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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For
the twelve months ended December 29, 2000

Commission
file number: 0-23198

SPHERION CORPORATION

(Exact name of registrant as specified in its charter)

|Delaware                        | 36-3536544            
|------------------------------- | ----------------------
|(State or other jurisdiction of | (I.R.S. Employer      
|incorporation or organization)  | Identification Number)

2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309

(Address of principal executive offices)    (Zip code)

(954) 938-7600(Registrant's telephone number, including area code)

Interim Services Inc.(Former name)

Securities registered pursuant to Section 12(b) of the Act:

|                            |  | Name of each exchange  
|--------------------------- |  | -----------------------
|Title of each class         |  | on which registered    
|COMMON STOCK$.01 PAR VALUE |  | New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None(Title of class)

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

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K./ /

The aggregate market value of the voting stock held by non-affiliates of the Registrant, computed by reference to the closing price of the
Registrant's Common Stock as of January 26, 2001 on the New York Stock Exchange, was $613,520,955.

Number
of shares of Registrant's Common Stock, par value $.01 per share ("Common Stock"), outstanding on January 26, 2001 was 60,853,486.

Documents
Incorporated by Reference:

Certain
specified portions of the registrant's definitive proxy statement to be filed within 120 days after December 29, 2000, are incorporated herein by reference in
response to Part III, Items 10 through 13, inclusive.

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PART I

Item 1. BUSINESS

Company Overview

Spherion Corporation ("Spherion"), formerly Interim Services Inc., is a human capital management company. It maximizes talent, technology and outsourcing
solutions for client organizations seeking increased efficiency. Solutions are delivered through a network of more than 1,000 offices across several distinct areas of specialization. These include
information technology, outsourcing, professional recruiting, outplacement, talent assessment and measurement and staffing solutions. Spherion currently operates in 13 countries: Australia, Brazil,
Canada, France, Germany, Hong Kong, Italy, New Zealand, Singapore, Spain, The Netherlands, the United Kingdom and the United States.

Since
its January 1994 initial public offering ("IPO"), excluding the HealthCare division which was sold effective September 1997, Spherion's network of offices has
grown from 373 in North America to more than 1,000 offices in 13 countries as of December 29, 2000. Spherion's revenues, excluding HealthCare, increased from $537.3 million in fiscal
1994 to $3.7 billion in fiscal 2000. This growth has been accomplished through strategic acquisitions, internal growth and by capitalizing on cross-selling opportunities. The most significant
recent acquisitions were Norrell Corporation ("Norrell") in July 1999 and Michael Page Group Plc ("Michael Page") in April 1997.

On
July 2, 1999, Spherion completed its acquisition of Norrell. Under the terms of the acquisition, the shareholders of Norrell received in exchange for each share of Norrell's
common stock either a 0.9 share of Spherion's common stock or a cash payment of $18.76. The holders of approximately 13% of Norrell's common stock elected to receive the cash payment which amounted to
approximately $75.6 million. Accordingly, Spherion issued approximately 20.8 million shares of Spherion's common stock to former Norrell shareholders and converted existing options to
purchase Norrell common stock into options to purchase approximately 1.6 million shares of Spherion common stock. The value of the
transaction including stock issued, cash paid and debt assumed, was approximately $650.0 million. Norrell is a strategic workforce management company focusing on information technology
consulting, flexible staffing (including accounting, administrative and light industrial), outsourcing, search/recruitment (accounting and administrative) and managed staffing (administrative and
light industrial). Operations of Norrell were combined with Spherion's existing operating segments effective with the completion of the acquisition.

Michael
Page is a premier international recruiting and staffing company providing flexible staffing and search/recruitment services primarily within the finance, banking and marketing
fields. Michael Page's more than 90 offices are located in the United Kingdom, Australia, France, Germany, Hong Kong, Italy, New Zealand, Singapore, Spain, The Netherlands, Brazil and the United
States. In January 2001, management announced its intention to sell 100% of Michael Page in an IPO on the London Stock Exchange. Management undertook a review of Michael Page's role within
Spherion's overall operating structure and concluded that a sale of Michael Page was the best overall strategic decision in order to maximize Spherion's investment in Michael Page. Management
currently expects the sale to be completed at the end of the first quarter or the beginning of the second quarter of 2001. Michael Page has been

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consolidated with Spherion's operating results in the Professional Services segment since its acquisition in April 1997 and Michael Page's summarized operating results are as follows (in
thousands):

Fiscal Years EndedDec. 29, 2000

Dec. 31, 1999

Dec. 25, 1998Revenues

$
645,998

$
530,642

$
424,218Cost of services


253,173


225,671


179,712Gross profit


392,825


304,971


244,506Selling, general and administrative expenses


281,953


216,402


170,372Amortization of intangibles


12,024


12,763


13,091Earnings before interest and taxes

$
98,848

$
75,806

$
61,043


Proceeds
from the sale are currently expected to retire portions of existing debt and repurchase stock. Spherion's investment in Michael Page was approximately $300.0 million
at December 29, 2000.

Industry Overview

The global staffing services industry has experienced significant growth in response to the changing work environment worldwide. According to published
industry sources, the total staffing services market had revenues of approximately $154.4 billion in 1999 (the latest available data). The staffing industry is evolving from employers'
traditional use of staffing services to manage personnel costs and meet fluctuating staffing requirements to the reduction of administrative overhead by outsourcing human resources operations that are
not part of an employer's core business competencies. In addition to the economic conditions driving staffing industry growth, Spherion believes that changing demographics of the workforces of
developed economies and evolving attitudes concerning work patterns also contribute to
growth in the staffing industry. These trends have accelerated with the pace of technological change and greater global competitive pressures.

The
U.S. remains the largest and most developed staffing services market in the world, representing approximately $76.9 billion or 49.8% of the total staffing market in 1999. Since
1994, the U.S. staffing market grew at an annual rate of 13.2%. According to the Staffing Industry Report, U.S. staffing industry revenue, including flexible staffing, managed staffing, outsourcing,
search/recruitment and outplacement, grew to an estimated $103.2 billion in 2000. In addition, the American Staffing Association has estimated that more than 90% of all U.S. businesses utilize
staffing services.

The
U.K. is the second largest national staffing services market in the world. According to published industry sources, staffing revenues in the U.K. to an estimated
$26.5 billion in 1999, representing a five year annual growth rate of 12.0%. Published industry sources estimate the U.K.'s penetration rate of temporary workers at 2.1%, compared with the U.S.
(2.2%) and The Netherlands (4.0%). Spherion believes that these factors, as well as the continued relatively rapid growth in the service sector, should increase the opportunities to provide services
in the U.K.

The
total staffing services market in the European Union (excluding the U.K.) during 1999 was estimated by published industry sources to be approximately $33.2 billion, with
France, Germany, The Netherlands and Belgium accounting for approximately 95% of such market. The European Commission has noted trends towards deregulation and greater labor market flexibility that
Spherion believes will increase the use of temporary and contract labor throughout Europe.

In
certain countries in the Australia/Asia region, particularly Australia, the staffing services industry is well developed, and Spherion believes that opportunities exist for
continued expansion within most of Spherion's service offerings. The Australian Bureau of Statistics figures indicate that 25% of the workforce now works in a "flexible" manner, i.e. as a contractor
or temporary employee.

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The staffing services market in most countries in which Spherion operates is highly fragmented and includes a large number of small businesses, many of which operate in a single
geographic market. This fragmentation, combined with changing client demands and competitive pressures, has resulted in a trend towards industry consolidation. Faced with a client's desire to minimize
the number of vendors, increase sophisticated management reporting and the expansion of professional level specialties, clients have begun to demand the services of large staffing companies capable of
offering a full range of staffing services over a broad geographic area.

Business Strategy

Spherion's goal is to drive revenue and earnings growth by delivering innovative integrated human capital solutions through its consultative diagnostic
approach to strategic workforce management. Spherion intends to achieve this goal to further develop its client base by capitalizing on cross-selling opportunities, with particular emphasis on its
higher-margin professional services (i.e. accounting, technology, legal, etc.). The company will also consider targeted acquisitions of companies focused in the professional services area. This growth
strategy is complemented by an operating strategy of offering a comprehensive range of innovative services under a common brand.

In
addition to expanding existing services, a critical element to Spherion's growth strategy is the continued development of innovative products and services and advanced recruitment
methods, enabled by technology. For example, Spherion's On-Premise offering utilizes proprietary software that provides "qualitative" measurement of performance, quantitative analysis of
staffing efficiencies and customized reporting. In addition, Spherion's Assessment Group utilizes proprietary interactive voice and web-based response systems to pre-screen and
behaviorally assess candidates. The Saratoga Institute offers clients the most comprehensive database of human performance metrics and Spherion assists clients with workforce planning using emerging
workforce trends identified in its nationwide survey conducted with Lou Harris and Associates.

Spherion
recognizes that the Internet is an important tool in the identification and recruitment of qualified candidates and is expanding its recruiting efforts through the Internet.
During 2000, Spherion made further investment in internet-based assets, including JobOptions.com and the creation of its Enthusian Corp. subsidiary, in partnership with Accenture, LLP (formerly
Andersen Consulting, LLP). JobOptions.com, now combined with Spherion's CareerZone.com, is a comprehensive career site where job seekers register their skills and can access strategic tools that allow
individuals to plan and manage their careers from first job through to retirement. Enthusian's primary product, Talent Axis, geared for larger clients, is a web-based tool that serves as
an electronic order system for clients to procure pre-screened, prequalified candidates from multiple vendors. Spherion believes the use of the Internet as a recruiting tool will expand
over time.

Acquisitions

Spherion's corporate management team has extensive experience in identifying acquisition candidates and integrating acquired operating companies into
Spherion's network. Spherion believes its decentralized, entrepreneurial management structure facilitates its efforts to acquire companies seeking alliances with a value-focused provider of a broad
range of human resources services.

Since
the IPO, Spherion has acquired 34 companies providing consulting, managed staffing, outsourcing, search/recruitment and flexible staffing services. In addition to external
acquisitions, Spherion is generally the purchaser of choice when a Spherion franchisee or licensee decides to sell its business. Spherion has a first right of refusal on any franchise sale at the same
terms and conditions as may be agreed with another purchaser and has a standard purchase option on licenses. In 2000, as part of an overall strategy to reduce market overlap, Spherion repurchased 7
franchisees, representing approximately $41.0 million of annualized acquired revenues and repurchased 48 licensed offices, which do not impact Spherion's reported revenues, as sales by the
licensed offices are included in Spherion's revenues, and sold several company-owned branches. Market overlap is created when a Norrell franchise operates in a market

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where a Spherion branch, licensee or franchisee operates or where a Spherion licensee or franchisee operates in a market where a Norrell branch or franchise operates. Overall, Spherion-owned branches
yield higher profits than franchised or licensed offices, and Spherion therefore believes that the purchase of these offices can be accretive to overall earnings. Spherion regularly evaluates
potential acquisitions of companies that can be integrated into existing operations and strategic acquisitions that provide entry into new geographic markets or service lines. Certain information
related to external acquisitions is summarized in the following table.

|Acquired Business                                      |  | Acquisition
Date |  | Number
of
Offices
(1) |  | Revenues
in
Millions
(2) |         | Primary Services (Skills)
|------------------------------------------------------ |  | ---------------- |  | --------------------- |  | ------------------------ | ------- | -------------------------
|JobOptions, LLC                                        |  | 10/00            |  | 2                     |  | $                        | 1.5     |                          
|Lynette Fairey & Associates, Inc.                      |  | 9/00             |  | 1                     |  |                          | 0.4     |                          
|Wilson White Associates Ltd.                           |  | 5/00             |  | 2                     |  |                          | 2.7     |                          
|Applied Internet Consultancy
Group B.V.                |  | 2/00             |  | 1                     |  |                          | 0.5     |                          
|Norrell Corporation                                    |  | 7/99             |  | 385                   |  |                          | 1,400.0 |                          
|Career Insights, Inc.                                  |  | 3/99             |  | 1                     |  |                          | 2.1     |                          
|Tutor Recursos Humanos/ Tutor Selección, S.L.          |  | 3/99             |  | 15                    |  |                          | 19.2    |                          
|Custom Counsel, Inc                                    |  | 1/99             |  | 1                     |  |                          | 2.0     |                          
|Computer Power Group (Australian and Asian operations) |  | 12/98            |  | 51                    |  |                          | 143.0   |                          
|HR Easy                                                |  | 12/98            |  | 3                     |  |                          | 6.6     |                          
|Ouranos Informatica Groep B.V.                         |  | 11/98            |  | 1                     |  |                          | 20.0    |                          
|Reedie & Company                                       |  | 9/98             |  | 3                     |  |                          | 4.4     |                          
|Polmar, Inc                                            |  | 9/98             |  | 1                     |  |                          | 5.4     |                          
|Clarke, Poynton & Associates;
C.P.G. Partners          |  | 8/98             |  | 5                     |  |                          | 8.0     |                          
|AGO Uitzendbureau B.V.                                 |  | 7/98             |  | 30                    |  |                          | 17.9    |                          
|Saratoga Institute                                     |  | 6/98             |  | 1                     |  |                          | 3.0     |                          
|Smyth, Fuchs & Company                                 |  | 3/98             |  | 5                     |  |                          | 2.5     |                          
|Crone Corkill                                          |  | 3/98             |  | 2                     |  |                          | 38.4    |                          
|Network Companies                                      |  | 2/98             |  | 2                     |  |                          | 5.0     |                          
|deRecat & Associates                                   |  | 1/98             |  | 3                     |  |                          | 3.5     |                          
|A.J. Burton Group, Inc                                 |  | 1/98             |  | 3                     |  |                          | 14.6    |                          
|Feldt Personnel Consultants                            |  | 10/97            |  | 1                     |  |                          | 0.5     |                          
|Mainstream Access                                      |  | 4/97             |  | 16                    |  |                          | 5.7     |                          
|Michael Page Group PLC                                 |  | 4/97             |  | 40                    |  |                          | 220.0   |                          

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|Aim Executive Holdings                          |  | 3/97  |  | 17  |  |   | 35.2    |  | Consulting, Flexible Staffing, Search/Recruitment (Outplacement & General Management)
|----------------------------------------------- |  | ----- |  | --- |  | - | ------- |  | -------------------------------------------------------------------------------------
|Allround/Interplan                              |  | 11/96 |  | 6   |  |   | 15.0    |  | Flexible Staffing (Administrative & Light Industrial)                                
|Brandon Systems                                 |  | 5/96  |  | 32  |  |   | 89.0    |  | Flexible Staffing, Managed Staffing (Technology)                                     
|Of-Counsel                                      |  | 5/96  |  | 1   |  |   | 1.0     |  | Flexible Staffing (Legal)                                                            
|Computer Power Group (U.S. and U.K. operations) |  | 12/95 |  | 17  |  |   | 81.0    |  | Consulting (Technology)                                                              
|Hernand & Partners                              |  | 11/95 |  | 3   |  |   | 2.7     |  | Flexible Staffing (Legal)                                                            
|Juntunen                                        |  | 10/95 |  | 2   |  |   | 13.6    |  | Search/Recruitment, Flexible Staffing, (Technology & General Management)             
|OCS Consulting Services                         |  | 6/95  |  | 5   |  |   | 16.1    |  | Consulting (Technology)                                                              
|Career Associates/Career Temps                  |  | 6/95  |  | 5   |  |   | 5.6     |  | Flexible Staffing, Search/Recruitment (Accounting)                                   
|ICS Temporary Services                          |  | 12/94 |  | 1   |  |   | 1.6     |  | Flexible Staffing (Administrative & Light Industrial)                                
|                                                |  |       |  |     |  |   |         | 
|                                                |  |       |  | 664 |  | $ | 2,187.7 |  |                                                                                      
|                                                |  |       |  |     |  |   |         | 

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Operations Overview

Spherion operates through three operating segments: Information Technology, Professional Services and Commercial Staffing. Within these operating segments,
Spherion provides five servicesconsulting, managed staffing, outsourcing, search/recruitment and flexible staffing. The following presents the percentage of 2000 revenues derived from
each of these services:

Information
Technology

Professional
Services

Commercial
StaffingConsulting

65
%
4
%
Managed Staffing

7
%


35
%Outsourcing

1
%
24
%
Search/Recruitment

1
%
32
%
2
%Flexible Staffing

26
%
40
%
63
%Total

100
%
100
%
100
%


Total Revenues (in thousands)

$
755,551

$
1,306,579

$
1,678,693


The
activities of the three segments are as follows:

Information TechnologyConsulting is provided in the U.S., Australia, The Netherlands and in the U.K. and includes the
areas of e-business, enterprise application integration, software quality management, information design services and education. Flexible staffing is provided in the U.S. and Australia and
includes supplying highly qualified professionals for short-term and long-term assignments to supplement customers' existing IT departments, such as networking, desktop
support, help desk and data centers. Managed staffing is provided primarily in the U.S. and includes managing customers' staffing for help desk operations.

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Professional ServicesFlexible staffing is provided in the U.S., U.K. and throughout continental Europe and includes
providing staff on a short-term and long-term basis in the areas of accounting, banking and finance, marketing, and legal professionals. Search/recruitment finds professionals
for full-time career opportunities from entry level up through executives across a wide range of professionsaccounting, finance, information technology, human resources, legal
services, engineering, manufacturing, sales, marketing and general management. These services are provided in the U.S., U.K., continental Europe, Australia, Asia and in Brazil.

Outsourcing
assumes responsibility for client functions in customer care, workforce selection, distribution and fulfillment and administrative services. Spherion offers outsourcing
services in the U.S. whereby its clients delegate to Spherion all responsibility for staffing and performance. Consulting services are provided to help clients assess, develop and transition talent.
Additional consulting services are provided, which offer tools to measure workforce productivity, and to provide technology-enabled prehire screening to find the best few candidates.

Commercial StaffingFlexible staffing is provided in the U.S., U.K., The Netherlands and in Spain. Flexible staffing
provides staffing solutions for office and light-industrial skills. For office skills,
Spherion supplies executive assistants, customer service representatives and word processing specialists, among others. For light-industrial skills, Spherion supplies assembly, mailroom and product
packaging support, among others. Managed staffing includes managing all of a client's staffing vendors for consistent quality, performance and pricing. Managed staffing is provided mainly through
On-Premise, which is onsite management of a client's flexible workforce.

HealthCare Operations

During 1997, Spherion sold its health care operations that represented 11.8% of total revenues for the year ended December 26, 1997. During
December 2000, Spherion sold Norrell's home health aide business. This business had been classified as an asset held for sale and the results of operations of this business are not included in
Spherion's Consolidated Statements of Earnings in fiscal 2000 or 1999.

Office Structure

Spherion offices are company-owned, franchised and licensed. Most offices serve multiple clients in their respective geographic area, with the exception of
On-Premise sites, which are established at the client's location to serve only that client. Spherion believes that it can better leverage profitability through its branch locations.
Currently 85% of revenues are derived from Spherion-owned branches, with the remaining being franchised and licensed. The following table details the number of offices, which are Spherion-owned,
franchised and licensed as of the end of the periods listed.

Fiscal Year Ended DecemberNumber of Offices

2000

1999

1998Branch Offices

883

815

543Licensed Offices

261

308

196Franchised Offices

113

121

138Total

1,257

1,244

877




As of December 29, 2000, Spherion operated 883 branch offices, which increased from the prior year due to the opening of offices at Michael Page, new
On-Premise locations and buybacks from licensees and franchisees. Branch office expansion is generally pursued in markets where Spherion has an established presence and is used to increase
market penetration. Additional expansion is achieved by establishing On-Premise operations at client sites. Spherion intends to continue to expand Spherion-owned branches in those
locations where it can "cluster" multiple offices in close geographic proximity to utilize centralized

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regional and area management and other administrative functions which should increase growth opportunities and increase profitability.



