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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K


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

                   For the fiscal year ended December 31, 2000

                                       OR

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

              For the transition period from _________ to _________

                         Commission file number 0-30035

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

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            DELAWARE                                      33-0831076
    (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization)                    Identification No.)
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               4 PARK PLAZA, SUITE 1000, IRVINE, CALIFORNIA 92614
           (Address of Principal Executive Office, including Zip Code)

                                 (949) 250-8002
              (Registrant's Telephone Number, including Area Code)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         COMMON STOCK, $.0001 PAR VALUE

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. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) 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. [ ]

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)

        Approximately $291,486,000, as of March 16, 2001.

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                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

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

        91,169,528 as of March 16, 2001


                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).

        Proxy Statement for the Annual Meeting of Stockholders to be held
        Thursday, May 17, 2001; portions incorporated in Part III.

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                                TABLE OF CONTENTS

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PART I

Item 1.         BUSINESS (including Risk Factors beginning on page 11).....................      1

Item 2.         PROPERTIES.................................................................     19

Item 3.         LEGAL PROCEEDINGS..........................................................     20

Item 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................     20

Executive Officers of the Registrant.......................................................     20

PART II

Item 5.         MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......     22

Item 6.         SELECTED FINANCIAL DATA....................................................     23

Item 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS......................................................     24

Item 7A.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................     30

Item 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................     30

Item 9.         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE........................................     30

PART III

Item 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.........................     30

Item 11.        EXECUTIVE COMPENSATION.....................................................     30

Item 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............     30

Item 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................     30

PART IV

Item 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...........     31

Information Regarding Forward Looking Statements and Industry Data.........................     34

SIGNATURES      ...........................................................................     35

Financial Statements.......................................................................    F-1
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                                     PART I

ITEM 1.  BUSINESS.

MISSION; OVERVIEW

   Our mission is to provide comprehensive business process management solutions
that enable Global 500 corporations to increase the productivity of their human
capital, convert HR spending to a variable cost basis and reduce the overall
cost of HR management and administration. We do this through multiple delivery
vehicles:

        -       our Exult eHRSM solution including our myHRSM web-enabled
                applications;

        -       shared client service centers; and

        -       best practices expertise and expert process consulting
                capabilities.

   These vehicles enable us to provide scalable, web-based service delivery
capabilities across many HR business processes. myHR includes our web-based
functional applications and browser system through which our clients' personnel
can access their HR information systems and navigate through those systems to
find information and process transactions. Our shared client service centers
handle our clients' HR transaction and contact center requirements from a
leveragable multi-client platform, and our best practices and process consulting
expertise enables us to improve efficiency and effectiveness through process
improvement. We deploy these capabilities to handle the transactional and
administrative elements of our clients' HR processes, freeing our clients' HR
departments to add value through focus on strategy and policy matters that are
important to their businesses.

INDUSTRY BACKGROUND

   HUMAN RESOURCES DEPARTMENTS IN THE GLOBAL 500. According to the Global 500
List for the Year 2000 published by Fortune Magazine, Global 500 corporations
employed more than 37 million people in 1999, and a typical Global 500 company
has 30,000 or more employees in multiple locations and countries. An employee
base of this magnitude presents logistical complexities, and the human resources
functions of Global 500 corporations are often complicated by multiple human
resources groups for different business units and the lack of central
information repositories and coordinated communications infrastructures. As a
result, the HR processes of large, multinational corporations often are
redundant and inefficient. In addition, the large number of third-party vendors
used by a human resources department to handle discrete functions complicates HR
process management. By necessity, HR departments typically devote most of their
resources to administrative functions rather than strategic planning and
initiatives. At the same time, corporations that extend cost-cutting to their HR
departments often focus more on reducing staff than on reengineering service
delivery.

   THE EMERGENCE OF HR PROCESS OUTSOURCING. Many large corporations outsource
discrete, non-core functions of their operations, such as payroll, tax filings
and benefits administration. According to Dataquest, the worldwide HR
outsourcing market opportunity is projected to grow from approximately $26.2
billion in 1999 to approximately $76.4 billion in 2004. However, the market
opportunity for comprehensive HR outsourcing is relatively new. Dataquest
estimates the market opportunity for integrated, multi-process HR outsourcing
will grow from over $900 million in 1999 to more than $12 billion by 2003 in the
US alone. Comprehensive HR process outsourcing for large multinational
corporations is difficult and requires a well-developed service delivery
infrastructure and significant expertise in analyzing, providing and managing HR
best practices across many divisions and third-party vendors. HR best practices
refer to those HR policies, procedures, operations and technologies that yield
superior performance as measured by productivity, cost, quality and customer
satisfactions metrics.

   EXPANSION OF THE INTERNET. The Internet extends our comprehensive service
delivery model to facilitate interactive communications among large groups of
individuals in multiple geographic locations. The Hunter Group estimates that by
using the functionality of the Internet to move HR delivery to a largely
self-service mode, organizations can achieve annual HR cost reductions of
approximately 25% to 30%. To date, however, HR organizations have not fully
utilized the

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Internet and web-enabled processes and systems because they have not broadly
implemented any mechanism for effectively centralizing and organizing the large
amount of information and electronic transmissions generated by processes within
the HR organization. Accordingly, the Internet's use in HR departments has been
largely limited to one-on-one e-mail communications or process-specific internal
networks, often provided by third parties which do not integrate into a seamless
information source for the company or its employees.

OUR STRATEGY

        Our Exult eHR solution enables us to assume broad responsibility for
management of our clients' human resources people, processes, technologies and
third-party vendors, and to deliver our clients increased human capital
productivity at reduced cost. The following are the key elements of our
strategy:

        -       FOCUS ON GLOBAL 500 CORPORATIONS. Global 500 corporations
                generally have operations spread across multiple business units
                and locations. We believe the magnitude and complexity of these
                corporations and their resulting HR needs make them ideal
                candidates for our comprehensive, web-enabled Exult eHR process
                management solution.

        -       ESTABLISH LONG-TERM CLIENT RELATIONSHIPS. We pursue long-term
                contracts to reengineer and manage our clients' HR processes. We
                believe long-term contracts foster mutual commitment and shared
                goals with our clients, and best enable us to transform client
                HR processes to our infrastructure and best practices. The
                long-term nature of our contracts also gives us greater
                visibility of future revenue streams and better information for
                determining future investment decisions.

        -       PROVIDE BROADLY INTEGRATED PROCESS MANAGEMENT SOLUTIONS. We have
                designed a service offering that covers more than 25 specific
                human resources and related processes in the areas of payroll
                production, rewards, life events, advice & administration, and
                finance & accounting. This enables us to offer clients a
                comprehensive solution for integrated management of many or all
                HR processes, which enhances the efficiency and effectiveness of
                clients' HR operations.

        -       UTILIZE AND LEVERAGE SHARED RESOURCES ACROSS OUR CLIENT BASE. We
                combine shared service centers, internal process capabilities,
                and alliances with selected vendors into an integrated service
                delivery infrastructure that enables us to deliver efficient,
                large-scale HR process management solutions to multiple clients.
                Our shared client service centers in Glasgow, Charlotte, and the
                Houston and Los Angeles areas are designed to handle multiple
                clients and utilize automated processes and technology to
                provide efficient client service and achieve economies of scale.
                We use our internal process capabilities, including payroll and
                HR information systems, to deliver core processes efficiently.
                We also utilize strategic relationships with world-class
                third-party providers to make our integrated service offering
                more comprehensive and efficient.

        -       USE OUR MYHR WEB-ENABLED SOLUTION SET FOR ENHANCED HR
                PERFORMANCE. We use emerging technologies and our myHR systems
                and applications to connect the people, processes, technologies
                and third-party vendors involved in clients' HR organizations
                and to provide a comprehensive central repository of company and
                employee data. We help our clients implement database and
                interconnectivity tools to easily access, evaluate and use HR
                information to further their strategic business objectives. Our
                myHR applications will operate behind secure Internet firewalls
                and enable clients' personnel to access information and employee
                productivity tools and communicate freely with other people
                throughout the organization. myHR will enable employees to
                perform both HR and non-HR tasks and will encourage employees to
                become more self-sufficient in handling many day-to-day HR
                functions, while enhancing communication and efficiency
                throughout clients' global organizations.


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THE EXULT EHR SOLUTION

        Our Exult eHR solution combines a broad process management services
offering, shared service center resources and service delivery, and strategic
consulting expertise to simplify and standardize our clients' HR practices and
procedures, and deliver improved management information and employee
communications at significant cost savings.

SERVICES

        Our Exult eHR solution includes a broad spectrum of process management
services grouped into five major categories, as follows:

        PAYROLL PRODUCTION

        We manage clients' payroll processes and related production requirements
to reduce our clients' investment of internal resources in transaction
processing. Our payroll and production services include:

            Payroll disbursements and reporting
            Time and attendance administration
            Wage attachments
            Tax withholding and reporting
            Banking interfaces
            Related systems and data administration

        REWARDS

        We manage compensation and benefit programs to reduce our clients'
internal process and administration burdens. Our services in this area include:

            Salary review planning
            Compensation and bonus administration
            Benefits enrollment and administration
            Performance management
            401(K) plan administration
            Pension plan administration

        LIFE EVENTS

        We process and manage clients' workforce changes to help our clients
effectively develop and deploy their human capital. Our services in this area
include:

            Recruiting and staffing functions
            Training
            Expatriation and repatriation
            Domestic relocation
            Severance


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        ADVICE AND ADMINISTRATION

        We manage our clients' HR information systems infrastructure through
integrated, web-enabled systems that enable us to capture, track, modify and
report large amounts of employee-related data. We use this data to help our
clients manage various HR functions, including:

            HRIS reporting
            Performance management
            Policy and legal compliance
            Organization development
            Employee development
            HR strategy
            Labor relations and employee relations
            Employee data and records management

        FINANCE & ACCOUNTING

        We manage accounts payable processes, including disbursements and
reconciliation. These services are intended to streamline clients' back office
transaction processing, and include:

            Third party vendor payments
            Travel and entertainment expense reimbursements
            Payroll accounting
            Benefits accounting
            Accounts payable
            Fixed asset accounting

SHARED RESOURCES AND SERVICE DELIVERY

        We deliver our process management services through an infrastructure of
client service centers, web-enabled technology systems, functional applications,
and third-party service providers. Our model involves leveraging shared
resources to provide HR best practices while achieving economies of scale, which
we believe enables us to deliver improved HR services at a reduced cost.

        CLIENT SERVICE CENTERS. We maintain three principal client service
centers, in Glasgow, Charlotte, and the Houston area, and we are operating a
fourth center in the Los Angeles area in connection with our contract with BP
Amoco p.l.c. and related entities (bp). These centers house the personnel and
systems we use to manage our clients' transaction, production and contact center
requirements, including customer service representatives and production
operations staff for functions such as payroll processing, benefits
administration, training administration, and IT support and maintenance. These
client service centers also contain systems and technology, such as contact/case
management systems, imaging and workflow, and HR application software and
databases. Our clients' employees can communicate with the client service
centers online through myHR or by phone, fax, or e-mail.

        We designed and outfitted the Glasgow center ourselves. We selected
Glasgow because of its accessibility, educated English-speaking workforce,
relatively low cost of doing business, and EU membership. The center is 31,000
square feet and currently houses approximately 140 persons, with room for up to
approximately 250. The Glasgow center currently handles the processes we have
taken on for bp in the United Kingdom, as well as our own UK internal processing
requirements. We expect management of HR processes for bp in continental Europe
and other parts of the world outside North America also to be handled through
this center. In addition to bp, the Glasgow center can accommodate additional
client demands, and will play a significant role in service delivery to future
European clients.


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        We acquired a center in the Woodlands, Texas, which is near Houston, at
the end of 1999. This center had been providing payroll and related services for
Tenneco Automotive and Pactiv Corporation, and we entered into agreements to
continue to provide those services to Tenneco and Pactiv when we acquired the
center. We have invested heavily in developing this center into a broad platform
from which we can deliver broad process management services. The center is
71,000 square feet and currently houses approximately 300 persons, with room for
up to approximately 370. This center currently provides services for bp in the
US, as well as Unisys, Tenneco and Pactiv, and also fulfills Exult's own US
internal processing requirements. This center can accommodate growth in our US
client base.

        We acquired the Charlotte facility at the time we signed our process
management contract with Bank of America Corporation. This was a "brownfield"
facility that Bank of America had utilized to provide for itself some of the HR
process management services we have agreed to handle. We are adapting this
facility to our own systems. Our ability to retain key managers and operate the
center during conversion has contributed to our ability to transition Bank of
America's HR processes relatively quickly. The Charlotte center is approximately
96,000 square feet and currently houses approximately 320 persons, with room for
approximately 750 persons. Process management for Bank of America will occupy
approximately half of this center's capacity, leaving room for additional client
expansion.

        The Los Angeles area center, located in Pasadena, operated as a full
employee information services facility for ARCO, which was acquired by bp in
1999. We are using this facility to manage payroll, benefits and HRIS functions
for the ARCO workforce under our bp contract, and may expand it into a
multiple-client platform in the future. This center currently houses
approximately 80 persons.

        All of our client service centers except Glasgow were previously
operated by our clients, and therefore have an experienced workforce. All of
these centers are designed to give us efficiencies and economies of scale by
leveraging the functionality, staff and technology of centralized processes and
services across many business units for multiple clients. They also provide
important redundancies for service continuity purposes.

