31,                                                                                2001                         2000                                                                               ----                         ----                                                                             Unaudited                     Audited                                                                                            (dollars in thousands                                                                                            except share amounts)                                                             ASSETSCurrent Assets   Cash and cash equivalents                                                                           $  8,199                       $ 7,598   Accounts and notes receivable - net                                       22,977                        31,134   Deposits, advance and prepayments                                          3,462                         2,809   Deferred tax asset                                                         1,874                         1,861                                                                           -------------------------    -----------------------      Total Current Assets                                                   36,512                        43,402Intangible Assets - Net                                                     175,826                       165,373Equipment and Leasehold Improvements - Net                                   10,124                         8,376Other Assets                                                                  4,455                         2,704                                                                          -------------------------     -----------------------      Total Assets                                                         $226,917                       219,855                                                                          =========================     =======================                                              LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities   Accounts payable                                                                             $2,385                         10,786   Accrued liabilities                                                       19,236                        17,664   Income taxes                                                                  39                            4,121   Deferred income                                                              945                           1,180   Debt maturing within one year                                             12,016                        11,968                                                                          ------------------------     -----------------------      Total Current Liabilities                                              34,621                        45,719Deferred Tax Liability                                                        7,996                         7,228Deferred Compensation                                                         2,258                         1,745Interest Rate Swap                                                            1,279                         -Long Term Debt                                                               61,835                        52,605Stockholders' Equity   Preferred stock          Authorized - 1,000,000 shares; $.01 par value, none issued            -                             -   Common stock          Authorized - 20,000,000 shares; $.01 par value          Issued and outstanding - 12,756,562 in 2001 and 12,675,309 in 2000    128                           127    Paid in capital                                                          89,342                        88,810    Retained earnings                                                        30,737                        23,621    Other comprehensive loss (interest rate swap)                            (1,279)                       -                                                                          -------------------------     -----------------------Total Stockholders' Equity                                                  118,928                       112,558                                                                          -------------------------     -----------------------Total Liabilities and Stockholders' Equity                                 $226,917                       219,855                                                                          =========================     =======================                              see accompanying notes to condensed consolidated financial statements                                                       Unaudited                                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                      Three Months Ended                    Six Months Ended                                                           June 30,                             June 30,                                                           --------                             --------                                               2001            2000             2001                2000                                               ----            ----             ----                ----                                                           (dollars in thousands except share amounts)Total Revenue                                  $43,468        $24,364          $109,505          $55,511  Commission and fee expense                    13,070          8,028            40,026           18,912                                               -----------------------------------------------------------------Gross Profit                                    30,398         16,336            69,479           36,599                                               -----------------------------------------------------------------Operating Expenses   General and administrative                 24,617            14,114           49,267            29,127   Amortization                                2,940             1,329            5,739             2,664                                              -----------------------------------------------------------------                                              27,557            15,443           55,006            31,791                                              -----------------------------------------------------------------Operating Income                              2,841             893              14,473            4,808Non-operating Income (Expense)                (72)                                119Interest   Income                                       64               53                202              127   Expense                                   (1,511)           (900)            (2,940)           (1,825)                                              ------------------------------------------------------------------                                             (1,447)           (847)            (2,738)           (1,698)                                              ------------------------------------------------------------------Income before taxes                           1,322             46               11,854            3,110Income taxes                                    422            (113)              4,740            1,160                                              ------------------------------------------------------------------Net Income                                    $900              $159             $7,114           $1,950                                              ==================================================================Basic Net Income per Common ShareNet income                                    $ 0.07            $ 0.02           $ 0.56          $ 0.20                                              ------------------------------------------------------------------Weighted average shares                       12,740,269         9,855,522       12,718,273  9,796,824                                              ------------------------------------------------------------------Diluted Net Income per Common ShareNet income                                    $0.07             $ 0.02           $ 0.55          $ 0.19                                              ------------------------------------------------------------------Weighted average shares                       13,021,962       10,124,431        12,914,812  10,074,062                                              ------------------------------------------------------------------        see accompanying notes to condensed consolidated financial statements                                                          Unaudited                                       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                             Six Months Ended                                                                                                 June 30,                                                                                                 --------                                                                                       2001                    2000                                                                                       ----                    ----                                                                                          (dollars in thousands)Cash From Operating Activities - Net                                             $   11,356               $    8,765Investing Activities   Purchases of businesses                                                          (17,584)                 (27,153)   Purchases of equipment                                                            (2,478)                  (1,729)   Other                                                                                -                       (894)                                                                              ----------------------- ------------------------                                                                                     (20,062)                 (29,776)                                                                              ----------------------- ------------------------Financing Activities   Proceeds from borrowings                                                           22,500                   29,100   Repayment of borrowings                                                           (13,222)                 (11,012)   Issuance of common stock - net                                                         29                      329                                                                                          -                        47                                                                              ----------------------- ------------------------                                                                                       9,307                   18,464                                                                              ----------------------- ------------------------Increase (Decrease) in Cash                                                              601                   (2,547)   Cash and Cash Equivalents at  Beginning of Period                                   7,598                    4,832                                                                              ----------------------- ------------------------   Cash and Cash Equivalents at  End of Period                                   $     8,199               $    2,285                                                                              ======================= ========================                            see accompanying notes to condensed consolidated financial statementsCLARK/BARDES, INC. AND SUBSIDIARIESUnauditedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJune 30, 2001(Tables shown in thousands of dollars, except per share amounts)1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     The condensed consolidated financial statements include the accounts of Clark/Bardes, Inc. and our wholly ownedsubsidiaries.  Through our five operating divisions, Compensation Resource Group, Banking Practice, Healthcare Group, Pearl Meyer &Partners, and Corporate Practice, we design, market and administer life insurance products, compensation, and benefit programs toU.S. corporations, banks and healthcare organizations.  We assist our clients in using customized life insurance products to  financelong-term benefit liabilities and supplement and secure benefits for key employees, and provide compensation consulting services.

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generallyaccepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of RegulationS-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles forcomplete financial statements.  In our opinion, all adjustments, including normal recurring accruals, considered necessary for a fairpresentation have been included.  Operating results for the three month and six month periods ended June 30, 2001 are not necessarilyindicative of the results that may be expected for the year ended December 31, 2001.

     The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does notinclude all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

     For further information, refer to the consolidated financial statements and footnotes thereto included in our annual reporton Form 10-K for the year ended December 31, 2000.
2.  ACQUISITION OF COMPENSATION RESOURCE GROUP, INC.
     On September 6, 2000, we acquired all the issued and outstanding capital stock of Compensation Resource Group ("CRG") for atotal purchase price of $30.5 million, not including acquisition expenses, consisting of the following:
- (i)      a cash payment to the CRG selling shareholders of $11.4 million; (ii)     the issuance of 596,463 shares of our common stock, having an aggregate value of $6.1 million based on the closing price on              September 5, 2000; and(iii)    the repayment of approximately $13.0 million of CRG's long-term debt.
     Acquisition expenses were $735,000.   The cash portion of the purchase price was borrowed under our acquisition and workingcapital credit facility.
     The acquisition of CRG has been accounted for as a purchase with $26.7 million of the purchase price allocated to thepresent value of in-force revenue and amortized over a period of thirty years and $11.4 million allocated to goodwill that will beamortized over twenty years.
     CRG is an executive compensation and benefits organization providing the design, marketing and administration ofnon-qualified benefit plans.  It is headquartered in Los Angeles, California and has affiliated offices in seven other cities.  Priorto the acquisition, we had no material relationship with CRG.
CLARK/BARDES, INC. AND SUBSIDIARIESUnauditedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Coincident with this acquisition, we entered into a bonus arrangement for certain key executives and employees of CRG.  Thisarrangement will provide for the payment of bonuses of up to $20 million if certain stipulated financial objectives are achievedduring the years ended December 31, 2003 to 2005.

     The unaudited financial information below presents our results and CRG as if the acquisition had occurred on January 1, 2000.
                                                        June 30, 2000               June 30, 2000                                                 ---------------------------------------------------Pro Forma             Revenue...............................       $ 32,551                      $ 74,717             Net income (loss).....................         (2,155)                          352             Diluted earnings (loss) per share.....           (.20)                          .033.  ACQUISITION OF PEARL MEYER & PARTNERS, INC.
>     On June 21, 2000, we acquired all of the outstanding capital stock of Pearl Meyer & Partners, Inc. for a total purchase price of$25.9 million, not including expenses.  The purchase price consisted of a cash payment of $21.9 million and the issuance of 250,000shares of our common stock with a value of $4.0 million. Acquisition expenses were $720,000.  The cash portion of the purchase pricewas borrowed under our line of credit.