Spherion grants licenses, which give the licensee the right to establish a business utilizing Spherion's trade names, service marks, advertising materials,
sales programs, operating procedures, manuals and forms within a designated territory. As of December 29, 2000, Spherion's 96 licensees operated 261 licensed offices. The decrease from 1999 is
due primarily to Spherion's overall strategy to reduce market overlap created in the Norrell acquisition.

Licensees
are required to observe Spherion's operating procedures and standards and act as a representative of Spherion in recruiting, screening, classifying, employing and placing
flexible staff in response to client orders. The licensee is responsible for establishing the office and paying related administrative and operating expenses, such as rent, utilities and salaries of
full-time employees. Spherion is responsible for paying the wages of the flexible staff and all related payroll taxes and insurance. As a result, Spherion provides a substantial portion of
the working capital needed for the licensed businesses.

Sales
by the licensed offices are included in Spherion's revenues, and the direct costs of services are included in Spherion's cost of services. The licensee receives a commission
from Spherion, which ranges between 50% and 75% of the licensed offices' gross profits. The licensee is required to use Spherion's billing, payroll and other data processing services.



Spherion has been granting franchises for approximately 40 years. The average tenure of franchise ownership is approximately 10 years, and a
number of franchisees are second generation owners. Most franchisees operate more than one franchise. As of December 29, 2000, Spherion's 14 franchisees operated 113 offices. The decrease from
1999 is due primarily to Spherion's overall strategy to reduce market overlap created in the Norrell acquisition.

Spherion
grants franchisees the right to market and furnish flexible staffing services within a designated geographic area using Spherion's trade names, service marks, advertising
materials, sales programs, operating procedures, manuals and forms. Spherion provides franchises with its national, regional and local advertising. Franchisees operate their businesses autonomously
within the framework of Spherion's policies and standards and recruit, employ and pay their own full-time and flexible staff. Spherion receives royalty fees from each franchise based upon
its sales, and in return, supplies a variety of support and marketing services.

Competition

The staffing services industry is intensely competitive and highly fragmented, with few barriers to entry by potential competitors at the local level. Spherion
faces significant competition in the markets it serves and will continue to face significant competition in any geographic market or industry sector that it may enter. In each market in which Spherion
operates, it competes for both clients and qualified personnel with other firms offering staffing services. The majority of competitors are significantly smaller than Spherion. However, certain of
Spherion's competitors have greater marketing and financial resources than Spherion. Many clients use more than one staffing services company and it is common for a major client to use several
staffing services companies at the same time.

Spherion's
largest competitors are Adecco S.A., Manpower Inc., Randstad Holdings, Kelly Services, Inc., Vedior, Robert Half International, Inc., Modis
Professional Services, Inc., Keane, Inc. and CDI Corporation. Spherion believes that it is currently one of the ten largest worldwide providers of staffing services based upon revenue.

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Spherion believes that a primary competitive factor in obtaining and retaining clients is the breadth of services provided as clients seek out providers that can service all of their
staffing needs. Additionally, other critical competitive factors include an understanding of clients' specific job requirements through consultative assessments, the ability to provide personnel in a
timely manner, the ability to measure the quality of job performance and pricing. The primary competitive factors in obtaining qualified candidates for employment assignments are quality of available
opportunities, wages, responsiveness to work schedules and number of available work hours. Spherion believes it has a competitive advantage over its competitors because it offers a wide range of
services and broad availability of skills to its customers.

Trademarks

In 2000, Spherion changed its name and primary identifying trademark from "INTERIM" to "SPHERION" and related "SPHERION" marks. Spherion, through its
subsidiaries, maintains a number of trademarks, trade names and service marks in the United States and certain other countries. Spherion believes that many of these marks and trade names, including
SPHERIONSM, INTERIM®, JOBOPTIONS®, NORRELL®, STRATFORD GROUP®, ENTHUSIANSM, SARATOGASM, TECHNOLOGY
ARCHITECTSSM and WORKFORCE ARCHITECTSSM have significant value and are materially important to its business. In addition, Spherion maintains other intangible property
rights.

Spherion,
through its subsidiaries, currently uses and has applications for registration pending on the following: SPHERIONSM, ENTHUSIANSM,
SARATOGASM, TECHNOLOGY ARCHITECTSSM and WORKFORCE ARCHITECTSSM.

Spherion's
U.S. trademark registration for INTERIM® expires April 6, 2003, but is renewable indefinitely for successive ten-year terms. Spherion's U.S.
trademark registration for NORRELL® expires on March 8, 2003, but is renewable indefinitely for successive ten-year terms.

Governmental Regulation

Flexible staffing firms are generally subject to one or more of the following types of government regulations: (i) regulation of the employer/employee
relationship between a firm and its flexible staff, (ii) registration, licensing, record keeping and reporting requirements and (iii) substantive limitations on its operations. Flexible
staffing firms are the legal employers of their flexible workers. Therefore, the firm is governed by laws regulating the employer/employee relationship such as tax withholding or reporting, social
security or retirement, anti-discrimination and workers' compensation.

Spherion
has significant operations in a number of foreign countries. In some of these countries, particularly in Europe, there is significant national and local regulation of
flexible staffing services. These laws generally require that part-time, temporary and contract workers receive benefits similar to full-time workers, such as vacation, welfare
plan contributions and severance pay. In some cases, hours of work and the duration of assignments are limited and workers may not be assigned to certain industries. Industry-wide union
membership is also a requirement in some countries. Spherion does not anticipate that these legal structures and requirements will have a material effect on its growth or prospects. However, any
material change in national or local regulation of flexible staffing services could have a material adverse effect on Spherion.

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Spherion's
sale of franchises and licenses is regulated by the Federal Trade Commission and by authorities in approximately 17 states and one Canadian province. Spherion must deliver
a franchise offering circular (similar to a prospectus) to prospective franchisees or licensees. Spherion has filed either the appropriate registration or obtained an exemption from registration in
states which require franchisers to register in order to sell franchises. Spherion does not anticipate that these requirements will have any material effect on its ability to sell franchises or
licenses.

Employees

Spherion estimates that it employed approximately 547,000 people in 2000. Approximately 9,000 individuals were employed full-time in both its
national and international operations and the remaining 538,000 individuals were flexible personnel assigned with its clients, of whom approximately 103,000 were assigned, on average, at any given
time.

Executive Officers of the Registrant

The executive officers of Spherion, each of whom has been elected to serve at the discretion of the Board of Directors of Spherion, are:

|Name and Age           |  | Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Raymond Marcy, 50      |  | Chairman since August 1997; Chief Executive Officer since September 1991; President and a Director since November 1989; Chief Operating Officer from November 1989 until September 1991. Prior to joining Spherion, Mr.
 Marcy served as Senior Vice President of Operations for Adia Services, Inc. ("Adia"), from 1980 through 1988. While retaining his position as Senior Vice President of Operations for Adia, from May 1988 until November 1989, Mr. Marcy was
President and Chief Executive Officer of Nursefinders, Inc., the temporary nursing subsidiary of Adia.
|Robert E. Livonius, 52 |  | Chief Operating Officer since February 1997, Executive Vice President since August 1993. Vice President, HealthCare from August 1991 to August 1993. Prior to joining Spherion, he served as Vice PresidentField Operations for a division of NYNEX
Corporation, from June 1986 through June 1991 and various management positions leading to Vice President of Field Operations for a division of IBM from 1971 through 1986.                                                                                                                                             
|Roy G. Krause, 54      |  | Executive Vice President and Chief Financial Officer since October 1995. Prior to joining Spherion, he served as Executive Vice President of HomeBank Federal Savings Bank and HomeBank Mortgage Corporation from November 1980 to September
1995.                                                                                                                                                                                                                                                                                                                          
|Shannon C. Allen, 34   |  | Vice President (Business Services) since June 2000, Vice President since November 1998, Treasurer since May 1997. Assistant Treasurer from October 1994 to May 1997. Prior to joining Spherion, she worked in the Treasury and Corporate Finance
Department at W. R. Grace & Co. from April 1992 to October 1994. From August 1988 to September 1991 she worked in Corporate Finance at Kidder, Peabody & Co., Incorporated.                                                                                                                                                
|Jose L. Aragon, 52     |  | Vice President (Marketing) since December 1999. Prior to joining Spherion, he was Vice President, Marketing for Bacardi-Martini USA from January 1997 through August 1999. From September 1992 through December 1996, he was Vice President, Marketing for
Bacardi-Martini B.V., Amsterdam, The Netherlands.                                                                                                                                                                                                                                                                
|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

10

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|Robert Evans, 57        |  | Vice President and Chief Information Officer since May 1996. From January 1991 to May 1996, he served in several executive positions with AT&T including Vice President Customer Care Strategy and Reengineering, Chief Technology Officer, Chief
Information Officer and General Manager of the Consumer Interactive Services business unit.                                                                                                                                                                        
|----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lisa G. Iglesias, 35    |  | General Counsel, Vice President and Secretary since July 1999. Associate Counsel from August 1998 to July 1999. Prior to joining Spherion, she was an attorney with the law firm of Greenberg Traurig from September 1994 to August 1998. From January
1989 to August 1991, she worked as a Certified Public Accountant with KPMG Peat Marwick.                                                                                                                                                                      
|Wayne D. L'Heureux, 43  |  | Vice President (Human Resources) since February 2000. Prior to joining Spherion, he worked as Vice PresidentHuman Resources of Volvo Cars of North America from September 1996 to February 2000. From October 1994 through September 1996, he was
Vice PresidentHuman Resources of the Retail Division of Office Depot, Inc.                                                                                                                                                                                       
|Roberta Marcantonio, 43 |  | Chief Quality Officer since October 2000. Vice President (Technology Solutions) from June 2000 to October 2000. Vice President, Business Systems, Staffing Group from January 1998 until June 2000. Senior Director, Corporate Operations from November
1996 until January 1998. Assistant to the President from June 1995 until November 1996. From January 1995 until June 1995, Spherion's Director of Operations, Court Reporting and from April 1993 until January 1995, Director of Projects, Special
Services.
|Liza F. Palermo, 29     |  | Vice President (Corporate Communications) since April 2000. Director, Corporate Communications from April 1998 until April 2000. Manager, Corporate Communications from May 1995 until April 1998. Corporate Communications Specialist for W.R. Grace
 & Co. from May 1993 until April 1995.                                                                                                                                                                                                                         
|Mark W. Smith, 38       |  | Vice President (Finance and Administration) since June 2000. Vice President (Finance) from June 1997 to June 2000. Prior to joining Spherion, he served as Group DirectorFinancial Planning, Ryder Integrated Logistics, Inc. from October 1996 to
June 1997. Assistant Corporate Controller, Ryder System, Inc. from October 1993 to September 1996. He held other positions with Ryder System, Inc. from February 1990 to September 1993.                                                                         

Item 2.  PROPERTIES

The executive offices of Spherion are located at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309, in a 113,000 square-foot building owned
by Spherion. Spherion also leases on a short-term basis approximately 24,705 square feet in buildings within one mile of its Florida executive offices for operations associated with its
corporate headquarters. In addition, Spherion leases approximately 113,075 square feet in Atlanta, Georgia, which housed Norrell's executive offices. Of the 113,075 square feet, approximately 20,461
square feet is available for sublease due to downsizing and redundancies of headquarters operations. All other offices of Spherion and its subsidiaries are operated in premises held primarily under
short-term leases providing fixed monthly rentals, usually with renewal options.

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Item 3.  LEGAL PROCEEDINGS

Spherion, in the ordinary course of its business, is threatened with or named as a defendant in various lawsuits. Spherion's management does not expect that
the outcome of any of these lawsuits, individually or collectively, will have a material adverse effect on the company's financial condition, results of operations or cash flows. Spherion maintains
insurance in such amounts and with such coverages and deductibles as management believes are reasonable and prudent. The principal risks that Spherion insures against are workers' compensation,
personal injury, bodily injury, property damage, professional malpractice, errors and omissions, employment practices and fidelity losses.

On
March 7, 2001, Spherion was notified by Interim HealthCare Inc., Catamaran Acquisition Corp. and Cornerstone Equity Investors IV, L.P. (collectively, the "Interim HealthCare
Plaintiffs") of their plans to file on April 2, 2001, an amended complaint in connection with Spherion's divestiture of Interim HealthCare and for a transfer from the Superior Court of the
State of Delaware in New Castle County to the Delaware Court of Chancery. The amended complaint outlines three counts: breach of contract, reformation and equitable rescission. The Interim HealthCare
Plaintiffs are seeking damages of $20 million, a reduction of the purchase price of $50 million or rescission of the contract. Management believes that the resolution of this matter will
not have a material impact on Spherion's consolidated financial position, liquidity or results of operations.

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

No matters were submitted to a vote of security holders during the fourth quarter of the twelve months ended December 29, 2000.

PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The
Common Stock is traded on The New York Stock Exchange under the symbol "SFN." On July 7, 2000, Spherion began using the "SFN" symbol which replaced its previous symbol, "IS." High and low
prices for the Common Stock by quarter appear in "Quarterly Financial Data" on page 48. On January 26, 2001, there were approximately 2,344 holders of record of Spherion's Common Stock.

Spherion
has not paid cash dividends and does not intend to pay cash dividends in the foreseeable future.

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Item 6.  SELECTED FINANCIAL DATA

|                                                                                                                                                                 |                                                     | Fiscal Years Ended
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------
|
|
|Income Statement Data:                                                                                                                                           |                                                     |                   
|Revenues:                                                                                                                                                        |                                                     |                   
|Revenues excluding HealthCare                                                                                                                                    |                                                     | $                 
|HealthCare (2)                                                                                                                                                   |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Total revenues                                      |                   
|Expenses:                                                                                                                                                        |                                                     |                   
|Cost of services                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Gross profit                                        |                   
|Selling, general and administrative expenses                                                                                                                     |                                                     |                   
|Licensee commissions                                                                                                                                             |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Results of operations                               |                   
|Amortization of intangibles                                                                                                                                      |                                                     |                   
|Interest expense                                                                                                                                                 |                                                     |                   
|Interest income                                                                                                                                                  |                                                     |                   
|Write-down of investment (3)                                                                                                                                     |                                                     |                   
|Year 2000 costs (4)                                                                                                                                              |                                                     |                   
|Restructuring and integration costs (5)                                                                                                                          |                                                     |                   
|Gain on sale of HealthCare business (6)                                                                                                                          |                                                     |                   
|Merger expense (7)                                                                                                                                               |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Earnings before income taxes and extraordinary item |                   
|Income taxes                                                                                                                                                     |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Earnings before extraordinary item                  |                   
|Extraordinary item-early extinguishment of debt, net of income taxes                                                                                             |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 | Net earnings                                        |                   
|                                                                                                                                                                 |                                                     |                   
|Basic earnings per share:                                                                                                                                        |                                                     |                   
|Earnings before extraordinary item                                                                                                                               |                                                     | $                 
|Extraordinary item                                                                                                                                               |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|Net earnings                                                                                                                                                     |                                                     | $                 
|                                                                                                                                                                 |                                                     |                   
|Diluted earnings per share:                                                                                                                                      |                                                     |                   
|Earnings before extraordinary item                                                                                                                               |                                                     | $                 
|Extraordinary item                                                                                                                                               |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|Net earnings                                                                                                                                                     |                                                     | $                 
|                                                                                                                                                                 |                                                     |                   
|Earnings per share                                                                                                                                               |                                                     |                   
|(excluding write-down of investment, Year 2000 costs, restructuring and integration costs, nonrecurring merger expense, and extraordinary item) (3)(4)(5)(7)(8): |                                                     |                   
|                                                                                                                                                                 | Basic                                               |                   
|                                                                                                                                                                 | Diluted                                             |                   
|Weighted average shares (8):                                                                                                                                     |                                                     |                   
|                                                                                                                                                                 | Basic                                               |                   
|                                                                                                                                                                 | Diluted                                             |                   
|Balance Sheet Data (9):                                                                                                                                          |                                                     |                   
|Total assets                                                                                                                                                     |                                                     | $                 
|Long-term debt, net of current portion                                                                                                                           |                                                     |                   
|Working capital                                                                                                                                                  |                                                     |                   
|Operating Information (9):                                                                                                                                       |                                                     |                   
|Operating offices                                                                                                                                                |                                                     |                   
|HealthCare offices                                                                                                                                               |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 |                                                     |                   
|                                                                                                                                                                 |                                                     |                   

(footnotes continued on following page)

13

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14

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Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Spherion is a leader in the area of human capital management. Spherion is organized into three operating segments, Information Technology, Professional
Services and Commercial Staffing. Through these operating segments, Spherion provides the following five services: (1) consulting including outplacement, executive coaching and
information technology consulting; (2) managed staffing such as temporary and permanent workforce management, which includes On-Premise and vendor management;
(3) outsourcing includes functional management and staffing of various administrative functions, including full service call center management;
(4) search/recruitment such as contingency recruiting and executive retained search; and (5) flexible staffing temporary personnel from administrative personnel
to executives.

In
January 2001, Spherion announced that the company continues to review strategic alternatives related to Michael Page and now expects to offer, subject to market conditions,
100% of Michael Page's common stock for sale through an initial public offering and listing on the London Stock Exchange early in 2001. Management expects to use the proceeds from the sale for the
repayment of debt and for the repurchase of common stock.

During
2000, Spherion repurchased licensed and franchised offices to reduce market overlap, which resulted primarily from the Norrell acquisition discussed below. In addition,
Spherion made various acquisitions during 2000 which did not materially impact operating results or financial position.

On
July 2, 1999, Spherion completed its acquisition of Norrell. Under the terms of the acquisition, the shareholders of Norrell received in exchange for each share of Norrell's
common stock either a 0.9 share of Spherion's common stock or a cash payment of $18.76. The holders of approximately 13% of
Norrell's common stock elected to receive the cash payment, which amounted to approximately $75.6 million. Accordingly, Spherion issued approximately 20.8 million shares of Spherion's
common stock to former Norrell shareholders and converted existing options to purchase Norrell common stock into options to purchase approximately 1.6 million shares of Spherion common stock.
The value of the transaction including stock issued, cash paid and debt assumed, was approximately $650.0 million. Norrell is a strategic workforce management company focusing on IT consulting,
flexible staffing (including accounting, administrative and light industrial), outsourcing, search/recruitment (accounting and administrative) and managed staffing (administrative and light
industrial). Operations of Norrell were combined with Spherion's existing operating segments effective with the completion of the acquisition. As such, all the discussion in the following Management's
Discussion and Analysis includes Norrell's operations in Spherion's operating segments and services from July 2, 1999, unless otherwise stated.

In
1998, Spherion made one significant acquisition, Computer Power Group Limited (Australian and Asian Operations) or ("Computer Power"). The Computer Power acquisition expanded both
Spherion's technology consulting and flexible staffing into Australia and Southeast Asia.

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Operating Segments

Effective in the first quarter of 2000, Spherion changed its basis of segmentation from a geographic approach to the following: Information Technology,
Professional Services and Commercial Staffing. Management believes that the new reportable segments better reflect the management and fiscal responsibilities within Spherion subsequent to the Norrell
acquisition and integration of its operations. Spherion evaluates the performance of its operating segments and allocates resources based on revenues, gross profit and segment operating margin.
Segment operating margin is defined as income before unallocated central costs, net interest expense, income taxes and special charges (write-down of investment, Year 2000, restructuring
and integration costs). All material intercompany revenues and expenses have been eliminated. All previous year amounts have been restated for comparative purposes. See notes to the consolidated
financial statements included herein for further discussion and financial information regarding these operating segments.