        In the aggregate, we expect our current client demands to occupy
approximately half of our current centers' capacity. Therefore, while we plan to
continue to develop additional centers, in particular through facility and
workforce acquisitions from new "brownfield" clients, our existing service
centers can accommodate significant expansion of our client base from
"greenfield" client opportunities.

        WEB ENABLED SYSTEMS, PRODUCTION APPLICATIONS AND MYHR.

        In order to deliver comprehensive, integrated HR process management, we
have developed a service infrastructure that relies upon third-party vendors,
licensed components, and our own intellectual property.

        Performance under our process management contracts requires
sophisticated information technology capabilities. All our clients utilize
database tools for their HR information systems, including such programs as
PeopleSoft, SAP, and some legacy systems. Some of these systems must be replaced
and others require substantial integration work. In most cases, significant
systems interface work is required to enable the client's systems to be
integrated and to communicate with our systems. We assist in these processes,
both directly and through vendors we supervise, so that the client's internal HR
information systems provide an adequate platform for integrated HR process
management.

        Many of our process management capabilities are based upon third-party
software that we have selected as "best in class" and compatible with our
infrastructure. For example, we rely upon sophisticated tax and process
management software licensed from Deloitte & Touche LLP in provision of our
expatriate administration services, and we use an open web platform for
workforce planning, hiring and deployment licensed from Deploy Solutions in our
delivery of strategic resourcing management.


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        In general, we manage all of the essential back-end systems, such as HR
application management, in order to provide full service accountability and
control. Application server management and hosting is generally provided by our
IT infrastructure partners, principally Unisys, and backed-up by their
sophisticated disaster backup and recovery systems.

        Our Exult eHR solution integrates state-of-the-art technology and
various software applications and business processes from the client's own
internal information and communications systems to compile and centralize a
wealth of HR information. The Internet, emerging technologies and our myHR
browser interface enable our clients and their employees to access and use that
information.

        THIRD-PARTY SERVICE PROVIDERS

        Our Exult eHR solution incorporates the services of third-party vendors
in two important ways. First, our process management contracts may include as
"in scope" certain services being provided to the client by third parties. At
the time we become responsible for a client's HR organization, we generally
assume responsibility for administration of these vendors, either by novation of
their contracts to us or through management arrangements. Depending upon a
number of factors, including the type of services involved, terms of the
vendors' contracts, and client preferences, over time we may retain the vendor
as a service provider to the client within the scope of our contract and under
our management, replace the vendor with a new third-party provider under our
management, or take over provision of the services ourselves.

        We believe our familiarity and experience with HR best practices and
with the market for third-party HR vendors enables us to evaluate whether the
services being provided by a third party meet the needs of a given client and
comply with HR best practices. In addition, we believe we will be able to
provide improved service levels and greater cost savings on behalf of our
clients through negotiation and management of these third-party vendor
contracts.

        In addition to management of third-party vendors who had preexisting
relationships with our clients, we also utilize selected third parties to
complement our integrated service offering with specialized HR services that can
be more effectively and efficiently handled by third-party vendors and
subcontractors than by our internal resources. The components of our solution
that we currently intend to "outsource" include pension management and some
elements of relocation administration. Over time, we may "outsource" additional
elements of our service offering, or bring some elements "in house," depending
upon the availability of appropriately skilled third parties in various areas,
competition, the development of our own capabilities, client demands,
acquisition opportunities, capital availability and requirements, and other
factors.

STRATEGIC CONSULTING EXPERTISE

        In November 1999, we acquired the business of Gunn Partners, Inc., a
business process improvement consulting company with operations in the United
States and Europe. Gunn Partners has been consulting with Global 500
corporations since 1991 on administrative staff functions such as human
resources and finance and accounting, as well as procurement, information
technology, and customer service. Gunn Partners generates revenue through its
own consulting activities, provides strategic assistance in structuring our
client relationships, assists in cross-marketing, and provides us with a service
offering for potential clients that are not yet ready for our full eHR solution.
Gunn Partners has provided consulting services to some of the largest companies
in the Global 500; current client engagements include UBS Warburg, Diageo,
Pechiney, Siemens, Japan Tobacco, Gillette, Dow Corning, International Paper and
Knight Ridder.

BUSINESS PROCESS MANAGEMENT CLIENTS

        BP

        In December 1999, we entered into a seven-year Framework Agreement with
BP Amoco p.l.c. (NYSE: BP), a leading international energy and petrochemicals
company, to create a comprehensive eHR services organization and provide a broad
range of human resources management services to bp and its affiliates. bp
currently operates in more than 40


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countries and has more than 80,000 employees and an equal or greater number of
annuitants. The contracts with bp are expected to result in aggregate revenue to
Exult of approximately $600 million over the anticipated initial term if we
implement and perform according to our plans.

        Our initial contracts under the Framework Agreement cover bp employees
in the United Kingdom and the United States, representing approximately 70% of
their total employees and annuitants. We have worked with bp to identify
separate processes involved in bp's HR organization: training, organization
development, HR strategy, labor relations, compliance, expatriate relocation and
administration, information services, benefits, compensation, employee
relations, vendor administration, payroll, employee development, recruiting,
severance, performance management, domestic relocation, and information
technology. Each of these processes is divided into component tasks or functions
and responsibility for each is allocated either to bp or to us. In general, we
are responsible for systems design and implementation, routine employee
communications, data gathering, processing and retrieval, management reporting,
vendor management, and overall administration of related HR functions. bp
remains responsible for strategic planning, policy decisions, employee
relations, legal compliance, and professional resources.

        As of the date of this report, we have successfully transitioned all of
bp's in-scope HR management processes in the UK and all core, direct processes
in the US to our systems and infrastructure. bp is requesting the expansion of
our services into additional countries where they operate, and we anticipate
that selected processes and countries will be transitioned during 2001 and 2002.
We continue to make arrangements to assume or administer bp's contracts with
third parties providing discrete services that constitute a part of our
integrated service offering.

        We are obligated to provide our services to bp in the UK and the US for
fixed fees that are generally equal to or less than bp's historical costs
incurred in connection with the services that we are assuming. After we have
achieved a negotiated minimum return from provision of our services, we are
required to share further savings with bp in a negotiated gain-sharing
arrangement that is intended to motivate us and bp to maximize efficiency in the
provision of our services.

        The Framework Agreement contemplates extending the arrangement beyond
the UK and the US to unite all of bp's worldwide operations under one global
integrated eHR solution. Under the Framework Agreement, we have a right to
provide human resources management services for each country in the world, in
addition to the US and the UK, in which bp determines by December 2001 to obtain
(or extend existing) human resources management services. bp is not obligated to
add additional countries and we must demonstrate our ability to meet their
service needs and provide specified cost savings in other countries to expand
the arrangement. If bp does add additional countries to our contract, we will
enter into a supplemental agreement for that country for an expected term of
five years. We expect additional country agreements to involve the same kinds of
transition and pricing arrangements as the UK and US Country Agreements,
although we anticipate completing additional country transitions more quickly
based on our initial experiences in the UK and the US.

        The Framework Agreement runs for seven years and the UK, US and other
Country Agreements runs for a minimum of five years, subject to bp's right to
terminate in the event of our insolvency or material breach or performance
failure, or if we are taken over by an entity that is a competitor of bp or that
is financially weaker than we are, or that, through control of Exult, could
adversely affect bp's reputation. In addition, starting in December 2002, bp may
terminate the Framework Agreement or the US or UK or any other Country Agreement
upon giving us 12 months' advance notice and by making termination payments
designed to defray our costs and give us a specified return on our investment in
the contract for the remaining term of the agreement but not to exceed two
years. After December 2004, bp may terminate a Country Agreement at any time
upon 12 months' advance notice without the obligation to make such termination
payments. Termination of the Framework Agreement causes termination of the US
and UK agreements and any other Country Agreements that are in effect at that
time. We expect to rely upon bp for a significant portion of our revenue for the
foreseeable future. If bp were to substantially reduce or stop the use of our
services, our reputation and future revenues would be seriously impaired. Short
of terminating an entire Country Agreement, bp may also terminate our rights to
provide particular services in a country if we are unable to meet performance
standards for those services in that country. All bp agreements terminate in
December 2006 if not renewed by mutual agreement. Any termination involves a


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winding-down period during which we continue to be paid for providing services
while transferring back to bp or to a new service provider the HR processes for
which we have been responsible. Additional country agreements will contain
similar termination provisions.

        BANK OF AMERICA CORPORATION

        In November 2000, we entered into a ten-year Master Services Agreement
with Bank of America Corporation (NYSE: BAC) to provide human resources and
certain finance and accounting services. The agreement involves services
applicable to approximately 150,000 employees of Bank of America Corporation and
its affiliates, primarily in the US, and is expected to result in aggregate
revenue to Exult of approximately $1.1 billion over the ten-year term if we
implement and perform according to our plans.

        Our contract with Bank of America covers the following processes:
benefits, payroll, employee data & records management, expatriate relocation and
administration, information technology & information services, policy & legal
compliance administration, accounts payable, travel & expense claim processing,
and asset accounting services. Each of these processes is divided into component
tasks or functions and responsibility for each is allocated either to Bank of
America or to us. In general we are responsible for systems and process design
and implementation, routine employee communications, data gathering, processing
and retrieval, management reporting, vendor management, transaction processing,
and overall administration of related HR functions. Bank of America remains
responsible for strategic planning, policy decisions, employee relations,
certain legal compliance, and transaction initiation and approval.

        We are obligated to provide our services to Bank of America for fixed
fees that are generally equal to or less than the bank's historical costs
incurred in connection with the services that we are assuming. In addition, we
are obligated to share with the bank any savings we achieve through management
of third-party vendors providing services within the scope of the contract.

        Our transition plans call for us to assume management of all in-scope
processes by the third quarter of 2001, and as of the date of this report, we
are on schedule. We are also making arrangements to assume or administer Bank of
America's contracts with third parties providing discrete services that
constitute a part of our integrated service offering.

        Bank of America has the right to terminate the agreement in the event of
our insolvency or material breach or material repeated performance failure, upon
the change in control of our business. In addition, due to certain unique and
established relationships, Bank of America has the right to terminate the
agreement if our current CEO or our current Operations President ceases to be
employed by us (other than due to nonperformance, death or disability) within
one year after certain contract milestones are met. Bank of America may also
terminate the agreement for convenience upon 12 months advance notice. If Bank
of America terminates the agreement for convenience during years two through
seven of the contract term, or terminates the agreement for change in control,
they are obligated to make a specified termination payment to us. The amount of
the termination payment is designed to defray certain costs, not to approximate
our total revenue or profit under the agreement. Any termination involves a
winding-down period during which we would continue to be paid for providing
services while transferring back to Bank of America or to a new service provider
the processes for which we have been responsible. We expect to rely upon Bank of
America for a significant portion of our revenue for the foreseeable future. If
Bank of America were to substantially reduce or stop the use of our services,
our reputation and future revenues would be seriously impaired.

        In connection with this agreement, we took over Bank of America's HR
processing center in Charlotte. This transaction took the form of transfer by
the bank to us of a paid-up lease on approximately 96,000 square feet of office
space and related assets in partial payment of indebtedness Bank of America had
incurred to us in connection with its earlier purchase from us of 5 million
shares of Exult Common Stock and three-year warrants to purchase an additional 5
million shares at $11 per share. We also hired approximately 600 people who had
previously been employed by the bank in roles now within the scope of our
responsibilities under the agreement.


                                       8
<PAGE>   12

        UNISYS CORPORATION

        In August 2000, we entered into a seven-year Master Services Agreement
with Unisys Corporation (NYSE: UIS) to provide human resources processes and
vendor management services. In November 2000, this contract was expanded to
include training administration services. The agreement involves services
applicable to approximately 36,000 employees of Unisys Corporation and its
affiliates in the US, UK and other countries.

        Our contract with Unisys covers compensation, benefits and payroll
processes; employee data management processes, including employee data & records
management and information technology & information services; workforce planning
processes, including resourcing, expatriate and domestic relocation &
administration, and severance; organization and people development processes,
including performance management, training and policy & legal compliance, as
well as organizational and people development; and workforce services processes,
including HR strategy and labor and employee relations. Each of these processes
is divided into component tasks or functions and responsibility for each is
allocated either to Unisys or to us. In general we are responsible for systems
and process design and implementation, routine employee communications, data
gathering, processing and retrieval, management reporting, vendor management,
transaction processing, and overall administration of related HR functions.
Unisys remains responsible for strategic planning, policy decisions, employee
relations, legal compliance, and transaction initiation and approval.

        We are obligated to provide our services to Unisys for fixed fees that
are generally equal to or less than the historical costs Unisys incurred in
connection with the services that we are assuming. In addition, we are obligated
to share with Unisys any savings we achieve through management of third-party
vendors providing services within the scope of the contract.

        Our transition plans call for completion of the transition of in-scope
processes to our systems and infrastructure by the end of the third quarter of
2001, and as of the date of this report, we are on schedule for completion by
this date. We are also making arrangements to assume or administer Unisys's
contracts with third parties providing discrete services that constitute a part
of our integrated service offering.