     The acquisition has been accounted for as a purchase and goodwill of $23.5 million will be amortized over  twenty years.

     In addition to the initial purchase price, $2.0 million of additional cash consideration will be paid in the first quarter of2002 upon the achievement of a defined performance objective during the eighteen months subsequent to the purchase.

     Pearl Meyer is a New York City based consulting firm specializing in executive compensation and retention programs.  The PearlMeyer organization became our fourth operating division.  Prior to the acquisition, we had no material relationship with Pearl Meyer.

     The unaudited pro forma information below presents our results and Pearl Meyer & Partners as if the acquisition had occurred onJanuary 1, 2000.
                                                      June 30, 2000                  June 30, 2000                                               ------------------------------- ----------------------Pro Forma             Revenue...............................       $ 27,280                      $ 61,603             Net income............................            404                         2,563             Diluted earnings per share............            .04                           .254.  RECENT ACCOUNTING PRONOUNCEMENTSFASB Accounting Standard - Derivatives and Hedging Activities
     As of January 1, 2001, we adopted Financial Accounting Standards Board Statement no. 133, (Accounting for DerivativeInstruments and Hedging Activities) issued in June 1998 together with its amendments, Statement 137, Accounting for DerivativeInstruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and Statement 138, Accounting forCertain Derivative Instruments and Certain Hedging Activities.  Collectively, these Statements require companies to recognize allderivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value.

     If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are eitheroffset against the change in fair value of assets, liabilities, or firm commitments through earnings or recognized in othercomprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative's change in fair valueis immediately recognized in earnings.

     We entered into interest rate swaps to match floating rate with fixed rate interest payments periodically over the life ofour term loan agreement.  The interest rate swaps have been designated as cash-flow hedges and have been highly effective as of June30, 2001.  At June 30, 2001, we had interest rate swap agreements outstanding with a notional principal amount of $41.5 million.Changes in the fair value of derivatives that are highly effective as and that are designated and qualify as  cash flow hedges arerecorded in other comprehensive income until earnings are affected by the variability of cash flows.

     Hedge ineffectiveness, determined in accordance with SFAS 133, had no impact on earnings for the six months ended June 30,2001.  No cash flow hedges were derecognized or discontinued for the six months ended June 30, 2001.  The adoption of the Standardshad no significant impact on our financial position or results of operation for the three months ended June 30, 2001.
FASB Accounting Standard - Business CombinationsFASB Accounting Standard - Goodwill and Other Intangible Assets
     On June 27, 2001 the Financial Accounting Standards Board (FASB)  issued Statements of Financial Accounting Standards No.141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December15, 2001.  Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordancewith the Statements.  Other intangible assets will continue to be amortized over their useful lives.

     We will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002.In addition, goodwill arising from acquisitions consummated subsequently to June 30, 2001, will not be amortized.  Application of thenonamortization provisions of the Statement is expected to result in an increase in net income of $2.4 million ($.20 per share in2002).  During 2002, we will perform the first of the required impairment tests of goodwill as of January 1, 2002 and have not yetdetermined what the effect of these tests will be on our earnings and financial position.
5.  EARNINGS PER SHAREThe following table sets forth the computation of historical basic and diluted earnings per share:                                                      June 30,                         June 30,                                                      --------                         --------                                                 2001           2000            2001              2000                                                 ----           ----            ----              ----                                                                 (dollars in thousands)Numerator:Net income for basic earnings per share     $      900             159             7,114             1,950                                            --------------- -------------- ----------------  ----------------Numerator for diluted earnings per share    $      900             159             7                 1,950                                            =============== ============== ================  ================DenominatorDenominator for basic earnings per share -   weighted average shares                                            12,740,269      9,855,522         12,718,273         9,796,824Effect of dilutive securities:   Stock options                               281,693        268,909            196,539           277,238                                            --------------- -------------- ----------------  ----------------Diluted earnings per share -   weighted average shares plus assumedconversions                                 13,021,962      10,124,431        12,914,812        10,074,062                                            =============== ============== ================  ================Per ShareBasic earnings                              $     0.07            0.02             0.56                0.20                                            =============== ============== ================  ================Diluted earnings                            $     0.07            0.02             0.55                0.19                                            =============== ============== ================  ================6.  RISKS AND UNCERTAINTIES
     Federal tax laws create certain advantages for the purchase of life insurance products by individuals and corporations,therefore the life insurance products underlying the benefit programs we market are vulnerable to adverse changes in tax legislationand policy.  Amendments to the federal tax laws enacted in 1996 and 1997 reduced the advantages of certain business owned lifeinsurance programs.

     During the past two years, a number of U.S. corporations have been faced with a significant income tax liability as a resultof Internal Revenue Service challenges and court rulings disallowing interest deductions related to a program known as a leveragedCOLI.  Although we stopped selling leveraged COLI programs in June 1997, this development may cause some existing holders ofleveraged COLI policies to surrender their policies, which could reduce the amount of renewal commissions or fees that we wouldrealize in the future.

     In addition, the Internal Revenue Service has begun an  initiative with respect to certain aspects of split-dollar insuranceprograms known as "equity split-dollar."  Under this initiative, the individual insured could suffer adverse income tax consequencesover the term of the policy.  This policy could result in a reduction of revenue derived from the sale of such policies.

     For a discussion of additional risks and uncertainties affecting our business, financial condition and results ofoperations, see the disclosure under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31,2000 as filed with the Securities and Exchange Commission on March 5, 2001.
7.  SEGMENTS AND RELATED INFORMATION
We have five reportable segments:
- Clark/Bardes Consulting - Compensation Resource Group Clark/Bardes Consulting - Banking PracticeClark/Bardes Consulting - Healthcare Group
- Compensation Consulting Corporate Practice
     On March 12, 2001, we acquired the assets and business of Rich, Florin/Solutions, Inc. and it became the fifth operatinggroup - Corporate Practice, specializing in technical and middle management compensation consulting.

     On September 6, 2000, we acquired all of the outstanding common stock of Compensation Resource Group, Inc. (CRG) anindependent company specializing in the design, marketing and administration of non-qualified executive compensation plans usingcompany owned life insurance  products.  In acquiring CRG, we reorganized as follows:
- The division formerly known as Clark/Bardes was renamed Clark/Bardes Consulting - Compensation Resource Group and consists of a Los Angeles,California headquarters with service centers in Dallas, Texas and Bethesda, Maryland. The bank owned life insurance product sold by the Clark/Bardes division was transferred to the Banking Practice thus placing all of our bank ownedlife insurance business in one division, commencing January, 2001.
     The Healthcare Group became a segment with the acquisition of MCG HealthCare on April 5, 1999.  Compensation Consultingbecame a segment with the acquisition of Pearl Meyer & Partners, Inc. on June 21, 2000.

     The five reportable segments operate as independent and autonomous business units with a central corporate staff responsiblefor finance, strategic planning, and human resources.   Each segment  has its own client base as well as its own marketing,administration, and management.