Information
on operating segments and a reconciliation to earnings before income taxes and extraordinary item for the periods indicated are as follows (in thousands):

|          |                        | Fiscal Years Ended |          
|--------- | ---------------------- | ------------------ | ---------
|
|
|Revenues: |                        |                    |          
|          | Information Technology |                    | $        
|          | Professional Services  |                    |          
|          | Commercial Staffing    |                    |          
|          |                        |                    |          
|          |                        | $                  | 3,740,823
|          |                        |                    |          

|              |                        |   |           | % of
Revenues |      |      |   | % of
Revenues |         |      |      | % of
Revenues |        
|------------- | ---------------------- | - | --------- | ------------- | ---- | ---- | - | ------------- | ------- | ---- | ---- | ------------- | -------
|Gross Profit: |                        |   |           |               |      |      |   |               |         |      |      |               |        
|              | Information Technology |   | $         | 241,892       |      | 32.0 | % | $             | 266,279 |      | 34.1 | %             | $      
|              | Professional Services  |   |           | 639,664       |      | 49.0 | % |               | 468,365 |      | 49.2 | %             |        
|              | Commercial Staffing    |   |           | 360,117       |      | 21.5 | % |               | 304,146 |      | 21.2 | %             |        
|              |                        |   |           |               |      |      |   |               |         |      |      |               |        
|              |                        | $ | 1,241,673 |               | 33.2 | %    | $ | 1,038,790     |         | 32.8 | %    | $             | 696,257
|              |                        |   |           |               |      |      |   |               |         |      |      |               |        

|                          |                                                     |  |         | % of
Revenues |     |      |   | % of
Revenues |         |     |      | % of
Revenues |        
|------------------------- | --------------------------------------------------- |  | ------- | ------------- | --- | ---- | - | ------------- | ------- | --- | ---- | ------------- | -------
|Segment Operating Margin: |                                                     |  |         |               |     |      |   |               |         |     |      |               |        
|                          | Information Technology                              |  | $       | 38,609        |     | 5.1  | % | $             | 70,083  |     | 9.0  | %             | $      
|                          | Professional Services                               |  |         | 142,403       |     | 10.9 | % |               | 102,267 |     | 10.7 | %             |        
|                          | Commercial Staffing                                 |  |         | 71,587        |     | 4.3  | % |               | 56,228  |     | 3.9  | %             |        
|                          |                                                     |  |         |               |     |      |   |               |         |     |      |               |        
|                          |                                                     |  | 252,599 |               | 6.8 | %    |   | 228,578       |         | 7.2 | %    |               | 152,012
|                          |                                                     |  |         |               |     |      |   |               |         |     |      |               |        
|                          | Unallocated central costs                           |  |         | (51,098       | )   |      |   |               | (34,430 | )   |      |               |        
|                          | Interest expense, net                               |  |         | (50,424       | )   |      |   |               | (36,304 | )   |      |               |        
|                          | Write-down of investment                            |  |         | (24,766       | )   |      |   |               |        |     |      |               |        
|                          | Year 2000 costs                                     |  |         |              |     |      |   |               | (4,420  | )   |      |               |        
|                          | Restructuring and integration costs                 |  |         |              |     |      |   |               | (29,542 | )   |      |               |        
|                          |                                                     |  |         |               |     |      |   |               |         |     |      |               |        
|                          | Earnings before income taxes and extraordinary item |  | $       | 126,311       |     |      |   | $             | 123,882 |     |      |               | $      
|                          |                                                     |  |         |               |     |      |   |               |         |     |      |               |        

16

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Fiscal 2000 Compared with 1999

Information Technology.Revenues decreased 3% to $755.6 million in 2000 from $781.7 million in 1999 due
primarily to industry-related decreases in customer demand and absence of longer duration ERP and Y2K-related projects in the 2000 period. Information Technology revenues were also impacted by the
trend toward smaller and shorter duration e-solutions projects and away from traditional IT services. On a pro forma basis (including Norrell as if it were acquired at the beginning of
1999), revenues were down 15% from $890.2 million in 1999. The decline in revenues from 1999 pro forma levels was primarily due to the reasons outlined above. Revenues by service line for the
year within the group were comprised of 65% consulting, 7% managed staffing, 1% outsourcing, 1% search/recruitment and 26% flexible staffing. As a percentage of total Information Technology revenues,
managed staffing increased from a 1999 pro forma level of 5% reflecting increases in help desk services, while consulting revenue decreased from 67% due to the industry-related decreases previously
described. All other service line revenue percentages were about the same in 2000 as compared with 1999.

Gross
profit decreased 9% to $241.9 million in 2000 from $266.3 million in 1999 and the overall gross profit percentage decreased to 32.0% in 2000 from 34.1% in 1999 due
primarily to lower utilization of consultants. On a pro forma basis, gross profit percentage for 2000 was lower than the 1999 level of 33.4%. This decrease was also due to lower utilization of
consultants.

Segment
operating margin (earnings before unallocated central costs, net interest expense, income taxes and special charges) decreased 45% to $38.6 million in 2000 from
$70.1 million in 1999. Lower operating margin in 2000 was due primarily to the decrease in gross profit of $24.4 million discussed above, higher operating expenses of $5.4 million
and higher amortization expense of $1.7 million. Operating costs as a percentage of revenues, net of the impact from cost reduction initiatives, increased from 24% in 1999 to 26% in 2000 due to
Norrell-related integration costs and the overall decline in revenue. Cost-reduction initiatives within this segment have been ongoing and include office closures and headcount reductions.
Management has actively addressed the level of infrastructure costs for this business unit, but cost reduction actions have not kept pace with sequential quarterly revenue declines. A major portion of
management effort for 2001 is being directed at properly sizing this segment's infrastructure.

Professional Services.Revenues increased 37% to $1.31 billion in 2000 from $951.8 million in 1999, with
most of the increase due to the acquisition of Norrell's outsourcing business and strong organic growth in the domestic and European search/recruitment businesses. On a pro forma basis, revenues
increased 15% from $1.13 billion in 1999 due primarily to growth in outsoucing and European search/recruitment.
Revenues by service line within the group were comprised of 4% consulting, 24% outsourcing, 32% search/recruitment and 40% flexible staffing. As a percentage of total Professional Services revenues,
search/recruitment revenues increased from a 1999 pro forma level of 28%, while flexible staffing decreased from a 1999 pro forma level of 42%. The shift in mix was due primarily to a strong permanent
placement market as unemployment levels were low in most of Spherion's markets during 2000.

Gross
profit increased 37% to $639.7 million in 2000 from $468.4 million in 1999 and the gross profit percentage decreased slightly from 49.2% in 1999 to 49.0% in 2000.
On a pro forma basis, gross profit percentage for 2000 was higher than the 1999 level of 45.3% due to the increase in proportion of search/recruitment revenues to total revenue.

Segment
operating margin increased 39% to $142.4 million in 2000 from $102.3 million in 1999. Higher operating margin compared with the prior year was due primarily to
the increase in gross profit of $171.3 million discussed above, which was partially offset by higher operating expenses of $128.8 million, mostly for permanent placement commissions, and
higher amortization expense of $2.4 million. As a percentage of revenues, operating expenses decreased slightly from 37% in 1999 to 36% in 2000 due primarily to the inclusion of the outsourcing
business in 2000 (which classifies most of its expenses in gross profit) and greater leveraging of operating expenses.

17

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Commercial Staffing.Revenues increased 17% to $1.68 billion in 2000 from $1.43 billion in 1999 due to
the Norrell acquisition. On a pro forma basis, revenues decreased 10% from $1.86 billion due primarily to the impact of Norrell acquisition-related integration efforts, economic slowdown in the
U.S. in the fourth quarter of 2000 and elimination of unprofitable and lower margin business. Revenues by service line within the group were comprised of 35% managed staffing, 2% search/recruitment
and 63% flexible staffing. As a percentage of total Commercial Staffing revenues, flexible staffing and search/recruitment increased from 1999 pro forma levels of 62% and 1%, respectively, while
managed staffing decreased from a 1999 pro forma level of 37%.

Gross
profit increased 18% to $360.1 million in 2000 from $304.1 million in 1999 due primarily to the Norrell acquisition. The gross profit percentage increased to 21.5%
in 2000 from 21.2% in 1999 and 21.0% on a 1999 pro forma basis, due to the elimination of lower margin business, reduction in state unemployment taxes and an increase in search/recruitment business.

Segment
operating margin increased 27% to $71.6 million in 2000 from $56.2 million in 1999. Higher operating margin in 2000 was due primarily to the increase in gross
profit of $56.0 million discussed
above partially offset by higher operating expenses of $35.5 million and higher amortization of $5.1 million, due primarily to the Norrell acquisition. Operating expenses as a percentage
of revenue decreased from 17% for 1999 to 16% for 2000, as Spherion was able to leverage fixed costs by eliminating redundant personnel and offices at the time of the Norrell acquisition. The segment
operating margin increased from 3.9% of revenues in 1999 to 4.3% in 2000.

Unallocated Central Costs.Unallocated central costs increased 48% to $51.1 million in 2000 from
$34.4 million in 1999, due primarily to the Norrell acquisition and related integration costs. These costs as a percentage of consolidated revenues increased to 1.4% in 2000 from 1.1% in 1999
due primarily to costs associated with the delay in conversion of Norrell's back and front office systems to common platforms which was substantially completed late in the fourth quarter of 2000.

Interest Expense, Net.Interest expense, net increased 39% to $50.4 million in 2000 from $36.3 million in
1999. The increase reflects higher average borrowings outstanding during 2000 related to the Norrell acquisition and increased borrowings to fund higher working capital needs due to an increase in
day's sales outstanding, franchise buybacks and earnouts, as well as slightly higher overall average interest rates. Spherion had average borrowings outstanding during 2000 of $813.4 million at
an average interest rate including the effects of interest rate swaps of 6.8%. During 1999, Spherion had average borrowings outstanding of $635.4 million at an average interest rate including
the effects of interest rate swaps of 6.0%. Interest income remained relatively unchanged at $2.5 million in 2000 compared with $3.0 million in 1999.

Write-down of Investment.During the second quarter of 2000, Spherion made an equity investment in
Worldwide Xceed Group, Inc., an internet-focused consulting group. In the fourth quarter of 2000, Spherion determined that the decline in value of this investment was other than temporary and
recorded a pre-tax charge to earnings of $24.8 million ($15.4 million after-tax, or $0.22 per diluted share).

Income Taxes.The effective income tax rate for 2000 was 41.0% compared with 42.8% (or 42.0% before Year 2000 costs and
restructuring and integration costs) in 1999. The decrease in the effective rate resulted primarily from higher levels of Work Opportunity tax credits.

Net Earnings.Net earnings increased 5% to $74.5 million ($1.16 per diluted share) in 2000 from
$70.8 million ($1.27 per diluted share) in the prior year period. Excluding the after-tax impact of special charges (write-down of investment, Year 2000 costs, and
restructuring and integration costs) diluted earnings per share were $1.38 in 2000 compared with $1.61 in 1999. The weighted average number of shares (as adjusted for the dilutive impact of common
stock equivalents) increased from 60.8 million in 1999 to 69.8 million in 2000 due to the issuance of 20.8 million shares in July 1999 related to the Norrell acquisition,
partially offset by stock repurchases. For 1999, Spherion's fiscal year included 53 weeks

18

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whereas 2000 included 52 weeks. The extra week in 1999 resulted in approximately $40.4 million in additional revenue, but net earnings benefited by less than $500,000 as the 53rd
week was a holiday week.

Fiscal 1999 Compared with 1998

Information Technology.Revenues increased 92% from $407.7 million in 1998 to $781.7 million in 1999.
Excluding the impact of Norrell, revenues increased 65% in 1999 compared with 1998. The increase in revenues is due primarily to fourth quarter 1998 acquisitions of Computer Power in Australia and
Ouranos in The Netherlands and strong organic growth in IT consulting during the first half of 1999. On a pro forma basis (including Norrell as if it were acquired at the beginning of 1999), revenues
by service line for 1999 within this business segment were comprised of 67% consulting, 5% managed staffing, 2% outsourcing, 1% search/recruitment and 25% flexible staffing. As a percentage of total
Information Technology revenues, consulting increased from a 1998 level of 63%, while managed staffing revenue decreased from 8% due primarily to the previously mentioned acquisitions. All other
service line revenue percentages were about the same in 1999 on a pro forma basis as compared with 1998.

Gross
profit increased 77% from $150.0 million in 1998 to $266.3 million in 1999, however the overall gross profit percentage decreased to 34.1% in 1999 from 36.8% in
1998. Excluding the impact of Norrell in 1999, the gross profit percentage was 35.0%. The decrease in gross profit percentage was due primarily to the inclusion of Computer Power's flexible staffing
business in 1999.

Segment
operating margin increased 66% from $42.3 million in 1998 to $70.1 million in 1999. Higher operating margin in 1999 was due primarily to the increase in gross
profit of $116.3 million partially offset by increased operating expenses of $83.5 million and higher amortization expense of $5.0 million due primarily to the Computer Power and
Norrell acquisitions. Operating costs as a percentage of revenues decreased from 26% in 1998 to 24% in 1999 with higher revenues allowing greater leveraging of expenses.

Professional Services.Revenues increased 58% from $601.9 million in 1998 to $951.8 million in 1999.
Excluding the impact of Norrell, revenues increased 27% in 1999 compared with 1998. The increase in revenue is due primarily to strong organic growth in European flexible staffing and both European
and domestic search/recruitment business. On a pro forma basis, revenues by service line for 1999 within
the group were comprised of 5% consulting, 25% outsourcing, 28% search/recruitment and 42% flexible staffing. As a percentage of total Professional Services revenues, outsourcing revenues increased
from a 1998 level of 1%, while search/recruitment and flexible staffing decreased from 40% and 54%, respectively. The shift in mix was due primarily to acquired outsourcing business from the Norrell
acquisition.

Gross
profit increased 37% from $340.9 million in 1998 to $468.4 million in 1999 and the gross profit percentage decreased from 56.6% in 1998 to 49.2% in 1999. Excluding
the impact of Norrell in 1999, the gross profit percentage was 55.9%. The decline in gross profit percentage was due primarily to a change in mix in our European operations as flexible staffing
increased as a percentage of total European Professional Services revenue and search/recruitment decreased.

Segment
operating margin increased 46% from $69.8 million in 1998 to $102.3 million in 1999. Higher operating margin compared with the prior year was due primarily to
the increase in gross profit of $127.5 million, which was partially offset by higher operating expenses of $92.2 million, due to growth in European search/recruitment business and the
impact of the Norrell acquisition, and higher amortization expense of $2.8 million, due to the Norrell acquisition. As a percentage of revenues, operating expenses decreased from 42% for 1998
to 36% in 1999 due primarily to the addition of Norrell's outsourcing business which has a lower proportionate amount of selling, general and administrative expenses.

Commercial Staffing.Revenues increased 63% from $880.5 million in 1998 to $1.43 billion in 1999.
Excluding the impact of Norrell, revenues increased 19% in 1999 compared with 1998. The increase in revenue was due primarily to increased managed staffing revenue through the expansion in North
America of the On-Premise program, increased flexible staffing revenue from the acquisitions of AGO in The Netherlands in July 1998 and Tutor in March 1999, and conversion of
a franchise operation to company-

19

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owned. On a pro forma basis, revenues by service line for 1999 within the group were comprised of 37% managed staffing, 1% search/recruitment and 62% flexible staffing. As a percentage of total
Commercial Staffing revenues, managed staffing increased from a 1998 level of 30%, while flexible staffing decreased from 68% due primarily to the mix of business acquired in the Norrell acquisition
and expansion of On-Premise mentioned previously.

Gross
profit increased 48% from $205.3 million in 1998 to $304.1 million in 1999 and the overall gross profit percentage decreased to 21.2% from 23.3%. Excluding the
impact of Norrell in 1999, the gross profit percentage was 21.5%. The decline in gross profit percentage was due primarily to lower pricing
associated with business expansion at existing On-Premise clients and higher self-insured workers' compensation costs.

Segment
operating margin increased 41% from $39.9 million in 1998 to $56.2 million in 1999. Higher operating margin in 1999 was due primarily to the increase in gross
profit of $98.8 million partially offset by higher operating expenses of $78.6 million and higher amortization expense of $3.9 million, due primarily to the Norrell acquisition.
In addition, the increase in operating expenses was due to an increase in licensee commissions. Excluding Norrell, licensee commissions increased consistent with the increase in Spherion licensee
revenue. Operating expenses as a percentage of revenue decreased from 18% for 1998 to 17% for 1999 due primarily to the leveraging of expenses and Norrell-related licensee commissions being paid at a
lower rate than Spherion licensees.

Unallocated Central Costs.Unallocated central costs increased 51% from $22.8 million in 1998 to
$34.4 million in 1999 due primarily to costs related to the Norrell acquisition. These costs as a percentage of consolidated revenues of 1.1% in 1999 were slightly lower than the 1998 level of
1.2%.

Interest Expense, Net.Interest expense, net increased 52% to $36.3 million in 1999 from $23.8 million in
1998. The increase reflects higher average borrowings outstanding during 1999 to fund acquisitions and lower interest income partially offset by lower average interest rates. Spherion had average
borrowings outstanding during 1999 of $635.4 million at an average interest rate including the effects of interest rate swaps of 6.0%. During 1998, Spherion had average borrowings outstanding
of $452.5 million at an average interest rate including the effects of interest rate swaps of 6.5%. Interest income was $3.3 million lower in 1999 compared with 1998 due to higher cash
balances as a result of second quarter 1998 common stock and notes offerings.

Year 2000 Costs.Year 2000 costs represent the costs associated with remediating Norrell's application systems. These
costs include both personnel costs related to project management, programming and hardware and software upgrades. Year 2000 costs expensed in 1999 were $4.4 million (or $0.04 per diluted
share).

Restructuring and Integration Costs.During 1999, Spherion incurred approximately $29.5 million (or $0.30 per
diluted share) of restructuring and integration costs related to a plan adopted by management in which certain redundant functions and assets of Spherion, as a result of the Norrell acquisition, were
eliminated. See further discussion on these costs in the "Restructuring and Integration" section below.

Income Taxes.The effective income tax rate was 42.8% (or 42.0% before Year 2000 costs and restructuring and
integration costs) in 1999 compared with 44.4% in 1998. The decrease in the effective rate
resulted primarily from an increase in pre-tax earnings, Work Opportunity tax credits and lower state income taxes.

Net Earnings.Net earnings increased 21% to $70.8 million ($1.27 per diluted share) from $58.6 million
($1.29 per diluted share) in 1998 before the extraordinary item. Excluding the after-tax impact of special charges (Year 2000 costs and restructuring and integration costs) diluted
earnings per share were $1.61. This per share amount represents an increase in 1999 of 25% compared with 1998 (before the extraordinary item). The weighted average number of shares (as adjusted for
the dilutive impact of

20

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common stock equivalents) increased from 48.2 million in 1998 to 60.8 million in 1999 due to the issuance of 20.8 million shares in July 1999 related to the Norrell
acquisition. For 1999, Spherion's fiscal year included 53 weeks whereas 1998 included 52 weeks. The extra week in 1999 resulted in approximately $40.4 million in additional revenue, but net
earnings benefited by less than $500,000 as the 53rd week was a holiday week.

Liquidity And Capital Resources



Historically, Spherion has financed its operations through cash generated by operating activities and bank lines of credit. Spherion's principal uses of cash
are funding acquisitions, capital expenditures, working capital needs and repayment of debt. The nature of Spherion's business requires payment of wages to its flexible staff and consultants on a
weekly or bi-weekly basis, while payments from clients are generally received 30-60 days after billing. Spherion believes that its internally generated funds and lines
of credit are sufficient to support operating activities during the next 12 months.

Cash
provided by operating activities in 2000 was $146.1 million compared with cash provided in 1999 of $148.1 million and cash provided in 1998 of $70.4 million.
Lower operating cash flows during 2000, compared with 1999, resulted from increased working capital needs, partially offset by higher earnings and the impact of higher amortization, depreciation and
other non-cash charges. Cash used by changes in working capital was $59.1 million this year compared with $15.4 million last year. The increase in cash used for working
capital items resulted primarily from: (1) a decrease in accounts payable, accrued expenses and other liabilities due primarily to the payout of acquisition and restructuring related items;
(2) an increase in receivables due to an increase in days sales outstanding offset by (3) a decrease in
other assets resulting primarily from the liquidation of certain insurance-related deposits of $12.0 million and the receipt of an $8.0 million tax refund related to the final Norrell
tax return. Higher operating cash flows during 1999 compared with 1998 resulted from increased earnings before restructuring costs, higher amortization and depreciation, and increased deferred income
tax expense primarily due to the Norrell acquisition. Higher 1999 operating cash flow also resulted from lower receivable levels due to a decrease in day's sales outstanding, the liquidation of
certain investments previously held by Norrell and an increase in participants and contributions in the deferred compensation plan. The increase in 1999 operating cash flow was partially offset by
higher cash payments to settle liabilities assumed in the acquisition of Norrell and a change in the timing of estimated tax payments in the U.K.