        Unisys has the right to terminate the agreement in the event of our
insolvency or material breach or repeated material performance failure, or if a
designated competitor of Unisys obtains control of our business. Unisys may also
terminate the agreement for convenience upon making a specified termination
payment to us. The amount of the termination payment is designed to defray
certain costs, not to approximate our total revenue or profit under the
agreement. Any termination may involve a winding-down period during which we
would continue to be paid for providing services while transferring back to
Unisys or to a new service provider the processes for which we have been
responsible. Unisys also has the right to remove services from the contract by
"insourcing" or delegation to third parties, subject to payment to us of
contract minimums. We expect our contract with Unisys to provide significant
revenue to us for the foreseeable future and if Unisys were to substantially
reduce or stop the use of our services, our reputation and future revenues would
be seriously impaired.

        PACTIV CORPORATION

        In January 2000, we entered into a three-year agreement with Pactiv
Corporation (NYSE: PTV), a leading provider of advanced packaging solutions
formerly known as Tenneco Packaging. Pactiv operates approximately 85 facilities
in approximately 17 countries around the world. Under this agreement, we assumed
management and accountability for Pactiv's North American payroll, employee
expense reimbursement, and accounts payable processes.

        TENNECO AUTOMOTIVE

        In January 2000, we entered into a three-year agreement with Tenneco
Automotive (NYSE: TEN), a large international manufacturer of ride management
control and exhaust systems and products with approximately 23,000 employees


                                       9
<PAGE>   13

worldwide. Under this agreement, we assumed management and accountability for
Tenneco's North American payroll, employee expense reimbursement, and accounts
payable processes.

SALES AND MARKETING

        Clients make decisions about outsourcing HR at very high levels because
of the strategic nature and importance of their HR processes. Therefore, our
lead generation and sales efforts target senior executives of Global 500
corporations, largely through personal relationships and introductions. Due to
the strategic importance of these senior executive relationships, most of our
selling efforts have been conducted by members of our executive management team.
We have also maintained a small staff of dedicated sales professionals whose
primary role has been to assess our compatibility with potential clients and
negotiate and document our contracts. We employ a team approach to business
development, working with colleagues in our IT delivery, client services
centers, strategy and other functional areas to identify, qualify and prioritize
prospects, manage due diligence processes, negotiate contracts, and craft Exult
eHR solutions for our clients.

        We have focused our marketing efforts on creating awareness of the
comprehensive nature of our Exult eHR solution and establishing Exult as the
leader in this new market primarily through market research, information pieces
and written articles published for industry trade press, public relations
activities, seminars, speaking engagements and relationships with industry
analysts. The goal of these activities is to promote Exult as the leading
provider of comprehensive eHR, and to publicize the advantages of integrated HR
process management. Lead generation has been pursued in a more targeted manner
through direct sales contacts.

COMPETITION

        We believe our primary competitors are large human resource departments
within Global 500 corporations who may be averse to outsourcing. This is another
key reason why we focus our sales and client relationship efforts on senior
executives, including those in charge of HR. We also believe we are in
competition with third parties including:

        -       the consulting divisions of the Big Five accounting firms;

        -       companies that provide a selected transactional service, such as
                benefits administration, and aspire to provide additional
                services;

        -       other consulting companies that perform individual projects,
                such as development of HR strategy and HR information systems;
                and

        -       certain IT outsourcers that aspire to provide BPO services and
                may seek to add selected HR offerings.

        Historically, most of these vendors have focused upon discrete
processes, but many of them are now promoting integrated process management
offerings that may be viewed as competitive with ours. We do not believe any
competitor currently assumes responsibility for all of the human resources
processes within a Global 500 HR department to the same degree that we do, but
over time we expect competitors to develop broader service capabilities that
match ours.

EMPLOYEES

        As of March 20, 2001, we employed 1,280 people, including approximately
775 in our client service centers, approximately 350 in information technology
and client transitions, approximately 50 in consulting and approximately 105 in
sales & marketing and general and administrative roles.


                                       10
<PAGE>   14

RISK FACTORS

        The following risks affect our business and the prospects for
investments in our Common Stock. Additional risks and uncertainties not
presently known to us or that we currently believe are not important may also
impair our business. Any of the following risks could adversely affect our
business, financial condition or results of operations.

WE HAVE A LIMITED OPERATING HISTORY AND UNPROVEN BUSINESS MODEL.

        We entered into our first process management contract in December 1999.
We have five clients under contract for our HR business process management
services, and we are still implementing the largest three of our process
management contracts. While we are ahead of our planned rate of client
acquisition and overall transition, our business model is unproven. Our success
depends on our ability to develop and implement a high quality, cost-effective
services offering that is scalable across a broad client base, operate it
profitably, produce satisfactory results for our clients and attract new
clients. While we have met our development objectives to date and our current
clients have perceived our services as beneficial, we have not been in operation
long enough to judge whether we can accomplish these objectives. Accordingly,
our revenue and income potential and future operating results are uncertain.

OUR SUCCESS DEPENDS LARGELY UPON OUR CONTRACTS WITH BANK OF AMERICA, BP, UNISYS
AND OTHER EARLY CONTRACTS, WHICH MAY NOT YIELD THE RESULTS WE EXPECT.

        Bank of America, bp and Unisys are the first clients for which we are
offering a comprehensive HR process management solution, and we anticipate
revenue from each of these contracts to represent a substantial portion of our
revenue through 2001 and possibly in future periods. These contracts are still
relatively new and our service offering is not yet fully implemented for these
clients. As such, we believe our ability to secure future clients and revenues
will be largely dependent upon our ability to perform and achieve the contracted
service levels and cost savings for these clients. Any of these contracts can be
terminated for material breach or significant and repeated performance failures,
or in certain instances for convenience upon required notice and payment of
specified early termination penalties that may not cover our termination costs
and are not intended to replace profits we might have earned. In addition, our
contracts generally permit our clients to impose financial penalties against us
for certain specified material performance failures. If any of these clients
were to substantially reduce or stop using our services, or if we experience
significant, repeated performance failures, our reputation and future revenues
would be seriously impaired. We expect to face similar risks with other
significant clients until our business model and service offering are more
firmly established.

        Although our arrangement with bp contemplates that we manage their HR
processes worldwide, and we have a first right to provide human resources
management services to bp in each country in which they have operations, our
current contract covers only the United Kingdom and the United States. bp is
requesting the expansion of our services into additional countries where they
operate, and we anticipate that selected processes and countries will be
included later in 2001 and 2002. However, this expansion of our performance
capabilities beyond the US and UK will require investment of additional
resources, will be executed in stages, and may be delayed.

OUR EHR SOLUTION IS EVOLVING AND REQUIRES ONGOING DEVELOPMENT.

        We are still developing our service delivery infrastructure, and our
ability to continue to deliver and expand our broad process management solution
depends upon continued success in assembling and managing our own systems and
capabilities and third-party vendors into an integrated and efficient delivery
platform. Our clients use disparate information systems and operating methods,
and transitioning their processes to our operating platforms requires
significant technology and process integration, and we often must adapt or
develop new systems and processes to accommodate various clients. Clients'
employees may access and utilize our web-enabled eHR solution and systems
through interfaces that require significant development and integration of many
independent programs and complex functions, and requires ongoing revision and
adaptation. If we fail to develop a client's service delivery infrastructure in
accordance with the specifications and delivery milestones agreed upon, or if we
are unable to complete development of


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<PAGE>   15

scalable systems and achieve the functionality we expect, our ability to deliver
our services and achieve our business objectives in general could be seriously
impeded.

WE MUST ANTICIPATE AND CONFORM TO THE NEW AND EVOLVING MARKET IN WHICH WE
OPERATE.

        Our business model is based on integrated management of a variety of
client HR and finance processes. Based on client reaction to date, we believe
there is significant market demand for this service, but because the market is
new, our ability to satisfy that demand depends upon our ability to anticipate
market developments and maintain our market leadership position. If we are
unable to react quickly to changes in the market, if the market fails to develop
in the ways we expect, or if our services do not achieve additional market
acceptance, then we are unlikely to remain the market leader or become or remain
profitable.

CAPACITY CONSTRAINTS AND THE LENGTH OF OUR NEW CLIENT SALES AND INTEGRATION
CYCLES WILL LIMIT OUR REVENUE GROWTH.

        We expect most of our future revenue growth in 2002 and beyond to come
from new client engagements. However, because we are a new company and are still
creating the components of our service offering, we plan to limit the number of
additional client engagements we accept over the near term. This strategy may
negatively affect our revenue growth until we have developed our solution to the
point that it can be extended more rapidly across a greater number of clients.

        Our client contracts involve significant commitments and cannot be made
without a lengthy, mutual due diligence process during which we identify the
potential client's service needs and costs, and our ability to meet those needs
and provide specified cost savings. We must devote significant management time
and other resources to each due diligence process over a period of four to six
months or more, and we can conduct at most only a few of these due diligence
undertakings at one time. This lengthy due diligence process limits our revenue
growth, and we have invested significant time in some potential client
relationships that have not resulted in contracts. It is possible that any
potential client due diligence process could result in a decision by us or the
potential client not to enter into a contract after we have made significant
investments of time and resources.

        After a new client contract is signed, we typically convert the client's
HR processes to our systems and infrastructure in stages. This transition period
can take from six months to over one year and may involve unanticipated
difficulties and delays. Our pricing model involves guaranteed reductions in the
client's controllable and direct HR costs upon transition completion, and we
cannot realize the full efficiencies of providing services to the client through
our infrastructure until this transition is complete. Therefore, any increase in
our earnings that could be expected from our agreements can be delayed for at
least several months after the contract is signed, and it could take a
significant amount of time for our agreements to contribute significantly to
profits or cash flow. The transition of HR processes under our existing
contracts with bp, Unisys, and Bank of America to our systems and infrastructure
is not scheduled to be complete until various times later in 2001, and could be
delayed. We attempt to negotiate long-term contracts in order to give us time to
complete the transition and earn a profit, but if implementation of our service
model is delayed, or if we do not meet our service commitments under any
particular contract and the client terminates our engagement early as a result,
we might experience no return on our substantial investment of time and
resources in that client.

WE EXPECT TO INCUR SIGNIFICANT NET OPERATING LOSSES AND WE MAY NEED TO RAISE
ADDITIONAL CAPITAL.

        Developing our company is expensive. In addition, acquiring new client
contracts and transitioning them until they are fully implemented and reach
their revenue potential requires significant capital investment. Since our
formation, we have not had a profitable quarter. We incurred a net loss of $15.2
million for the year ended December 31, 1999 and a net loss $64.9 million,
exclusive of a non-cash warrant charge of $29.9 million, for the year ended
December 31, 2000. For the year ended December 31, 1999, we used cash of $7.6
million in operating activities and $9.6 million in investing activities. For
the year ended December 31, 2000, we used cash of $60.7 million in operating
activities and $23.8 million in investing activities. We expect to continue to
make significant investments in the development of our eHR solution, client
service centers, and service delivery technologies, the expansion of our sales,
transition and service capabilities and


                                       12
<PAGE>   16

the procurement of additional contracts, as well as the acquisition of hardware,
software, furniture and fixtures needed to support these efforts. We invested
approximately $24 million in these items in 2000 and we expect to purchase as
much as an additional $25 million in 2001. These capitalized amounts are
amortized generally over three to five years, resulting in significant
depreciation and amortization expense that will reduce future profitability. Our
capital investments and commensurate amortization will increase if we are able
to take advantage of market opportunities and grow the Company faster than we
anticipate. We may also need cash to make acquisitions and develop new service
offerings and technologies. As a result, we expect to incur net losses in 2001,
and we will need to generate significant revenues to achieve profitability.
While we do not enter "loss leader" contracts, and although we estimate and
model each of our client contracts to be individually profitable, due to our
rapid growth, the expense of creating our company, and other factors described
herein, we cannot be certain that we will ever operate profitably, or that we
can sustain or increase profitability on a quarterly or annual basis in the
future.

        Because we do not expect our operating income to cover our cash needs
for some time, and because we anticipate rapid growth, we may need to raise
additional funds through public or private debt or equity financings. We cannot
be certain that we will be able to raise additional funds on favorable terms, or
at all. If we are unable to obtain additional funds, we may be unable to fund
our operations.

WE MAY NOT BE ABLE TO ACHIEVE THE COST SAVINGS WE HAVE PROMISED OUR CLIENTS.

        We provide our services for fixed fees that are generally equal to or
less than our clients' historical costs to provide for themselves the services
we contract to deliver. As a result, our profitability will depend on our
ability to provide services cost-effectively. Achieving the efficiency we need
depends upon our ability to develop our process operations and our Exult eHR
solution into a standardized management system that can be operated from our
client service centers and extended to multiple clients with limited
client-specific adaptation and modification. The actual cost reductions we are
able to achieve will vary by client for a variety of reasons, including the
scope of services we agree to provide, the existing state of our clients' HR
departments and processes, and our ability to standardize, centralize, and
simplify their processes, notwithstanding the complexity of their existing
systems and potential resistance by some parts of the client organization to
change. If we miscalculate the resources or time we need to perform under any of
our contracts, the costs of providing our services could exceed the fees we
receive from our clients, and we would lose money. We also have certain minimum
service level or cost savings requirements that we must meet for "controllable"
costs. If we are not able to meet these requirements, we may be obligated to
issue credits to our clients against future payments to us. If we breach a
contract in a material way or repeatedly fail to perform, our client can
terminate the contract. In addition, with notice and payment, our clients are
generally permitted to terminate their contracts with us for convenience before
the end of the scheduled term. The termination payments required are
substantially less than our revenue under the contracts, and may not cover our
termination costs or replace profits we may have earned.