     We evaluate performance and allocate resources based on income from operations before income taxes, interest, or corporateadministrative expenses.  The accounting policies of the reporting segments are the same as those described in the summary ofsignificant policies.  There are no inter-segment revenues or expenses.
                                                     June30,                      June 30,                                            ------------------------------------------------------------                                                2001         2000         2001             2000                                            ------------------------------------------------------------Revenues from External Customers     Compensation Resource Group             $11,720       $ 5,712       $51,341         $14,770     Banking Practice                         19,703        13,048        36,316          29,688     Healthcare                                5,583         5,398        11,416          10,847     Compensation Consulting                   2,850           206         5,964             206     Corporate Practice                        3,612           -           4,468              -                                            ------------------------------------------------------------                   Total segments - reported  43,468        24,364       109,505          55,511     Reconciling items                            -            -            -                                            ------------------------------------------------------------               Total consolidated - reported $43,468       $24,364      $109,505         $55,551                                            ============================================================Operating Income and Income/(Loss) BeforeTaxes     Compensation Resource Group             $(1,148)      $   839         7,979         $ 1,585     Banking Practice                          5,838         1,726        10,401           6,486     Healthcare                                 (905)          466          (397)            264     Compensation Consulting                     530           107         1,328             107     Corporate practice                        1,377            -          1,756              -                                            ------------------------------------------------------------              Total segments -   reported      5,692         3,138        21,067           8,442     Corporate overhead                       (2,851)       (2,245)       (6,594)         (3,634)     Non-operating income (expense)              (72)          -             119             -     Interest - net                           (1,447)         (847)       (2,738)         (1,698)                                            ------------------------------------------------------------                      Income before taxes    $ 1,322            46        11,854         $ 3,110                                            ============================================================Depreciation and Amortization     Compensation Resource Group             $ 1,559       $   648      $  2,942         $ 1,256     Banking Practice                            629           362         1,366             742     Healthcare                                  786           567         1,545           1,241     Compensation Consulting                     384            35           761              35     Corporate practice                          146            -            185              -                                            ------------------------------------------------------------                  Total segments - reported  $ 3,504       $ 1,612      $  6,799           3,274     Reconciling items                            61            76           119              76                                            ------------------------------------------------------------              Total consolidated - reported  $ 3,565       $ 1,688      $  6,918         $ 3,350                                            ============================================================                                                                      June 30,       December 31,Identifiable Assets                                                    2001             2000                                                                       ----             ----     Compensation Resource Group                                   $  78,568        $  84,497     Banking Practice                                                 59,933           64,623     Healthcare                                                       35,459           33,768     Compensation Consulting                                          32,132           29,627     Corporate practice                                               15,171              -                                                                     ----------------------------------                  Total segments - reported                          221,263          212,515     Deferred tax asset                                                1,874            1,861     Holding company assets - non operating                            3,780            5,479                                                                     ----------------------------------              Total consolidated - reported                        $ 226,917         $ 219,855                                                                     ==================================Capital Expenditures     Compensation Resource Group                                   $     874         $   1,091     Banking Practice                                                    247             1,161     Healthcare                                                          698               663     Compensation Consulting                                             604               550     Corporate practice                                                   52                32                                                                     ----------------------------------                Total segments -  reported                             2,475             3,497                                                                           3               -                                                                     ----------------------------------               Total consolidated - reported                      $    2,478         $   3,497                                                                   ==================================8.  ACQUISITIONS
     On July 25, 2001, we acquired all of the operating assets and assumed certain liabilities of Management Science Associates,Inc., an Independence, Missouri based provider of consulting services to healthcare institutions.  The purchase price was $4.6million cash, not including acquisition expenses.  In addition, we will pay the sellers an additional $750,000 upon the Company'sachieving certain revenue targets during the years ending December 31, 2003.  The purchase price was borrowed under our line ofcredit.

     The value of the net assets and excess purchase price has not been determined.

     On July 20, 2001, we announced the signing of a letter of intent to purchase Lyons Compensation and Benefits, LLC.  Lyons isa Watham, Massachusetts based provider of compensation and benefit plans.  Consummation of the purchase is subject to the approval ofboth Companies' Boards of Directors, approval of our lending banks and the satisfactory completion of financial and business duediligence.
9.  LITIGATION
     On May 30, 2001, we were named a defendant in a lawsuit, case No. 00-11-00088 CVL, filed in the District Court of LaSalle,County, Texas alleging gross negligence in connection with the death of an employee.  Damages are unspecified.

     We deny any and all claims and allegations in this action and intend a vigorous defense.  The matter is covered by ourexisting insurance.
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Tables shown in thousands of dollars, except per share amounts)
     The following discussion and analysis of our financial condition and results of operations should be read in conjunctionwith our financial statements, the notes thereto and other information appearing elsewhere in this Form 10-Q.
Overview
     Net income for the quarter ended June 30, 2001 was $900,000 or $.07 per diluted share representing a 466.0% increase overnet income of $159,000 or $.02 per diluted share in the comparable quarter of 2000.  For the first six months of 2001, our net incomewas $7.1 million or $.55 per diluted share, an increase of 264.8% over the reported net income of $2.0 million or $.19 per dilutedshare for the six months ended June 30, 2000.
Acquisitions
     On July 25, 2001, we acquired all of the operating assets and assumed certain liabilities of Management Science Associates,Inc., an Independence, Missouri based provider of consulting services to healthcare institutions.  The purchase price was $4.6million cash, not including acquisition expenses.  In addition, we will pay the sellers an additional $750,000 upon the Company'sachieving certain revenue targets during the years ending December 31, 2003.  The purchase price was borrowed under our line ofcredit.

     The value of the net assets and excess purchase price has not been determined.

