<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

                         Commission file number: 0-27276

                                MEDPARTNERS, INC.
             (Exact Name of Registrant as Specified in its Charter)


         DELAWARE                                                63-1151076
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)

                         3000 GALLERIA TOWER, SUITE 1000
                            BIRMINGHAM, ALABAMA 35244
                    (Address of Principal Executive Offices)

                                  (205)733-8996
              (Registrant's Telephone Number, Including Area Code)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
        Class                            Outstanding at November 6, 1998
-----------------------                  -------------------------------
<S>                                      <C>         
COMMON STOCK, PAR VALUE                             199,026,769*
 $.001 PER SHARE
</TABLE>

* Includes 8,675,899 shares held in trust to be utilized in employee benefit
plans.


                                       1
<PAGE>   2


                           FORWARD LOOKING STATEMENTS

         Statements in this document that are not historical facts are hereby
identified as "forward looking statements" for purposes of the safe harbor
provided by Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act") and section 27A of the Securities Act of 1933 ( the "Securities Act").
MedPartners, Inc. (the "Company") cautions readers that such "forward looking
statements", including without limitation, those relating to the Company's
future business prospects, announced asset sales, revenue, working capital,
liquidity, capital needs, interest costs and income, wherever they occur in this
document or in other statements attributable to the Company, are necessarily
estimates reflecting the judgment of the Company's senior management and involve
a number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the "forward looking statements". Such
"forward looking statements" should therefore, be considered in light of the
factors set forth in "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations-Factors That May Affect Future Results and
Financial Condition."

         The "forward looking statements" contained in this report are made
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations". Moreover, the Company, through its senior
management, may from time to time make "forward looking statements" about
matters described herein or other matters concerning the Company.

         The Company disclaims any intent or obligation to update "forward
looking statements" to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.


                                       2
<PAGE>   3


                                MEDPARTNERS, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>                                                                                                   <C>                  
PART I - FINANCIAL INFORMATION                                                                             

Item 1.  Financial Statements                                                                     

         Condensed Consolidated Balance Sheets -                                                  
         December 31, 1997 and September 30, 1998 (Unaudited).................................          4

         Condensed Consolidated Statements of Operations (Unaudited) -                            
         Three Months Ended September 30, 1997 and 1998.......................................          5

         Condensed Consolidated Statements of Operations (Unaudited) -
         Nine Months Ended September 30, 1997 and 1998........................................          6

         Condensed Consolidated Statements of Cash Flows (Unaudited) -                           
         Nine Months Ended September 30, 1997 and 1998........................................          7

         Notes to Condensed Consolidated Financial Statements (Unaudited).                              8

Item 2.  Management's Discussion and Analysis of Financial                                        
         Condition and Results of Operations..................................................         11

Item 3.  Quantitative and Qualitative Disclosure About Market Risk............................         16

PART II - OTHER INFORMATION                                                                            

Item 6.  Exhibits and Reports on Form 8-K.....................................................         17
</TABLE>

                                       3
<PAGE>   4


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                MEDPARTNERS, INC.
               CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,      SEPTEMBER 30,
                                                                                       1997              1998
                                                                                   ------------      -------------
                                                                                           (IN THOUSANDS)
<S>                                                                                <C>               <C>        
                                                 ASSETS
Current assets:
  Cash and cash equivalents .................................................      $   215,801       $   142,026
  Accounts receivable, less allowances for bad debts of $204,249 and $192,104          763,551           739,392
  Inventories ...............................................................          164,049           140,166
  Income tax receivable .....................................................           10,446             6,764
  Deferred tax assets, net ..................................................           72,203            68,632
  Prepaid expenses and other current assets .................................           86,991            78,366
                                                                                   -----------       -----------
         Total current assets ...............................................        1,313,041         1,175,346
Property and equipment, net .................................................          530,033           548,011
Intangible assets, net ......................................................          731,586           818,946
Deferred tax assets, net ....................................................          175,619           198,113
Other assets ................................................................          140,250           135,388
                                                                                   -----------       -----------
         Total assets .......................................................      $ 2,890,529       $ 2,875,804
                                                                                   ===========       ===========

                                LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ..........................................................      $   340,106       $   269,088
  Accrued medical claims payable ............................................          208,937           216,513
  Other accrued expenses and liabilities ....................................          670,615           450,563
  Current portion of long-term debt .........................................           17,636             7,736
                                                                                   -----------       -----------
         Total current liabilities ..........................................        1,237,294           943,900

Long-term debt, net of current portion ......................................        1,470,622         1,743,490
Other long-term liabilities .................................................           91,759           127,998

Stockholders' equity:
  Common stock, $.001 par value; 400,000 shares
    authorized; issued -- 197,766 in 1997
    and 198,697 in 1998 .....................................................              198               199
  Additional paid-in capital ................................................          937,233           944,791
  Notes receivable from stockholders ........................................           (1,367)           (1,170)
  Other comprehensive income ................................................           (5,035)           (5,035)
  Shares held in trust, 9,317 in 1997 and 8,931 in 1998 .....................         (150,200)         (146,724)
  Accumulated deficit .......................................................         (689,975)         (731,645)
                                                                                   -----------       -----------
         Total stockholders' equity .........................................           90,854            60,416
                                                                                   -----------       -----------
         Total liabilities and stockholders' equity .........................      $ 2,890,529       $ 2,875,804
                                                                                   ===========       ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>   5


                                MEDPARTNERS, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         THREE MONTHS ENDED
                                                                                             SEPTEMBER 30,
                                                                                   -----------------------------
                                                                                       1997              1998
                                                                                   -----------------------------
                                                                                        (IN THOUSANDS, EXCEPT
                                                                                          PER SHARE AMOUNTS)
<S>                                                                                <C>               <C>        