Investing
activities used $168.1 million, $320.5 million and $158.3 million in 2000, 1999 and 1998, respectively. Cash used for investing activities in 2000
reflects the repurchase of license operations to reduce market overlap created by the Norrell acquisition, earnout payments associated with prior acquisitions and strategic investments in eBusiness
alliance partners. Investing activities in 2000 also included $56.2 million of capital expenditures primarily for new computer hardware and software to continue to upgrade and expand Spherion's
information technology capabilities. Cash used for investing activities in 1999 reflects the acquisition of Norrell, which included cash payments of $87.8 million, the remaining payments of
$111.0 million made in the first quarter of 1999 on the December 1998 acquisition of Computer Power, various buybacks of Spherion's license operations, and $55.8 million of
capital expenditures primarily related to new computer hardware and software to upgrade and expand Spherion's information technology capabilities including the new front office system within domestic
flexible staffing and expenditures associated with Spherion's outsourcing business. Investing activities used $158.3 million in 1998 primarily due to acquisitions in the areas of outplacement
and career consulting, technology consulting, accounting search/recruitment and flexible staffing and European flexible staffing. Cash used for investing activities in 1998 also included capital
expenditures of $37.5 million primarily also for new computer hardware and software and new office-related expenditures. Spherion expects the level of capital expenditures for 2001 to be
approximately 30% lower than 2000. In addition, Spherion plans to pay approximately $23.0 million for earnouts (contingent consideration) associated with prior acquisitions.

21

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Cash provided by financing activities was $22.9 million, $56.5 million and $225.7 million in 2000, 1999 and 1998, respectively. Cash provided by financing
activities in 2000 primarily reflects net borrowings, proceeds from employee stock option and purchase plan activity and treasury share purchases of $33.8 million. During 2000, Spherion
purchased approximately 2.6 million shares of its common stock at an average price of $13.04 per share. At December 29, 2000, Spherion had 3.5 million shares remaining to be
repurchased under a 4.0 million share repurchase program approved in November 2000. Cash provided by financing activities in 1999 primarily reflects net borrowings for the Norrell and
other acquisitions offset by $89.4 million of purchases of Spherion's common stock. As part of the acquisition of Norrell, Spherion assumed $125.5 million in existing Norrell debt, which
was repaid with the proceeds of borrowings under Spherion's credit facilities. Cash provided by financing activities in 1998 primarily reflects proceeds from the common stock and notes offerings,
offset by repayment of borrowings under Spherion's existing credit facilities. In May 1998, Spherion completed an offering of 7.0 million shares of
its common stock, resulting in proceeds to Spherion of approximately $197.0 million net of issuance costs and offering expenses. Concurrently with the common stock Offering, Spherion completed
an offering of $207.0 million of 41/2% Convertible Subordinated Notes due 2005, resulting in proceeds to Spherion of approximately $201.3 million net of issuance costs and
offering expenses. A portion of the proceeds from the common stock and notes offerings was used to repay borrowings under Spherion's existing credit facilities and for acquisitions. The balance of the
proceeds was used for general corporate purposes, including strategic acquisitions.



Spherion has a multi-currency syndicated credit agreement ("Revolving Loan Facility") with a total capacity of $675.0 million, which terminates in 2004.
Outstanding borrowings at December 29, 2000 subject to this Revolving Loan Facility were $242.0 million in revolving loans and $9.5 million in loan notes to prior shareholders of
Michael Page with $221.5 million of the revolving loans and loan notes denominated in British pound sterling and $30.0 million denominated in U.S. dollars. Borrowings under this
Revolving Loan Facility are unsecured. The Revolving Loan Facility is available to fund Spherion's acquisitions, to supply working capital and to provide for general corporate needs. Interest rates on
amounts outstanding under the Revolving Loan Facility are based on LIBOR plus a variable margin. The Revolving Loan Facility contains customary covenants, which include restrictions on the payment of
cash dividends, as well as the maintenance of certain financial ratios including minimum net worth, restrictions on the incurrence of liens and additional indebtedness.

In
July 1999, Spherion also added a loan facility secured by Spherion's accounts receivable of $250.0 million ($214.4 million outstanding at December 29,
2000) ("Accounts Receivable Securitization") and issued a $53.0 million Australian dollar term financing ($37.4 million outstanding at December 29, 2000). Interest rates on the
Accounts Receivable Securitization borrowings and the Australian dollar term financing are based on commercial paper market rates and Australian bank bills plus a variable margin, respectively. In
addition, Spherion has established short-term, unsecured lines of credit with certain banks. Interest rates on these lines of credit are based on LIBOR and are available to fund Spherion's
short-term capital requirements. There was approximately $403.8 million available for future borrowings under these agreements at December 29, 2000.

As
part of the sale of Michael Page, Spherion expects to repay the borrowings under the Revolving Loan Facility, the Australian dollar-term financing and the Accounts Receivable
Securitization and renegotiate terms on its remaining credit facilities to more closely match future borrowing requirements.

In
October 2000, Spherion issued $8.0 million of interest-bearing convertible promissory notes due October 1, 2005 in conjunction with the purchase of 80% of the
membership interests of JobOptions, LLC. In May 1998, Spherion issued $207.0 million of 41/2% Convertible Subordinated Notes due June 1, 2005. See notes to
the consolidated financial statements for discussion of the 41/2% Convertible Subordinated Notes.

22

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Restructuring and Integration

During 1999, Spherion incurred approximately $29.5 million of restructuring and integration costs related to a plan (the "Plan") adopted by management
in which certain redundant functions and assets of Spherion, as a result of the Norrell acquisition, would be eliminated. This included restructuring charges of $12.8 million and nonrecurring
integration costs of $16.7 million.

Restructuring
costs and charges of $12.8 million include employee severance costs of approximately $3.7 million and facility closure costs of $7.0 million
primarily relating to the elimination of redundant branch locations. The facility closure costs include approximately $5.0 million in lease termination costs and approximately
$2.0 million in losses on the disposition of facility related fixed assets, primarily the write-off of leasehold improvements on closed branch locations and write-down
of furniture and fixtures to their estimated fair value, determined by comparable market information. In addition, as part of the Plan, Spherion recorded a charge of approximately $2.1 million
for the write-off of certain software programs that will no longer be utilized as a result of the acquisition. These assets were taken out of service at the time of the
write-down and consequently were not depreciated further after the write-down.

During
the second quarter of 2000, remaining accruals of approximately $3.0 million were identified that were not needed, primarily the result of the buyout of existing lease
obligations at better than expected rates and this $3.0 million was reversed to income. Spherion then undertook additional restructuring actions in the amount of $3.2 million. These
additional actions included the elimination of 71 positions, with most of these positions being administrative personnel within the Information Technology segment, and the closure of an additional 14
offices.

An
analysis of the restructuring accrual is as follows (dollar amounts in thousands):

|                    |  | Original
Plan
Charge |        | Utilized
During
Fiscal
1999 |   | Accrual at
Dec. 31,
1999 |   | Reversal
of Over
Accrual |       | 2000
Restructuring
Actions |   | Utilized
During
Fiscal
2000 |   | Accrual at
Dec. 29,
2000
|------------------- |  | -------------------- | ------ | --------------------------- | - | ------------------------ | - | ------------------------ | ----- | -------------------------- | - | --------------------------- | - | ------------------------
|Facility closures   |  | $                    | 6,992  |                             | $ | (1,340                   | ) | $                        | 5,652 |                            | $ | (2,007                      | ) | $                       
|Severance           |  |                      | 3,650  |                             |   | (1,465                   | ) |                          | 2,185 |                            |   | (978                        | ) |                         
|Asset write-offs    |  |                      | 2,108  |                             |   | (2,108                   | ) |                          |      |                            |   |                            |   |                         
|                    |  |                      |        |                             |   |                          |   |                          |       |                            |   |                             |   |                         
|Total charge        |  | $                    | 12,750 |                             | $ | (4,913                   | ) | $                        | 7,837 |                            | $ | (2,985                      | ) | $                       
|                    |  |                      |        |                             |   |                          |   |                          |       |                            |   |                             |   |                         
|Number of offices   |  |                      | 43     |                             |   | (22                      | ) |                          | 21    |                            |   |                            |   |                         
|Number of personnel |  |                      | 160    |                             |   | (48                      | ) |                          | 112   |                            |   | (74                         | ) |                         

The remaining accruals, which are included in accounts payable and accrued expenses, relate to lease payments on closed offices that will be
paid out through 2004 and severance costs which will be paid out during 2001.

Nonrecurring
integration costs of approximately $16.7 million included approximately $7.6 million in cost relating to employees whose positions were eliminated and were
involved solely in exit functions and systems integrations, approximately $5.0 million in consulting costs primarily related to systems integrations, approximately $2.6 million for a
one-time acquisition completion incentive bonus, approximately $0.7 million in relocation of employees and approximately $0.8 million in other related integration costs.
Substantially all these costs were paid by December 31, 1999, and any remaining amounts were paid by December 29, 2000.

Inflation

The effects of inflation on Spherion's operations were not significant during the periods presented in the financial statements.

23

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Impact of the Euro

The Euro was introduced on January 1, 1999, at which time the participating European Monetary Union member countries established fixed conversion rates
between their existing currencies (legacy currencies) and the Euro. The legacy currencies will continue to be used as legal tender through January 1, 2002. Spherion has initiated an internal
analysis regarding the business and systems issues related to the Euro conversion and has begun a comprehensive action plan to ensure that all necessary modifications are made on a timely basis. The
costs of addressing the Euro conversion are not expected to be material. Depending upon the type of cost, the amount will be charged to operations as incurred or capitalized as software consistent
with Spherion's policies. Spherion believes that the conversion to the
Euro will not have a significant impact on the marketing strategy for Spherion's international operations. Spherion has studied the implications of the overall Euro conversion and does not expect it
to have a material impact on Spherion's financial condition or results of operations upon adoption.

Seasonality And Cyclicality Of Business

Spherion's businesses are not seasonal in nature. However, the staffing industry has historically been considered to be cyclical, often acting as a
coincidental indicator of both economic downswings and upswings. Spherion believes that the balance between its service lines somewhat reduces the impact of cyclicality, but the company remains
subject to economic downswings and upswings. Spherion's business unit, Talent Solutions, which specializes in outplacement, is also expected to mitigate the impact of cyclicality as outplacement
growth rates amplify during a slower economy, offsetting other services, which may be fairly sensitive to economic declines.

Other

In June 1998, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (the "Statement" or "SFAS No. 133"). The Statement establishes accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes
in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge
accounting. Spherion will adopt the provisions of SFAS No. 133, as amended, in the first quarter of 2001 and record a cumulative pre-tax reduction to earnings of $1.8 million
($1.1 million after-tax).

In
December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides specific guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. Spherion's revenue recognition policies were conformed to the
provisions of SAB 101 in the fourth quarter of 2000. Such action did not have a material impact on results of operations.

24

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Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 29, 2000, Spherion maintains a portion of its cash and cash equivalents in financial instruments with original maturities of three months
or less. These financial instruments are subject to interest rate risk and will decline in value if interest rates increase. Due to the short duration of these financial instruments, an immediate
increase of 1% in interest rates would not have a material effect on Spherion's financial condition.

Spherion's
outstanding variable rate debt at December 29, 2000 and December 31, 1999 was $569.1 million and $522.7 million, respectively. Interest rates on
the Revolving Loan Facility and other short-term borrowings are based on LIBOR plus a variable margin. Interest rates on the Accounts Receivable Securitization borrowings and the
Australian dollar term financing are based on commercial paper market rates and Australian bank bills plus a variable margin, respectively. Based on the outstanding balance, a change of 1% in the
interest rate would cause a change in interest expense of approximately $5.7 million and $5.2 million in 2000 and 1999, respectively, on an annual basis not considering the offset of the
interest rate swap discussed below.

Spherion
utilizes interest rate swap agreements to reduce the impact on interest expense of fluctuating interest rates on its variable-rate debt. Spherion had a variable-to-variable
interest rate swap agreement outstanding as of December 29, 2000 and December 31, 1999 with the notional amount of $112.0 million and $121.4 million, respectively, which
effectively converts interest from a British pound LIBOR basis to a broader index and caps Spherion's exposure to upward movement in rates at 8.5%. This agreement expires in 2002. The fair value of
the outstanding interest rate swap as of December 29, 2000 and December 31, 1999 was $1.6 million and $1.3 million, respectively. Spherion expects to terminate this swap
agreement as a result of the anticipated sale of Michael Page as most variable-rate debt is expected to be retired.

In
May 1998, Spherion issued $207.0 million of 41/2% Convertible Subordinated Notes due June 2005. The fair value of Spherion's fixed rate
convertible subordinated debt as of December 29, 2000 and December 31, 1999 was $140.6 million and $183.7 million, respectively, compared with the related carrying value of
$207.0 million.

The
purpose of Spherion's foreign exchange hedging activities is to mitigate the impact of changes in foreign currency exchange rates. Spherion attempts to hedge transaction exposures
through natural offsets. To the extent this is not practicable, exposure areas that are considered for hedging include
foreign currency denominated receivables and payables, intercompany loans, firm committed transactions and dividends related to foreign subsidiaries. Spherion uses financial instruments, principally
forward exchange contracts, in its management of foreign currency exposures. Spherion does not enter into forward contracts for trading purposes. At December 29, 2000 and December 31,
1999, Spherion had outstanding foreign currency forward contracts to sell Australian dollars in the notional amount of $82.6 million and $76.9 million, respectively. Termination of the
foreign currency forward contracts as of December 29, 2000 and December 31, 1999 would have resulted in a gain of $11.4 million and a loss of $0.1 million, respectively.

25

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Forward-looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Spherion. Spherion and its
representatives may from time to time make written or oral statements that are "forward-looking," including statements contained in this report and other filings with the Securities and Exchange
Commission and in reports to Spherion's stockholders. Statements contained in this Annual Report filed on Form 10-K which may be forward-looking but are not limited to statements
regarding the following: (i) Spherion's plans, intentions and expectations with respect to its future prospects, including its business and growth strategies; (ii) industry trends and
competitive conditions; (iii) expected capital expenditures to be made in the future; (iv) resolution of pending litigation without material adverse effect on Spherion;
(v) Spherion's expectations about the transition to the Euro; (vi) Spherion's quantitative and qualitative estimates as to market risk; and (vii) Spherion's plans with respect to
the sale of Michael Page. These forward-looking statements are subject to a number of risks and uncertainties. Among others, factors that could cause actual results to differ materially from
Spherion's beliefs or expectations are the following: industry trends and trends in the general economy; competitive factors in the markets in which Spherion operates; changes in regulatory
requirements which are applicable to Spherion's business; and other factors referenced herein or from time to time in Spherion's filings with the Securities and Exchange Commission.

26

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INDEPENDENT AUDITORS' REPORT

To the Board of Directors
  of Spherion Corporation
Fort Lauderdale, Florida

We
have audited the accompanying consolidated balance sheets of Spherion Corporation (formerly Interim Services Inc.) and subsidiaries ("Spherion") as of December 29, 2000 and
December 31, 1999, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 29, 2000. Our audits
also included the financial statement schedule listed in the Index at Item 14. These financial statements and financial statement schedule are the responsibility of Spherion's management. Our
responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Spherion Corporation and subsidiaries as of December 29, 2000 and
December 31, 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 2000 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

DELOITTE &
TOUCHE LLP
Certified Public Accountants

Fort
Lauderdale, Florida
February 8, 2001, except for paragraph 5 of the Commitments and Contingencies footnote, as to which the date is March 7, 2001

27

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(amounts in thousands, except per share amounts)

|                                                                               |                                                     | Fiscal Years Ended |          
|------------------------------------------------------------------------------ | --------------------------------------------------- | ------------------ | ---------
|
|Revenues                                                                       |                                                     | $                  | 3,740,823
|Cost of services                                                               |                                                     |                    | 2,499,150
|                                                                               |                                                     |                    |          
|                                                                               | Gross profit                                        |                    |          
|                                                                               |                                                     |                    |          
|Selling, general and administrative expenses                                   |                                                     |                    | 925,927  
|Licensee commissions                                                           |                                                     |                    | 70,871   
|Amortization of intangibles                                                    |                                                     |                    | 43,374   
|Interest expense                                                               |                                                     |                    | 52,947   
|Interest income                                                                |                                                     |                    | (2,523   
|Write-down of investment                                                       |                                                     |                    | 24,766   
|Year 2000 costs                                                                |                                                     |                    |         
|Restructuring and integration costs                                            |                                                     |                    |         
|                                                                               |                                                     |                    |          
|                                                                               |                                                     |                    | 1,115,362
|                                                                               |                                                     |                    |          
|                                                                               | Earnings before income taxes and extraordinary item |                    |          
|Income taxes                                                                   |                                                     |                    | 51,785   
|                                                                               |                                                     |                    |          
|                                                                               | Earnings before extraordinary item                  |                    |          
|Extraordinary itemearly extinguishment of debt, net of income taxes of $1,849 |                                                     |                    |         
|                                                                               |                                                     |                    |          
|                                                                               | Net earnings                                        |                    | $        
|                                                                               |                                                     |                    |          
|Basic earnings per share:                                                      |                                                     |                    |          
|Earnings before extraordinary item                                             |                                                     | $                  | 1.17     
|Extraordinary item                                                             |                                                     |                    |         
|                                                                               |                                                     |                    |          
|Net earnings                                                                   |                                                     | $                  | 1.17     
|                                                                               |                                                     |                    |          
|Diluted earnings per share:                                                    |                                                     |                    |          
|Earnings before extraordinary item                                             |                                                     | $                  | 1.16     
|Extraordinary item                                                             |                                                     |                    |         
|                                                                               |                                                     |                    |          
|Net earnings                                                                   |                                                     | $                  | 1.16     
|                                                                               |                                                     |                    |          
|Basic weighted average shares outstanding                                      |                                                     |                    | 63,728   
|                                                                               |                                                     |                    |          
|Diluted weighted average shares outstanding                                    |                                                     |                    | 69,757   
|                                                                               |                                                     |                    |          

See
notes to Consolidated Financial Statements.