     On July 20, 2001, we announced the signing of a letter of intent to purchase Lyons Compensation and Benefits, LLC.  Lyons isa Waltham, Massachusetts based provider of compensation and benefit plans.  Consummation of the purchase is subject to the approvalof both Companies' Board of Directors, our lending banks and the satisfactory completion of financial and business due diligence.
Compensation Resource Group, Inc.
     On September 6, 2000, we acquired all the issued and outstanding capital stock of Compensation Resource Group ("CRG") for atotal purchase price of $30.5 million, not including acquisition expenses, consisting of the following:
-       a cash payment to the CRG selling shareholders of $11.4 million;      the issuance of 596,463 shares of our common stock,  having an aggregate value of $6.1 million based on the closing price on         September 5, 2000; and    the repayment of approximately $13.0 million of CRG's long term debt.
     Acquisition expenses were $735,000.   The cash portion of the purchase price was borrowed under our acquisition and workingcapital credit facility.
     The acquisition of CRG has been accounted for as a purchase with $26.7 million of the purchase price allocated to thepresent value of in-force revenue and amortized over a period of thirty years and $11.4 million allocated to goodwill, which will beamortized over twenty years.
     CRG is an executive compensation and benefits organization that provides the design, marketing and administration ofnon-qualified benefit plans.  It is headquartered in Los Angeles, California and has affiliated offices in seven other cities.  Priorto the acquisition, we had no material relationship with CRG.
     Coincident with this acquisition, we entered into a bonus arrangement for certain key executives and employees of CRG.  Thisarrangement will provide for the payment of bonuses of up to $20 million if certain stipulated financial objectives are achievedduring the years ended December 31, 2003 to 2005.
     The unaudited financial information below presents the results of CRG and ourselves as if the acquisition had occurred onJanuary 1, 2000.
                                                      June 30, 2000                  June 30, 2000                                               ------------------------------- ----------------------Pro Forma             Revenue...............................       $ 32,551                      $ 74,717             Net income (loss).....................         (2,155)                          352             Diluted earnings (loss) per share.....           (.20)                          .03
Pearl Meyer & Partners, Inc.
     On June 21, 2000, we acquired all of the issued and outstanding capital stock of Pearl Meyer & Partners, Inc. for a totalpurchase price of $25.9 million, not including expenses.  The purchase price consisted of  a cash payment of $21.9 million and theissuance of 250,000 shares of our common stock with a value of $4.0 million.  Acquisition expenses were $720,000.  The cash portionof the purchase price was borrowed under our line of credit.
     The acquisition has been accounted for as a purchase and goodwill of $23.5 million will be amortized over a twenty-yearperiod.
     In addition to the initial purchase price, $2.0 million of additional cash consideration will be paid in the first quarterof 2002 upon the achievement of a defined performance objective during the eighteen months subsequent to the purchase.
     Pearl Meyer is a New York City based consulting firm specializing in executive compensation and retention programs.  ThePearl Meyer organization became our fourth operating division.  Prior to the acquisition, we had no material relationship with PearlMeyer.
     The unaudited pro forma information below presents the results of Pearl Meyer & Partners and ourselves as if the acquisitionhad occurred on January 1, 2000.
                                                     June 30, 2000                    June 30, 2000                                              ------------------------------    ----------------------Pro Forma             Revenue...............................       $ 27,280                      $ 61,603             Net income............................            404                         2,563             Diluted earnings per share............            .04                           .25
Earnings Guidance
     Set forth below is a comparison of our actual results for the three months ended June 30, 2001 compared to the guidancepreviously provided.
                                               --------------------------------------                                                   Actual           Guidance                                                   ------           --------Revenue     First year                                 $ 26,790         $  26,300     Renewal and fees                             16,678            18,100                                                ---------------------------           Total                                  43,468            44,400Gross profit                                      30,398            30,500                                               ----------           ------Earnings before interest, taxes and     amortization                                  5,781             5,200Net income                                      $    900         $     800                                               ======================================Diluted shares outstanding                                               13,021,962        13,218,000Diluted earnings per share                                               $    0.07         $     0.06Contributions by division     Revenue          Corporate Benefits                    $ 11,720         $  13,965          Banking Practice                        19,703            20,577          HealthCare Compensation                  5,583             4,661          Compensation Consulting                  6,462             5,197                                               --------------------------------------                  Total                         $ 43,468            44,400                                               ======================================     Earnings before interest, taxes and         amortization          Corporate Benefits                    $   195               692          Banking Practice                        6,382             4,400          HealthCare Compensation                  (307)              119          Compensation Consulting                 2,303             1,122          Holding Company                        (2,792)           (1,133)                                               --------------------------------------                                                $ 5,781             5,200                                               ======================================
     Set forth below is an update of our previously published forecasts of our expected results of operations for the year endedDecember 31, 2001.  All of the data in the following table constitute forward-looking information within the meaning of Section 27Aof the Securities Acts of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward looking statements are subjectto the risks and uncertainties described on page 10 hereof and under the caption "Risk Factors" in our Annual Report on Form 10-K forthe year ended December 31, 2000.
                                  --------------------------------------------------------------------                                  March 31, (A)     June 30 (A)       September 30      December 31      2001          2002                                  -------------     -----------       ------------      -----------      ----          ----Revenue     First year                   $   40,132         $   26,685        $    29,300       $   42,200   $ 138,317       $161,700     Renewal and fees                 25,905             16,783             17,900           23,900      84,488         94,000                                  -----------       -------------         Total                        66,037             43,468             47,200           66,100     222,805        255,700                                  -----------       -------------                            -------    --------   -----------Gross profit                          39,081             30,398             33,000           45,700     148,179        169,800                                  -----------       -------------                            -------    --------   -----------Earnings before interest, taxesand amortization                      14,431              5,781             19,300           19,300      46,012         52,000Net income                        $    6,213         $      900        $     1,600       $    9,600    $ 18,313        $ 21,600                                      =======            ======                               ======     =======        =======Diluted shares outstanding           12,783,715      13,021,962        13,500,000         13,600,000     13,400,000    13,700,000Diluted earnings per share        $       0.49       $     0.07        $     0.12         $     0.71   $   1.37         $  1.58Contributions by Market     Revenue         Corporate Benefits                                                                                    39%            38%         Banking Practice                                                                                      40%            39%         HealthCare Compensation                                                                               11%            12%         Compensation Consulting                                                                               10%            11%     Earnings before interest,taxes and amortization         Corporate Benefits                                                                                    30%            35%         Banking Practice                                                                                      68%            57%         HealthCare Compensation                                                                                6%            10%         Compensation Consulting                                                                               17%            19%         Holding Company                                                                                      -21%           -21%
     The above forward looking statements are based on the beliefs of management and the information currently available and arenot an assurance of future performance.  Such forward looking statements are based on a number of assumptions by management,including, without limitation; there will be no change in tax laws, regulations or enforcement policies of the Internal RevenueService and that our acquisitions will be successful.  If we are incorrect in the assumptions, or if the risks and uncertainties wereto be realized, our actual result could be materially different.  Because of such risks and uncertainties and the possibility thatone or more of our assumptions may be incorrect, you should not rely on the above forward looking statements in making any investmentdecision whether to buy, hold or sell any of our securities.
Revenue Sources and Recognition
     Our operating units derive their revenue primarily from:
-  commissions paid by the insurance companies issuing the policies underlying our benefit programs;         program design and administrative service fees paid by our clients; and        executive compensation and benefit consulting fees.
     Our commission revenue is normally long term and recurring, is typically paid annually and usually extends for a period often years or more after the sale.  Commissions paid by insurance companies vary by policy and by program and represent a percentageof the premium or the cash surrender value of the insurance policies underlying the program.
        First Year Revenue.  First year revenue is derived from two principal sources; (a) the commission we earn when the client              first purchases the policies.  It is the financial result of our sales efforts and revenue is recognized at the time the              application is substantially completed, the client is contractually committed to purchase the insurance policies and the              premiums are paid, by the client, to the insurance company; and (b) fees for the services we perform in advising our              clients on their executive compensation programs.  These fees are based on a rate per hour arrangement and are earned              when the service is rendered and billed to the client.
-         Renewal Commission Revenue.  Renewal revenue is the commission we earn based on the premiums on the policies underlying the              benefit programs we have sold in prior periods.  Renewal revenue is recognized on the date that the renewal premium is              due or paid to the insurance company depending on the type of policy.  Renewal revenue in future periods, which is not              recorded on our balance sheet, is estimated to be approximately $369 million over the next five years.  However, renewal              revenue can be affected by policy surrenders or exchanges, material contract changes, asset growth and case mortality              rates. Over the last five years, we have experienced a persistency rate of approximately 95% of the inforce insurance              underlying our programs.  However, we can give no assurances that our persistency rate will remain at this level.  We              intend to do all we can to retain our clients, serve their accounts and sustain our persistency.         Other Revenue.  Other revenue consists mostly of fees we charge our clients for the administration of their benefit program.
        All fees are recorded as revenue as they are earned in accordance with the governing agreement.
Quarterly Results
     The following table presents a summary of key revenue and expense statistics for the most recent eight calendar quarters.This information is not necessarily indicative of results for any full year or for any subsequent period.