Net revenue .................................................................      $ 1,614,062       $ 1,739,189
Operating expenses:
  Clinic expenses ...........................................................          889,165           998,842
  Non-clinic goods and services .............................................          548,140           602,390
  General and administrative expenses .......................................           45,423            63,297
  Depreciation and amortization .............................................           29,414            35,084
  Net interest expense ......................................................           13,969            25,673
  Gain on sale of operations ................................................               --            (1,437)
                                                                                   -----------       -----------
Income from continuing operations before income taxes .......................           87,951            15,340
Income tax expense ..........................................................           33,509             7,617
                                                                                   -----------       -----------
Income from continuing operations ...........................................           54,442             7,723
Loss from discontinued operations ...........................................           (5,273)               --
                                                                                   -----------       -----------
Net income ..................................................................      $    49,169       $     7,723
                                                                                   ===========       ===========

Basic earnings per common share:
  Income from continuing operations .........................................      $      0.29       $      0.04
  Loss from discontinued operations .........................................            (0.03)               --
                                                                                   -----------       -----------
  Net income ................................................................      $      0.26       $      0.04
                                                                                   ===========       ===========
Diluted earnings per common share:
  Income from continuing operations .........................................      $      0.29       $      0.04
  Loss from discontinued operations .........................................            (0.03)               --
                                                                                   -----------       -----------
  Net income ................................................................      $      0.26       $      0.04
                                                                                   ===========       ===========

Weighted average common shares outstanding ..................................          186,691           189,585
Dilutive effect of employee stock options ...................................            3,691                74
                                                                                   -----------       -----------
Weighted average shares outstanding, assuming dilution ......................          190,382           189,659
                                                                                   ===========       ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>   6

                                MEDPARTNERS, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                   -----------------------------
                                                                                       1997              1998
                                                                                   ------------     ------------
                                                                                        (IN THOUSANDS, EXCEPT
                                                                                         PER SHARE AMOUNTS)
<S>                                                                                <C>               <C>        

Net revenue .................................................................      $ 4,642,595       $ 5,234,972
Operating expenses:
  Clinic expenses ...........................................................        2,480,939         3,066,490
  Non-clinic goods and services .............................................        1,669,678         1,778,473
  General and administrative expenses .......................................          130,984           210,400
  Depreciation and amortization .............................................           83,871            94,370
  Net interest expense ......................................................           36,299            80,388
  Merger expense ............................................................           59,434                --
  Terminated merger expenses ................................................               --             8,445
  Restructuring expense .....................................................               --            75,175
  Gain on sale of operations ................................................               --           (19,028)
                                                                                   -----------       -----------
Income (loss) from continuing operations before income taxes ................          181,390           (59,741)
Income tax expense (benefit) ................................................           80,503           (18,071)
                                                                                   -----------       -----------
Income (loss) from continuing operations ....................................          100,887           (41,670)
Loss from discontinued operations ...........................................          (80,707)               --
                                                                                   -----------       -----------
Net income (loss) ...........................................................      $    20,180       $   (41,670)
                                                                                   ===========       ===========

Basic earnings (loss) per common share:
  Income (loss) from continuing operations ..................................      $      0.54       $     (0.22)
  Loss from discontinued operations .........................................            (0.43)               --
                                                                                   -----------       -----------
  Net income (loss) .........................................................      $      0.11       $     (0.22)
                                                                                   ===========       ===========
Diluted earnings (loss) per common share:
  Income (loss) from continuing operations ..................................      $      0.53       $     (0.22)
  Loss from discontinued operations .........................................            (0.42)               --
                                                                                   -----------       -----------
  Net income (loss) .........................................................             0.11       $     (0.22)
                                                                                   ===========       ===========

Weighted average common shares outstanding ..................................          185,300           189,083
Dilutive effect of employee stock options ...................................            3,340                --
                                                                                   -----------       -----------
Weighted average shares outstanding, assuming dilution ......................          188,640           189,083
                                                                                   ===========       ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.



                                       6
<PAGE>   7


                                MEDPARTNERS, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           NINE MONTHS ENDED
                                                                                             SEPTEMBER 30,
                                                                                   -----------------------------
                                                                                      1997              1998
                                                                                   ----------       ------------
                                                                                           (IN THOUSANDS)

<S>                                                                                <C>               <C>         
Operating activities:
 Income (loss) from continuing operations ...................................      $   100,887       $   (41,670)
 Adjustments for non-cash items:
  Depreciation and amortization .............................................           83,871            94,370
  Provision for deferred taxes...............................................           25,836           (37,764)
  Merger expense ............................................................           59,434                --
  Restructuring expense .....................................................               --            75,175
  Terminated merger expenses ................................................               --             8,445
  Net gain on sales of operations ...........................................               --           (19,028)
  Other .....................................................................              613              (850)
Changes in operating assets and liabilities,
  net of effects of  acquisitions ...........................................         (116,559)         (128,973)
                                                                                   -----------       -----------
    Net cash and cash equivalents provided by
     (used in) continuing operations ........................................          154,082           (50,295)
Investing activities:
 Net cash used to fund acquisitions .........................................         (327,486)         (140,079)
 Cash paid for merger and terminated merger charges .........................         (116,998)           (9,920)
 Purchase of property and equipment .........................................          (67,077)         (114,064)
 Additions to intangibles, net of acquisitions ..............................          (13,630)           (3,656)
 Net proceeds from sales of operations ......................................               --            69,102
 Proceeds from sales of property and equipment ..............................               --             8,523
 Other ......................................................................            2,813              (933)
                                                                                   -----------       -----------
    Net cash and cash equivalents used in investing activities ..............         (522,378)         (191,027)
Financing activities:
  Capital contributions .....................................................           46,894             3,048
  Net borrowings under line of credit .......................................           60,000           292,251
  Proceeds from senior subordinated notes offering ..........................          420,000                --
  Proceeds from other debt ..................................................           53,946               188
  Repayment of debt .........................................................          (34,594)          (20,242)
  Financing costs ...........................................................           (2,395)          (15,299)
  Other .....................................................................              249              (576)
                                                                                   -----------       -----------
    Net cash and cash equivalents provided by financing activities ..........          544,100           259,370