TO SUCCEED WE MUST HIRE, ASSIMILATE AND RETAIN KEY MANAGEMENT PERSONNEL AND
LARGE NUMBERS OF NEW EMPLOYEES, OPEN NEW CLIENT SERVICE CENTERS, ASSIMILATE OUR
CLIENTS' PERSONNEL AND SYSTEMS, AND EXPAND OUR OWN SYSTEMS AND CONTROLS.

        To achieve sustainable profitability, we must extend our service model
across many client organizations and gain critical mass in the size and breadth
of our operations. Our ability to achieve rapid growth depends upon the
following essential elements:

        -       Current markets for skilled employees are competitive, and we
                must be able to hire, train and retain key management personnel
                and large numbers of human resources specialists, web and
                Internet technologists and programmers, business development and
                process management specialists and technical and customer
                support personnel.

        -       We currently operate three large-scale client service centers,
                in Charlotte, Glasgow, and the Houston area. We also manage more
                limited service center operations in the Los Angeles area. These
                centers are designed to handle our


                                       13
<PAGE>   17

                existing client demands, but we must open new client service
                centers in new geographic locations to handle significant
                additional growth in our business. We must devote substantial
                financial and management resources to launch and operate these
                centers successfully, and we may not select appropriate
                locations for these centers, open them in time to meet our
                client service commitments, or manage them profitably.

        -       As we assume responsibility for the existing HR departments of
                our clients, we must be able to assimilate HR personnel from
                these clients and integrate disparate systems, procedures,
                controls and infrastructures.

        -       We will need to improve our financial and management controls,
                reporting systems and operating systems to accommodate growth.
                If we do not manage growth effectively, our ability to perform
                our existing contracts successfully may be jeopardized, our
                ability to handle new clients and contracts will be limited, and
                our reputation may be harmed.

OUR QUARTERLY REVENUES AND OPERATING RESULTS ARE VOLATILE AND MAY CAUSE OUR
STOCK PRICE TO FLUCTUATE.

        Our quarterly operating results have varied in the past and are likely
to vary significantly in the future. It is possible that in some future quarter
or quarters our operating results will be below the expectations of public
market analysts or investors. If so, the market price of our Common Stock may
decline significantly. Factors that may cause our results to fluctuate include:

        -       the growth of the market for our HR services and our ability to
                obtain new client contracts;

        -       our ability to continue to execute successfully on client
                contracts;

        -       the length of the sales and integration cycle for our new
                clients;

        -       cancellations or reductions in the scope of our contracts;

        -       delays in transitioning various client processes to our
                infrastructure;

        -       our ability to develop and implement additional service
                offerings and technologies;

        -       the introduction of comprehensive HR services by new and
                emerging competitors;

        -       changes in our pricing policies or those of our competitors;

        -       our ability to manage costs, including personnel costs and
                support services costs; and

        -       the timing and cost of anticipated openings or expansions of
                client service centers.

WE COULD EXPERIENCE DAMAGES, SERVICE INTERRUPTIONS OR FAILURES AT OUR CLIENT
SERVICE CENTERS OR IN OUR COMPUTER AND TELECOMMUNICATIONS SYSTEMS.

        Our business could be interrupted by damage to or disruption of our
client service centers, computer and telecommunications equipment and software
systems from fire, power loss, hardware or software malfunctions, penetration by
computer hackers, computer viruses, natural disasters and other causes,
including "Year 2000" problems that could arise if our systems or third party
systems we rely upon fail to distinguish properly between 21st century dates and
20th century dates. Our clients' businesses may be harmed by any system or
equipment failure we experience. As a result of any of the foregoing, our
relationship with our clients may be adversely affected, we may lose clients,
our ability to attract new clients may be adversely affected and we could be
exposed to liability. We cannot be certain that we will be able to route calls
and other operations from an affected center to another in the event service is
disrupted. In addition, in the event of widespread damage or failures at our
facilities, we cannot guarantee that the disaster recovery plans we have in
place will protect our business.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS.

        Our business strategy requires us to expand internationally as we
broaden the geographic scope of services we deliver to our clients from US and
UK operations to foreign operations and as we take on additional large,
multinational clients.


                                       14
<PAGE>   18

We will face risks in doing business abroad that include the following:

        -       changing regulatory requirements;

        -       legal uncertainty regarding foreign laws, tariffs and other
                trade barriers;

        -       political instability;

        -       international currency issues, including fluctuations in
                currency exchange rates;

        -       cultural differences;

        -       designing and operating web sites and other service delivery
                components in foreign languages; and

        -       differing technology standards and Internet regulations that may
                affect access to and operation of our web sites and our clients'
                web sites.

THE MARKET FOR OUR SERVICES AND OUR REVENUE GROWTH DEPENDS ON OUR ABILITY TO USE
THE INTERNET AS A MEANS OF DELIVERING HUMAN RESOURCES SERVICES.

   We rely on the Internet as a key mechanism for delivering our services to our
clients and achieving efficiencies in our service model, and this reliance
exposes us to various risks.

        -       We use public networks to transmit and store extremely
                confidential information about our clients and their employees,
                such as compensation, medical information and social security
                numbers. We may be required to expend significant capital and
                other resources to address security breaches. We cannot be
                certain that our security measures will be adequate and security
                breaches could disrupt our operations, damage our reputation and
                expose us to litigation and possible liability.

        -       Our target clients may not be receptive to human resources
                services delivered over the Internet because of concerns over
                transaction security, user privacy, the reliability and quality
                of Internet service and other reasons. In addition, growth in
                Internet traffic may cause performance and reliability to
                decline. Interruptions in Internet service and infrastructure
                delays could interfere with our ability to use the Internet to
                support our Exult eHR service, which would impair our revenue
                growth and results of operations.

        -       Laws and regulations may be adopted relating to Internet user
                privacy, pricing, usage fees and taxes, content, distribution,
                and characteristics and quality of products and services. This
                could decrease the popularity or impede the expansion of the
                Internet and decrease demand for our services. Moreover, the
                applicability of existing laws to the Internet is uncertain with
                regard to many important issues, including property ownership,
                intellectual property, export of encryption technology, libel
                and personal privacy. The application of laws and regulations
                from jurisdictions whose laws do not currently apply to our
                business, or the application of existing laws and regulations to
                the Internet and other online services, could also harm our
                business.

WE MUST KEEP OUR COMPUTING AND COMMUNICATIONS INFRASTRUCTURE ON PACE WITH
CHANGING TECHNOLOGIES.

        Our success depends on our sophisticated computer, Internet and
telecommunications systems. We have invested significantly in our technological
infrastructure and anticipate that it will be necessary to continue to do so in
the future to remain competitive. These technologies are evolving rapidly and
are characterized by short product life cycles, which require us to anticipate
technological changes and developments. Our success in delivering services
cost-effectively and creating processes that are consistent with HR best
practices for our clients depends, in part, upon our ability to adapt our
processes to incorporate new and improved software applications, communications
systems and other technologies and devices. If we fail to adapt to technological
developments, our clients may experience service implementation delays or our
services may become non-competitive or obsolete.


                                       15
<PAGE>   19

WE RELY ON THIRD-PARTY VENDORS FOR SOFTWARE AND SPECIALIZED FUNCTIONS, AND MUST
FIND WAYS OF MAKING THEIR SERVICES MORE COST-EFFECTIVE.

        Our service delivery capability incorporates and relies on software
owned by third parties that we license directly or use through existing license
arrangements between our clients and the vendor. If these vendors change or
cancel a product we are using or if these agreements are terminated or not
renewed, we might have to delay or discontinue services until equivalent
technology can be found, licensed and installed.

        A significant part of our revenue is attributable to services we provide
to our clients by utilizing third-party vendors to provide a number of
specialized services for our clients, such as benefits administration and
relocation services. We select some of these vendors and assume others from
relationships established by our clients before contracting with us. These
vendors may act as subcontractors to us or provide services directly to our
clients under our management; in either case we have responsibilities under our
client contracts for their costs and services. In many cases our cost of paying
these vendors is as high as our revenue attributable to their services, and the
profitability of our client contracts therefore depends in part upon our ability
to reduce these vendor costs through improved efficiencies and/or more favorable
pricing. We plan to achieve these efficiencies and cost reductions through
vendor management and consolidation, but this may involve delay as existing
contracts run their course and we attempt to renegotiate with or replace these
vendors. In addition, if any third-party vendors are not willing to provide
their services to us at competitive rates and we are unable to provide these
services ourselves or find suitable substitute providers when necessary, our
operating results could be seriously harmed because we may not be able to adjust
our fixed-fee contracts with our clients to offset an increase in the cost of
these specialized services. If our clients are not satisfied with the services
provided by these third parties, our clients may be entitled to recover
penalties or to terminate their agreements with us, which could seriously harm
our business.

THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE AND OUR COMPETITORS MAY HAVE MUCH
GREATER RESOURCES TO COMMIT TO GROWTH, NEW TECHNOLOGY AND MARKETING.

        Our current and potential competitors include in-house HR departments of
large, multinational corporations, as well as other third parties that provide
discrete or combined HR and IT functions, including consulting divisions of Big
Five accounting firms and other consulting firms, information technology
outsourcers, and transaction processors such as benefits administrators. In
addition, we expect that the predicted growth of the HR outsourcing market will
attract other consulting firms, transaction providers, and outsourcers and
motivate competitors to assume responsibility for broad integration of HR
processes.

        Several of our competitors have substantially greater financial,
technical and marketing resources, larger customer bases, greater name
recognition and more established relationships with their customers and key
product and service suppliers than we do. Our competitors may be able to:

        -       develop and expand their delivery infrastructure and service
                offerings more quickly;

        -       adapt better to new or emerging technologies and changing client
                needs;

        -       take advantage of acquisitions and other opportunities more
                readily;

        -       devote greater resources to the marketing and sale of their
                services; and

        -       adopt more aggressive pricing policies.

        Some of our competitors may also be able or willing to provide clients
with additional benefits at lower overall costs. In addition, we believe there
will be future consolidation in our market, which could increase competition in
ways that may be adverse to us.


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<PAGE>   20

WE OPERATE IN A COMPLEX REGULATORY ENVIRONMENT, AND FAILURE TO COMPLY WITH
APPLICABLE LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.

        Corporate human resources operations are subject to a number of laws and
regulations, including those applicable to payroll practices, benefits
administration, employment practices, and data privacy. Because our clients have
employees in states across the US and in various countries around the world, we
must perform our services in compliance with the legal and regulatory
requirements of multiple jurisdictions. Some of these laws and regulations may
be difficult to ascertain or interpret, may change, and may be inconsistent with
our business practices. Violation of laws and regulations could subject us to
fines and penalties, damage our reputation, constitute breach of our client
contracts, and impair our ability to do business in various jurisdictions or
according to our established processes.

        The European Commission's Directive on Data Privacy limits transfer of
personal data outside the EU. In order to receive personal data about our
clients' European employees and fulfill our service commitments, we have elected
to comply with the Safe Harbor Principles established by the US Department of
Commerce, in collaboration with the European Commission, to provide "adequate
protection" for personal data about EU residents. Because we process HR data, we
are required by the Safe Harbor Principles to submit to the jurisdiction of the
European Union Data Protection Authorities (DPAs). Specifically, we must
cooperate with the DPAs in the investigation and resolution of complaints
brought under the Safe Harbor Principles by European citizens and comply with
any corrective advice and remedial or compensatory measures they dictate. In
addition, operation under the Safe Harbor Principles subjects us to the
jurisdiction of the Federal Trade Commission. If we fail to process personal
data in accordance with these principles, we could be subject to legal penalties
under the Federal Trade Commission Act and foreign privacy laws. We could also
lose our ability to move personal data from the EU to the United States, which
would significantly impair our ability to fulfill our contractual commitments to
our clients. We expect to have to comply with similar laws of other foreign
jurisdictions in which we do business in the future.

WE MAY UNDERTAKE ACQUISITIONS WHICH MAY LIMIT OUR ABILITY TO MANAGE AND MAINTAIN
OUR BUSINESS, MAY RESULT IN ADVERSE ACCOUNTING TREATMENT AND MAY BE DIFFICULT TO
INTEGRATE INTO OUR BUSINESS.

        We expect to pursue acquisitions under appropriate circumstances. We
cannot provide any assurance that we will be able to complete any acquisitions,
or that any acquisitions we may complete will enhance our business. Any
acquisition we do complete could subject us to a number of risks, including:

        -       diversion of our management's attention;

        -       amortization of substantial goodwill and other intangible
                assets, adversely affecting our reported results of operations;

        -       inability to integrate the acquired company and its employees
                into our organization effectively, and to retain key personnel
                of the acquired business;

        -       inability to retain the acquired company's customers; and

        -       exposure to legal claims for activities of the acquired business
                prior to acquisition.

Client satisfaction or performance problems with an acquired business also could
affect our reputation as a whole. In addition, any acquired business could
significantly underperform relative to our expectations.

WE MUST PROTECT OUR INTELLECTUAL PROPERTY AND AVOID INFRINGING INTELLECTUAL
PROPERTY OF OTHERS.