     Our operating results can fluctuate considerably, especially when compared on a consecutive quarterly basis.  We canexperience large increases in revenue in the fourth quarter and operating results may be affected by a number of other factors,including:
-         new or enhanced programs and services by us or our competitors and client acceptance or rejection of these programs;         program development expenses;        competitive, legislative or regulatory changes;
-         federal income tax legislation; and         general economic conditions.                           -------------------------------------------------------------------------------------                              Sep       Dec        Mar       Jun        Sep       Dec        Mar        Jun                              1999      1999      2000       2000      2000       2000      2001       2001                              ----      ----      ----       ----      ----       ----      ----       ----Revenue                      $ 25,655  $ 41,335   $ 31,147  $ 24,364   $ 34,645  $ 57,457   $ 66,037   $ 43,468   % of annual                  23.9%     34.2%      24.4%     19.9%      26.3%     38.9%      36.2%      21.6%Gross profit                   15,199    25,898     20,263    16,336     22,888    37,322     39,081     30,398   Ratio                        59.2%     62.7%      65.1%     67.0%      66.1%     65.0%      59.2%      69.9%Operating expenses             11,332    15,364     15,013    14,114     17,875    21,705     24,650     24,617Amortization                    1,237     1,361      1,335     1,329      1,933     2,540      2,799      2,940Operating income                2,630     9,173      3,915       893      3,080    13,077     11,632      2,841   % of revenue                 10.3%     22.2%      12.6%      3.7%       8.9%     22.8%      17.6%       6.5%   % of gross profit            17.3%     35.4%      19.3%      5.5%      13.5%     35.0%      29.8%       9.3%Non-operating income                                                                1,001        191       (72)Interest expense - net            790     1,015        851       847      1,407     1,587      1,291      1,447Income taxes                      804     3,270      1,273     (113)        514     4,151      4,318        422Net income                   $  1,036   $ 4,888   $  1,791   $   159   $  1,159  $  8,339   $  6,214    $   900Per diluted common share      $  0.11   $  0.50    $  0.18   $  0.02    $  0.11   $  0.65    $  0.49    $  0.07
     Many of these factors are beyond our control.  Sales cycles of some of our division take between twelve and eighteen months,with a large portion of first year revenue often coming from a few large cases.  Our revenue is thus difficult to forecast, and webelieve that comparing our consecutive quarterly results of operations is not necessarily meaningful, nor does it indicate whatresults we will achieve for any subsequent period.  In our business, past operating results are not reliable indicators of futureperformance.
Results of Operations                                     ----------------------------------     -----------------------------------                                         2001       2000      % Change          2001        2000      % Change                                         ----       ----    ----------          ----        ----    ----------Total revenue                            $ 43,468   $ 24,364     78.4%         $ 109,505    $ 55,511     97.3%Commission and fee expense               (13,070)    (8,028)      62.8          (40,026)    (18,912)     111.6Gross profit                               30,398     16,336      86.1            69,479      36,599      89.8        % of total revenue                  69.9%      67.0%                       63.4%       65.9%General and administrative expenses        24,617     14,114      74.4            49,267      29,127      69.1        % of total revenue                  56.6%      57.9%                       45.0%       52.5%Operating income, excludingamortization,     and non-recurring expenses             5,781      2,222     160.2            20,212       7,472     170.5        % of total revenue                  13.3%       9.1%                       18.5%       13.5%Interest - net                            (1,447)      (847)      70.8           (2,738)     (1,698)      61.2        % of total revenue                   3.3%       3.5%                        2.5%        3.1%Income taxes                                1,387       (34) (4,179.4)             6,990       2,154     224.5        Effective tax rate                  32.0%     -2.45%                       40.0%       37.3%Income before amortization andnon-recurring     expenses and income                    2,947      1,409     109.2            10,484       3,620     189.6        % of total revenue                   6.8%       5.8%                        9.6%        6.5%Amortization, non-recurring expensesand     non-recurring income - net oftaxes                                     (2,047)    (1,250)      63.8           (3,370)     (1,670)     101.8Net income (loss)                         $   900    $   159     466.0          $  7,114    $  1,950     264.8        % of total revenue                   2.1%       0.7%                        6.5%        3.5%Per common shareBasic        Income before amortization       $   0.23   $   0.14     61.8%          $   0.82     $  0.37    123.1%        Amortization and        non-recurring             items                      $  (0.16)  $  (0.13)      26.7         $  (0.26)    $ (0.17)      55.4        Net income                       $   0.07   $   0.02     338.8          $   0.56     $  0.20     181.0        Weighted average shares        12,740,269  9,855,522      29.3        12,718,273   9,796,824      29.8Diluted        Income before amortization       $   0.23   $   0.14      62.7          $   0.81     $  0.36     125.9        Amortization and        non-recurring             items                      $  (0.16)  $  (0.12)      27.3         $  (0.26)    $ (0.17)      57.4        Net income                       $   0.07   $   0.02     341.0          $   0.55     $  0.19     184.5        Weighted average shares        13,021,962 10,124,431       8.6        12,914,812  10,074,062      28.2                                         Three Months Ended                       Six Months Ended                                              June 30,                                June 30,                                              --------                                --------                                        2001           2000                    2001            2000                                        ----           ----                    ----            ----                                                              Operating ResultsRevenue     First year                      $ 4,289          2,625                    26,317        5,385     Renewal                           7,431          3,087                    25,024        9,385                                    ------------------------------        ---------------------------------         Total                        11,720          5,712                    51,341        14,770Commission expense                     5,368          2,088                    26,553         6,579                                    ------------------------------        ---------------------------------Gross profit                           6,352          3,624                    24,788         8,191         % of revenue                   54.2%         63.4%                   48.3%           55.5%                                    ------------------------------        ---------------------------------Expenses     General and administrative        6,157         2,551                     14,295         6,180         % of revenue                   52.5%         44.7%                   27.8%           41.8%     Amortization of intangibles       1,343           234                      2,514           426         % of revenue                   11.5%          4.1%                    4.9%            2.9%                                    ------------------------------        ---------------------------------         Total                         7,500         2,785                     16,809         6,606Operating income/(loss)              $(1,148)          839                      7,979         1,585         % of revenue                   -9.8%         14.7%                   15.5%           10.7%                                    ==============================        =================================                                                              Variances - +/(-)                                      $             %                       $               %Revenue     First year                    $1,664         63.4%                   20,932        388.7%     Renewal                        4,344        140.7                    15,639        166.6                                    ------------------------------        ---------------------------------         Total                      6,008        105.2                    36,571        247.6Commission expense                  3,280        157.1                    19,974        303.6                                    ------------------------------        ---------------------------------Gross profit                        2,728        75.3                     16,597        202.6Expenses     General and administrative     3,606        141.4                    8,115         131.3     Amortization of intangibles    1,109        473.9                    2,088         490.1                                    ------------------------------        ---------------------------------         Total                      4,715        169.3                    10,203        154.5Operating income/(loss)           $(1,987)      -236.8%                    6,394        403.4%                                    ==============================        =================================
     Our Compensation Resource Group division, formerly our Clark/Bardes division, now consists of the original non-bankingbusiness as well as the non-banking revenues from the Schoenke, Wiedemann & Johnson, Wamberg Organization, and Compensation ResourceGroup acquisitions.

     In order to streamline the focus of this division on non-bank corporate benefits, the banking business was transferred tothe Banking Practice division, effective January 1, 2001, and the Consulting Compensation Resource Group division will concentrate onnon-qualified executive compensation and benefit plans.

     The Compensation Resource Group division's operating income for both the current quarter and year-to-date 2001, has beenaffected by a higher than historical commission expense.  Operating expenses and amortization for the first six months of 2001 haveincreased substantially over the six months ended June 30, 2000 as a result of the September 2000 acquisition of CompensationResource Group.

     The lower levels of gross profit and higher levels of expenses are expected to continue.
                                          Three Months Ended                          Six Months Ended                                               June 30,                                   June 30,                                               --------                                   --------                                         2001             2000                    2001             2000                                         ----             ----                    ----             ----                                                                Operating ResultsRevenue     First year                     $11,495           4,578                    21,786            15,016     Renewal                          8,208           8,470                    14,530            14,672                                   ----------------------------------        -----------------------------------        Total                       $19,703          13,048                    36,316            29,688Commission expense                    6,912           5,377                    12,073            11,116                                   ----------------------------------        -----------------------------------Gross profit                         12,791           7,671                    24,243            18,572        % of revenue                     64.9%           58.8%                     66.8%            62.6%                                   ----------------------------------        -----------------------------------Expenses     General and administrative       6,409           5,336                    12,651            10,846        % of revenue                     32.5%           40.9%                     34.8%            36.5%     Amortization of intangibles        544             609                     1,191             1,240        % of revenue                     2.8%             4.7%                      3.3%             4.2%                                   ----------------------------------        -----------------------------------        Total                         6,953           5,945                    13,842            12,086Operating income                    $ 5,838           1,726                    10,401             6,486         % of revenue                    29.6%           13.2%                     28.6%            21.8%                                   ==================================        ===================================                                                                Variances - +/(-)Revenue                              $               %                         $                %                                     -               -                         -                -     First year                   $6,917           151.1%                    6,770            45.1%     Renewal                        (262)            (3.1)                    (142)             (1.0)                                   ----------------------------------        -----------------------------------        Total                      6,655            51.0                     6,628             22.3Commission expense                 1,535            28.5                       957              8.6                                   ----------------------------------        -----------------------------------Gross profit                       5,120            66.7                     5,671             30.5Expenses     General and administrative    1,073            20.1                     1,805             16.6     Amortization of intangibles    (65)           (10.7)                      (49)            (4.0)                                   ----------------------------------        -----------------------------------        Total                      1,008            17.0                     1,756             14.5Operating income                  $4,112           238.2%                    3,915             60.4%                                   ==================================        ===================================
     The Banking Practice enjoyed favorable growth with revenues increasing 51.0% over the first quarter of 2000 and 22.3% overthe six month period ended June 30, 2000.

     For the quarter ended June 30, 2001, operating income was 29.6% of revenue compared with 13.2% in the comparable 2000quarter.