Cash paid for restructuring expenses ........................................               --           (81,707)
Cash used in discontinued operations ........................................          (67,977)          (10,116)
                                                                                   -----------       -----------
Net increase (decrease) in cash and cash equivalents ........................          107,827           (73,775)
Cash and cash equivalents at beginning of period ............................          127,397           215,801
Beginning cash and cash equivalents of immaterial
 pooling of interests entities ..............................................              501                --
                                                                                   -----------       -----------

Cash and cash equivalents at end of period ..................................      $   235,725       $   142,026
                                                                                   ===========       ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>   8


                                MEDPARTNERS, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


NOTE 1.  BASIS OF PRESENTATION

         The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries and have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and in accordance with Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and notes required by generally accepted
accounting principles for complete financial statements.

         In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring items) necessary for a fair presentation of results for the interim
periods presented. The results of operations for any interim period are not
necessarily indicative of results for the full year. The condensed consolidated
balance sheet of the Company at December 31, 1997 has been derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. These financial statements and footnote
disclosures should be read in conjunction with the December 31, 1997 audited
consolidated financials statements and the notes thereto.

         The Company has historically amortized the goodwill related to its
practice management agreements over the terms of the agreements, generally 20 to
40 years. Effective July 1, 1998, the Company adopted a maximum of 25 years as
the useful life for amortization of its intangible assets, including those
acquired in prior years. Had this policy been in place in 1997, amortization
expense would have increased by approximately $1.7 million for the quarter ended
September 30, 1997 and $5.1 million for the nine months ended September 30,
1997. The effect on diluted earnings per share,  using the Company's historical
effective tax rate, would have been $0.01 and $0.02 for the three and nine month
periods ended September 30, 1997 respectively. On the same basis, amortization
expense would have increased by $4.2 million for the first six months of 1998,
resulting in a decrease in earnings per share of $0.01.
        
         The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the accompanying
consolidated financial statements and notes. Actual results could differ from
those estimates.

NOTE 2.  NEW ACCOUNTING PRONOUNCEMENTS

         As of January 1, 1998, the Company adopted Statement 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's consolidated net
income or consolidated stockholders' equity. SFAS 130 requires unrealized gains
or losses on the Company's available-for-sale securities, which prior to
adoption had been reported separately in stockholders' equity, to be included in
other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS 130.

         During the first nine months of 1998 and 1997, total other
comprehensive income was immaterial to the condensed consolidated financial
statements.

         In June 1997, the FASB issued "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS 131 is effective for the Company's financial statements for the year ending
December 31, 1998. The adoption of SFAS 131 will have no impact on the Company's
results of operations or financial position.

         The Emerging Issues Task Force ("EITF") issued guidance during 1997,
EITF 97-2, on the consolidation of physician practice revenues. Under EITF 97-2,
Physician Practice Management Companies will be required to consolidate
financial information of a physician practice where the company acquires a
"controlling financial interest" in the practice through the execution of a
contractual management agreement even though the company does not own a
controlling equity interest in the physician practice. EITF 97-2 outlines six
requirements for establishing a controlling financial interest. The guidance
contained in EITF 97-2 is effective for the Company's financial statements for
the year ending December 31, 1998. The Company does not believe that the
implementation of this guidance will have a material impact on its financial
condition or results of operations.

NOTE 3.   ACQUISITIONS

         During the nine months ended September 30, 1998, the Company acquired
four companies in the Contract Services Division and two physician groups in
the Physician Practice Management Division. The acquisitions have been accounted
for by the purchase method of accounting and, accordingly, the purchase price
has been allocated to net assets acquired based on estimated fair values at

                                       8
<PAGE>   9



                               NOTES TO CONDENSED
          CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)

the dates of acquisition. Cash paid during the nine months ended September 30,
1998 totaled $27.0 million related to these acquisitions. Additionally $113.1
million in cash was paid during the nine months ended September 30, 1998 related
to payments for previously completed acquisitions, including a $51.9 million
payment related to the 1997 acquisition of the Health Centers Division of Blue
Cross Blue Shield of Massachusetts.

NOTE 4.  EARNINGS (LOSS) PER COMMON SHARE

         Basic earnings (loss) per common share is calculated by dividing income
available to common stockholders by the weighted average number of common shares
outstanding. For the computation of diluted earnings (loss) per common share, no
incremental shares related to options are included for the nine months
ended September 30, 1998, since including the shares would be antidilutive.

NOTE 5.  SALES OF OPERATIONS

         During the first quarter of 1998, the Company sold its international
operations in Germany, the Netherlands, Canada, Puerto Rico and Japan. The
pharmacy benefits management ("PBM") operations in the Netherlands were sold
during the second quarter of 1998. The remaining international operation, the
home infusion unit in the United Kingdom, was sold during the third quarter of
1998. In addition, the Company also sold certain of its physician practice
management ("PPM") operations in Utah, New Mexico, Arizona and California. The
net pretax gain on sales of operations were $19.0 million for the nine months
ended September 30, 1998.