28

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SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)

|                                              |                                                                                                    | Dec. 29, 2000 |                            | Dec. 31, 1999 |  
|--------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------- | -------------------------- | ------------- | -
|Assets                                        |                                                                                                   
|Current Assets:                               |                                                                                                    |               |                            |               |  
|                                              | Cash and cash equivalents                                                                          |               | $                          | 38,457        |  
|                                              | Receivables, less allowance for doubtful accounts of $21,643 and $16,956                           |               |                            | 607,438       |  
|                                              | Deferred tax asset                                                                                 |               |                            | 29,946        |  
|                                              | Other current assets                                                                               |               |                            | 49,288        |  
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    |               | Total current assets       |               |  
|Goodwill, net                                 |                                                                                                    |               | 1,334,754                  |               |  
|Tradenames and other intangibles, net         |                                                                                                    |               | 180,611                    |               |  
|Property and equipment, net                   |                                                                                                    |               | 149,093                    |               |  
|Deferred tax asset                            |                                                                                                    |               | 59,740                     |               |  
|Other assets                                  |                                                                                                    |               | 33,893                     |               |  
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    | $             | 2,483,220                  |               | $
|                                              |                                                                                                    |               |                            |               |  
|Liabilities and Stockholders' Equity          |                                                                                                   
|Current Liabilities:                          |                                                                                                    |               |                            |               |  
|                                              | Current portion of long-term debt                                                                  |               | $                          | 286,203       |  
|                                              | Accounts payable and other accrued expenses                                                        |               |                            | 179,387       |  
|                                              | Accrued salaries, wages and payroll taxes                                                          |               |                            | 220,442       |  
|                                              | Other current liabilities                                                                          |               |                            | 31,453        |  
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    |               | Total current liabilities  |               |  
|Long-term debt, net of current portion        |                                                                                                    |               | 282,914                    |               |  
|Convertible subordinated notes                |                                                                                                    |               | 206,997                    |               |  
|Other long-term liabilities                   |                                                                                                    |               | 85,274                     |               |  
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    |               | Total liabilities          |               |  
|                                              |                                                                                                    |               |                            |               |  
|Commitments and contingencies (see footnotes) |                                                                                                    |               |                           |               |  
|Stockholders' Equity:                         |                                                                                                    |               |                            |               |  
|                                              | Preferred stock, par value $.01 per share; authorized 2,500,000 shares; none issued or outstanding |               |                            |              |  
|                                              | Common stock, par value $.01 per share; authorized 200,000,000 shares; issued 65,341,425 shares    |               |                            | 653           |  
|                                              | Treasury stock, at cost, 3,587,793 and 1,751,143 shares                                            |               |                            | (50,732       | )
|                                              | Additional paid-in capital                                                                         |               |                            | 870,202       |  
|                                              | Retained earnings                                                                                  |               |                            | 407,624       |  
|                                              | Accumulated other comprehensive loss                                                               |               |                            | (37,197       | )
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    |               | Total stockholders' equity |               |  
|                                              |                                                                                                    |               |                            |               |  
|                                              |                                                                                                    | $             | 2,483,220                  |               | $
|                                              |                                                                                                    |               |                            |               |  

See
notes to Consolidated Financial Statements.

29

---

SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For Fiscal Years Ended December 29, 2000, December 31, 1999 and December 25, 1998
(amounts in thousands, except share data)

|                                                                                           |                             | Common
Stock                             |     | Treasury
Stock |   | Additional
Paid-in
Capital |   | Retained
Earnings |         | Accumulated
Other
Comprehensive
(Loss)/Income |   | Total   |       
|------------------------------------------------------------------------------------------ | --------------------------- | ---------------------------------------- | --- | -------------- | - | -------------------------- | - | ----------------- | ------- | --------------------------------------------- | - | ------- | ------
|Balance as of December 26, 1997                                                            |                             | $                                        | 397 |                | $ |                           |   | $                 | 260,067 |                                               | $ | 206,461 |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Comprehensive income:                                                                      |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Net earnings                |                                          |     |               |   |                            |  |                   |         |                                              |   |         | 55,804
|                                                                                           | Other comprehensive income: |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             | Foreign currency translation adjustments |     |                |  |                            |   |                  |         |                                               |  |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Comprehensive income        |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Sale of 7,000,000 shares of common stock in a public offering, net                         |                             |                                          | 70  |                |   |                           |   |                   | 196,945 |                                               |   |        |       
|Proceeds from exercise of employee stock options, including tax benefit                    |                             |                                          | 5   |                |   |                           |   |                   | 8,966   |                                               |   |        |       
|Proceeds from issuance of shares under Employee Stock Purchase Plan                        |                             |                                          | 1   |                |   |                           |   |                   | 2,054   |                                               |   |        |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Balance as of December 25, 1998                                                            |                             |                                          | 473 |                |   |                           |   |                   | 468,032 |                                               |   | 262,265 |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Comprehensive income:                                                                      |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Net earnings                |                                          |     |               |   |                            |  |                   |         |                                              |   |         | 70,833
|                                                                                           | Other comprehensive loss:   |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             | Foreign currency translation adjustments |     |                |  |                            |   |                  |         |                                               |  |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Comprehensive income        |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Purchase of treasury stock                                                                 |                             |                                          |    |                |   | (89,368                    | ) |                   |        |                                               |   |        |       
|Common stock issued and treasury stock reissued in connection with the Norrell acquisition |                             |                                          | 175 |                |   | 54,182                     |   |                   | 383,025 |                                               |   |        |       
|Proceeds from exercise of employee stock options, including tax benefit                    |                             |                                          | 3   |                |   | 1,498                      |   |                   | 4,821   |                                               |   |        |       
|Proceeds from issuance of shares under Employee Stock Purchase Plan                        |                             |                                          | 2   |                |   | 1,651                      |   |                   | 1,481   |                                               |   |        |       
|Treasury stock reissued and compensation earned in connection with deferred compensation   |                             |                                          |    |                |   | 409                        |   |                   | 11,236  |                                               |   |        |       
|Other                                                                                      |                             |                                          |    |                |   |                           |   |                   | (23     | )                                             |   |        |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Balance as of December 31, 1999                                                            |                             |                                          | 653 |                |   | (31,628                    | ) |                   | 868,572 |                                               |   | 333,098 |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Comprehensive income:                                                                      |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Net earnings                |                                          |     |               |   |                            |  |                   |         |                                              |   |         | 74,526
|                                                                                           | Other comprehensive loss:   |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             | Foreign currency translation adjustments |     |                |  |                            |   |                  |         |                                               |  |         |       
|                                                                                           |                             | Unrealized gain on investment            |     |                |  |                            |   |                  |         |                                               |  |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           | Comprehensive income        |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Purchase of treasury stock                                                                 |                             |                                          |    |                |   | (33,819                    | ) |                   |        |                                               |   |        |       
|Proceeds from exercise of employee stock options, including tax benefit                    |                             |                                          |    |                |   | 7,851                      |   |                   | (1,748  | )                                             |   |        |       
|Proceeds from issuance of shares under Employee Stock Purchase Plan                        |                             |                                          |    |                |   | 5,398                      |   |                   | (1,525  | )                                             |   |        |       
|Treasury stock reissued and compensation earned in connection with deferred compensation   |                             |                                          |    |                |   | 1,466                      |   |                   | 4,895   |                                               |   |        |       
|Other                                                                                      |                             |                                          |    |                |   |                           |   |                   | 8       |                                               |   |        |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       
|Balance as of December 29, 2000                                                            |                             | $                                        | 653 |                | $ | (50,732                    | ) | $                 | 870,202 |                                               | $ | 407,624 |       
|                                                                                           |                             |                                          |     |                |   |                            |   |                   |         |                                               |   |         |       

See notes to Consolidated Financial Statements.

30

---

SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)

|                                                 |                                                                          | Fiscal Years Ended                                                                 |                                                         
|------------------------------------------------ | ------------------------------------------------------------------------ | ---------------------------------------------------------------------------------- | --------------------------------------------------------
|
|Cash Flows from Operating Activities:            |                                                                          |                                                                                    |                                                         
|                                                 | Earnings before extraordinary item                                       |                                                                                    | $                                                       
|                                                 | Adjustments to reconcile earnings to net cash from operating activities: |                                                                                    |                                                         
|                                                 |                                                                          | Depreciation and amortization                                                      |                                                         
|                                                 |                                                                          | Deferred income tax expense/(benefit)                                              |                                                         
|                                                 |                                                                          | Write-down of investment                                                           |                                                         
|                                                 |                                                                          | Restructuring charge                                                               |                                                         
|                                                 |                                                                          | Other non-cash items                                                               |                                                         
|                                                 |                                                                          | Changes in assets and liabilities, net of effects of acquisitions:                 |                                                         
|                                                 |                                                                          |                                                                                    | Receivables                                             
|                                                 |                                                                          |                                                                                    | Other assets                                            
|                                                 |                                                                          |                                                                                    | Accounts payable, accrued expenses and other liabilities
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|Cash Flows from Investing Activities:            |                                                                          |                                                                                    |                                                         
|                                                 | Acquisitions, net of cash acquired                                       |                                                                                    |                                                         
|                                                 | Capital expenditures                                                     |                                                                                    |                                                         
|                                                 | Investment in equity securities                                          |                                                                                    |                                                         
|                                                 | Proceeds from the sale of HealthCare business, net                       |                                                                                    |                                                         
|                                                 | Other                                                                    |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|Cash Flows from Financing Activities:            |                                                                          |                                                                                    |                                                         
|                                                 | Debt proceeds                                                            |                                                                                    |                                                         
|                                                 | Debt repayments                                                          |                                                                                    |                                                         
|                                                 | Net proceeds from common stock offering                                  |                                                                                    |                                                         
|                                                 | Purchase of treasury stock                                               |                                                                                    |                                                         
|                                                 | Proceeds from exercise of employee stock options and stock purchase plan |                                                                                    |                                                         
|                                                 | Other, net                                                               |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|                                                 |                                                                          |                                                                                    |                                                         
|Increase/(decrease) in cash and cash equivalents |                                                                          |                                                                                    | 918                                                     
|Cash and cash equivalents, beginning of period   |                                                                          |                                                                                    | 37,539                                                  
|                                                 |                                                                          |                                                                                    |                                                         
|Cash and cash equivalents, end of period         |                                                                          | $                                                                                  | 38,457                                                  
|                                                 |                                                                          |                                                                                    |                                                         
|Supplemental Cash Flow Information:              |                                                                          |                                                                                    |                                                         
|                                                 | Cash paid during the year for:                                           |                                                                                    |                                                         
|                                                 |                                                                          | Income taxes                                                                       |                                                         
|                                                 |                                                                          | Interest                                                                           |                                                         
|                                                 | Non-cash activities:                                                     |                                                                                    |                                                         
|                                                 |                                                                          | Loan notes and convertible promissory notes issued in connection with acquisitions |                                                         
|                                                 |                                                                          | Payable in connection with purchase of Computer Power                              |                                                         
|                                                 |                                                                          | Stock issuance in connection with the Norrell acquisition                          |                                                         
|                                                 |                                                                          | Reissuance of treasury stock in connection with the Norrell acquisition            |                                                         

See notes to Consolidated Financial Statements.

31

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SPHERION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Spherion Corporation and subsidiaries ("Spherion"), formerly Interim
Services Inc., is a human capital management company which currently operates in 13 countries: Australia, Brazil, Canada, France, Germany, Hong Kong, Italy, New Zealand, Singapore, Spain, The
Netherlands, the United Kingdom and the United States. Through its three operating segments: Information Technology; Professional Services; and Commercial Staffing, Spherion provides the following
services: consulting, managed staffing; outsourcing; search/recruitment; and flexible staffing. Spherion's services focus on providing professionals in the fields of information technology, finance,
law, manufacturing and human resources, as well as clerical, administrative and light industrial staffing. In most of its operating segments Spherion provides the five primary services indicated
above.

Principles of Consolidation The consolidated financial statements include the accounts of Spherion
Corporation and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated. Certain prior year amounts have been restated to conform to the current year
presentation.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in future
periods may be different from those estimates.

Fiscal Year Spherion's fiscal year is comprised of 52 or 53 weeks, ending on the last Friday in December.
The fiscal years ended December 29, 2000 and December 25, 1998 were 52 weeks. The fiscal year ended December 31, 1999 was 53 weeks.

Cash and Cash Equivalents Spherion considers all highly liquid investments with original maturities of
90 days or less at the time of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.

Allowance for Doubtful Accounts Spherion carries accounts receivable at the amount it estimates to be
collectible. Accordingly, Spherion provides allowances for accounts receivable it estimates to be uncollectible based on management's best estimates. Recoveries are recognized in the period they are
received. The ultimate amount of accounts receivable that become uncollectible could differ from those estimated.

Investments Spherion's investments are classified as available-for-sale securities,
reported at fair value and are included in "Other assets" in the Consolidated Balance Sheets. Unrealized gains and losses are reported, net of tax, as a component of stockholders' equity. Unrealized
losses are charged against earnings when a decline in fair value is determined to be other than temporary. The specific identification method is used to determine cost of securities sold.

During
the second quarter of 2000, Spherion made an equity investment in Worldwide Xceed Group, Inc., an internet-focused consulting group. In the fourth quarter of 2000,
Spherion determined that the decline in value of this investment was other than temporary and recorded a pre-tax charge to earnings of $24.8 million ($15.4 million
after-tax, or $0.22 per diluted share).

Intangible Assets Intangible assets consist principally of goodwill and tradenames and are being amortized
on a straight-line basis over periods of approximately 38 years. Spherion evaluates the recoverability of intangible assets, as well as amortization periods, to determine whether an
adjustment to carrying values or a revision to estimated useful lives is appropriate. Recoverability is determined through evaluation of anticipated cash flows on an undiscounted basis. If the
estimated future cash flows are

32

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projected to be less than the carrying value, an impairment write-down would be recorded, measured by the amount of the intangible asset's carrying value in excess of fair value.

Property and Equipment Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of their estimated useful life or the lease term using the
straight-line method. Maintenance and repairs, which do not improve or extend the life of an asset, are expensed as incurred.

Accrued Self-Insurance Losses Spherion retains a portion of the risk under its workers'
compensation, general liability/professional liability, employment practices liability insurance programs and health insurance benefits programs. Reserves have been recorded which reflect the
discounted estimated liabilities including claims incurred but not reported. Workers' compensation losses, general liability/professional liability and employment practices liability losses have been
discounted at approximately 6.0% at December 29, 2000 and December 31, 1999. Such liabilities are necessarily based on estimates and, while management believes that the amount is
adequate, there can be no assurance that changes to management's estimates may not occur due to limitations inherent in the estimation process. Changes in the estimates of these accruals are charged
or credited to earnings in the period determined. Spherion funds portions of its retained risks through deposits with insurance carriers and others. These deposits are reflected in "other current
assets" on the accompanying Consolidated Balance Sheets and reflect the estimated fair market value of such amounts.

Foreign Currency Translation Spherion's foreign operations use the local currency as their functional
currency. Assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. Income statement items are translated at the average exchange rates for
the year. The impact of currency fluctuation is included in stockholders' equity as part of accumulated other comprehensive loss.

Revenue Recognition Spherion generates revenues from sales of services by its own branch and licensed
operations and from royalties earned on sales of services by its franchise operations. Franchise royalties, which are included in revenues, were $8.0 million, $8.8 million and
$9.4 million for the years ended December 29, 2000, December 31, 1999 and December 25, 1998, respectively. Revenues and the related labor costs and payroll taxes are
recorded in the period in which flexible staffing services are performed. Revenues on placements are recognized when services provided are substantially completed. Allowances are established to
estimate losses due to placed candidates not remaining employed for Spherion's guarantee period.

Spherion
utilizes two forms of franchising agreements. Under the first form, Spherion records franchise royalties, based upon the contractual percentage of franchise sales, in the
period in which the franchisee provides the service. Under the second form (termed "licensee" by Spherion), revenues generated by the licensee and related direct costs are included as part of
Spherion's revenues and cost of services, respectively. The net distribution paid to the licensee is based upon a percentage of the gross profit generated, and is captioned "licensee commissions" in
the Consolidated Statements of Earnings.

Income Taxes Deferred taxes arise from temporary differences between the tax basis of an asset or liability
and its reported amount in the financial statements. Spherion does not provide for U.S. income taxes on the undistributed earnings of foreign operations as such earnings are considered to be invested
for an indefinite period of time and such earnings will only be repatriated when tax effective to do so. At December 29, 2000 and December 31, 1999, undistributed earnings of foreign
subsidiaries totaled
$104.7 million and $33.4 million, respectively. It is not practicable to estimate the amount of the deferred tax liability on such earnings; however, foreign tax credits would be
available to reduce U.S. income taxes in the event of distribution of earnings of foreign subsidiaries.

Earnings Per Share Basic earnings per share is computed by dividing Spherion's earnings by the weighted
average number of shares outstanding during the period. Diluted earnings per share is computed

33

---

by dividing Spherion's earnings plus the after-tax interest on convertible notes, by the weighted average number of shares outstanding and the impact of all potential dilutive common
shares, primarily stock options and convertible subordinated notes. The dilutive impact of stock options is determined by applying the treasury stock method and the dilutive impact of the convertible
subordinated notes is determined by applying the "if converted" method.

Derivative Financial Instruments Spherion enters into interest rate swap agreements and foreign exchange
forward contracts as part of the management of its interest rate and foreign currency exchange rate exposures; it has no derivative financial instruments held for trading purposes and none of the
instruments are leveraged. All financial instruments are put into place to hedge specific exposures. Amounts to be paid or received under swap agreements are recognized over the terms of the
agreements as adjustments to interest expense. Amounts receivable or payable under the agreements are included in receivables or accrued expenses in the Consolidated Balance Sheets. Gains and losses
on foreign currency forward contracts offset gains and losses resulting from the underlying transactions. Gains and losses on contracts that hedge specific foreign currency commitments are deferred
and recorded in net earnings in the period in which the underlying transaction is recorded.

Stock-based Compensation Spherion accounts for stock-based compensation to employees using the intrinsic
value method as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, compensation cost for stock
options issued to employees is measured as the excess, if any, of the quoted market price of Spherion's stock at the date of grant over the amount an employee must pay for the stock. Compensation cost
related to restricted stock or deferred stock units granted is recognized in the period the compensation is earned and measured using the quoted market price on the effective grant date.

Research and Development Syndicates Spherion participated in two research and development syndicates ("R&D
Syndicates") through its Australian subsidiary. The R&D Syndicates were formed under special legislation in Australia to promote research and development projects. The R&D Syndicates had the ability
to exercise put options up through June 2002 to sell project results back to Spherion for a return of escrowed amounts. Both syndicates exercised their put options during the fourth quarter of
2000 and Spherion returned escrowed funds of approximately $25.0 million to the R&D Syndicates. At
December 31, 1999, the amount of the escrow of $29.6 million was included in other assets and the put option of $29.6 million was included in accounts payable and other
long-term liabilities in the accompanying Consolidated Balance Sheet. No amounts were outstanding at December 29, 2000.

New Accounting Pronouncements and Interpretations In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (the "Statement" or "SFAS No. 133"). The Statement
establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must
formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. Spherion will adopt the provisions of SFAS No. 133, as amended, in the first quarter of
2001 and record a cumulative pre-tax reduction to earnings of $1.8 million ($1.1 million after-tax).

In
December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides specific guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. Spherion's revenue recognition policies were conformed to the
provisions of SAB 101 in the fourth quarter of 2000. Such action did not have a material impact on results of operations.

34

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ACQUISITIONS AND DISPOSITION



NORRELL CORPORATION  On July 2, 1999, Spherion completed its acquisition of Norrell. Norrell is a strategic workforce
management company focusing on IT consulting, flexible staffing (including accounting, administrative and light industrial), outsourcing, search/recruitment (accounting and administrative) and managed
staffing (administrative and light industrial). Norrell shareholders received either a 0.9 share of Spherion common stock or a cash payment of $18.76 per share. The holders of approximately 13% of
Norrell's common stock elected to receive cash in lieu of Spherion stock and Spherion issued approximately 20.8 million shares to former Norrell shareholders and converted existing
Norrell stock options into options to purchase approximately 1.6 million shares of Spherion common stock. The value of the transaction including stock issued, cash paid and debt assumed, was
approximately $650.0 million. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the operations of Norrell are included in the Consolidated Statements
of Earnings from the date of acquisition. Norrell's tangible and intangible assets and liabilities have been adjusted to their fair market values in the accompanying Consolidated Balance Sheets. The
excess of the purchase price over the fair market value of Norrell's net tangible assets was approximately $537.0 million, which is being amortized over 40 years.

COMPUTER
POWER GROUP LIMITED  During December 1998, Spherion acquired Computer Power for approximately $124.4 million plus liabilities
assumed. Computer Power provides information technology services, including consulting, flexible staffing, education and training services with offices in Australia, New Zealand, Hong Kong, the U.K.
and Singapore. This acquisition was accounted for under the purchase method of accounting. Accordingly, the operations of Computer Power are included in the Consolidated Statements of Earnings from
the date of acquisition. Computer Power's operations were immaterial to Spherion's Consolidated Statements of Earnings in fiscal 1998. At December 31, 1999, the excess of the purchase price
over the fair value of the net tangible assets acquired was $134.6 million. This amount has been allocated to goodwill based upon an independent valuation performed to assist management in this
allocation and is being amortized over 40 years. In 1999, Spherion paid the remaining purchase price of $111.0 million.