     For the six months ended June 30, 2001, operating income was $3.9 million or 60.4% over last year as revenue increases of$6.6 million were significantly more than increases in operating expenses.  Gross profit also benefited by a 6.7% increase.
                                             Three Months Ended                        Six Months Ended                                                  June 30,                                 June 30,                                                  --------                                 --------                                             2001           2000                      2001           2000                                             ----           ----                      ----           ----                                                                  Operating ResultsRevenue     First year                         $  4,544           4,369                    8,554           8,104     Renewal                               1,039           1,029                    2,862           2,743                                       -------------------------------          --------------------------------                 Total                     5,583           5,398                    11,416          10,847Commission expense                           790             563                     1,400           1,217                                       -------------------------------          --------------------------------Gross profit                               4,793           4,835                    10,016          9,630                 % of revenue               85.8%          89.6%                     87.7%           88.8%                                       -------------------------------          --------------------------------Expenses     General and administrative            5,100           3,982                    9,225           8,465                 % of revenue               91.3%          73.8%                     80.8%           78.0%     Amortization of intangibles             598             387                      1,188           901                 % of revenue               10.7%           7.2%                     10.4%           8.3%                                       -------------------------------          --------------------------------                 Total                     5,698           4,369                    10,413          9,366Operating income/(loss)                 $   (905)           466                      (397)           264                 % of revenue               -16.2%          8.6%                     -3.5%           2.4%                                       ===============================          ================================                                                                  Variances - +/(-)Revenue                                       $              %                         $               %                                              -              -                         -               -     First year                         $  175              4.0%                     450             5.6%     Renewal                                10              1.0                      119             4.3                                       -------------------------------          --------------------------------                 Total                     185              3.4                      569             5.2Commission expense                         227             40.3                      183             15.0                                       -------------------------------          --------------------------------Gross profit                               (42)            (0.9)                     386             4.0Expenses     General and administrative          1,118             28.1                      760             9.0     Amortization of intangibles           211             54.5                      287             31.9                                       -------------------------------          --------------------------------                 Total                   1,329             30.4                    1,047            11.2Operating income/(loss)                $(1,371)          -294.2%                    (661)          -250.4%                                       ===============================          ================================
     The Healthcare Group continues to experience the difficult conditions prevailing in the healthcare industry, in general.Revenues for the June 30, 2001 quarter increased 3.4% over the comparable quarter of 2000 while operating expenses grew 28.1%reflecting the first quarter acquisition of Partners First.
                                             Three Months Ended                         Six Months Ended                                                  June 30,                                  June 30,                                            2001            2000                       2001           2000                                                                  Operating ResultsRevenue                                $   6,462          $  206                    $ 10,432        $ 206     Renewal                                  -              -                          -               -                                       --------------------------------          -------------------------------                 Total                     6,462             206                      10,432          206Commission expense                           -                -                          -             -                                       --------------------------------          -------------------------------Gross profit                               6,462             206                     10,432          206                 % of revenue              100.0%          100.0%                     100.0%         100.0%                                       --------------------------------          -------------------------------Expenses     General and administrative            4,159              64                      6,618           64                 % of revenue               64.4%          31.1%                      63.4%          31.1%     Amortization of intangibles             396              35                       730             35                 % of revenue               6.1%           17.0%                       7.0%          17.0%                                       --------------------------------          -------------------------------                 Total                     4,555             99                      7,348             99Operating income                       $   1,907          $ 107                      3,084            107                 % of revenue               29.5%          51.9%                      29.6%          51.9%                                       ================================          ===============================                                                                  Variances - +/(-)Revenue                                       $              %                          $              %     First year                         $ 6,256           3036.9%                    10,226         4964.1%     Renewal                                -              -                          -               -                                       --------------------------------          -------------------------------                 Total                    6,256          3,036.9                    10,226          4,964.1Commission expense                          -              -                          -               -                                       --------------------------------          -------------------------------Gross profit                              6,256          3,036.9                    10,226          4,964.1Expenses     General and administrative           4,095          6,398.4                     6,554         10,240.6     Amortization of intangibles            361          1,031.4                       695          1,985.7                                       --------------------------------          -------------------------------                 Total                    4,456          4,501.0                     7,249          7,322.2Operating income                        $ 1,800           1682.2%                    2,977         2782.2%                                       ================================          ===============================
     The Compensation Consulting Group consists of Pearl Meyer & Partners, acquired in June 2000 and Executive Alliance,purchased in March 2001.  As these are recent acquisitions, there are no prior year comparisons.
Results Attributable to Acquisitions
     As an acquirer, our operating results are significantly influenced by the contribution of our acquired businesses.  Bydefinition, we consider any business not appearing in four full quarters of operating results as being from acquisitions.  Afterthat, they become part of existing business.  An analysis of our operating results, separating acquisitions from existing businessesis as follows:
                                             June 30, 2001                              June 30, 2000                                             -------------                              -------------                                 Existing   Acquisitions    Combined      Existing     Acquisitions      Combined                                 --------   ------------    --------      --------     ------------      --------Revenue     First year                 $ 17,720     $ 9,070       $ 26,790      $ 11,778      $    -           $ 11,778     Renewal                      12,066       4,612         16,678        12,586           -             12,586                                --------------------------------------------------------------------------------------     Total                        29,786      13,682         43,468        24,364           -             24,364Commission expense                 9,250       3,820         13,070        10,079        (2,051)           8,028                                --------------------------------------------------------------------------------------Gross profit                      20,536       9,862         30,398        14,285         2,051           16,336General and administrative        16,646       7,971         24,617        13,183           931           14,114                                --------------------------------------------------------------------------------------Operating income beforeamortization                       3,890       1,891          5,781         1,102         1,120            2,222Amortization of intangibles        1,772       1,168          2,940           958           371            1,329                                --------------------------------------------------------------------------------------Operating income                $  2,118     $   723       $  2,841      $    144      $    749         $    893                                ======================================================================================                                          Six Months Ended                           Six Months Ended                                           June 30, 2001                                June 30, 2000                                           -------------                                -------------                                 Existing   Acquisitions    Combined        Existing     Acquisitions    Combined                                 --------   ------------    --------        --------     ------------    --------Revenue     First year                 $ 35,398     $  31,691      $  67,089       $  28,711      $     -       $ 28,711     Renewal                      25,747        16,669         42,416          26,800            -         26,800     Total                        61,145        48,360        109,505          55,511            -         55,511Commission expense                18,764        21,262         40,026          25,267         (6,355)      18,912                                --------------------------------------------------------------------------------------Gross profit                      42,381        27,098         69,479          30,244          6,355       36,599General and administrativeexpense                           34,053        15,214         49,267          27,527          1,600       29,127                                --------------------------------------------------------------------------------------Operating income beforeamortization                       8,328        11,884         20,212           2,717          4,755        7,472Amortization of intangibles        3,452         2,287          5,739           1,944            720        2,664                                --------------------------------------------------------------------------------------Operating income                $  4,876     $   9,597       $ 14,473       $     773          4,035        4,808                                ======================================================================================
     Caution should be used in analyzing and evaluating the foregoing.  While acquisitions have been made, and will continue tomake, a substantial contribution to our operating performance and growth, the resources dedicated to our acquisition program wouldhave had an impact on the performance of the existing business had the acquisitions not been made.