        We may not be able to detect or deter unauthorized use of our
intellectual property. If third parties infringe or misappropriate our trade
secrets, copyrights, trademarks, service marks, trade names or proprietary
information, our


                                       17
<PAGE>   21

business could be seriously harmed. In addition, although we believe that our
proprietary rights do not infringe the intellectual property rights of others,
other parties may assert that we have violated their intellectual property
rights. These claims, even if not true, could result in significant legal and
other costs and may be a distraction to management. In addition, protection of
intellectual property in many foreign countries is weaker and less reliable than
in the United States, so if our business expands into foreign countries, risks
associated with protecting our intellectual property will increase.

OUR EXECUTIVE OFFICERS, DIRECTORS AND THEIR AFFILIATES CONTROL THE COMPANY.

        Our executive officers, directors and their respective affiliates
beneficially own approximately three-quarters of our outstanding Common Stock.
As a result, these stockholders, acting together, have the ability to control
matters requiring stockholder approval, including the election of directors and
mergers, consolidations and sales of all or substantially all of our assets.
These stockholders may have interests that differ from other investors and they
may approve actions that other investors vote against or reject actions that
other investors have voted to approve. In addition, this concentration of
ownership may also have the effect of preventing or discouraging or deferring a
change in control of Exult, which, in turn, could depress the market price of
our Common Stock.

OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE, AND WE COULD BE A TARGET OF
SECURITIES CLASS ACTION LITIGATION.

        The price at which our Common Stock trades has fluctuated significantly
and is likely to continue to be highly volatile. We are a relatively new company
with no record of profits, and we utilize the internet and a technology
infrastructure to deliver our services. The market prices for other companies
with similar characteristics have at times increased to levels that bore no
relationship to their operating performance, and at other times have declined
dramatically, even without apparent changes in their business. In addition, the
stock market in general has from time to time experienced significant price and
volume fluctuations that have affected the market prices for companies like
ours. In the past, this kind of market price volatility has often resulted in
securities class action litigation against companies comparable to ours.
Securities litigation could result in substantial costs and divert our
management's attention and resources.

SUBSTANTIAL SALES OF OUR COMMON STOCK BY OUR EXISTING INVESTORS COULD CAUSE OUR
STOCK PRICE TO DECLINE.

        Of our outstanding shares, only 6.3 million have been sold publicly by
the Company, and only small numbers of privately issued shares have subsequently
been sold in the public markets. The vast majority of our outstanding shares are
in the hands of their original purchasers. These investors may seek to sell
their shares, and sales of large numbers of shares in the same time period could
cause the market price for our Common Stock to decline significantly. These
sales also might make it more difficult for us to sell securities in the future
at a time and price that we deem appropriate.

OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DETER A TAKEOVER EFFORT.

        Provisions of our certificate of incorporation and bylaws, including
those that provide for a classified board of directors, authorized but unissued
shares of Common and Preferred Stock and notice requirements for stockholder
meetings, and Delaware law regarding the ability to conduct specific types of
mergers within specified time periods, could make it more difficult for a third
party to acquire us, even if doing so would provide our stockholders with a
premium to the market price of their Common Stock. A classified board of
directors may inhibit acquisitions in general, and a tender offer not endorsed
by our board in particular, since only one-third of our directors are reelected
annually, thereby requiring two annual meetings before a majority of our
directors could be replaced. The authorization of undesignated preferred stock
gives our board the ability to issue Preferred Stock with voting or other rights
or preferences that could impede the success of any attempt to change control of
the Company. If a change in control or change in management is delayed or
prevented, the market price of our Common Stock could decline.


                                       18
<PAGE>   22

ITEM 2.  PROPERTIES.

FACILITIES

        Our corporate headquarters are located in approximately 29,000 square
feet of office space in Irvine, California under a lease that expires in April
2003. Our lease agreement for this facility requires monthly base rental
payments of approximately $80,000. Our European headquarters are located in
approximately 9,000 square feet of office space in London under a lease that
expires in June 2010 and provides for monthly base rental payments of
approximately GBP 36,000 per month. We also currently lease approximately 71,000
square feet of office space for our shared service center in The Woodlands,
Texas under a lease that expires in March 2006 and requires monthly base rental
payments of approximately $37,000; approximately 31,000 square feet of office
space for our shared service center in Glasgow, Scotland under a lease that
expires in March 2010 and requires quarterly base rental payments of
approximately GBP 132,000; and approximately 96,000 square feet of office space
for our shared service center in Charlotte, North Carolina under a lease that
expires in November 2010. Under the Glasgow lease the landlord or we may
terminate the lease in March 2005 with 12 months prior notice. We prepaid the
rent through 2010 under the Charlotte lease as part of the consideration for our
sale of stock to Bank of America Corporation. The center we operate in the Los
Angeles area is currently under lease to bp. We also lease office space for our
consultants in Georgia, Massachusetts, New York, the United Kingdom and
Switzerland. Finally, we have small numbers of employees providing various
services to Bank of America from office space in approximately 15 locations
throughout the US, which we occupy under prepaid site licenses from Bank of
America.

INTELLECTUAL PROPERTY

        We regard the protection of our trademarks, service marks, copyrights,
trade secrets and other intellectual property rights as critical to our future
success. We rely on various intellectual property laws and contractual
restrictions to protect our proprietary rights in products and services. We
currently have pending service mark applications in the United States for the
marks EXULT, E-F&A, MYHR, "PROCESS EXCELLENCE, PROVEN RESULTS," and our logo. We
have also filed service mark applications for these marks in Australia, Canada,
Europe, and Switzerland. We cannot guarantee that we will be able to secure
registrations of our marks domestically or in any foreign country. Our inability
to register and protect marks could require us to stop using them or to share
them with others, which could cause confusion in the marketplace and harm our
business.

        In addition, we currently hold various Internet domain names, including
www.exult.net and www.myHR.com. The acquisition and maintenance of domain names
generally is regulated by Internet regulatory bodies. The regulation of domain
names in the United States and in foreign countries is subject to change.
Governing bodies may establish additional top-level domains, appoint additional
domain name registrars or modify the requirements for holding domain names. As a
result, we may be unable to acquire or maintain relevant domain names in all
countries in which we conduct business or into which we choose to expand.
Furthermore, the relationship between regulations governing domain names and
laws protecting trademarks and similar proprietary rights continues to evolve.
Therefore, we may be unable to prevent third parties from acquiring domain names
that are similar to, infringe upon or otherwise decrease the value of our
intellectual property and other proprietary rights.

        We also rely on technologies that we license from third parties. These
licenses may not continue to be available to us on commercially reasonable terms
in the future, if at all. As a result, we may be required to obtain substitute
technology of lower quality or at greater cost, which could materially adversely
affect our business, results of operations and financial condition.

        As is common with technology companies, from time to time, third parties
may assert patent, copyright, trademark and other intellectual property rights
to our intellectual property or proprietary information or technologies. Any
claims asserting that our products, services, intellectual property, or
proprietary information infringe or may infringe proprietary


                                       19
<PAGE>   23

rights of third parties could require significant defense expenditures and, if
determined adversely to us, could seriously harm our business, results of
operation and financial condition.

ITEM 3.  LEGAL PROCEEDINGS.

        From time to time, we may be involved in litigation relating to claims
arising out of our operations in the normal course of business. As of the date
of this report, we are not a party to any material legal proceedings.

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

        No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year covered by this report, either by
proxy solicitation or otherwise.

EXECUTIVE OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES OF THE REGISTRANT

        Set forth below are the names, ages, positions and business backgrounds
of the Company's executive officers and certain significant employees.

        JAMES C. MADDEN, V, 39, has been the Company's Chief Executive Officer
and President since November 1998 and the Chairman since February 2000. Mr.
Madden served as the Corporate Chief Financial Officer at MCI Systemhouse, the
outsourcing unit of MCI, from June 1997 to November 1998. From June 1995 to June
1997, Mr. Madden served as the President of the US and Latin American Divisions,
and from January 1994 to June 1995, he was the General Manager of MCI
Systemhouse's Pacific Region. He first joined MCI Systemhouse in 1993 as Vice
President and Managing Director of the Los Angeles office. Prior to joining MCI
Systemhouse, Mr. Madden was a Principal at Booz-Allen & Hamilton from 1991 to
1993. Mr. Madden began his career with Andersen Consulting, where he created and
led Andersen's first outsourcing practice on the west coast. Mr. Madden received
his B.B.A. degree in Finance and B.A. degree in Geology from Southern Methodist
University.

        KEVIN M. CAMPBELL, 41, joined Exult as Operations President on May 30,
2000. Before joining Exult, Mr. Campbell was a partner with Ernst & Young, LLP
from August 1999 to May 2000, and was Director of the Products Market for its
Global Operate practice for business process and information technology
outsourcing. Before joining Ernst & Young, Mr. Campbell was with Andersen
Consulting for 17 years, including nine years as a partner. At Andersen
Consulting, he served at different times as the Global Managing Partner for
business process management for the Resources Market Unit; America's managing
partner for business process management for the manufacturing industry; and
partner in charge of the northeast region's electronics and high-tech market.
Mr. Campbell has a B.S. degree in Management from Boston College.

        STEPHEN M. UNTERBERGER, 43, has been our Executive Vice President,
Development and Consulting since June 2000 and served as our Chief Operating
Officer from February 1999 to June 2000. Prior to joining Exult, Mr. Unterberger
served as the Vice President and Operating Executive of the US Division of MCI
Systemhouse from December 1997 to February 1999, and as its Vice President,
Western Region from September 1996 to December 1997. From January 1994 to
September 1996, Mr. Unterberger managed large consulting and outsourcing
engagements for MCI Systemhouse. From September 1988 to January 1994, Mr.
Unterberger served with Price Waterhouse in its information technology
management consulting practice. Mr. Unterberger has a B.A. degree in Economics
from the University of Pennsylvania.

        DOUGLAS L. SHURTLEFF, 54, has been our Chief Financial Officer and
Executive Vice President since joining Exult in September 1999. From March 1999
to September 1999, Mr. Shurtleff was Chief Financial Officer for National Water
& Power, Inc., a business process outsourcing provider of utility billing
services to the multi-family apartment industry. From June 1995 to February
1999, Mr. Shurtleff was Senior Vice President and Chief Financial Officer of
USCS International, a publicly traded, business outsourcing provider of software
and billing services to communications and


                                       20
<PAGE>   24

other large transaction-based businesses. From January 1990 to June 1995, he
served as the Vice President of Finance and Administration for Infonet Services
Corporation, a provider of public international data communications. Mr.
Shurtleff was instrumental in and oversaw the spin-off of Infonet from Computer
Sciences Corporation, where he served as the Group Vice President for Finance
and Administration from October 1984 to January 1990. Mr. Shurtleff is a
certified public accountant and has an M.B.A. degree and a B.S. degree in
Accounting from the University of Southern California.

        DUNCAN N. THOMAS, 39, joined Exult in February 2001 as our Executive
Vice President, Corporate Development & Strategy. Prior to joining Exult, Mr.
Thomas was the Chief Executive Officer and President of Boats Depot, Inc., an
Internet distributor of marine products. From 1997 to 1999, Mr. Thomas served as
the Managing Partner of Acacia Capital Partners, LLC, a private investment firm.
Mr. Thomas was co-founder of the Los Angeles, California office of Bain & Co,
where he served as Team Leader from 1995 to 1997. From 1992 to 1995, Mr. Thomas
served as Senior Consultant at McKinsey & Co. Mr. Thomas has an M.B.A. degree
from the Johnson Graduate School of Management at Cornell University and a
Doctor of Veterinary Medicine degree from the University of Melbourne.

        ROBERT W. GUNN, 53, founded Gunn Partners in 1991 and has served as our
Senior Vice President, Executive Client Lead since we acquired Gunn Partners in
1999. Prior to founding Gunn Partners, Mr. Gunn served as a partner at A. T.
Kearney from 1981 to 1991 and launched Kearney's Administrative Practice in
1987. From 1978 to 1981, Mr. Gunn served as a consultant with William E. Hill.
Mr. Gunn received an M.B.A. degree from the Wharton School of Management at the
University of Pennsylvania and his A.B. degree in Political Science from
Williams College.

        BRUCE W. FERGUSON, 46, joined the Company as our Senior Vice President,
Chief People Officer in June 2000. Prior to joining Exult, Mr. Ferguson served
as National Director of Recruiting for Ernst & Young LLP from 1998 to 2000 and
as National Director of Human Resources from 1995 to 1998. Mr. Ferguson served
as Director of Human Resources for Kenneth Leventhal & Company from 1990 to
1995. From 1978 to 1990, Mr. Ferguson served in various capacities at Arthur
Andersen & Co., including Director of Human Resources and Director of
Recruiting. Mr. Ferguson received his B.S. degree from the University of
Wisconsin.

        BRIAN W. COPPLE, 40, has served as our Senior Vice President, General
Counsel and Secretary since February 2000. Prior to joining Exult, Mr. Copple
served as a Senior Vice President and the General Counsel for EPS Solutions
Corporation, a provider of outsourced executive search, performance learning and
financial services, from February 1999 to February 2000. From January 1988 to
February 1999, Mr. Copple practiced corporate and securities law with Gibson,
Dunn & Crutcher LLP, including as a partner for three years. Mr. Copple has a
J.D. degree and an M.B.A. degree from the University of California, Los Angeles
and an A.B. degree in Political Science from Stanford University.