OTHER
ACQUISITIONS  During 2000, 1999, and 1998, Spherion made certain other acquisitions that were accounted for under the purchase method of accounting.
Their operations are included in the Consolidated Statements of Earnings from the dates of acquisition. In addition, Spherion made earnout payments associated with previous acquisitions.

The
fair value of assets acquired and liabilities assumed (excluding cash acquired) in connection with all acquisitions follows (in thousands):

|                          |  | Dec. 29, 2000 |         | Dec. 31, 1999 |   | Dec. 25, 1998 |  
|------------------------- |  | ------------- | ------- | ------------- | - | ------------- | -
|Working capital (deficit) |  | $             | (23     | )             | $ | 179,415       |  
|Goodwill and tradenames   |  |               | 126,576 |               |   | 578,162       |  
|Other net assets          |  |               | 946     |               |   | 78,044        |  
|Debt assumed              |  |               |        |               |   | (129,050      | )
|                          |  |               |         |               |   |               |  
|Net assets acquired       |  | $             | 127,499 |               | $ | 706,571       |  
|                          |  |               |         |               |   |               |  

Net
assets acquired in the year ended December 29, 2000 include $26.4 million for the non-cash issuance of convertible promissory notes in conjunction with a
current period acquisition and issuance of loan notes in conjunction with prior period acquisitions. In the year ended December 31, 1999, net assets acquired included the non-cash
issuance of stock to Norrell stockholders in the amount of $437.4 million.

35

---



The following unaudited pro forma information presents the results of operations of Spherion for the years ended December 31, 1999 and
December 25, 1998 as if the acquisitions of Norrell, Computer Power and other acquisitions had occurred at the beginning of the periods presented (in thousands, except for per share data):

Dec. 31, 1999

Dec. 25, 1998Revenues

$
3,903,452

$
3,531,109Earnings before extraordinary item


76,903


81,334Net earnings


76,903


78,561Earnings per share before extraordinary item:Basic

$
1.17

$
1.25Diluted


1.16


1.23Basic weighted average shares outstanding


65,750


65,038Diluted weighted average shares outstanding


71,638


69,045


The
pro forma consolidated results of operations are based on historical financial information of Spherion and include adjustments to give effect to the following: additional
amortization of goodwill and other intangibles arising from the transactions; increased interest on borrowings to finance the acquisitions; reduced depreciation related to the disposition and
write-down of certain fixed assets; the elimination of the operating results of Norrell's home health aide business which has been classified as an asset held for sale; elimination of
one-time costs incurred by Norrell and Computer Power related to their being acquired by Spherion; and certain other adjustments, together with estimated related income tax effects. These
unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisitions
occurred on the date indicated, or of future results of operations of the consolidated entities. Pro forma results of operations have not been presented for 2000 because the effects of these
acquisitions were not significant.



In January 2001, management announced its intention to sell 100% of Michael Page Group Plc ("Michael Page") in an initial public offering (IPO) on the
London Stock Exchange. Management undertook a review of Michael Page's role within Spherion's overall operating structure and concluded that a sale of Michael Page was the best overall strategic
decision in order to maximize Spherion's investment in Michael Page.

The
sale is currently expected to be completed at the end of the first quarter or the beginning of the second quarter of 2001. Michael Page provides flexible staffing and
search/recruitment services primarily within the finance, banking and marketing fields in the U.K., continental Europe, Asia, Australia, U.S. and Brazil. Michael Page has been consolidated with
Spherion's operating results in the Professional Services

36

---

segment since its acquisition in April 1997 and summarized operating results for Michael Page are as follows (in thousands):

|                                             |  | Fiscal Years Ended
|-------------------------------------------- |  | ------------------
|
|Revenues                                     |  | $                 
|Cost of services                             |  |                   
|                                             |  |                   
|Gross profit                                 |  |                   
|Selling, general and administrative expenses |  |                   
|Amortization of intangibles                  |  |                   
|                                             |  |                   
|Earnings before interest and taxes           |  | $                 
|                                             |  |                   

Spherion's
investment in Michael Page was approximately $300 million at December 29, 2000.

RESTRUCTURING AND INTEGRATION

During 1999, Spherion incurred approximately $29.5 million of restructuring and integration costs related to a plan (the "Plan") adopted by management
in which certain redundant functions and assets of Spherion, as a result of the Norrell acquisition, would be eliminated. This included restructuring charges of $12.8 million and nonrecurring
integration costs of $16.7 million.

Restructuring
costs and charges of $12.8 million include employee severance costs of approximately $3.7 million and facility closure costs of $7.0 million
primarily relating to the elimination of redundant branch locations. The facility closure costs include approximately $5.0 million in lease termination costs and approximately
$2.0 million in losses on the disposition of facility related fixed assets, primarily the write-off of leasehold improvements on closed branch locations and write-down
of furniture and fixtures to their estimated fair value, determined by comparable market information. In addition, as part of the Plan, Spherion recorded a charge of approximately $2.1 million
for the write-off of certain software programs that will no longer be utilized as a result of the acquisition. These assets were taken out of service at the time of the
write-down and consequently were not depreciated further after the write-down.

During
the second quarter of 2000, remaining accruals of approximately $3.0 million were identified that were not needed, primarily the result of the buyout of existing lease
obligations at better than expected rates and this $3.0 million was reversed to income. Spherion then undertook additional restructuring actions in the amount of $3.2 million. These
additional actions included the elimination of 71 positions, with most of these positions being administrative personnel within the Information Technology segment, and the closure of an additional 14
offices.

An
analysis of the restructuring accrual is as follows (dollar amounts in thousands):

|                    |  | Original
Plan
Charge |        | Utilized
During
Fiscal
1999 |   | Accrual at
Dec. 31,
1999 |   | Reversal
of Over
Accrual |       | 2000
Restructuring
Actions |   | Utilized
During
Fiscal
2000 |   | Accrual at
Dec. 29,
2000
|------------------- |  | -------------------- | ------ | --------------------------- | - | ------------------------ | - | ------------------------ | ----- | -------------------------- | - | --------------------------- | - | ------------------------
|Facility closures   |  | $                    | 6,992  |                             | $ | (1,340                   | ) | $                        | 5,652 |                            | $ | (2,007                      | ) | $                       
|Severance           |  |                      | 3,650  |                             |   | (1,465                   | ) |                          | 2,185 |                            |   | (978                        | ) |                         
|Asset write-offs    |  |                      | 2,108  |                             |   | (2,108                   | ) |                          |      |                            |   |                            |   |                         
|                    |  |                      |        |                             |   |                          |   |                          |       |                            |   |                             |   |                         
|Total charge        |  | $                    | 12,750 |                             | $ | (4,913                   | ) | $                        | 7,837 |                            | $ | (2,985                      | ) | $                       
|                    |  |                      |        |                             |   |                          |   |                          |       |                            |   |                             |   |                         
|Number of offices   |  |                      | 43     |                             |   | (22                      | ) |                          | 21    |                            |   |                            |   |                         
|Number of personnel |  |                      | 160    |                             |   | (48                      | ) |                          | 112   |                            |   | (74                         | ) |                         

37

---

The remaining accruals, which are included in accounts payable and accrued expenses in the accompanying Consolidated Balance Sheets, relate to
lease payments on closed offices that will be paid out through 2004 and severance costs which will be paid out during 2001.

Nonrecurring
integration costs of approximately $16.7 million included approximately $7.6 million in costs relating to employees whose positions were eliminated and were
involved solely in exit functions and systems integrations, approximately $5.0 million in consulting costs primarily related to systems integrations, approximately $2.6 million for a
one-time acquisition completion incentive bonus, approximately $0.7 million in relocation of employees and approximately $0.8 million in other related integration costs.
Substantially all these costs were paid by December 31, 1999, and any remaining amounts were paid by December 29, 2000.

INTANGIBLE ASSETS

A summary of intangible assets follows (in thousands):

|                              |  | Weighted
Average Life
(in years) |  | Dec. 29, 2000 |           | Weighted
Average Life
(in years) |    | Dec. 31, 1999 |  
|----------------------------- |  | -------------------------------- |  | ------------- | --------- | -------------------------------- | -- | ------------- | -
|Goodwill                      |  | 38                               |  | $             | 1,455,712 |                                  | 39 |               | $
|Tradenames                    |  | 40                               |  |               | 199,086   |                                  | 40 |               |  
|Other                         |  | 5                                |  |               | 330       |                                  | 5  |               |  
|                              |  |                                  |  |               |           |                                  |    |               |  
|                              |  | 38                               |  |               | 1,655,128 |                                  | 39 |               |  
|Less accumulated amortization |  |                                  |  |               | (139,763  | )                                |    |               |  
|                              |  |                                  |  |               |           |                                  |    |               |  
|                              |  |                                  |  | $             | 1,515,365 |                                  |    |               | $
|                              |  |                                  |  |               |           |                                  |    |               |  

Amortization
of intangible assets for the years ended December 29, 2000, December 31, 1999 and December 25, 1998 amounted to $43.4 million,
$34.2 million and $22.6 million, respectively.

PROPERTY AND EQUIPMENT

A summary of property and equipment follows (in thousands):

|                                                   |  | Life (in years) |  | Dec. 29, 2000 |          | Dec. 31, 1999 |  
|-------------------------------------------------- |  | --------------- |  | ------------- | -------- | ------------- | -
|Land                                               |  |                |  | $             | 4,167    |               | $
|Buildings                                          |  | 10-40           |  |               | 15,686   |               |  
|Equipment                                          |  | 3-8             |  |               | 206,216  |               |  
|Software, primarily third party purchased software |  | 3-5             |  |               | 18,205   |               |  
|Leasehold improvements and other                   |  | 3-5             |  |               | 22,376   |               |  
|                                                   |  |                 |  |               |          |               |  
|                                                   |  |                 |  |               | 266,650  |               |  
|Less accumulated depreciation and amortization     |  |                 |  |               | (117,557 | )             |  
|                                                   |  |                 |  |               |          |               |  
|                                                   |  |                 |  | $             | 149,093  |               | $
|                                                   |  |                 |  |               |          |               |  

Depreciation
and amortization of property and equipment for the years ended December 29, 2000, December 31, 1999 and December 25, 1998 amounted to
$37.5 million, $31.0 million, and $21.8 million, respectively.

38

---

LONG-TERM DEBT

A summary of long-term debt follows (in thousands):

|                                                                    |                                               | Dec. 29, 2000 |          | Dec. 31, 1999 |  
|------------------------------------------------------------------- | --------------------------------------------- | ------------- | -------- | ------------- | -
|Revolving Loan Facility due 2004:                                   |                                               |               |          |               |  
|                                                                    | British pound sterling denominated borrowings |               | $        | 212,006       |  
|                                                                    | U.S. dollar denominated borrowings            |               |          | 30,000        |  
|U.S. dollar convertible subordinated notes, due 2005                |                                               |               | 206,997  |               |  
|U.S. dollar convertible promissory notes, due 2005                  |                                               |               | 8,000    |               |  
|U.S. dollar loan facility, secured by accounts receivable, due 2001 |                                               |               | 214,432  |               |  
|Australian dollar term loan, due 2006                               |                                               |               | 37,364   |               |  
|Other foreign debt, with interest rates ranging from 5.4% to 7.0%   |                                               |               | 42,359   |               |  
|Loan notes denominated in British pound sterling, due 2001          |                                               |               | 24,952   |               |  
|Other domestic debt                                                 |                                               |               | 4        |               |  
|                                                                    |                                               |               |          |               |  
|                                                                    |                                               |               | 776,114  |               |  
|Less current maturities of long-term debt                           |                                               |               | (286,203 | )             |  
|Less U.S. dollar convertible subordinated notes, due 2005           |                                               |               | (206,997 | )             |  
|                                                                    |                                               |               |          |               |  
|                                                                    |                                               | $             | 282,914  |               | $
|                                                                    |                                               |               |          |               |  

Spherion
has a multi-currency syndicated credit agreement ("Revolving Loan Facility") with a total capacity of $675.0 million, which terminates in 2004. This agreement provides
a multi-currency revolving loan facility and also allows for and guarantees sterling denominated loan notes due to certain former shareholders of Michael Page. Borrowings under this facility are
unsecured and interest rates on
amounts outstanding under the revolving loan and loan notes are based on LIBOR plus a variable margin. The facility contains customary covenants, which include restrictions on the payment of cash
dividends, as well as the maintenance of certain financial ratios including minimum net worth, restrictions on the incurrence of liens and additional indebtedness. The average interest rates on
outstanding borrowings under the Revolving Loan Facility, including the effects of interest rate swaps, for the years ended December 29, 2000 and December 31, 1999 were 7.9% and 6.7%,
respectively.

The
U.S. dollar convertible subordinated notes (the "Notes") are convertible into common stock at any time prior to maturity at a conversion rate of 26.8052 shares per each $1,000
principal amount, equivalent to a conversion price of approximately $37.31 per share. Interest on the Notes is payable semi-annually on June 1 and December 1 of each year at
a rate of 41/2%. The Notes are redeemable, in whole or in part, at the option of Spherion at any time on or after June 1, 2001 at the redemption prices (together with accrued
interest to the redemption date) set forth below. Such redemption prices (expressed as a percentage of principal amount) are as follows for the 12-month period beginning on June 1
of the following years:

Year

Redemption Price2001

102.571
%2002

101.929
%2003

101.286
%2004

100.643
%June 1, 2005 and thereafter

100.000
%


The
Notes are unsecured obligations subordinated in right of payment to all existing and future Senior Debt (as defined in the indenture) of Spherion and will be effectively
subordinated in right of payment to all Senior Debt and other liabilities of Spherion and Spherion's subsidiaries. The Notes will not restrict Spherion or its subsidiaries from incurring additional
Senior Debt or other indebtedness. The Notes were

39

---

issued in May 1998 and a portion of the proceeds were used to repay existing debt and related interest rate swap agreements and resulted in an extraordinary charge for the early extinguishments
of debt of $2.8 million ($4.6 million before tax) or $0.06 per diluted share in 1998.

In
July 1999, Spherion also added a $250.0 million facility ("U.S. dollar loan facility") secured by Spherion's accounts receivable under which $214.4 million was
outstanding at December 29, 2000. This facility is due in June 2001, can be extended annually and interest is based on commercial paper market rates plus a margin, and the total rate on
average was 6.8% for the year ended December 29, 2000.

In
1999, Spherion also issued $53.0 million of Australian dollar financing which is due in 2006. As of December 29, 2000, borrowings outstanding were
$37.4 million. The Australian dollar financing is unsecured and interest is based on Australian bank bills plus a variable margin and the total rate on average was 8.3% for the year ended
December 29, 2000.

As
of December 29, 2000, Spherion had the ability to borrow $403.8 million under the Revolving Loan Facility and other available lines. Maturities of debt outstanding at
December 29, 2000 are $286.2 million, $242.0 million and $215.0 million in 2001, 2004 and 2005, respectively. For 2002 and 2003, there are no maturities of debt outstanding
at December 29, 2000.

As
part of the sale of Michael Page, Spherion expects to repay the borrowings under the Revolving Loan Facility and the U.S. dollar loan facility, secured by accounts receivable.
Spherion also expects to decrease the amount of credit available under those two facilities to more closely match future borrowing requirements.

INCOME TAXES

A summary of the provision for income taxes follows (in thousands):

Dec. 29, 2000

Dec. 31, 1999

Dec. 25, 1998Current tax expense:Federal

$
3,479

$
14,646

$
24,058State and local


2,297


2,776


5,745Foreign


32,989


27,453


22,17938,765


44,875


51,982Deferred tax expense (benefit):Federal


9,091


4,308


(3,100
)State and local


761


1,188


(715
)Foreign


3,168


2,678


(1,391
)13,020


8,174


(5,206
)Total provision for income taxes

$
51,785

$
53,049

$
46,776


40

---

The
following table reconciles the U.S. Federal income tax rate to Spherion's effective tax rate:

Dec. 29, 2000

Dec. 31, 1999

Dec. 25, 1998Statutory Rate

35.0
%
35.0
%
35.0
%Increase (decrease) in rate resulting from:State and local income taxes, net of
Federal benefit

1.6

2.1

3.1Nondeductible amortization of
intangibles

9.6

7.8

5.7Wages to work credits

(3.9
)
(2.3
)
(0.8
)Other, net

(1.3
)
0.2

1.4Effective tax rate

41.0
%
42.8
%
44.4
%


Significant
components of Spherion's deferred tax assets and liabilities are as follows (in thousands):

Dec. 29, 2000

Dec. 31, 1999Current deferred tax assets (liabilities):Self-insurance

$
13,683

$
11,387Sale of HealthCare business


2,010


2,891Accrued expenses, including acquisition and restructure costs


10,965


23,749Receivables allowances


5,795


6,352Foreign and other


(2,507
)

1,30729,946


45,686Noncurrent deferred tax assets (liabilities):Employee benefits, primarily deferred compensation


16,440


13,343Self-insurance


18,913


15,171Fixed assets


(2,000
)

(3,513
)Intangible assets


14,985


27,937Investment in equity securities


9,136


Foreign tax credits


18,600


22,000Other


2,266


(986
)78,340


73,952Valuation allowance


(18,600
)

(22,000
)59,740


51,952Net deferred tax assets

$
89,686

$
97,638


As
of December 29, 2000, Spherion had foreign tax credit carryforwards of $18.6 million that will expire in 2004. A valuation allowance has been provided against this
available credit. Additionally, Spherion has net operating loss carryforwards of approximately $8.0 million in Australia that will be recognized when realized and will begin to expire in 2011.
Spherion has reviewed its net deferred tax asset and believes that a valuation allowance is not required, other than for foreign tax credits.

EMPLOYEE BENEFIT PLANS

Spherion has a voluntary defined contribution 401(k) benefit plan covering substantially all eligible U.S. employees. Spherion's subsidiary, Michael Page,
operates a defined contribution plan covering substantially all eligible employees. Spherion contributions to the plans are based on employee contributions, the level of Spherion match and, in the
U.S., the attainment of certain financial objectives.

41

---

Contributions, net of forfeitures, by Spherion under the plans amounted to $6.2 million, $7.3 million and $3.7 million for the years ended December 29, 2000,
December 31, 1999 and December 25, 1998, respectively.

Spherion
also has a non-qualified deferred compensation plan for those highly compensated employees who are not eligible to participate in Spherion's 401(k) benefit plan.
The plan allows eligible employees to defer receipt of a portion of their compensation. Employee deferrals earn a return based on each employee's elected hypothetical plan investments including
amounts represented by deferred stock units of Spherion's common stock. Spherion matches and accrues certain amounts deferred pursuant to this plan based upon the same criteria as the 401(k) plan. All
Spherion matches are represented by deferred stock units of Spherion's common stock. The plan is not funded but Spherion has investments in company owned life insurance policies in the amount of
$15.2 million and $13.6 million at December 29, 2000 and December 31, 1999, respectively, and the earnings from these investments partially offset Spherion's cost of
providing the benefit. The deferred compensation, along with company matching amounts and accumulated investment earnings, is accrued. Such accrual amounted to $29.4 million and
$24.5 million at December 29, 2000 and December 31, 1999, respectively. The deferred compensation and company matching of amounts represented by deferred stock units of Spherion
are included in additional paid-in capital in the Consolidated Balance Sheets.

Spherion
has adopted an Employee Stock Purchase Plan that provides substantially all eligible employees who have been employed for at least six months an opportunity to purchase
shares of its common stock at a discount of 15%. The aggregate amount an employee may purchase each calendar year is limited to a maximum of 15% of an employee's compensation up to $25,000 of stock.
There were 296,794 and 356,576 shares issued in 2000 and 1999, respectively, under this plan. In 2000, an additional 1,000,000 shares were authorized for issuance to and purchase by eligible
employees. A total of 950,638 shares are available as of December 29, 2000 for purchase under the plan which expires on July 1, 2002.