     For the six months ended June 30, 2001, approximately 44.2% of gross revenue and 66.3% of operating income came fromacquisitions while 9.7% of gross revenue and 93.6% of operating income were from acquisitions during the same period in 2000.  We donot attribute a great deal of significance to these statistics for the following reasons:
-         an acquisition's contribution to operating performance in any given period is considerably dependent on the timing of the             transaction;         an acquisition, by our definition for this purpose, is one that has not yet appeared in four quarters' operating results.             As these acquisitions add to our existing business base, the relative contribution of any subsequent acquisition may             diminish; and        acquisitions have made, and are expected to make, a substantial contribution to our operating performance and growth,             however, the resources dedicated to our acquisition program could have had an impact on the performance of the existing             business had the acquisitions not been made.
Corporate General and Administrative Expenses
     The corporate administrative office in North Barrington, Illinois contains our executive staff and provides direction andcoordination of our financial, strategic planning and acquisition activities.  For the June 30, 2001 quarter, the cost of ourCorporate Headquarters amounted to $2.9 million compared with $2.2 million for the comparable quarter of last year.  For the sixmonths, expenses were $6.6 million in 2001 compared with $3.6 million last year.  The year-to-date increase reflects a significantamount of litigation expenditures along with the normal expenditures required to bring the office to the proper level of operation.
Interest Expense - Net
     Net interest expense was $1.4 million in the June 30, 2001 quarter, a 70.8% increase from the $847,000 net expense in firstquarter 2000.  Year-to-date interest of $2.7 million is $1.0 million or 61.2% more than last year's first six months.  Although cashflow from operations was $11.4 million, our average borrowings increased $13.0 million over the same quarter of 2000, which attoday's interest rates, accounts for the full amount of the interest expense increase.  Borrowing increased to support our acquisitionprogram.  During the first six months, our cash outlays for acquisitions were $17.6 million.
Income Taxes
     Income taxes for the first six months of 2001 were $4.7 million at an effective rate of 40% compared with $1.2 million at aneffective rate of 37.3% in the first six months of 2000.  This reflects the fact that we are now doing more business in higher taxrate states than last year.
Liquidity and Capital Resources
Selected Measures of Liquidity and Capital Resources
                                                                2001              2000              2000                                                            ---------             -----             ----Cash and cash equivalents................................   $    8,199      $     7,598        $     2,285Working capital..........................................   $    1,891      $   (2,317)        $   (7,477)Current ratio - to one...................................         1.05             .95                .65Shareholders' equity per common share (1)...............    $     9.32      $     8.88         $     7.07Debt to total capitalization (2).........................         38.3%           36.5%             46.0%___________(1)  total shareholders' equity divided by actual shares outstanding(2)  current debt plus long term debt divided by current debt plus long term debt plus stockholders' equity
     In addition to our recognized balance sheet assets and liabilities, we have an on going renewal revenue stream, estimated tobe $628 million over the next ten years.  Discounting these renewals to the net present value of the estimated realizable amounts,adjusted for a 95% persistency rate, at the U.S. Treasury ten year note rate yield was approximately $388 million at June 30, 2001compared with $270 million at June 30, 2000.
     As a financial company with strong operating cash flow, we believe we have little need to retain substantial cash balances.We use the net cash from operating activities to fund capital expenditures and small acquisitions and pay down our credit facility.We expect that large future acquisitions will be financed primarily through externally available funds.  However, we can offer noassurance that such funds will be available and, if so, on terms acceptable to us.
Summarizing our cash flow, comparatively, for the year-to-date:                                                                                     June 30,                                                                             ------------------------                                                                                 2001           2000                                                                             ----------    -------------Cash flows from (used in):   Operations................................................................$11,356         $  8,765    Investing................................................................ (20,062)        (29,776)    Financing................................................................    9,307         18,464
Cash Flows from Operating Activities
     Our cash flow from operations for the six months ended March 31, 2001, compared with the same six month period in 2000, wasas follows:
                                                                       June 30,                                                            --------------------------Increase/(Decrease)                                                      2001              2000              In Cash                                                      ----              ----              -------Net income (loss) plus non-cash expenses             $14,033           $ 5,300            $  8,733Changes in operating assets and liabilities            (2,677)            3,465              (6,142)                                                     ---------            -----           ----------Cash flow from operating activities                  $11,356           $ 8,765            $   2,591                                                     =======           ========           =========
     Our continued strong cash flow from operations allows us to pay down acquisition debt and still continue our acquisitionprogram.  We make significant use of borrowings to finance our acquisitions.  Because of this and the strong cash generated byoperations, management has decided to dedicate all excess cash to the reduction of bank borrowings and, as a result only cash forreasonably foreseeable needs and expenses is retained.O
     The following table represents the estimated gross renewal revenue associated with our inforce business owned life insurancepolicies as of June 30, 2001.  The projected gross revenue is not adjusted for mortality, lapse or other factors that may impairrealization.  These projected gross revenues are based on the beliefs and assumptions of management and are not necessarilyindicative of the revenue that may actually be achieved in the future and we cannot assure you that commissions under these policieswill be received.
                              Resource Group         Practice             Group              Total                              --------------         --------             -----              -----        2002                      $  55,805          $  31,572              6,049              93,426        2003                         49,157             27,382              5,869              82,408        2004                         40,859             24,214              5,403              70,476        2005                         33,890             24,711              4,935              63,536        2006                         29,737             25,166              4,569              59,472        2007                         28,293             23,681              4,162              56,136        2008                         26,316             23,222              3,480              53,018        2009                         26,270             23,638              2,706              52,614        2010                         25,676             24,207              1,859              51,742        2011                         25,663             24,920              1,483              52,066                            ----------------     --------------      -------------       -------------                     Total        $ 341,666          $ 252,713            $40,515            $634,894
     At June 30, 2000, our ten year renewal projection amounted to $452 million.  The June 30, 2001 balance represents a 40%increase in our residual book of business - a reflection of our revenue growth.

        As a fee based business, our Compensation Consulting division does not have renewal revenues.
Cash Used in Investing Activities
     Acquisitions accounted for $17.6 million used in investing activities.  The balance of $2.4 million was for purchases ofequipment.

        We expect acquisitions to continue and be financed primarily from available credit lines and possible additional equity.However, we can offer no assurances such will be the case.
Cash Flows from Financing Activities
     We presently have a $114.3 million credit facility with a group of banks.  Loans bear interest at a rate based on the LondonInterBank Offered Rate at the time of borrowing or floating prime rate.  The credit agreement contains a number of restrictivecovenants and we were in compliance at June 30, 2001.

        In an effort to reduce interest costs, management has directed that all cash beyond reasonably foreseeable needs be used topay down debt.  Depending upon adherence to the criteria in our loan agreements at the time of draw down, we had $48.1 millionavailable under our credit line at June 30, 2001.

        We believe that our net cash flow from operations will continue to provide sufficient funds to service our debtobligations.  We estimate renewal revenue in future periods, which is not reflected on our balance sheet, to be approximately $362million over the next five years.  However, renewal revenue can be adversely affected by policy surrenders or exchanges, materialcontract changes, asset growth and case mortality rates.

        As our business grows, our working capital and capital expenditure requirements will also continue to increase.  We believethat net cash flows from operations will be sufficient to finance our debt payments, working capital and capital expenditures for thenext twelve months.  There can be no assurance, however, that the net cash flows from operations will be sufficient to meet ouranticipated requirements or that we will not require additional debt or equity financing within this time frame.  We may continue toissue stock to finance future acquisitions.
Intangible Assets and Renewal Revenue
     We believe it helpful to understand the inter-relationship between our renewal revenue and our intangible assets.  Becausethe renewal premiums underlying the book of business that come with many of our acquisitions are not contractually enforceable,generally accepted accounting principles do not recognize them as assets.  In most of our acquisitions, we acquire very little in theway of tangible assets, therefore virtually the entire purchase price is allocated to intangible assets.  Two important elements ofour intangible assets affect our cash flow:
-         the present value of inforce revenue is the net discounted cash flow from the book of business of those companies having             future renewal revenue at the time we acquired them; and         a potential future tax benefit over the next fifteen years.  Approximately $155.2 million of our gross intangible assets are             expected to be tax deductible.
        Net intangible assets arising from our purchased businesses consist of the following:
                                                                      2001                       2000                                                                  -------------           ----------------         Present value of inforce revenue.........................$   82,236              $     85,962         Goodwill.................................................    92,735                    78,419         Non-competition agreements...............................       855                       992                                                                  ----------            -------------- ..................................................................$  175,826               $   165,373                                                                  ==========               ===========         Total assets.............................................      77.5%                    75.2%         Stockholders' equity.....................................     147.8%                   146.9%
     The amounts allocated to inforce revenue are determined using the discounted cash flow of future commission adjusted forexpected persistency, mortality and associated costs.  The balance of the excess purchased price over the net tangible assets isallocated to goodwill.  The inforce revenue is amortized over its period of duration, which is normally twenty to thirty years.  Manyfactors outside our control determine the persistency of our inforce business and we cannot be sure that the value we allocated willultimately be realized.

        Goodwill is being amortized over periods of twenty to forty years.  Non-competitive agreements are amortized over five toten years, according to the terms of the agreements.

        On June 27, 2001, the Financial Accounting Standards Board adopted Standard No. 142 - Goodwill and Other Intangible Assets.Under this new rule, effective with the year beginning January 1, 2002, goodwill will no longer be amortized but will be subject toperiodic tests for impairment.  Application of this new principal is expected to reduce our annual amortization expense by $4.0million.
Market Risk
     Our primary market risk exposure is to changes in interest rates on borrowings under our credit agreement.  We have a creditfacility of $114.3 million with a group of bank lenders.  The credit facility provides for a revolving credit and a term loan.Interest on borrowings under our line of credit is based on:
-         the U.S. prime rate, published in the Wall Street Journal, which will float for as long as the borrowed segment is             outstanding; or,         the London InterBank offered rate (LIBOR), based on the published rate at the time of the borrowing plus a spread based on             the ratio of consolidated indebtedness to income before interest, taxes, depreciation and amortization for the most             recent four quarters on a rolling quarterly basis. This rate remains fixed for as long as the borrowed segment is             outstanding,
at our option, at the time the funds are borrowed.