NOTE 6.  TERMINATED MERGER AND RESTRUCTURING

         On October 1, 1997, the Company announced that it entered into an
agreement to acquire America Service Group Inc. ("ASG") in a stock transaction
valued at approximately $59 million. On February 26, 1998, it was announced that
the merger agreement had been terminated by mutual consent of both parties and
that a release and settlement agreement had been executed. Due to the exchange
of confidential information, the settlement agreement contains non-competition
and non-solicitation provisions and provides that certain expenses and costs be
paid by the Company. Accordingly, the pre-tax loss for the nine months ended
September 30, 1998 includes costs totaling $8.4 million, primarily relating to
the terminated merger with ASG.

         In addition, during the first nine-months of 1998 the Company recorded
a pre-tax restructuring charge of $75.2 million that primarily relates to
severance costs, costs associated with the closing of certain clinic operations
and real estate obligations for space no longer in use or scheduled to become
vacant as a result of continuing consolidation activities.

NOTE 7.  CREDIT FACILITY

         On June 9, 1998, the Company entered into an amendment and restatement
of its $1.0 billion credit facility. The credit facility consists of the
following:

           i. a one-year non-amortizing term loan in an aggregate principal
              amount of up to $300 million (the Company has an option to extend
              the term loan an additional two years as an amortizing term loan);

          ii. a three-year non-amortizing term loan in an aggregate principal
              amount of up to $300 million; and

         iii. a three-year revolving credit facility in an aggregate principal
              amount of up to $400 million.

         As of September 30, 1998, $816.8 million was outstanding under the
credit facility. In addition, the Company had $53.9 million in letters of credit
outstanding under its credit facility as of September 30, 1998. The credit
facility contains affirmative and negative covenants which include requirements
that the Company maintain certain financial ratios (including minimum fixed
charge coverage ratio and maximum indebtedness to cash flow), maintain during
1998 a specified minimum level of EBITDA and establishes certain restrictions on
investments, mergers and sales of assets. Additionally, the Company is required
to obtain bank consent for any

                                       9
<PAGE>   10



                               NOTES TO CONDENSED
          CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)

acquisitions with an aggregate purchase price in excess of $15 million. The
credit facility is unsecured but provides a negative pledge on substantially all
domestic assets of the Company. The credit facility is also guaranteed by
substantially all of the Company's domestic subsidiaries.


NOTE 8. CONTINGENCIES

On January 7, 1998, MedPartners issued a press release announcing the
termination of its proposed merger with PhyCor, Inc. On that date, MedPartners
also issued another press release announcing certain fourth quarter 1997 charges
and negative earnings estimates. On January 8, 1998, there was a decline in the
market prices for MedPartners' publicly traded securities. Since then, certain
persons claiming to be stockholders of MedPartners have filed complaints in
either state or federal court against MedPartners and certain officers and
directors of MedPartners. Originally, there were two state court actions and 14
federal court actions, all filed in Birmingham, Alabama. In each of these
lawsuits, the plaintiffs purport to represent a class and generally allege
violations of the Securities Exchange Act of 1934, fraud and various state law
claims in connection with the public disclosure by MedPartners of the
termination of the PhyCor merger and the fourth quarter 1997 charges and
earnings estimates. All of the federal court actions have been consolidated into
one case and one state court action has been dismissed but is being appealed by
the plaintiff's counsel. The remaining state court action was filed against
MedPartners and certain of its officers and directors, purportedly on behalf of
all persons who purchased MedPartners' Threshold Appreciation Price
Securities(TM) in the offering occurring on or about September 16, 1997.
Collectively, these complaints seek class certification, damages and interest,
as well as costs and expenses. MedPartners' management believes that it and
MedPartners have acted properly throughout and intends to defend each of these
cases vigorously. All of these cases are in the most preliminary stages, and
their ultimate resolution cannot be known at this time. Therefore, there can be
no assurance that the ultimate resolution of these matters will not have a
material adverse effect on the operating results and financial condition of
MedPartners.

NOTE 9. SUBSEQUENT EVENTS

On November 11, 1998 the Company announced that its Caremark division, which
includes its PBM and the therapeutic services businesses, will become its core
operating unit. The Company will divest its PPM operations, either by sale,
spinout to stockholders, or some combination thereof, in a process which
management believes will be completed within the next twelve months. The Company
is in negotiations with its bank group in order to restructure its credit
facility to reflect its new strategic direction. The Company currently
anticipates applying discontinued operations accounting treatment for the PPM
operations.


                                       10
<PAGE>   11

Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations

GENERAL

          MedPartners is a diversified healthcare management company which
currently operates three separate business divisions: Pharmaceutical Services,
Physician Practice Management Services and Contract Medical Services. The
Pharmaceutical Services Division provides pharmacy benefits management and
therapeutic pharmaceutical services, with revenues of $1.9 billion for the nine
months ended September 30, 1998. The Physician Practice Management Services
Division develops, consolidates and manages physician-based healthcare delivery
systems, with $2.6 billion in revenues for the nine months ended September 30,
1998. The Contract Medical Services Division provides hospital-based physician
management services and provides medical services to correctional and certain
other governmental institutions, with revenues of $0.6 billion for the nine
months ended September 30, 1998.

         On June 23, 1998, the Company announced its intent to sell its Team
Health operations, which is a significant portion of its Contract Medical
Services Division. On September 25, 1998, the Company announced its intent to
sell its Government Services Unit, the remainder of its Contract Medical
Services Division. Proceeds from the sale of these operations would be used to
reduce the outstanding debt of the Company. The Contract Medical Services
Division represented $0.6 billion of the Company's consolidated net revenue
and $47.8 million of the Company's operating income for the nine months ended
September 30, 1998.

         On November 11, 1998, the Company announced its intent to divest its
PPM operations either by sale, spinout to stockholders, or some combination
thereof. Proceeds from the sale of these operations would be used to reduce the 
outstanding debt of the Company. The PPM represented $2.6 billion of the 
Company's consolidated net revenue and had an operating loss of $48.7 million 
for the nine months ended September 30, 1998.