STOCK-BASED COMPENSATION PLANS

Spherion has three primary stock option plans, the 2000 Stock Incentive Plan, the 1997 Stock Option Plan for employees of Michael Page and the 1994 Stock
Option Plan for Franchisees, Licensees and Agents. Under the plans, options may be granted to outside directors, employees of Spherion and its subsidiaries, franchisees, licensees and agents to
purchase Spherion's common stock for periods not to exceed ten years at a price that is not less than 100% of fair market value on the date of grant. Options granted under all plans are exercisable
cumulatively 20% to 100% each year beginning one year after the initial date of grant. At December 29, 2000 and December 31, 1999, Spherion had 691,000 and 833,000 shares, respectively,
reserved for future grants under these plans.

During
2000, Spherion granted approximately 284,000 deferred stock units of Spherion's common stock with prices ranging from $11.31 to $18.69. The deferred stock units vest between
one and seven years or a shorter period based upon certain earnings performance criteria. The value of these deferred stock units is being amortized ratably over the vesting period.

42

---

Changes under these stock option plans for 2000, 1999 and 1998 were as follows:

|                                   |  | Dec. 29, 2000 |   | Dec. 31, 1999 |       | Dec. 25, 1998
|---------------------------------- |  | ------------- | - | ------------- | ----- | -------------
|
|Outstanding at beginning of year   |  | 8,264,123     |   | $             | 20.35 |              
|Granted                            |  | 2,560,486     |   |               | 12.68 |              
|Converted from Norrell options     |  |              |   |               |      |              
|Exercised                          |  | (391,786      | ) |               | 13.18 |              
|Forfeited                          |  | (719,078      | ) |               | 21.43 |              
|                                   |  |               |   |               |       |              
|Outstanding at end of year         |  | 9,713,745     |   | $             | 18.54 |              
|                                   |  |               |   |               |       |              
|Options exercisable at end of year |  | 4,179,135     |   | $             | 19.78 |              
|                                   |  |               |   |               |       |              

The
following table summarizes information about fixed stock options outstanding at December 29, 2000:

|              |  | Options Outstanding |  |      |  |  
|------------- |  | ------------------- |  | ---- |  | -
|
|
|
|$ 0.00-$ 9.99 |  | 49,883              |  | 2.65 |  | $
|$10.00-$14.99 |  | 2,966,302           |  | 8.35 |  |  
|$15.00-$19.99 |  | 2,427,557           |  | 6.78 |  |  
|$20.00-$24.99 |  | 2,803,648           |  | 8.36 |  |  
|$25.00-$29.99 |  | 1,407,707           |  | 6.49 |  |  
|$30.00-$35.56 |  | 58,648              |  | 7.05 |  |  
|              |  |                     |  |      |  |  
|              |  | 9,713,745           |  | 7.65 |  | $
|              |  |                     |  |      |  |  

Spherion
accounts for stock-based compensation using the intrinsic value method of accounting as prescribed by APB Opinion No. 25. Using this method, no compensation expense
has been recorded for its stock option plans. The following table summarizes the impact on net earnings and earnings per share had Spherion adopted the fair value based method prescribed by
FAS 123, "Accounting for Stock-Based Compensation" (in thousands, except per share amounts) for the fiscal years ended:

Dec. 29, 2000

Dec. 31, 1999

Dec. 25, 1998Net earnings:As reported

$
74,526

$
70,833

$
55,804Pro forma


67,027


63,398


51,808Earnings per share:Basic:As reported


1.17


1.29


1.26Pro forma


1.05


1.15


1.17Diluted:As reported


1.16


1.27


1.23Pro forma


1.05


1.14


1.15


43

---

The
fair value of options at grant date was estimated using the Black-Scholes multiple option model where each vesting increment is treated as a separate option with its own expected
life and own fair value. The following weighted average assumptions were used:

Dec. 29, 2000

Dec. 31, 1999

Dec. 25, 1998Expected life (in years)


3


2


2Interest rate


5.97
%

5.34
%

5.51
%Volatility


47.00
%

39.00
%

32.91
%Weighed average per share fair value

$
4.61

$
5.30

$
6.25


STOCKHOLDER RIGHTS PLAN

On February 17, 1994, Spherion's Board of Directors adopted a rights plan to protect stockholders in the event of an unsolicited attempt to acquire
Spherion which is not believed by the Board of Directors to be in the best interest of stockholders. Under the plan, a dividend of one right (a "Right") per share was declared and paid on each share
of Spherion's common stock outstanding on April 1, 1994. As to shares issued after such date, rights will automatically attach to them after their issuance.

Under
the plan, registered holders of each Right may purchase from Spherion one one-hundredth of a share of a new class of Spherion's preferred stock, $0.01 par value per
share, at a price of $150.00, subject to adjustment, when the Rights become exercisable. The Rights become exercisable when a person or group of persons acquires 15% or more of the outstanding shares
of Spherion's common stock without the prior written approval of Spherion's Board of Directors (an "Unapproved Stock Acquisition"), and after ten business days following the commencement of a tender
offer that would result in an Unapproved Stock Acquisition. If a person or group of persons makes an Unapproved Stock Acquisition, the registered holder of each Right has the right to purchase, for
the exercise price of the Right, a number of shares of Spherion's common stock having a market value equal to twice the exercise price of the Right. In the event of an Unapproved Stock Acquisition,
and if following the Unapproved Stock Acquisition, Spherion is involved in either (i) a merger or (ii) a sale of 50% or more of Spherion's assets or earning power, then in such case, the
registered holder of each Right has the
right to purchase, for the exercise price of the Right, a number of shares of the common stock of the acquiring company having a market value equal to twice the exercise price of the Right.

After
an Unapproved Stock Acquisition, but before any person or group of persons acquires 50% or more of the outstanding shares of Spherion's common stock, the Board of Directors may
exchange all or part of the then outstanding and exercisable Rights for common stock at an exchange ratio of one share of common stock per Right. Upon any such exchange, the right of any holder to
exercise a Right terminates.

Spherion
may redeem the Rights at a price of $0.01 per Right at any time prior to an Unapproved Stock Acquisition. The Rights expire on April 1, 2004, unless extended by the
Board of Directors. Until a Right is exercised, the holder thereof, as such, has no rights as a stockholder of Spherion, including the right to vote or to receive dividends. The issuance of the Rights
alone has no dilutive effect and does not affect reported earnings per share.

FINANCIAL INSTRUMENTS AND FAIR VALUES

Spherion utilizes interest rate swap agreements to reduce the impact on interest expense of fluctuating interest rates on its variable rate debt. Spherion had
a variable-to-variable interest rate swap agreement outstanding as of December 29, 2000 with the notional amount of $112.0 million which effectively converts interest from a British
LIBOR basis to a broader index and caps Spherion's exposure to upward movement in rates at 8.5%. Spherion received an average variable rate of 6.2% and paid an average variable rate of 6.7% during the
twelve months ended December 29, 2000. This agreement expires in 2002. The notional

44

---

amount outstanding at December 31, 1999 was $121.4 million. Spherion received an average variable rate of 5.9% and paid an average variable rate of 6.1% during the twelve months ended
December 31, 1999.

In
June 1998, Spherion terminated variable-to-fixed interest rate swap agreements in the notional amount of $100.0 million when Spherion repaid
the related U.S. dollar denominated debt. Spherion received an average variable rate of 5.7% and paid an average fixed rate of 6.2% during the twelve months ended December 25, 1998. Also in
June 1998, Spherion terminated variable-to-variable interest rate swap agreements in the notional amount of $100.0 million when Spherion repaid the related U.S.
dollar-denominated debt. Spherion received an average variable rate of 7.0% and paid an average variable rate of 6.0% during the twelve months ended December 25, 1998. The costs to terminate
the variable-to-variable
and variable-to-fixed interest rate swap agreements in June 1998 are included in the extraordinary charge for early extinguishment of debt.

At
December 29, 2000, Spherion had outstanding foreign currency forward contracts to sell Australian dollars in the notional amount of $82.6 million for the purpose of
hedging intercompany amounts outstanding with its Australian operations. At December 31, 1999, Spherion had outstanding foreign currency forward contracts to sell Australian dollars in the
notional amount of $76.9 million for the purpose of hedging intercompany amounts outstanding with its Australian operations.

Exposure
to market risk on interest rate and foreign currency financial instruments results from fluctuations in interest and currency rates, respectively, during the periods in which
the contracts are outstanding. The counterparties to Spherion's interest rate swap agreements and currency exchange contracts consist of a diversified group of major financial institutions, each of
which is rated investment grade A or better. Spherion is exposed to credit risk to the extent of potential nonperformance by counterparties on financial instruments. Any potential credit exposure does
not exceed the fair value as stated below. Spherion believes the risk of incurring losses due to credit risk is remote.

The
carrying amount of cash and cash equivalents approximates fair value due to the short-term maturities of these instruments. The cost to terminate the outstanding
interest rate swap and the book value as of December 29, 2000 were approximately $1.8 million and a $0.2 million payable, respectively. The cost to terminate the outstanding
interest rates swaps as of December 31, 1999 was $1.3 million. Book value at December 31, 1999 was a $0.1 million payable. Termination of the foreign currency forward
contracts as of December 29, 2000 and December 31, 1999, would have resulted in a gain of $11.4 million and a loss of $0.1 million in 2000 and 1999, respectively. In
estimating the fair value of its derivative positions, Spherion utilizes quoted market prices, if available, or quotes obtained from outside sources. The cost to terminate Spherion's fixed-rate
convertible subordinated debt as of December 29, 2000 and December 31, 1999 was $140.6 million and $183.7 million, respectively, with a $207.0 million carrying
value. The fair value of Spherion's fixed-rate debt is estimated based on quoted market prices for the same issue. The fair values of all other financial instruments, including debt other than the
Notes, approximate their book values as the instruments are short-term in nature or contain market rates of interest.

45

---

COMMITMENTS AND CONTINGENCIES

Substantially all of Spherion's field operations are conducted in leased premises. Spherion also leases computer equipment. Total lease expense for the years
ended December 29, 2000, December 31, 1999 and December 25, 1998 was $51.6 million, $37.6 million and $25.2 million, respectively. Future minimum lease
payments under non-cancelable leases as of December 29, 2000 are $52.7 million, $44.2 million, $35.7 million, $26.7 million and $19.9 million in
2001, 2002, 2003, 2004 and 2005, respectively.

In
the year 2001, Spherion plans to pay approximately $23.2 million for earnouts (contingent consideration) associated with prior Spherion and Norrell acquisitions.

Spherion
had outstanding irrevocable letters of credit of approximately $55.3 million (same as fair value) and surety bonds outstanding of approximately $23.8 million.
These instruments primarily collateralize Spherion's recorded obligations under certain workers' compensation insurance programs.

Spherion,
in the ordinary course of its business, is threatened with or named as a defendant in various lawsuits. Spherion's management does not expect that the outcome of any of
these lawsuits, individually or collectively, will have a material adverse effect on the company's financial condition, results of operations or cash flows.

On
March 7, 2001, Spherion was notified by Interim HealthCare Inc., Catamaran Acquisition Corp. and Cornerstone Equity Investors IV, L.P. (collectively, the "Interim HealthCare
Plaintiffs") of their plans to file on April 2, 2001, an amended complaint in connection with Spherion's divestiture of Interim HealthCare and for a transfer from the Superior Court of the
State of Delaware in New Castle County to the Delaware Court of Chancery. The amended complaint outlines three counts: breach of contract, reformation and equitable rescission. The Interim HealthCare
Plaintiffs are seeking damages of $20 million, a reduction of the purchase price of $50 million or rescission of the contract. Management believes that the resolution of this matter will
not have a material impact on Spherion's consolidated financial position, liquidity or results of operations.

SEGMENT INFORMATION

Effective in the first quarter of 2000, Spherion changed its basis of segmentation from a geographic approach to the following: Information Technology,
Professional Services and Commercial Staffing. Management believes that the new reportable segments better reflect the management and fiscal responsibilities within Spherion subsequent to the Norrell
acquisition and integration of its operations. Spherion evaluates the performance of its operating segments and allocates resources based on revenues, gross profit and segment operating margin.
Segment operating margin is defined as income before unallocated costs and central costs, net interest expense, income taxes and special charges (write-down of investment, Year 2000 costs and
restructuring and integration costs). All material intercompany revenues and expenses have been eliminated. Asset information by reportable segment is not presented due to the fact that such
information is not produced internally. All previous year amounts have been restated for comparative purposes.

Information
on operating segments and a reconciliation to earnings before income taxes and extraordinary item for the periods indicated are as follows (in thousands):

|          |                        | Fiscal Years Ended |          
|--------- | ---------------------- | ------------------ | ---------
|
|Revenues: |                        |                    |          
|          | Information Technology |                    | $        
|          | Professional Services  |                    |          
|          | Commercial Staffing    |                    |          
|          |                        |                    |          
|          |                        | $                  | 3,740,823
|          |                        |                    |          

46

---

|Gross Profit:             |                                                     |   |           |           |   |           |           |   |           |          
|------------------------- | --------------------------------------------------- | - | --------- | --------- | - | --------- | --------- | - | --------- | ---------
|                          | Information Technology                              |   | $         | 241,892   |   | $         | 266,279   |   | $         | 150,041  
|                          | Professional Services                               |   |           | 639,664   |   |           | 468,365   |   |           | 340,879  
|                          | Commercial Staffing                                 |   |           | 360,117   |   |           | 304,146   |   |           | 205,337  
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     | $ | 1,241,673 |           | $ | 1,038,790 |           | $ | 696,257   |          
|                          |                                                     |   |           |           |   |           |          
|Segment Operating Margin: |                                                     |   |           |           |   |           |           |   |           |          
|                          | Information Technology                              |   | $         | 38,609    |   | $         | 70,083    |   | $         | 42,340   
|                          | Professional Services                               |   |           | 142,403   |   |           | 102,267   |   |           | 69,830   
|                          | Commercial Staffing                                 |   |           | 71,587    |   |           | 56,228    |   |           | 39,842   
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     |   | 252,599   |           |   | 228,578   |           |   | 152,012   |          
|                          | Unallocated central costs                           |   |           | (51,098   | ) |           | (34,430   | ) |           | (22,840  
|                          | Interest expense, net                               |   |           | (50,424   | ) |           | (36,304   | ) |           | (23,819  
|                          | Write-down of investment                            |   |           | (24,766   | ) |           |          |   |           |         
|                          | Year 2000 costs                                     |   |           |          |   |           | (4,420    | ) |           |         
|                          | Restructuring and integration costs                 |   |           |          |   |           | (29,542   | ) |           |         
|                          |                                                     |   |           |           |   |           |          
|                          | Earnings before income taxes and extraordinary item |   | $         | 126,311   |   | $         | 123,882   |   | $         | 105,353  
|                          |                                                     |   |           |           |   |           |          
|Depreciation expense:     |                                                     |   |           |           |   |           |           |   |           |          
|                          | Information Technology                              |   | $         | 8,413     |   | $         | 9,488     |   | $         | 5,961    
|                          | Professional Services                               |   |           | 18,789    |   |           | 12,987    |   |           | 7,903    
|                          | Commercial Staffing                                 |   |           | 10,306    |   |           | 8,512     |   |           | 7,937    
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     | $ | 37,508    |           | $ | 30,987    |           | $ | 21,801    |          
|                          |                                                     |   |           |           |   |           |          
|Services Information      |                                                     |   |           |           |   |           |           |   |           |          
|Revenues:                 |                                                     |   |           |           |   |           |           |   |           |          
|                          | Consulting                                          |   | $         | 538,809   |   | $         | 544,108   |   | $         | 286,250  
|                          | Managed Staffing                                    |   |           | 645,679   |   |           | 550,342   |   |           | 294,753  
|                          | Outsourcing                                         |   |           | 325,520   |   |           | 170,888   |   |           | 21,417   
|                          | Search/Recruitment                                  |   |           | 451,090   |   |           | 333,199   |   |           | 257,507  
|                          | Flexible Staffing                                   |   |           | 1,779,725 |   |           | 1,569,434 |   |           | 1,030,186
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     | $ | 3,740,823 |           | $ | 3,167,971 |           | $ | 1,890,113 |          
|                          |                                                     |   |           |           |   |           |          
|Georgraphic Information   |                                                     |   |           |           |   |           |           |   |           |          
|Revenues:                 |                                                     |   |           |           |   |           |           |   |           |          
|                          | North America                                       |   | $         | 2,732,535 |   | $         | 2,274,293 |   | $         | 1,382,383
|                          | Europe                                              |   |           | 776,231   |   |           | 642,828   |   |           | 455,845  
|                          | Australia/Asia                                      |   |           | 232,057   |   |           | 250,850   |   |           | 51,885   
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     | $ | 3,740,823 |           | $ | 3,167,971 |           | $ | 1,890,113 |          
|                          |                                                     |   |           |           |   |           |          
|Long-Lived Assets:        |                                                     |   |           |           |   |           |           |   |           |          
|                          | North America                                       |   | $         | 99,107    |   | $         | 92,337    |   | $         | 55,069   
|                          | Europe                                              |   |           | 41,711    |   |           | 35,580    |   |           | 28,130   
|                          | Australia/Asia                                      |   |           | 8,275     |   |           | 8,059     |   |           | 7,423    
|                          |                                                     |   |           |           |   |           |          
|                          |                                                     | $ | 149,093   |           | $ | 135,976   |           | $ | 90,622    |          
|                          |                                                     |   |           |           |   |           |          

Spherion
has no single customer representing greater than 10% of revenues. Revenues in the U.K. were $487.0 million, $401.3 million and
$318.0 million for the years ended December 29, 2000, December 31, 1999 and December 25, 1998, respectively. Long-lived assets in the U.K. were
$18.7 million, $19.4 million and $17.6 million at December 29, 2000, December 31, 1999 and December 25, 1998, respectively.

47

---

QUARTERLY FINANCIAL DATA(unauditedamounts in thousands, except share data)

The
following is a tabulation of the quarterly results of operations for the fiscal years ended December 29, 2000 and December 31, 1999.

|                                      |  | Quarter Ended
|------------------------------------- |  | -------------
|
|Revenues                              |  | $            
|Gross profit                          |  |              
|Net earnings (loss) (a)               |  |              
|Basic earnings (loss) per share (a)   |  |              
|Diluted earnings (loss) per share (a) |  |              
|Share price:                          |  |              
|High                                  |  |              
|Low                                   |  |              

---

EARNINGS PER SHARE

The following table reconciles the numerator (earnings) and denominator (shares) of the basic and diluted earnings per share computations for earnings before
extraordinary item.

|                               |                                             | Fiscal Years Ended
|------------------------------ | ------------------------------------------- | ------------------
|
|
|
|Basic EPS                      |                                             | $                 
|                               |                                             |                   
|Effect of Dilutive Securities: |                                             |                   
|                               | Stock options and other dilutive securities |                   
|                               | Convertible subordinated notes              |                   
|                               |                                             |                   
|Diluted EPS                    |                                             | $                 
|                               |                                             |                   

48

---



Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There has been no change in the registrant's principal accountants during the two most recent fiscal years or any subsequent interim time period.

PART III

Items 10, 11, 12 and 13.

Information regarding executive officers of the Registrant is contained in Part I. The remaining information required by Item 10 and the
information required by Items 11, 12 and 13 of this Part III is omitted because, no later than 120 days from December 29, 2000, Spherion will file and distribute its definitive
proxy statement containing the information required by such Items. Such omitted information is incorporated herein by this reference.

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL
STATEMENTS

The
following consolidated financial statements of Spherion Corporation and subsidiaries are filed as part of this Report:

PageIndependent Auditors' Report

27Consolidated Statements of Earnings

28Consolidated Balance Sheets

29Consolidated Statements of Stockholders' Equity

30Consolidated Statements of Cash Flows

31Notes to Consolidated Financial Statements

32


(2) FINANCIAL
STATEMENT SCHEDULES

The
following financial statement schedule is filed as part of this Report:



Schedules
not filed herewith are either not applicable, the information is not material or the information is set forth in the financial statements or notes thereto.