     At December 31, 1999, we had total outstanding indebtedness of $64.6 million, or approximately 36.5% of total marketcapitalization.  At June 30, 2001, we had total outstanding indebtedness of $73.9 million or 16.6% of total market capitalization.Our interest rate risk objective is to limit the impact of rate fluctuations on earnings and cash flows.  To achieve this objective,we use fixed rate debt instruments to the extent that reasonably favorable rates are obtainable, and interest rate swaps to mitigateinterest rate risk and to effectively fix the interest rate on a portion of our variable rate term debt.

     Coincident with the credit facility, we entered into three interest rate swap agreements with a bank affiliated with thelending group.  The first agreement went into effect on July 6, 1999, and sets the underlying LIBOR-based interest rate at 5.76% on$11.3 million of the debt.  The second agreement went into effect on January 18, 2000 and sets the underlying LIBOR-based rate at5.29% on $11.3 million of the debt.  The third agreement went into effect on June 29, 2000 and sets the underlying LIBOR rate at7.24% on $19.0 million of the debt.

     As LIBOR interest rates declined during the June 30, 2001 quarter, these swaps produced a net cost of $151,000 over thefixed amounts we received.  This was offset by reduced interest costs on the LIBOR based borrowings.

     We do not enter into derivative or interest rate transactions for speculative purposes.  Approximately 31.7% of ouroutstanding debt was at the prime rate of 6.75% plus the applicable spread at June 30, 2001.  An additional 91.8% of our outstandingdebt at June 30, 2001, was effectively locked at an interest rate of 6.23% through an interest rate swap agreement for a notionalamount of $41.5 million.  While these hedges effectively reduce our overall cost of borrowings, it should not be inferred that we canborrow at these reduced rates.  Our ability to control interest rates through swap agreements is limited to the notional amountsunder those agreements with such notional amounts declining on a quarterly basis.

     The following table incorporates only those exposures that existed as of  June 30, 2001, and does not consider exposures orpositions that could arise after that date.  In addition, because firm commitments are not represented in the table above, theinformation presented therein has limited predictive value.  As a result, our ultimate realized gain or loss with respect to interestrate fluctuations would depend on the exposures that arise during future periods and prevailing interest rates. There is inherentrollover risk for borrowings as they mature and are renewed at current market rates.  The extent of this risk is not quantifiable orpredictable because of the variability of future interest rates and our financing requirements.
                                    2001      2002     2003      2004      2005   Thereafter   Total   Fair Value                                    ----      ----     ----      ----      ----   ----------   -----   ----------LiabilitiesLong term debt       Fixed rate                    $  486   $1,046    $1,154   $ 1,274   $1,407     $ 2,244   $7,611    $ 7,611       Average interest rate          10.0%    10.0%     10.0%     10.0%    10.0%       10.0%       Variable rate:       U. S. Prime                  $ 4,200   $4,200    $4,200   $ 4,200   $4,200                         $12,500                                                                                               $21,000       London Interbank Offered     $ 5,510            $11,020   $11,020   $6,670                         $45,240                                             $11,020                                           $45,240       Average interest rate           6.2%     6.2%      6.2%      6.2%     6.2%Interest Rate DerivativesInterest rate swaps       Variable to fixed       Average notional amount     $ 40,250            $20,250   $10,250   $2,500                                             $30,250       Average pay rate               6.29%    6.33%     6.38%     6.51%    6.91%       Average receive rate                 variable - floating three month LIBORRecent Accounting PronouncementsFASB Accounting Standard - Derivatives and Hedging Activities
     As of January 1, 2001, we adopted Financial Accounting Standards Board Statement no. 133, (Accounting for DerivativeInstruments and Hedging Activities) issued in June 1998, together with its amendments, Statements 137, Accounting for DerivativeInstruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and 138, Accounting for CertainDerivative Instruments and Certain Hedging Activities.  Collectively, these Statements require that companies recognize allderivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value.

     If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are eitheroffset against the change in fair value of assets, liabilities, or firm commitments through earnings or recognized in othercomprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative's change in fair valueis immediately recognized in earnings.

     As explained in the preceding section on Market Risk, we have entered into interest rate swaps to exchange floating rate forfixed rate interest payments periodically over the life of our loan agreement.  The interest rate swaps have been designated ascash-flow hedges and have been highly effective as of June 30, 2001.  At June 30, 2001, we had interest rate swap agreementsoutstanding with a notional principal amount of $41.6 million.  Changes in the fair value of a derivative that is highly effective asand that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income, until earnings are affected bythe variability of cash flows, that is, when periodic settlements on a variable-rate asset or liability are recorded in earnings.

     We formally document all relationships between hedging instruments and hedged items, as well as our risk-managementobjective and strategy for undertaking various hedge transactions.  We also formally assess, both at the hedge's inception and on anongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fairvalues or cash flows of hedged items.  When it is determined that a derivative is not highly effective, as a hedge or that it hasceased to be a highly effective hedge, we discontinue hedge accounting prospectively.  We do not hold derivative or financialinstruments for trading purposes.
FASB Accounting Standard - Business CombinationsFASB Accounting Standard - Goodwill and Other Intangible Assets
     On June 27, 2001 the Financial Accounting Standards Board (FASB)  issued Statements of Financial Accounting Standards No.141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December15, 2001.  Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordancewith the Statements.  Other intangible assets will continue to be amortized over their useful lives.  Additionally, acquisitionsconsummated after June 30, 2000, will no longer be subject to amortization.

     We will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002.Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of $2.4 million($.20 per share in 2002).  During 2002, we will perform the first of the required impairment tests of goodwill as of January 1, 2002and have not yet determined what the effect of these tests will be on our earnings and financial position.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     Information required by this item is incorporated by reference from the Liquidity and Capital Resources section of "Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations" in pages 14 through 31 of this Form 10-Q.
PART II OTHER INFORMATIONITEM 1.  LEGAL PROCEEDINGS
     On May 30, 2001, we were named a defendant in a lawsuit, case No. 00-11-00088 CVL, filed in the District Court of LaSalle,County, Texas alleging gross negligence in connection with the death of an employee.  Damages are unspecified.

     We deny any and all claims and allegations in this action and intend a vigorous defense.  The matter is covered by ourexisting insurance.
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS- (a)      The 2001 Annual Meeting of Stockholders of the Company (the "Meeting") was held on May 1, 2001. (b)      Randolph A. Pohlman and Warren T. Wamberg were each elected to serve as a director at the Meeting for a term of three         years.  The terms of office as directors of L. William Seidman, Bill Archer, George D. Dalton and Steven F. Piaker continued         after the Meeting.(c)      Randolph A. Pohlman was elected to serve as a director until the Company's 2004 annual meeting of stockholders according to         the following votes:         For: 7,836,562    Against or Withheld:  1,960    Abstentions:  301       Broker non-votes:  0         Warren T. Wamberg was elected to serve as a director until the Company's 2004 annual meeting of stockholders according to         the following votes:         For: 7,829,958    Against or Withheld:  1,960    Abstentions:  6,905     Broker non-votes:  0         The appointment by the Board of Directors of Ernst & Young LLP as the independent auditors of the Company's financial         statements for the year ended December 31, 2001 was ratified according to the following votes:         For: 7,720,469    Against or Withheld:  118,212    Abstentions:  142     Broker non-votes:  0         The amendment of the certificate of incorporation to change our name to Clark/Bardes, Inc. from Clark/Bardes Holdings, Inc.         was ratified according to the following votes:         For: 7,720,469    Against or Withheld:  1,336      Abstentions:  143     Broker non-votes:  0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
        (a)  The list of exhibits required by this Item 6(a) appears on the Exhibit Index attached hereto.
-          (b)  Reports in Form 8-K. None  SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.
Date              August 10, 2001                                      /s/ W.T. WAMBERG     -------------------------------                          -----------------------------------                                                                       W.T. Wamberg                                                              President and Chief Executive OfficerDate              August 10, 2001                                      /s/  THOMAS M. PYRA    --------------------------------                          --------------------------------------------                                                                       Thomas M. Pyra                                                              Vice President and Chief Financial Officer                                                              (Principal Financial Officer)