         The Company currently anticipates applying discontinued operations
accounting for the PPM operations. Additionally, should the Company determine
that the Team Health and Government Services units will be sold, discontinued
operations treatment may be applied to the Contract Services Division. Net
revenue and operating income for the divisions are set forth in the table below,
and net revenue and results of operations for those divisions to which
discontinued operations accounting is applied would be removed from the
Company's revenue and operating income from continuing operations. In addition,
the Company anticipates that discontinued operations will include allocations of
corporate overhead and interest expense.

         The Company's Pharmaceutical Services division includes the
prescription benefit management ("PBM") and therapeutic services businesses. The
PBM manages prescription programs for corporations, insurance companies, unions,
government employee groups and managed care organizations. The PBM through its
network of 53,000 retail pharmacies and its mail-order distribution centers
filled over 32 million prescriptions in the first nine months of 1998. The
therapeutic services business provides drug therapies and services for patients
with chronic high cost, low incidence conditions such as hemophilia, growth
disorders, immune deficiencies, cystic fibrosis and multiple sclerosis.

         The Company's PPM division manages physician group practices under a
range of affiliation models. These affiliations are carried out by the
acquisition of PPM entities or practice assets or by affiliation on a
contractual basis. Most of the Company's PPM revenue is derived from contracts
covering 2.0 million lives with health maintenance organizations and other
third-party payors that compensate the Company on a prepaid basis for
professional, and in some cases, all medical services required by enrollees. The
remainder of the PPM revenues are derived from long-term practice management
agreements with affiliated physicians that provide for both the management of
their practices by the Company and the clinical independence of the physicians.

         The Contract Medical Services Division organizes and manages physicians
and other healthcare professionals engaged in the delivery of emergency,
radiology and primary care services. The Company provides these services to
hospitals, clinics, managed care organizations, correctional facilities,
Department of Defense facilities and government-affiliated physician groups. At
September 30, 1998, the Contract Medical Services Division had 450 contracts in
place.

RESULTS OF OPERATIONS

         Net revenue was $1.739 billion and $5.235 billion for the three and
nine months ended September 30, 1998, respectively, and $1.614 billion and
$4.643 billion for the same periods of 1997. The increases in net revenue
primarily resulted from various increases in PPM, PBM and Contract Medical
Services as discussed below. Net income (loss) for the third quarter of 1998 was
$7.7 million, compared to $49.2 million for the same period of 1997, and $(41.7)
million for the nine months ended September 30, 1998, compared to $20.2 million
for the same period of 1997.

         The Company recorded pre-tax restructuring charges of $75.2 million for
the nine months ended September 30, 1998. Such charges relate to severance
costs, costs associated with the closing of certain clinic operations and real
estate obligations for space no longer in use or scheduled to become vacant.


                                       11
<PAGE>   12

Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations (Continued)

         Net interest expense increased $11.7 million and $44.1 million for the
three and nine months ended September 30, 1998, respectively, over the same
periods in the previous year. The increase was the result of increased
borrowings and interest rates under the credit facility and the issuance of the
$420 million senior subordinated notes in September, 1997.

         The following table sets forth the earnings summary by division for the
periods indicated. (Operating income (loss) represents earnings (loss) before
interest and income taxes and excludes merger expenses, terminated merger
expense, restructuring expense and gain on sales of operations):

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED                                 NINE MONTHS ENDED
                                            SEPTEMBER 30,                                      SEPTEMBER 30,
                                  1997        1998                               1997           1998
                                -------------------------------------------------------------------------------------
                                 Total       Total        % Change               Total          Total        % Change
                                --------    -------      ----------            ---------     -----------    --------- 
<S>                             <C>          <C>          <C>                 <C>            <C>             <C>  
Physician Practice
Management Services
   Net revenue                  $777,865     $ 852,493       9.6%             $ 2,181,175    $ 2,633,741       20.7%
   Operating income (loss)        45,349       (10,621)   (123.4)%                130,220        (48,693)    (137.4)%
   Margin                           5.83%        (1.25)%                             5.97%         (1.85)%

Pharmaceutical Services
   Net revenue                  $578,040     $ 660,608      14.3%             $ 1,769,624    $ 1,920,291        8.5%
   Operating income (loss)        38,084        43,291      13.7%                 106,593        116,321        9.1%
   Margin                           6.59%         6.55%                              6.02%          6.11%

Contract Medical Services
   Net revenue                  $220,840     $ 217,198      (1.6)%            $   601,163    $   635,040        5.6%
   Operating income (loss)        23,502        16,978     (27.8)%                 57,008         47,820      (16.1)%
   Margin                          10.64%         7.82%                              9.48%          7.53%

International
   Net revenue                  $ 37,317     $   8,890     (76.2)%            $    90,633    $    45,900      (49.4)%
   Operating income (loss)           996           209     (79.0)%                  2,051            701      (65.8)%
   Margin                           2.67%         2.35%                              2.26%          1.53%
</TABLE>

Pharmaceutical Services

         Pharmaceutical Services revenues grew approximately 14.3% and 8.5% for
the three months and nine months ended September 30, 1998, respectively. Key
factors contributing to this growth include new contracts, drug cost inflation,
and increased revenue in the multiple sclerosis line. The majority of
Pharmaceutical Services revenue is earned on a fee-for-service basis through
contracts covering one to three-year periods. The remainder of revenues are
earned based on a percentage of savings achieved or on a per-enrollee or
per-member basis.

         Margins for Pharmaceutical Services remained relatively constant at
6.6% from the third quarter of 1997 to the third quarter of 1998 and at 6.1% and
6.0% for the first nine months of 1998 and 1997, respectively. Management 
believes that revenue growth in the multiple sclerosis line will negatively 
impact margins in future periods, as this product line provides lower margins 
than existing products.