        RICHARD JONES, 49, joined the Company's UK subsidiary, Exult Ltd, in
September 2000 as its Senior Vice President of International Operations. Prior
to joining the Company, Mr. Jones served as Managing Partner, Business Process
Management, of the Resources Industries Global Market Unit of Andersen
Consulting from 1999 to 2000 and as the Chief Operations Officer of the United
Kingdom Outsourcing Business of Andersen Consulting from 1997 to 1999. From 1994
to 1997, Mr. Jones served in various roles, including Managing Director, Sales
and Marketing Director, Director of Commercial Business and Director of Finance
Services, for Digital Equipment Company. From 1973 to 1994, Mr. Jones held
various management positions at IBM. Mr. Jones received his degree in Pure
Mathematics from the University of Southampton in England.

        PETER WORK, 42, has been our Chief Technology Officer since April 1999.
From 1999 until joining Exult, Mr. Work served as the Director of Strategic
Technology for the Consumer Products Division of The Walt Disney Company. From
1986 to 1994, Mr. Work served in various positions with Price Waterhouse, most
recently as a Senior Manager. Prior to that, Mr. Work was employed by Ramboll &
Hanemann, a leading consulting company in Denmark. Mr. Work is the spouse of
Rebecca Work, our Chief Information Officer. Mr. Work has a B.S. degree in
Electrical Engineering from the Technical University of Denmark, a Master's
degree in Operations Science from Princeton University and the Technical
University of Denmark, and a Bachelor of Commerce degree in Human Resources and
Strategic Planning from Copenhagen Business School.


                                       21
<PAGE>   25

        REBECCA L. WORK, 46, has served as our Chief Information Officer since
joining Exult in 1999. Prior to joining Exult, Ms. Work served as the head of
Delivery Management for the US Division of MCI Systemhouse from 1994 to 1999.
Ms. Work is the spouse of Peter Work, our Chief Technology Officer and has a
B.S. degree in Management Information Systems from Colorado State University.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

        The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "EXLT". The following table sets forth for the quarters indicated the
high and low prices as reported by Nasdaq. The quotations reflect inter-dealer
prices, without retail markup, markdown or commissions, and may not represent
actual transactions. The Company completed its initial public offering in June
2000.

<TABLE>
<CAPTION>
                                               HIGH       LOW
                                              -----      -----
<S>                                           <C>        <C>
QUARTER ENDED:
  June 30, 2000 ........................      11.56       9.69
  September 30, 2000 ...................      19.00       7.00
  December 31, 2000 ....................      17.88       8.38
</TABLE>

        At March 16, 2001, there were approximately 86 holders of record of the
Company's Common Stock. The Company estimates the number of beneficial holders
of its Common Stock to be in excess of 1,400.

        In November 2000, the Company issued to an investor 5,000,000 of
unregistered shares of its Common Stock and three-year warrants to acquire an
additional 5,000,000 unregistered shares of its Common Stock with an exercise
price of $11.00 per share. The shares and warrants were valued at $84.9 million
based upon the $11.00 per share closing price of the Company's Common Stock on
the day before the transaction was consummated. The Company received $11.0
million in cash and $44.0 million in prepaid rent and intangible assets. The
shares and warrants were issued in a private placement pursuant to Section 4(2)
of the Securities Act of 1933, as amended.

        Through March 16, 2001, the Company has never declared or paid any cash
dividends on shares of its Common Stock. We currently intend to retain any
future earnings to finance the growth and development of our business.
Therefore, we do not anticipate that we will declare or pay any cash dividends
on our Common Stock in the foreseeable future. Any future determination to pay
cash dividends will be at the discretion of our board of directors and will be
dependent upon our financial condition, results of operations, capital
requirements, restrictions under any existing indebtedness and other factors the
board of directors deems relevant.


                                       22
<PAGE>   26

ITEM 6.  SELECTED FINANCIAL DATA.

        The Company commenced operations in October 1998. The following selected
consolidated financial data as of and for the period and years ended December
31, 1998, 1999 and 2000, has been derived from our audited consolidated
financial statements and related notes. The historical results are not
necessarily indicative of future results. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes included elsewhere herein.

<TABLE>
<CAPTION>
                                                         OCTOBER 31,
                                                            1998
                                                         (INCEPTION)
                                                             TO              YEAR ENDED          YEAR ENDED
                                                         DECEMBER 31,        DECEMBER 31,        DECEMBER 31,
                                                            1998                1999                2000
                                                         ------------        -----------         -----------
                                                                  (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                                      <C>                 <C>                 <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue ........................................          $      --           $   4,857           $  66,661
Cost of revenue ................................                 --               4,498              93,195
                                                          ---------           ---------           ---------
Gross profit (loss) ............................                 --                 359             (26,534)

Expenses:
  Product development ..........................                 --                 368               6,674
  Selling, general and administrative ..........                187               9,976              28,207
  Depreciation and amortization ................                 --                 943               8,811
  Warrant charges ..............................                 --               4,547              29,900
                                                          ---------           ---------           ---------
    Total expenses .............................                187              15,834              73,592
                                                          ---------           ---------           ---------
Loss from operations ...........................               (187)            (15,475)           (100,126)
Interest income, net ...........................                  3                 263               5,306
                                                          ---------           ---------           ---------
Net loss .......................................          $    (184)          $ (15,212)          $ (94,820)
                                                          =========           =========           =========
Net loss per share:
  Basic and diluted (rounded) ..................          $ (140.48)          $   (2.20)          $   (1.74)
                                                          =========           =========           =========
Weighted average number of common shares
  outstanding, basic and diluted ...............                  1               6,906              54,491
                                                          =========           =========           =========
</TABLE>


<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                            -----------------------------------------
                                                             1998            1999              2000
                                                            ------          -------          --------
                                                                          (IN THOUSANDS)
<S>                                                         <C>             <C>              <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and investments ...........          $  851          $39,199          $ 99,890
Working capital ..................................             813           31,957            93,185
Total assets .....................................             854           58,767           204,181
Long term obligations, net of current portion ....              --            4,304               152
Convertible preferred stock ......................           1,000           58,768                --
Total stockholders' equity .......................             816           46,110           171,429
</TABLE>

Please refer to note 2 and note 9 of notes to consolidated financial statements
for information regarding the method used to compute our basic and diluted net
loss per share.

        Concurrent with the consummation of the June 2000 initial public
offering of the Company's Common Stock, all outstanding shares of Series A,
Series B, Series C, and Series D Preferred Stock were automatically converted
into Common Stock at the rate of 900 shares of Common Stock for each share of
Series A Preferred Stock, five shares of Common Stock for each share of Series B
and Series C Preferred Stock, and one share of Common Stock for each share of
Series D Preferred Stock.


                                       23
<PAGE>   27

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

OVERVIEW

        Our mission is to provide comprehensive business process management
solutions that enable Global 500 corporations to increase the productivity of
their human capital, convert HR spending to a variable cost basis and reduce the
overall cost of HR management and administration. We do this through multiple
delivery vehicles:

        -       our Exult eHR solution including our myHR web-enabled
                applications;

        -       shared client service centers; and

        -       best practices expertise and expert process consulting
                capabilities.

        These vehicles enable us to provide scalable, web-based service delivery
capabilities across many HR business processes. myHR includes our web-based
functional applications and browser system through which our clients' personnel
can access their HR information systems and navigate through those systems to
find information and process transactions. Our shared client service centers
handle our clients' HR transaction and contact center requirements from a
leveragable multi-client platform, and our best practices and process consulting
expertise enables us to improve efficiency and effectiveness through process
improvement. We deploy these capabilities to handle the transactional and
administrative elements of our clients' HR processes, freeing our clients' HR
departments to add value through focus on strategy and policy matters that are
important to their businesses. In addition, we also manage certain finance and
administration processes, including disbursements and reconciliations, that have
historically been integrated with various HR functions at our clients. These
additional services are intended to streamline clients' back office transaction
processing. As of December 31, 2000, we have five HR business process management
clients, three of which also receive certain finance and administration process
management services from us.

        Our Exult eHR solution incorporates the services of third-party vendors
in two important ways. First, our process management contracts may include as
"in scope" certain services being provided to the client by third parties. At
the time we become responsible for a client's HR organization, we generally
assume responsibility for administration of these vendors, either by novation of
their contracts to us or through management arrangements. Depending upon a
number of factors, including the type of services involved, terms of the
vendors' contract, and client preferences, over time we may retain the vendor as
a service provider to the client within the scope of our contract and under our
management, replace the vendor with a new third-party provider under our
management, or take over provision of the services ourselves. In addition to
management of third-party vendors who had preexisting relationships with our
clients, we also utilize selected third parties to complement our integrated
service offering with specialized HR services that can be more effectively and
efficiently handled by third-party vendors and subcontractors than by internal
resources.

        We commenced operations in October 1998 as BPO-US, Inc. and changed our
name to Exult, Inc. in August 1999. From our inception through November 1999,
our activities primarily related to the pursuit of our initial contracts and the
development of the infrastructure to support comprehensive eHR process
management. In November 1999, we acquired the business of Gunn Partners, Inc., a
business process improvement consulting company with operations in the United
States and Europe. Gunn Partners has been consulting with Global 500
corporations since 1991 on administrative staff functions such as human
resources and finance and accounting, as well as procurement, information
technology, and customer service. Gunn Partners generates revenue through its
own consulting activities, provides strategic assistance in structuring our
client relationships, assists in cross-marketing, and provides us with a service
offering for potential clients that are not yet ready for our full eHR solution.


                                       24
<PAGE>   28

        In December 1999, we entered into a seven-year Framework Agreement with
BP Amoco p.l.c. to create a comprehensive eHR services organization and provide
a broad range of human resources management services to bp and its affiliates.
In January 2000, we entered into a three-year agreement with Pactiv Corporation,
formerly known as Tenneco Packaging, under which we assumed management and
accountability for Pactiv's North American payroll and accounts payable
processes. In January 2000, we entered into a three-year agreement with Tenneco
Automotive under which we assumed management and accountability for Tenneco's
North American payroll and accounts payable processes. In August 2000, we
entered into a seven-year Master Services Agreement with Unisys Corporation to
provide human resources processes and vendor management services. In November
2000, this contract was expanded to include training administration services. In
November 2000, we entered into a ten-year Master Services Agreement with Bank of
America Corporation to provide human resources and accounts payable services.
(See Part I. Item 1. Business. Business Process Management Clients for a more
detailed description of these business process management agreements.)

        We expect our primary source of revenue for the near future to be the
fees we earn for providing our eHR process management services under long-term
contracts. We recognize revenue under these contracts as the services are
rendered. A secondary source of revenue is the consulting services performed by
Gunn Partners. We recognize revenue for these services over the period in which
services are performed as information or feedback is provided to the client. As
part of our eHR solution, we manage our clients' relationships with third party
vendors. In most cases, we expect to become responsible for the vendor contracts
and we will include in revenue all charges that we collect from our clients. We
will pay the costs of these services to the third-party vendors, and such costs
will be included in our cost of revenue. Revenue from consulting and related
services is net of reimbursable expenses.

        To date, we have typically generated leads for potential eHR process
management clients through our management, existing consulting relationships,
board of directors, third-party consultants, contact with key executives at
companies within the Global 500 or direct communication from such companies
after reading articles, press releases or visiting our web site. After initial
discussions with and qualification of the potential client, we typically enter
into a letter of intent with the client which establishes a framework for due
diligence and contract negotiations. Our letter of intent may provide for
reimbursement of some or all of our direct and indirect costs incurred during
this process if a contract is not signed. To the extent such costs are
guaranteed by the letter of intent, reimbursements of costs will be included in
revenue. To the extent reimbursements are not guaranteed, such amounts will be
expensed as incurred and will be included in revenue once invoiced and
collection is reasonably assured.

        We incurred a net loss in 1999 and 2000 and expect to incur a net loss
in 2001 and potentially in future years. In the next two years, we anticipate
making large expenditures to build additional client service centers, to expand
our sales and marketing capabilities, and to fund the development and expansion
of our technology and general operating infrastructures. To the extent that
revenue does not increase at a rate commensurate with our increasing costs and
expenditures, our future operating results and liquidity could be materially and
adversely affected.


                                       25
<PAGE>   29
RESULTS OF OPERATIONS

        In view of the rapidly evolving nature of our business and our limited
operating history, we believe that period to period comparisons of our operating
results, including our revenue, gross profit (loss) and expenses as a percentage
of revenue, should not be relied upon as an indication of our future
performance. The following table sets forth statement of operations data
expressed as a percentage of revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                     YEAR ENDED        YEAR ENDED
                                                     DECEMBER 31,      DECEMBER 31,
                                                        1999              2000
                                                     -----------       -----------
<S>                                                  <C>               <C>
Revenue .....................................           100.0%            100.0%
Cost of revenue .............................            92.6             139.8
                                                       ------            ------
Gross profit (loss) .........................             7.4             (39.8)
                                                       ------            ------
Expenses:
  Product development .......................             7.6              10.0
  Selling, general and administrative .......           205.4              42.3
  Depreciation and amortization .............            19.4              13.2
  Warrant charges ...........................            93.6              44.9
                                                       ------            ------
     Total expenses .........................           326.0             110.4
                                                       ------            ------
Loss from operations ........................          (318.6)           (150.2)
Interest income, net ........................             5.4               8.0
                                                       ------            ------
Net loss ....................................          (313.2)%          (142.2)%
                                                       ======            ======
</TABLE>

        Our primary activities in the first quarter of 1999 and the period Exult
existed in 1998 were organization and planning. During this time, we generated
no revenue and only minimal interest income. We hired a few employees and
incurred associated selling, general and administrative expenditures.