(3) EXHIBITS
REQUIRED BY ITEM 601 OF REGULATION S-K

|Exhibit
Number |  | Exhibit Name                                                                                                                                                                                                  
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Restated Certificate of Incorporation of the registrant, as last amended on July 7, 2000, filed as Exhibit 3.1 to the registrant's Report on Form 8-K filed July 7, 2000, is incorporated herein by reference.
|3.2            |  | By-Laws of registrant, amended and restated as of December 29, 2000, filed as Exhibit 3.2 hereto.                                                                                                             
|4.1            |  | Form of Stock Certificate, filed as Exhibit 4.1 hereto.                                                                                                                                                       
|4.2            |  | Rights Agreement dated as of March 17, 1994 between the registrant and Boatmen's Trust Company, filed as Exhibit 1.1 to the registrant's Form 8-A filed April 11, 1994, is incorporated herein by reference.  
|               |  |                                                                                                                                                                                                               

49

---

|4.3  |  | Restated Certificate of Designation, Preferences and Rights of Participating Preferred Stock of the registrant as filed with the Secretary of State of the State of Delaware, filed as Exhibit 4.3 to the registrant's Report on Form 8-K filed
July 7, 2000, is incorporated herein by reference.                                                                                                                             
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.4  |  | Amendment No. 1, dated as of June 26, 1996, to Rights Agreement dated March 17, 1994, between the registrant, Boatmen's Trust Company and ChaseMellon Shareholder Services L.L.C., filed as Exhibit 4.1(A) to the registrant's Form
 10-Q for the quarter ended September 27, 1996, is incorporated herein by reference.                                                                                                       
|4.5  |  | Amendment No. 2, dated as of February 25, 1997, to Rights Agreement dated March 17, 1994, between the registrant and ChaseMellon Shareholder Services L.L.C., filed as Exhibit 4.1(B) to the registrant's Form 10-Q for the
quarter ended March 28, 1997, is incorporated herein by reference.                                                                                                                                 
|4.6  |  | Articles Fourth, Fifth, Seventh, Eighth and Tenth of the Restated Certificate of Incorporation of the registrant, as last amended July 7, 2000, filed as Exhibit 4.6 to the registrant's Form 10-Q for the quarter ended June 30, 2000,
 are incorporated herein by reference.                                                                                                                                                 
|4.7  |  | Sections Four through Twelve and Thirty-five through Forty-one of the Bylaws of the registrant, amended and restated as of December 29, 2000, filed as Exhibit 4.7 hereto.                                                                                                                                                                                                                                                     
|4.8  |  | Certificate of Increase of Shares Designated as Participating Preferred Stock, filed as Exhibit 2.2 to the registrant's Form 8-A/A2, dated November 3, 1997, is incorporated herein by reference.                                                                                                                                                                                                                              
|4.9  |  | Indenture, including form of Notes, dated as of May 27, 1998, from the registrant to The Bank of New York with respect to the registrant's 41/2% Convertible Subordinated Notes due 2005, issued or to be issued pursuant
to the registrant's Form S-3 dated April 23, 1998, filed on May 6, 1998, filed as Exhibit 4.9 to the registrant's Form 10-Q for the quarter ended June 26, 1998, is incorporated herein by reference.
|4.10 |  | Amendment No. 3, dated as of January 20, 1998, to Rights Agreement dated as of March 17, 1994, between the registrant and ChaseMellon Shareholder Services LLC., filed as Exhibit 4.10 to the registrant's Form 10-K for the
fiscal year ended December 25, 1998, is incorporated herein by reference.                                                                                                                         
|4.11 |  | Amendment No. 4, dated as of November 21, 2000, to Rights Agreement dated March 17, 1994, between the registrant, ChaseMellon Shareholder Services LLC and the Bank of New York, filed as Exhibit 4.11 hereto.                                                                                                                                                                                                                 
|10.1 |  | Registrant's 1994 Stock Option Plan for Franchisees, Licensees and Agents, as amended through and restated as of August 10, 1999, filed as Exhibit 10.1 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is
incorporated herein by reference.                                                                                                                                                           
|10.3 |  | Form of Indemnification Agreement dated August 10, 1999 between the registrant and each director of the registrant, filed as Exhibit 10.2 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is incorporated
herein by reference.                                                                                                                                                                         
|10.4 |  | Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Raymond Marcy, filed as Exhibit 10.3 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated herein by
reference.                                                                                                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                

50

---

|10.5  |  | Amended and Restated Credit Agreement, dated July 2, 1999, by and among the registrant, the Borrowing Subsidiaries and Nationsbank, N.A. as Administrative Agent, The First National Bank of Chicago, as Documentation Agent, Banc of America
Securities LLC, as Sole Lead Arranger and Book Manager, and the Bank Parties thereto, filed as Exhibit 10.4 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is incorporated herein by reference.
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Interim Services Inc. 1997 Long Term Executive Compensation and Outside Directors Stock Option Plan, filed as Exhibit I to the registrant's Proxy Statement dated April 10, 1997, is incorporated herein by reference.                                                                                                                                                                                                                                                
|10.8  |  | Interim Services Inc. Incentive Plan for 162(m) Executives, filed as Exhibit III to the registrant's Proxy Statement dated April 10, 1997, is incorporated herein by reference.                                                                                                                                                                                                                                                                                       
|10.9  |  | Norrell Corporation Employee Stock Purchase Plan, filed as Exhibit 10.2 to Norrell Corporation's Form 10-K for the fiscal year ended October 29, 1995, is incorporated herein by reference.                                                                                                                                                                                                                                                                           
|10.10 |  | Second Amendment to the Norrell Corporation Employee Stock Purchase Plan, dated August 28, 1997, by Norrell Corporation to be effective September 30, 1997, filed as Exhibit 10.2.2 to Norrell Corporation's Form 10-K for the fiscal
year ended November 2, 1997, is incorporated herein by reference.                                                                                                                                                               
|10.11 |  | Norrell Corporation 1994 Stock Incentive Plan, filed as Exhibit 10.27 to Norrell Corporation's Registration Statement on Form S-1, as filed with the Securities and Exchange Commission on June 10, 1994, is incorporated herein by
reference.                                                                                                                                                                                                                        
|10.12 |  | Norrell Corporation 1991 Stock Option Plan, filed as Exhibit 10.29 to Norrell Corporation's Registration Statement on Form S-1, as filed with the Securities and Exchange Commission on June 10, 1994, is incorporated herein by
reference.                                                                                                                                                                                                                           
|10.17 |  | Restated Stock Purchase Agreement, dated September 26, 1997 among Interim Services Inc., Catamaran Acquisition Corp. and Cornerstone Equity Investors IV, L.P., filed as Exhibit 2.1 to the registrant's Form 8-K dated September 26,
1997 and filed October 13, 1997, is incorporated herein by reference.                                                                                                                                                           
|10.18 |  | The Deferred Compensation Plan of Interim Services Inc., filed as Exhibit 4.1 to the registrant's Form S-8 filed on July 23, 1997, is incorporated herein by reference.                                                                                                                                                                                                                                                                                               
|10.19 |  | Interim Services Inc.'s Outside Directors' Compensation Plan, effective July 1, 1999, filed as Exhibit 10.10 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is incorporated herein by reference.                                                                                                                                                                                                                                             
|10.20 |  | Spherion Corporation Stock Purchase Assistance Plan, filed as Exhibit 10.20 to the registrant's Form 10-Q for the quarter ended September 29, 2000, is incorporated herein by reference.                                                                                                                                                                                                                                                                              
|10.21 |  | Amendment Agreement No. 1, dated as of June 1, 1997, to the Credit Agreement dated as of May 1, 1997, between the registrant and NationsBank filed as Exhibit 10.17 to the registrant's Form 10-K for the fiscal year ended
December 25, 1998, is incorporated herein by reference.                                                                                                                                                                                   
|10.22 |  | Spherion Corporation 2000 Stock Incentive Plan, filed as Exhibit 10.22 hereto.                                                                                                                                                                                                                                                                                                                                                                                        
|10.23 |  | Receivables Sale Agreement, dated as of July 1, 1999, between the registrant and each of its direct and indirect wholly-owned subsidiaries who from time to time thereafter becomes a Seller thereunder and Interim Services Receivables Corp, filed
as Exhibit 10.13 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is incorporated herein by reference.                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

51

---

|10.24 |  | Credit and Security Agreement, dated as of July 1, 1999, by and among Interim Services Receivables Corp., the registrant, Blue Ridge Asset Funding Corporation, Falcon Asset Securitization Corporation, Wachovia Bank N.A., and The First National
Bank of Chicago, filed as Exhibit 10.14 to the registrant's Form 10-Q for the quarter ended September 24, 1999, is incorporated herein by reference.                                                                                                                                                                                                                                                                                                                             
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.25 |  | Amendment No. 1 to the Credit and Security Agreement dated as of October 19, 1999, by and among Interim Services Receivables Corp., the registrant, Blue Ridge Asset Funding Corporation, Falcon Asset Securitization Corporation, Wachovia Bank
 N.A., and The First National Bank of Chicago, filed as Exhibit 10.25 to the registrant's Form 10-K for the fiscal year ended December 31, 1999, is incorporated herein by reference.                                                                                                                                                                                                                                                                                               
|10.26 |  | Joinder Agreement dated as of October 19, 1999 by and among Norrell Corporation, American Technical Resources, Inc., CallTask Incorporated, Comtex Information Systems, Inc., Dynamic Temporary Services, Inc., a Georgia corporation, NorCross
Teleservices, Inc., Norrell Information Services, Inc., Norrell Resources Corporation, Norrell Services of Texas, Inc., Norrell Services, Inc., Norrell Temporary Services Inc., Tascor Incorporated, Tascor Resources Corporation, Interim Atlantic
Enterprises LLC, Interim Pacific Enterprises LLC, and Interim Services Receivables Corp., filed as Exhibit 10.26 to the registrant's Form 10-K for the fiscal year ended December 31, 1999, is incorporated herein by
reference.
|10.28 |  | Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert E. Livonius, filed as Exhibit 10.18 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.29 |  | Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy G. Krause, filed as Exhibit 10.19 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.31 |  | Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert Evans, filed as Exhibit 10.21 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.33 |  | Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Raymond Marcy, filed as Exhibit 10.22 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.34 |  | Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert E. Livonius, filed as Exhibit 10.23 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.35 |  | Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy G. Krause, filed as Exhibit 10.24 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.37 |  | Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert Evans, filed as Exhibit 10.26 to the registrant's Form 10-K for the fiscal year ended December 25, 1998, is incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.39 |  | Spherion Corporation 2000 Employee Stock Purchase Plan, filed as Exhibit 10.39 hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

52

---

|10.40 |  | Amendment No. 2 dated March 10, 2000, to the Credit and Security Agreement dated as of July 1, 1999, by and among Interim Services Receivables Corp. (now known as Spherion Receivables Corp.) the registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago), filed as Exhibit 10.40 to the registrant's Form 10-Q for the quarter ended June 30, 2000, is incorporated
herein by reference.         
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.41 |  | Amendment No. 3 dated June 29, 2000, to the Credit and Security Agreement dated as of July 1, 1999, by and among Interim Services Receivables Corp. (now known as Spherion Receivables Corp.) the registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago), filed as Exhibit 10.41 to the registrant's Form 10-Q for the quarter ended June 30, 2000, is
incorporated herein by reference.          
|10.42 |  | Amendment No. 4 dated July 31, 2000, to the Credit and Security Agreement dated as of July 1, 1999, by and among Interim Services Receivables Corp. (now known as Spherion Receivables Corp.) the registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago), filed as Exhibit 10.42 to the registrant's Form 10-Q for the quarter ended September 29, 2000, is
incorporated herein by reference.     
|10.43 |  | Amendment No. 5 dated September 15, 2000, to the Credit and Security Agreement dated as of July 1, 1999, by and among Interim Services Receivables Corp. (now known as Spherion Receivables Corp.) the registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago), filed as Exhibit 10.43 to the registrant's Form 10-Q for the quarter ended September 29, 2000, is
incorporated herein by reference.
|10.44 |  | First Amendment dated March 5, 1999, to the Interim Services Inc. Deferred Compensation Plan, filed as Exhibit 10.44 hereto.                                                                                                                                                                                                                                                                                                                                                                                          
|10.45 |  | Second Amendment dated June 14, 1999, to the Interim Services Inc. Deferred Compensation Plan, filed as Exhibit 10.45 hereto.                                                                                                                                                                                                                                                                                                                                                                                         
|10.46 |  | Third Amendment dated August 1, 2000, to the Interim Services Inc. Deferred Compensation Plan, filed as Exhibit 10.46 hereto.                                                                                                                                                                                                                                                                                                                                                                                         
|10.47 |  | Employment Agreement dated February 29, 2000, by and between Interim Services Inc. and Wayne D. L'Heureux, filed as Exhibit 10.47 hereto.                                                                                                                                                                                                                                                                                                                                                                             
|10.48 |  | Change In Control Agreement dated February 29, 2000 by and between Interim Services Inc. and Wayne D. L'Heureux, filed as Exhibit 10.48 hereto.                                                                                                                                                                                                                                                                                                                                                                       
|11.   |  | See "Earnings Per Share" in the Notes to Consolidated Financial Statements included at page 48 herein.                                                                                                                                                                                                                                                                                                                                                                                                                
|21.   |  | Subsidiaries of the registrant, filed as Exhibit 21 hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|23.1  |  | Consent of Deloitte & Touche LLP, filed as Exhibit 23.1 hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                       

(b) REPORTS
ON FORM 8-K

During
the last quarter of the period covered by this report, no reports on Form 8-K were filed.

53

---

(c) EXHIBITS FILED WITH THIS FORM

|Exhibit
Number |  | Exhibit Name                                                                                                                                                                   
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2            |  | By-Laws of registrant, amended and restated as of December 29, 2000.                                                                                                           
|4.1            |  | Form of Stock Certificate.                                                                                                                                                     
|4.7            |  | Sections Four though Twelve and Thirty-five through Forty-one of the By-Laws of the registrant, amended and restated as of December 29, 2000.                                  
|4.11           |  | Amendment No. 4 dated as of November 21, 2000, to Rights Agreement dated March 17, 1994 between the registrant, ChaseMellon Shareholder Services, LLC and The Bank of New York.
|10.22          |  | Spherion Corporation 2000 Stock Incentive Plan.                                                                                                                                
|10.39          |  | Spherion Corporation 2000 Employee Stock Purchase Plan.                                                                                                                        
|10.44          |  | First Amendment dated March 5, 1999, to the Interim Services Inc. Deferred Compensation Plan.                                                                                  
|10.45          |  | Second Amendment dated June 14, 1999, to the Interim Services Inc. Deferred Compensation Plan.                                                                                 
|10.46          |  | Third Amendment dated August 1, 2000, to the Interim Services Inc. Deferred Compensation Plan.                                                                                 
|10.47          |  | Employment Agreement dated February 29, 2000, by and between Interim Services Inc. and Wayne D. L'Heureux.                                                                     
|10.48          |  | Change In Control Agreement dated February 29, 2000, by and between Interim Services Inc. and Wayne D. L'Heureux.                                                              
|21.            |  | Subsidiaries of the registrant.                                                                                                                                                
|23.1           |  | Consent of Deloitte & Touche LLP.                                                                                                                                              

(d) OTHER
FINANCIAL STATEMENTS

There
were no other financial statements of the type described in subparagraph (d) of Item 14 of Part IV required to be filed herein.

54

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|               |  | SPHERION CORPORATION
|-------------- |  | --------------------
|March 16, 2001 |  | By                  

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the date indicated.

|Signature                               |  | Title    |  | 
|--------------------------------------- |  | -------- |  | 
|                                        |  |          |  | 
|/s/STEVEN S. ELBAUMSteven S. Elbaum     |  | Director |  | 
|/s/WILLIAM F. EVANSWilliam F. Evans     |  | Director |  | 
|/s/JEROME B. GROSSMANJerome B. Grossman |  | Director |  | 
|/s/CINDA A. HALLMANCinda A. Hallman     |  | Director |  | 
|/s/RAYMOND MARCYRaymond Marcy           |  | Director |  | 
|/s/GUY W. MILLNERGuy W. Millner         |  | Director |  | 
|/s/J. IAN MORRISONJ. Ian Morrison       |  | Director |  | 
|/s/A. MICHAEL VICTORYA. Michael Victory |  | Director |  | 

(Signed as to each on March 16, 2001)

55

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|Signature                     |  | Title                                                                              |  | 
|----------------------------- |  | ---------------------------------------------------------------------------------- |  | 
|                              |  |                                                                                    |  | 
|/s/RAYMOND MARCYRaymond Marcy |  | Chairman, President and Chief Executive Officer (principal executive officer)      |  | 
|/s/ROY G. KRAUSERoy G. Krause |  | Executive Vice President and Chief Financial Officer (principal financial officer) |  | 
|/s/MARK W. SMITHMark W. Smith |  | Vice President Finance and Administration (principal accounting officer)           |  | 

(Signed as to each on March 16, 2001)

56

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SPHERION CORPORATION AND SUBSIDIARIES
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS(amounts in thousands)

|Column A                            |            | Column B |          | Column C Additions |   | Column D |         | Column E |       
|----------------------------------- | ---------- | -------- | -------- | ------------------ | - | -------- | ------- | -------- | ------
|
|Fiscal Year Ended December 25, 1998 |            |          |          |                    |   |          |         |          |       
|Allowance for doubtful accounts     |            | $        | (5,229   | )                  | $ | (6,946   | )       | $        | (363  
|                                    |            |          |          |                    |   |          |         |          |       
|Accumulated Amortization:           |            |          |          |                    |   |          |         |          |       
|                                    | Goodwill   |          | $        | (40,402            | ) | $        | (16,828 | )        | $     
|                                    | Tradenames |          |          | (4,142             | ) |          | (5,558  | )        |       
|                                    | Other      |          |          | (2,700             | ) |          | (164    | )        |       
|                                    |            |          |          |                    |   |          |         |          |       
|                                    |            | $        | (47,244  | )                  | $ | (22,550  | )       | $        | (68   
|                                    |            |          |          |                    |   |          |         |          |       
|Fiscal Year Ended December 31, 1999 |            |          |          |                    |   |          |         |          |       
|Allowance for doubtful accounts     |            | $        | (8,937   | )                  | $ | (6,685   | )       | $        | (5,944
|                                    |            |          |          |                    |   |          |         |          |       
|Accumulated Amortization:           |            |          |          |                    |   |          |         |          |       
|                                    | Goodwill   |          | $        | (57,261            | ) | $        | (28,605 | )        | $     
|                                    | Tradenames |          |          | (9,521             | ) |          | (5,422  | )        |       
|                                    | Other      |          |          | (552               | ) |          | (137    | )        |       
|                                    |            |          |          |                    |   |          |         |          |       
|                                    |            | $        | (67,334  | )                  | $ | (34,164  | )       | $        | 763   
|                                    |            |          |          |                    |   |          |         |          |       
|Fiscal Year Ended December 29, 2000 |            |          |          |                    |   |          |         |          |       
|Allowance for doubtful accounts     |            | $        | (16,956  | )                  | $ | (9,907   | )       | $        | (2,429
|                                    |            |          |          |                    |   |          |         |          |       
|Accumulated Amortization:           |            |          |          |                    |   |          |         |          |       
|                                    | Goodwill   |          | $        | (85,423            | ) | $        | (38,100 | )        | $     
|                                    | Tradenames |          |          | (14,602            | ) |          | (5,100  | )        |       
|                                    | Other      |          |          | (464               | ) |          | (174    | )        |       
|                                    |            |          |          |                    |   |          |         |          |       
|                                    |            | $        | (100,489 | )                  | $ | (43,374  | )       | $        | 3,773 
|                                    |            |          |          |                    |   |          |         |          |       

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