Physician Practice Management Services

         The Company's PPM revenues increased over the three and nine months
ended September 30, 1997 by 9.6% and 20.7% respectively, primarily due to growth
in prepaid enrollment and acquisitions during the last three quarters of 1997
(primarily Talbert Medical Management Holdings Corporation, Aetna U.S.
Healthcare's physician practice management business and the Health Centers
Division of Blue Cross and Blue Shield of Massachusetts). The Company's PPM
operations in the Western Region of the country function in a
predominantly prepaid environment. The Company's PPM operations in the other
regions of the country are in predominantly fee-for-service environments
with limited but increasing managed care penetration. The following table sets
forth the breakdown of net revenue for the PPM Division for the periods
indicated:


                                       12
<PAGE>   13


Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations (Continued)


<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED            NINE MONTHS ENDED                 
                                        SEPTEMBER 30,                  SEPTEMBER 30,                  
                                    ----------------------      -------------------------             
                                      1997          1998           1997           1998                
                                    --------      --------      ----------     ----------             
                                        (in thousands)              (in thousands)                    
                                                                                                      
<S>                                 <C>           <C>           <C>            <C>                    
Prepaid healthcare........          $532,615      $566,563      $1,460,704     $1,779,259             
Fee-for-service ..........           231,587       281,877         697,157        835,817             
Other ....................            13,663         4,053          23,314         18,665             
                                    --------      --------      ----------     ----------             
Net Revenue ..............          $777,865      $852,493      $2,181,175     $2,633,741             
                                    ========      ========      ==========     ==========
</TABLE>
                                   
         Prepaid revenues increased 21.8% from the first nine months of 1997 to
the first nine months of 1998, and 6.4% from the third quarter of 1997 to the
third quarter of 1998. Approximately 39% of the increase in prepaid revenues
relates to acquisitions made during the last four months of 1997. The remaining
increase primarily relates to additional institutional risk assumed.

         The operating loss for the third quarter of 1998 was $10.6 million,
compared to operating income of $45.3 million for the same period of 1997. For
the first nine months of 1998, the operating loss was $48.7 million compared to
operating income of $130.2 million for the same period of 1997. The third
quarter 1998 operating loss for the PPM division is a substantial improvement
from the operating losses of $25.0 and $13.1 million for the first and second
quarter of 1998, respectively. The most significant component of the third
quarter 1998 operating loss is attributable to the negative performance in the
PPM's Southern California operations. The Company has replaced management in its
Southern California operations and is undertaking consolidation and
restructuring activities which has improved financial results.


Contract Medical Services

         Contract Medical Services net revenue decreased $3.6 million or 1.6%
over the third quarter of 1997 and increased $33.9 million or 5.6% over the
first nine months of 1997. The increase in revenue for Contract Services for the
nine months ended September 30, 1998 is due to four new acquisitions in the Team
Health operations and the increase in the number of contracts and inmates in the
correctional care operations.

         Contract Medical Services operating income decreased by 16.1% from the
nine-months ended September 30, 1997, to September 30, 1998 and 27.8% from the
three months ended September 30, 1997, to September 30, 1998, primarily due to
the absorption by the division of certain overhead costs from InPhyNet corporate
operations previously absorbed by the corporate division and changes in
estimates of net accounts receivable balances. 


Sales of Operations

         During the first quarter of 1998, the Company sold its international
operations in Germany, the Netherlands, Canada, Puerto Rico and Japan. The PBM
operations in the Netherlands were sold during the second quarter of 1998. The
remaining international operation, the home infusion unit in the U.K., was sold
during the third quarter of 1998. In addition the Company also sold certain of
its PPM operations in Utah, New Mexico, Arizona and California. The net pretax
gains on sales of operations were $19.0 million for the nine months ended
September 30, 1998.


Other

         The year 2000 presents a problem for computer software and hardware
that were not designed to handle dates beyond the year 1999. The year 2000
("Y2K")  problem is pervasive and complex because virtually every computer
operation will be affected in some way by the rollover of the last two digits of
the year to "00." As a consequence, any such software and hardware will need to
be modified some time prior to December 31, 1999 in order to remain functional.
Computer systems and hardware that do not properly handle this rollover could
generate erroneous data or fail to function.


                                       13
<PAGE>   14
         The Company has initiated a company-wide program to address the year
2000 issue with respect to the information systems (software and hardware) and
equipment and systems (including medical equipment manufactured by third
parties) utilized in the Company's operations. The program includes: (1) an
inventory of the information systems, hardware, and equipment (the "Systems,
Hardware and Equipment") utilized in operations; (2) an assessment of the Y2K
issues associated with the Systems, Hardware and Equipment; (3) the remediation
of such Systems, Hardware and Equipment to achieve year 2000 readiness ("Y2K
Readiness" or "Y2K Ready"); (4) the testing of such Systems, Hardware and
Equipment to confirm Y2K Readiness; and (5) the development of contingency plans
to address the year 2000 and the principal risks facing the Company in its
efforts to achieve Y2K Readiness. The Company's Y2K program also includes its
"Trading Partners Initiative," which is designed to provide the Company with
insights into the Y2K Readiness of certain of the Company's customers, suppliers
and vendors. In addition, the Company has sent letters to certain manufacturers
of the hardware and equipment utilized in operations requesting that such
manufacturers address the Y2K Readiness of such hardware and equipment.