YEARS ENDED DECEMBER 31, 1999 AND 2000

        Our primary activities during 1999 were organization, planning and
certain work performed for our first business process management client prior to
entering into the related long-term contract. We did not generate any
outsourcing process revenues from long-term contracts during 1999. At December
31, 1999, we had approximately 75 employees. As of December 31, 2000, we have
five business process management clients and approximately 634 employees. Due to
the early stage of our business during 1999, our operating results for this
period do not bear significant relationship to our operating results for the
year ended December 31, 2000.

REVENUE

        Revenue for the years ended December 31, 1999 and 2000, was $4.9 million
and $66.7 million, respectively. The 1999 amount primarily consisted of
approximately $4.1 million billed to our first business process management
client, BP Amoco, for work performed before we entered into a long-term contract
with this client in December 1999. The balance of our 1999 revenue primarily
consisted of consulting revenue generated from various clients. The 2000 amount
consisted of $54.9 million of contract revenue derived from four business
process management clients and $11.8 million of consulting and related revenue
from various clients.

COST OF REVENUE

        Our cost of revenue for the years ended December 31, 1999 and 2000, was
$4.5 million and $93.2 million, respectively, and our gross margin (loss) for
the same periods was 7.4 percent and (39.8) percent as a percentage of revenue,
respectively. Cost of revenue consists primarily of expenses associated with the
third-party vendors whom we manage for our clients, compensation and benefits of
employees directly involved in providing our services, computer and
communications equipment costs and services, and facilities. We expect to incur
a net loss in 2001 and may have negative gross profit for that period depending
upon our rate of growth and commensurate expenditures.


                                       26
<PAGE>   30

PRODUCT DEVELOPMENT EXPENSE

        Product development expense for the years ended December 31, 1999 and
2000, was $368,000, or 7.6 percent as a percentage of revenue, and $6.7 million,
or 10.0 percent as a percentage of revenue, respectively. Product development
expense consists primarily of third-party costs, salaries, bonuses and benefits
of employees directly associated with the development of our portal and Internet
software and capabilities, and the performance of research and benchmarking of
HR best practices that are not part of a specific engagement. We did not
capitalize any costs in 1999 for internally developed software for research and
benchmarking and in the 2000 period such capitalized amounts were immaterial. We
increased our overall spending for product development throughout 2000 and plan
to continue to spend at least the same dollar amount in future years. We cannot
be certain that our product development efforts will provide us with the desired
results or will be economically feasible.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

        For the years ended December 31, 1999 and 2000, selling, general and
administrative expense was $10.0 million, or 205.4% as a percentage of revenue,
and $28.2 million, or 42.3% as a percentage of revenue, respectively. Selling,
general and administrative expense generally consists of salaries, bonuses and
benefits for employees engaged in marketing, promoting and selling our services,
and for management and administrative personnel. Selling, general and
administrative expense also includes third-party consulting and marketing
expenditures, as well as facilities and office costs, and legal, accounting and
recruiting fees and expenses.

DEPRECIATION AND AMORTIZATION EXPENSE

        Depreciation and amortization expense for the years ended December 31,
1999 and 2000, was $943,000 and $8.8 million, respectively. The 1999 amount
included amortization of intangibles associated with the November 1999
acquisition of certain assets of Gunn Partners of $357,000 and amortization of
deferred compensation of $479,000. Similarly, the 2000 amount included $4.2
million of intangibles amortization associated with the Gunn Partners
acquisition and $1.2 million of deferred compensation amortization. The balance
of depreciation and amortization expense for each period arose from property and
equipment depreciation and amortization.

WARRANT CHARGES

        Warrant charges were $4.5 million and $29.9 million for the years ended
December 31, 1999 and 2000, respectively. The 1999 amount included a $3.3
million charge for warrants issued in connection with a business process
management contract and a $1.2 million charge for warrants issued in exchange
for consulting and recruiting services. The 2000 amount consisted of a charge
for warrants issued in connection with the sale of Common Stock.

INTEREST INCOME, NET

        Interest income, net for the year ended December 31, 1999 was
approximately $263,000, which consisted primarily of interest income of $334,000
generated from short-term investments raised from private equity placements,
offset in part by interest associated with the Gunn Partners acquisition debt
and certain capitalized leases. Interest income, net for the year ended December
31, 2000 was $5.3 million, which consisted primarily of interest income of $6.7
million generated from short-term investments, offset in part by interest
expense of $1.4 million associated with the Gunn Partners acquisition debt and
certain capitalized leases.

INCOME TAXES

        We incurred losses in 1999 and 2000, resulting in federal and state net
operating loss carryforwards which expire beginning in 2020 and 2008,
respectively.


                                       27
<PAGE>   31

NET LOSS

        The foregoing resulted in a net loss for the years ended December 31,
1999 and 2000 of $15.2 million, or $2.20 per basic and diluted share, and $94.8
million, or $1.74 per basic and diluted share, respectively. Excluding warrant
charges of $4.5 million and $29.9 million for the years ended December 31, 1999
and 2000, and reflecting the conversion of all of the outstanding shares of the
Company's Preferred Stock during 1999 and 2000, the net losses would have been
$10.7 million, or $0.14 per share, and $64.9 million, or $0.81 per share,
respectively. We expect to continue to incur net losses for at least the year
2001.

YEAR ENDED DECEMBER 31, 1998

        We were formed in October 1998, and did not enter into our first process
management contract until December 1999. During 1998, we hired our Chief
Executive Officer and one other employee. Selling, general and administrative
expense for 1998 consisted primarily of the salary and benefits for these two
employees. Due to the early stage of our company during the year ended December
31, 1998, our operating results for this period do not bear any significant
relationship to our operating results for the year ended December 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

        Since our inception in October 1998, we have financed our operations
primarily with equity contributions including private placements of
approximately $1.0 million in 1998, $55.1 million in 1999, and $161.3 million in
2000; the net proceeds from our initial public offering of $56.7 million in June
2000; and, to a lesser extent, by cash generated from our business and the
exercise of stock options and warrants. The 2000 amount of $161.3 million
included $29.9 million from a warrant issued in connection with the sale of
Common Stock and $44.0 million from Common Stock issued for prepaid rent and an
intangible asset in connection with one of our business process management
contracts. The intangible asset is being amortized as a reduction of revenue
over the life of the contract.

        Net cash used in operating activities was $7.6 million in the year ended
December 31, 1999 and $60.7 million for the year ended December 31, 2000. We
obtained our first three process management contracts in December 1999 and
January 2000 and began generating revenue therefrom during the first quarter of
2000. We also completed our acquisition of Gunn Partners in November 1999. Thus
during 1999, operating cash was used primarily for sales and marketing
activities, third-party consulting fees in support of our pursuit of business
and the development of corporate infrastructure. We made additional operating
cash expenditures of this nature during 2000. We also expended operating cash
during the 2000 period in support of revenue generated by the process management
contracts and the Gunn Partners business and to fund the transfer and
transformation costs associated with these new process management contracts.
Cash used in investing activities was $9.6 million in 1999 and $23.8 million in
2000. Approximately $4.4 million in 1999 and $23.8 million in 2000, was spent to
purchase computer and related equipment and office furnishings and in addition,
in the 2000 period, to construct and expand our client service centers and our
internal systems. Included in the 1999 amount is $3.5 million spent to purchase
assets used internally by a client and now used to support that client as well
as other clients. In 1999, we also spent $5.0 million in cash and incurred $10.0
million of debt in connection with our acquisition of most of the assets of Gunn
Partners. The aggregate purchase price was allocated to costs incurred in
connection with assembling a work force, Gunn Partners' client list, the name
"Gunn Partners", the non-compete covenant, the research database and an
immaterial amount of equipment which were assigned lives ranging from one to
five years.

        We expect to generate negative operating cash flow for the foreseeable
future as we continue to incur losses from operations. We expect to increase our
investments in property and equipment to support the expansion and renovation of
our facilities, including our existing client service centers, and to purchase
related computer and other equipment necessary to support our client contracts
and growth. We expect to spend at least $25 million in 2001 on capital
expenditures, which will be amortized over three to five years, and at least $6
million to $8 million in 2001 for product development. In addition, from time to
time in the ordinary course of business, we evaluate potential acquisitions of


                                       28
<PAGE>   32

related businesses, assets, services and technologies. Such acquisitions, if
completed, may require significant cash expenditures.

        We believe that our cash on hand will be sufficient to satisfy our
working capital requirements for at least the next 12 months. We are unable to
predict whether our cash on hand will be adequate to satisfy our working capital
requirements beyond 12 months because our capital needs will vary depending upon
future market conditions and business opportunities, among other factors, and we
are not certain when or if we will be able to achieve profitable operations and
positive cash flow. If we need additional funds, we will seek to raise them from
equity or debt financing. Regardless of whether additional funds are actually
required, we may seek to raise funds from equity or debt financing. We may not
be able raise additional funds on acceptable terms, if at all.

RECENT ACCOUNTING PRONOUNCEMENTS

        In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. SOP 98-1 requires all
costs related to the development of internal use software other than those
incurred during the application development stage to be expensed as incurred.
Costs incurred during the application development stage are required to be
capitalized and amortized over the estimated useful life of the software. We
adopted SOP 98-1 on January 1, 1999. The adoption of SOP 98-1 did not have a
material effect on our consolidated financial position or results of operations.

        In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of
Start-Up Activities. We adopted SOP 98-5 on January 1, 1999, which requires
costs of start-up activities and organization costs to be expensed as incurred.
The adoption of SOP 98-5 did not have a material effect on our consolidated
financial position or results of operations.

        In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income (loss) depending on whether a derivative is designed as
part of a hedge transaction and, if so, the type of hedge transaction involved.
We do not expect that adoption of SFAS No. 133 will have a material impact on
our consolidated financial position or results of operations as we do not
currently hold any derivative financial instruments.

        On December 3, 1999, the Securities and Exchange Commission staff
released Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition, to
provide guidance on the recognition, presentation and disclosure of revenue in
financial statements. While SAB No. 101 provides a framework by which to
recognize revenue in the financial statements, the Company believes that
adherence to this SAB will not have a material impact on the Company's financial
statements.

        In March 2000, the Financial Accounting Standards Board issued
Interpretation (FIN) No. 44, Accounting for Certain Transactions Involving Stock
Compensation -- an Interpretation of APB No. 25. FIN No. 44 clarifies (a) the
definition of employee for purposes of applying APB No. 25, (b) the criteria for
determining whether a plan qualifies as a non-compensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN No. 44 became effective July
1, 2000, but certain conclusions in FIN No. 44 cover specific events that occur
after either December 15, 1998, or January 12, 2000. To the extent that FIN No.
44 covers events occurring during the period after December 15, 1998, or January
12, 2000, but before the effective date of July 1, 2000, the effects of applying
FIN 44 are recognized on a prospective basis from July 1, 2000. Such effects are
considered by management to be immaterial to the Company's financial position
and results of operations.


                                       29
<PAGE>   33

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        Not applicable.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        The Financial Statements of the Company identified in the Index to
Financial Statements appearing under "Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form-8K" of this report are incorporated herein by
reference to Item 14.


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

        None.

                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

        Except for certain information concerning the Company's executive
officers which is included under the caption "Executive Officers and Certain
Significant Employees of the Registrant" following Part I, Item 4 of this
report, the information required under this Item is included in the Company's
Proxy Statement for its 2001 Annual Meeting of Stockholders under the caption
"Directors and Executive Officers," which will be filed with the Securities and
Exchange Commission no later than April 30, 2001, and is incorporated herein by
reference.


ITEM 11. EXECUTIVE COMPENSATION.

        The information required under this Item is included in the Company's
Proxy Statement for its 2001 Annual Meeting of Stockholders under the caption
"Directors and Executive Officers," which will be filed with the Securities and
Exchange Commission no later than April 30, 2001, and is incorporated herein by
reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        The information required under this Item is included in the Company's
Proxy Statement for its 2001 Annual Meeting of Stockholders under the caption
"Directors and Executive Officers," which will be filed with the Securities and
Exchange Commission no later than April 30, 2001, and is incorporated herein by
reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The information required under this Item is included in the Company's
Proxy Statement for its 2001 Annual Meeting of Stockholders under the caption
"Directors and Executive Officers," which will be filed with the Securities and
Exchange Commission no later than April 30, 2001, and is incorporated herein by
reference.


                                       30
<PAGE>   34

                                     PART IV

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

(a)     The following documents are filed as part of this report:

        1.  Index to financial statements

                                                                       PAGE
                                                                       ----
  Report of Independent Public Accountants.........................    F-2
  Consolidated Balance Sheets......................................    F-3
  Consolidated Statements of Operations............................    F-4
  Consolidated Statements of Stockholders' Equity..................    F-5
  Consolidated Statements of Cash Flows............................    F-6
  Notes to Consolidated Financial Statements.......................    F-7

        2.  Financial statement schedules

                                                                PAGE
                                                          ----------------
Report of Independent Public Accountants on
  Supplemental Schedule.................................. See Exhibit 99.1

Supplemental Schedule Schedule II Valuation and
  Qualifying Accounts.................................... See Exhibit 99.2


        3.  Exhibits.

        See Item (c) below.

(b)     Reports on Form 8-K.