         In terms of the status of the Company's Y2K program, management
believes that the Company's inventory of information systems is approximately
95% complete, that its assessment of Y2K issues associated with such information
systems is approximately 75% complete and that its remediation efforts with
respect to such information systems is approximately 40% complete. With respect
to the status of the Company's Y2K efforts with respect to equipment and systems
that include embedded logic or software which presents Y2K issues, management
believes that the inventory of such equipment and systems is approximately 20%
complete; however, the Company has not yet commenced the assessment or
remediation efforts with respect to the Y2K issues associated with such
equipment and software. It is currently contemplated that the Company will
commence testing efforts with respect to the Systems, Hardware and Equipment
following the completion of the inventory and assessment stages of its Y2K
program. The Company has not, to date, received substantial responses to its
requests of customers, suppliers and vendors with respect to their Y2K
Readiness. As a result, management is currently unable to form an opinion as to
the present level of risk associated with the state of Y2K Readiness of the
Company's customers, vendors and suppliers, other than a belief that the Y2K
issues generally associated with the healthcare industry are very significant
and complex and include issues associated with the delivery of healthcare
services and products as well as the billing and collection of amounts due for
such services and products. The Company is unaware of any survey speaking to Y2K
Readiness in the healthcare industry at-large and is thus unable to assess the
magnitude of this risk.

         Management of the Company believes that the Company's Y2K program will
be substantially completed by mid-1999. The Company estimates that the total
cost of the Y2K program will be approximately $32.5 million, of which
approximately $14.7 million has been spent through September 30, 1998. Of such
aggregate Y2K expenditures made to date, management currently estimates that
approximately $12.2 million consisted of capital expenditures for new or
replacement Systems, Hardware and Equipment and approximately $2.5 million
consisted of expenses of the Y2K program. The source of the funding utilized to
make such historical expenditures has been borrowings under the Company's credit
facility and cash flow from operations. Management of the Company believes that
a significant amount of the funds spent to date and budgeted in the future for
achieving Y2K Readiness would otherwise have been spent and budgeted in
connection with the Company's ongoing information technology consolidation
efforts to reduce the number of information systems and hardware platforms
utilized in its operations and acquired through the Company's various
acquisition transactions over the years.

         The Company believes that the most reasonably likely worse case 
scenario with respect to Y2K issues is the possibility that equipment and 
systems that include embedded logic or software will fail to be Y2K Ready and 
that such failure will cause such equipment to fail to operate or operate 
improperly. The failure of such equipment (including without limitation, the 
medical equipment used by the Company) may expose individual patients to 
potential injury and may expose the Company to claims and liabilities, 
including without limitation medical malpractice claims. At this time the 
Company cannot estimate the likelihood or magnitude of any such equipment or 
systems failures. The Company has not established a contingency plan for the 
failure of such equipment or systems but plans to establish such a plan during 
1999 in conjunction with the implementation of the Y2K program.

         The foregoing discussion involves the estimates and judgments of the 
senior management of the Company. There can be no assurances that the Company 
will be Y2K Ready or that the Company will not incur liability or suffer a 
material adverse effect as a result of the Company's failure to be Y2K Ready. 
In addition, there can be no assurances that the estimated expenses to make the 
Company Y2K Ready will not be materially higher than estimated or that the 
Company will not incur additional expenses associated with its efforts to get 
Y2K Ready or its failure to do so.


                                       14


<PAGE>   15
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations (Continued)

FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION

The healthcare industry in general is in a state of significant flux. This,
together with the circumstance that the Company has a relatively short operating
history makes the Company particularly susceptible to various factors that may
affect future results. The future operating results and financial condition of
the Company are dependent on, among other things, the Company's ability to
market its services profitably, successfully increase market share, manage
expense growth relative to revenue growth and successfully sell the Contract
Services Division and divest the PPM Division, manage the operations of the
Company during such sale and divestiture process and to address the liquidity
and capital needs of the business over the short and long term. The future
operating results and financial condition of the Company may be affected by a
number of additional factors, including: (1) adverse developments with respect
to the sale of the contract medical services division or the planned divestiture
of the PPM Division (including the timing, terms or feasibility of such sale and
divestiture); (2) adverse developments with respect to the operation of the
Company's business units during such sale and divestiture process; (3) failure
to meet operating objectives or to execute the operating plan; (4) pharmacy
licensing, healthcare reform and government regulation and (5) adverse
developments with respect to the healthcare industry in general and overall
market conditions. Changes in one or more of these factors could have a material
adverse effect on the future operating results and financial condition of the
Company.

         There are various legal matters which, if adversely determined, could
have a material adverse effect on the Company's operating results and financial
condition. See Note 8 to the unaudited consolidated financial statements and
Item 3 of the Company's Annual Report filed on Form 10-K for the fiscal year
ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1998, the Company had working capital of $231.4
million, including cash and cash equivalents of $142.0 million. For the first
nine months of 1998, cash used by operations was $50.3 million compared to cash
flows from operations of $154.1 million for the same period of 1997.

         For the nine months ended September 30, 1998 and 1997, the Company
invested cash of $140.1 million and $327.5 million, respectively, in
acquisitions of the assets of physician practices and PPM entities, and $114.1
million and $67.1 million, respectively, in property and equipment. During the
nine months ended September 30, 1998 and 1997, the Company paid $9.9 and $117.0
million, respectively, in cash for terminated merger costs and merger costs.
During the nine months ended September 30, 1998, the Company paid $81.7 million
for restructuring expenses and $15.3 million for financing costs. These
expenditures were primarily funded in 1998 by $292.3 million in increased
borrowings under the Company's credit facility, and, in 1997, the $420 million
senior subordinated note offering and $46.9 million derived from capital
contributions. The Company expects that future capital requirements will relate
primarily to the replacement of property and equipment, payments related to
restructuring expenses, severance and other exit costs relating to discontinued
operations and expansions of PBM operations.

         On June 9, 1998, the Company entered into an amendment and restatement
of its $1.0 billion credit facility. The credit facility consists of the
following:

         i. a one-year non-amortizing term loan in an aggregate principal amount
            of up to $300 million (the Company has an option to extend the term
            loan an additional two years as an amortizing term loan) ($284.1
            million outstanding at September 30, 1998);
         ii. a three-year non-amortizing term loan in an aggregate principal
             amount of up to $300 million ($284.1 million outstanding at 
             September 30, 1998); and
         iii. a three-year revolving credit facility in an aggregate principal
              amount of up to $400 million.

As of September 30, 1998, there was $248.5 million in outstanding borrowings and
$53.9 million in letters of credit under the revolving credit facility,
resulting in $98 million in available borrowing capacity. Proceeds of the
announced asset sales will be used to reduce indebtedness under the credit
facility. Based on its projections of 

                                       15
<PAGE>   16
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations (Continued)

short-term cash requirements, the Company is pursuing the following measures to
increase its short and long term capital resources: (1) negotiating additional
financing, which would be secured by accounts receivable of the PBM division;
(2) proposing amendments to its bank facility to allow portions of asset sale
proceeds to be applied to the revolving credit facility, thereby increasing
available borrowing capacity; and (3) negotiating with various parties to reduce
letter of credit requirements to increase available borrowing capacity. The
additional financing and proposed amendments to the credit facility noted above
will require the consent of a simple majority of the bank group under the
Company's credit facility. Management of the Company currently believes, based
upon preliminary discussions, that the bank group will consent to such
additional financing and/or proposed amendments. However, there can be no
assurance that such consents will ultimately be received. To the extent the
Company does not receive such consents, the Company intends to address its
liquidity and capital needs through alternative sources of funds, a further
reduction in capital expenditures and operating costs or a combination of one or
more of the foregoing.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         The Company is exposed to market risk from changes in interest rates
related to its long-term debt. The impact on earnings and value of its long-term
debt is subject to change as a result of movements in market rates and prices.
As of September 30, 1998, the Company had $870.6 million in long-term debt
subject to variable interest rates. The remaining $872.9 million in long-term
debt is subject to fixed rates of interest. A hypothetical increase in interest
rates of 1% would result in potential losses in future pre-tax earnings of
approximately $8.7 million per year. The impact of such a change on the carrying
value of the long-term debt would not be significant. These amounts are 
determined based on the impact of the hypothetical interest rates on the 
Company's long-term debt balances and do not consider the effects, if any, of 
the potential changes in the overall level of economic activity that could 
exist in such an environment.


                                       16
<PAGE>   17

                                    Part II

Item 6. Exhibits and Reports on Form 8-K

        (a)       Exhibits.

Exhibit           Description

3.1               MedPartners, Inc. Third Restated Certificate of Incorporation,
                  filed as Exhibit (3)-1 to the Company's Annual Report on 
                  Form 10-K for the fiscal year ended December 31, 1996, is 
                  hereby incorporated herein by reference.

3.2               The Third Amended and Restated Bylaws of the Company

4.1               MedPartners, Inc. Stockholders' Rights Plan, filed as 
                  Exhibit (4)-1 to the Company's Registration Statement on
                  Form S-4 (Registration No. 333-00774), is hereby incorporated
                  by reference.

4.2               Amendment No. 1 to the Stockholders' Rights Plan of 
                  MedPartners, Inc., filed as Exhibit (4)-2 to the Company's 
                  Annual Report on Form 10-K for the fiscal year ended 
                  December 31, 1996, is hereby incorporated herein by 
                  reference.

4.3               Amendment No. 2 to the Stockholders' Rights Plan of
                  MedPartners, Inc., filed as Exhibit (4)-2 to the Company's
                  Registration Statement on Form S-3 (Registration 
                  No. 333-17339), is hereby incorporated herein by reference.

10.1              Employment Agreement by and between Registrant and 
                  E. Mac Crawford dated as of March 18, 1998, filed as 
                  Exhibit (10)-4 to the Company's Quarterly Report for the 
                  quarter ending March 31, 1998 on Form 10-Q, is hereby
                  incorporated by reference.

10.2              First Amendment to Employment Agreement by and between
                  the Company and E. Mac Crawford.

10.3              Nonqualified Stock Option Agreement by and between the Company
                  and E. Mac Crawford.

27.1              Financial Data Schedule (For SEC use only)

99.1              MedPartners, Inc. 1998 New Employee Stock Option Plan.

99.2              MedPartners, Inc. 1998 Employee Stock Option Plan, filed as
                  Exhibit 4.5 to the Company's Registration Statement on 
                  Form S-8 (Registration No. 333-64371) filed with the 
                  Commission on September 25, 1998, is incorporated herein by 
                  reference.

99.3              Form of Option Surrender and Relinquishment Agreement, filed 
                  as Exhibit 4.6 to the Company's Registration Statement on
                  Form S-8 (Registration No. 333-64371) filed with the 
                  Commission on September 25, 1998, is incorporated herein by
                  reference.

99.4              Form of Stock Option Award Certificate pursuant to the
                  MedPartners, Inc. 1998 Employee Stock Option Plan and the
                  Option Surrender Program, filed as Exhibit 4.7 to the
                  Company's Registration Statement on Form S-8 (Registration 
                  No. 333-64371) filed with the Commission on September 25, 
                  1998, is incorporated herein by reference.

        (b)       Reports on Form 8-K.

         There were no reports filed on Form 8-K for the quarter ended 
         September 30, 1998.



                                       17
<PAGE>   18

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


MedPartners, Inc.



By:/s/ James H. Dickerson, Jr.
   ----------------------------------------------------
   James H. Dickerson, Jr., 
   Executive Vice President and Chief Financial Officer



By:/s/ Howard A. McLure                                         
   ----------------------------------------------------
   Howard A. McLure, Senior 
   Vice President and Chief Accounting Officer




Date:  November 16, 1998