        None

(c)     Exhibits

     2.1(1)         Asset Purchase Agreement by and among Exult, Inc., Gunn
                    Partners, Inc., the shareholders of Gunn Partners, Inc. and
                    Michael Gibson dated as of November 22, 1999.

     2.2(1)         Asset Purchase Agreement dated as of December 20, 1999 among
                    Pactiv Corporation, Pactiv Business Services, Inc. and
                    Exult, Inc.

     3.1(1)         Fourth Amended and Restated Certificate of Incorporation of
                    Exult, Inc.

     3.2(1)         Amended and Restated Bylaws of Exult, Inc.

     4.1(1)         See Exhibits 3.1 and 3.2 for provisions of the Exult, Inc.'s
                    Certificate of Incorporation and Bylaws defining the rights
                    of holders of Exult, Inc.'s Common Stock.

     4.2(1)         Specimen Common Stock certificate.

    10.1.1(1)*      Registrant's 1999 Stock Option/Stock Issuance Plan.

    10.1.2(1)*      Form of Notice of Grant of Stock Option.

    10.1.3(1)*      Form of Stock Option Agreement.

    10.1.4(1)*      Form of Addendum to Stock Option Agreement.

    10.1.5(1)*      Form of Stock Purchase Agreement.

    10.1.6(1)*      Form of Addendum to Stock Purchase Agreement.

    10.1.7(1)*      Form of Stock Issuance Agreement.

    10.1.8(1)*      Form of Addendum to Stock Issuance Agreement.


                                       31
<PAGE>   35
    10.2.1(1)*      Registrant's 1999 Special Executive Stock Option/Stock
                    Issuance Plan.

    10.2.2(1)*      Form of Notice of Grant of Stock Option.

    10.2.3(1)*      Form of Stock Option Agreement.

    10.2.4(1)*      Form of Addendum to Stock Option Agreement.

    10.2.5(1)*      Form of Stock Purchase Agreement.

    10.2.6(1)*      Form of Addendum to Stock Purchase Agreement.

    10.2.7(1)*      Form of Stock Issuance Agreement.

    10.2.8(1)*      Form of Addendum to Stock Issuance Agreement.

    10.3(1)*        Form of Directors' and Officers' Indemnification Agreement.

    10.4(1)*        Founder Stock Purchase Agreement by and among BPO-US, Inc.,
                    James Madden and General Atlantic Partners, LLC dated April
                    1, 1999.

    10.5.1(1)*      Amended and Restated Registration Rights Agreement among
                    Exult, Inc. and the Stockholders identified therein dated
                    December 23, 1999.

    10.5.2(1)*      Amendment No. 1 to Amended and Restated Registration Rights
                    Agreement among Exult and the Stockholders identified
                    therein dated February 10, 2000.

    10.6.1(1)       Office Space Lease between The Irvine Company and BPO-US,
                    Inc. dated June 28, 1999.

    10.6.2(1)       First Amendment to Office Space Lease between The Irvine
                    Company and Exult, Inc. dated February 29, 2000

    10.7.1(1)       Lease Agreement Venture Technology Center VI Building, The
                    Woodlands, Montgomery County, Texas between The Woodlands
                    Corporation and Tenneco Business Services, Inc. dated August
                    15, 1995.

    10.7.2(1)       Assignment and Assumption of Lease between Pactiv Business
                    Services, Inc. (formerly known as Tenneco Business services,
                    Inc.) and Exult, Inc. dated January 1, 2000.

    10.8(1)@        Framework Agreement dated December 7, 1999 by and between
                    the Company and BP Amoco, p.l.c.

    10.9(1)@        US Country Agreement dated December 7, 1999 by and between
                    the Company and BP America, Inc.

    10.10(1)@       UK Country Agreement dated December 7, 1999 by and between
                    Exult Limited and BP International Limited.

    10.16(1)*       Registrant's 2000 Employee Stock Purchase Plan.

    10.17(1)        Lease among Scottish Mutual Assurance p.l.c. and Exult
                    Limited and Exult, Inc.

    10.18(1)        Registrant's 2000 Equity Incentive Plan.

    10.19(1)*       Loan Agreement dated May 30, 2000 by and between Exult,
                    Inc. and Kevin Campbell

    10.20(2)@@      Master Services Agreement by and between Exult, Inc. and
                    Unisys Corporation dated August 28, 2000.

    10.21*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for James C. Madden, V.

    10.22*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Stephen M. Unterberger.


                                       32
<PAGE>   36

    10.23*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Kevin M. Campbell.

    10.24*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Douglas L. Shurtleff.

    10.25*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Robert W. Gunn.

    10.26           Office Lease between Temple Property Holdings Limited and
                    Exult Limited dated June 13, 2000.

    10.27           Unit Purchase Agreement between Exult, Inc. and Bank of
                    America Corporation dated October 12, 2000.

    10.28           Common Stock Warrant Issued to Bank of America October 12,
                    2000.

    10.29@@         Master Services Agreement between Exult, Inc. and Bank of
                    America Corporation dated November 21, 2000.

    10.30@@         Office Space Lease between Bank of America, National
                    Association and Exult, Inc. dated November 21, 2000.

    21.1(1)         Subsidiaries of Exult, Inc.

    23.1            Consent of Independent Public Accountants

    99.1            Report of Independent Public Accountants on Supplemental
                    Schedule

    99.2            Supplemental Schedule - Schedule II - Valuation and
                    Qualifying Accounts

-----------
(1)     Previously filed with the Registrant's Registration Statement on Form
        S-1, Registration Number 333-31754, and incorporated herein by
        reference.

(2)     Previously filed with the Registrant's quarterly report on Form 10-Q for
        the quarter ended September 30, 2000 and incorporated herein by
        reference.

@       Confidential treatment has been granted with respect to certain portions
        of this agreement. Such portions have been omitted from this filing and
        have been filed separately with the Securities and Exchange Commission.

@@      Confidential treatment is being sought with respect to certain portions
        of this agreement. Such portions have been omitted from this filing and
        have been filed separately with the Securities and Exchange Commission.

*       This exhibit is a management contract or a compensatory plan or
        arrangement.

(d)     See item (a)(2) above.


                                       33
<PAGE>   37

       INFORMATION REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This report contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about our company
and our industry. When used in this report, the words "may," "will," "should,"
"predict," "continue," "plans," "expects," "anticipates," "estimates," "intends"
and similar expressions are intended to identify forward-looking statements.
These statements include, but are not limited to, statements under the captions
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this report concerning,
among other things, our goals and strategies, the anticipated scope and result
of our business operations, and our ability to:

        -       complete development of our service delivery infrastructure;

        -       obtain new comprehensive process management contracts;

        -       successfully implement our comprehensive Exult eHR solutions for
                our existing clients and scale our service offering across a
                broad client base;

        -       establish new client service centers;

        -       increase revenue, control expenditures, recognize economies of
                scale and achieve profitability; and

        -       expand our sales and marketing capabilities and our technology
                and general operating infrastructure.

        These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those projected. Exult
has not yet proven its business model and must invest substantial resources to
build its service capabilities. It is not certain that eHR will perform as
anticipated. The market in which Exult operates is competitive and other service
providers may be more effective at selling or delivering human resources process
management services. These and other risks and uncertainties are described in
this report under the heading "Risk Factors" and in other filings made from time
to time by Exult with the Securities and Exchange Commission. The cautionary
statements made in this report should be read as being applicable to all related
forward-looking statements wherever they appear in this report. These statements
are only predictions. We cannot guarantee future results, levels of activity,
performance or achievements. We assume no obligation to publicly update or
revise these forward-looking statements for any reason, or to update the reasons
actual results could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available in the
future.

        This report contains estimates of market size and growth related to the
human resources business process outsourcing market, the use of the Internet,
the Global 500 and other industry data. These estimates have been included in
studies published by Dataquest, a division of GartnerGroup, International Data
Corporation, The Hunter Group and Fortune Magazine. These estimates contain
certain assumptions regarding current and future events, trends and activities.
Although we believe that these estimates are generally indicative of the matters
reflected in those studies, these estimates are inherently imprecise, and we
caution you to read these estimates in conjunction with the rest of the
disclosure in this report, particularly the "Risk Factors" section.

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


                                       34
<PAGE>   38

                                   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.

                                            EXULT, INC.
                                            (REGISTRANT)


Date: March 29, 2001                        By: /s/ JAMES C. MADDEN, V
                                                --------------------------------
                                                    James C. Madden, V
                                                    Chief Executive Officer and
                                                    President

        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 dates indicated.

<TABLE>
<CAPTION>
         SIGNATURE                                    TITLE                          DATE
         ---------                                    -----                          ----
<S>                                            <C>                               <C>
/s/ JAMES C. MADDEN, V                         Chief Executive Officer,          March 29, 2001
----------------------------------------       President and
    James C. Madden, V                         Chairman of the Board
                                               (principal executive officer)


/s/ DOUGLAS L. SHURTLEFF                       Chief Financial Officer           March 29, 2001
----------------------------------------       (principal financial and
    Douglas L. Shurtleff                       accounting officer)


/s/ J. MICHAEL CLINE                           Director                          March 29, 2001
----------------------------------------
    J. Michael Cline


/s/ STEVEN A. DENNING                          Director                          March 29, 2001
----------------------------------------
    Steven A. Denning


/s/ MARK DZIALGA                               Director                          March 29, 2001
----------------------------------------
    Mark Dzialga


/s/ MICHAEL MILES                              Director                          March 29, 2001
----------------------------------------
    Michael Miles


/s/ THOMAS NEFF                                Director                          March 29, 2001
----------------------------------------
    Thomas Neff


/s/ JOHN R. OLTMAN                             Director                          March 29, 2001
----------------------------------------
    John R. Oltman


/s/ A. MICHAEL SPENCE                          Director                          March 29, 2001
----------------------------------------
    A. Michael Spence
</TABLE>

                                       35
<PAGE>   39


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
                                                                    PAGE
                                                                    ----
<S>                                                                 <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants.........................    F-2
Consolidated Balance Sheets......................................    F-3
Consolidated Statements of Operations............................    F-4
Consolidated Statements of Stockholders' Equity..................    F-5
Consolidated Statements of Cash Flows............................    F-6
Notes to Consolidated Financial Statements.......................    F-7
</TABLE>


                                      F-1
<PAGE>   40

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the stockholders of Exult, Inc.:

        We have audited the accompanying consolidated balance sheets of Exult,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1999 and 2000,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the period from October 29, 1998 (Inception) to December 31,
1998, and for the years ended December 31, 1999 and 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

        We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Exult,
Inc. and subsidiaries as of December 31, 1999 and 2000, and the results of their
operations and their cash flows for the period from October 29, 1998 (Inception)
to December 31, 1998, and for the years ended December 31, 1999 and 2000, in
conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Orange County, California
February 6, 2001


                                      F-2
<PAGE>   41

                                   EXULT, INC.

                           CONSOLIDATED BALANCE SHEETS
                 (amounts in thousands except per share amounts)



<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -----------------------
                                                                1999           2000
                                                              --------      ---------
<S>                                                           <C>           <C>
                                     ASSETS

Current Assets:
  Cash and cash equivalents ...............................   $ 39,199      $  94,890
  Investments .............................................         --          5,000
  Accounts receivable .....................................        802         17,713
  Other receivables .......................................         22          2,418
  Prepaid expenses and other current assets ...............        287          5,764
                                                              --------      ---------
         Total Current Assets .............................     40,310        125,785
Property and equipment, net ...............................      4,440         24,945
Intangibles assets, net ...................................     13,603         36,447
Other assets ..............................................        414         17,004
                                                              --------      ---------
         Total Assets .....................................   $ 58,767      $ 204,181
                                                              ========      =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable ........................................   $  1,453      $   3,475
  Accrued liabilities .....................................      2,270         24,858
  Current portion of long-term obligations ................      4,630          4,267
                                                              --------      ---------
         Total Current Liabilities ........................      8,353         32,600
                                                              --------      ---------
Long-Term Obligations, net of current portion .............      4,304            152
                                                              --------      ---------

Commitments and Contingencies

Stockholders' Equity:
  Convertible preferred stock, $0.0001 par value;
    Authorized -- 15,000 shares;
    Issued and outstanding -- 6,191 and 0 at
      December 31, 1999 and 2000, respectively,
      including additional paid-in capital ................     58,768             --
  Common stock, $0.0001 par value;
    Authorized -- 500,000 shares;
    Issued and outstanding -- 9,434 and 90,956 at
      December 31, 1999 and 2000, respectively ............          1              9
  Additional paid-in capital ..............................      5,971        284,393
  Subscriptions receivable ................................       (100)            --
  Deferred compensation ...................................     (3,134)        (2,757)
  Accumulated deficit .....................................    (15,396)      (110,216)
                                                              --------      ---------
         Total Stockholders' Equity .......................     46,110        171,429
                                                              --------      ---------
         Total Liabilities and Stockholders' Equity .......   $ 58,767      $ 204,181
                                                              ========      =========
</TABLE>



                   The accompanying notes are an integral part
                     of these consolidated balance sheets.


                                      F-3
<PAGE>   42

                                   EXULT, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
                                           OCTOBER 29,
                                              1998
                                           (INCEPTION)
                                               TO          YEAR ENDED     YEAR ENDED
                                           DECEMBER 31,    DECEMBER 31,   DECEMBER 31,
                                              1998            1999            2000
                                           -----------     -----------    ------------
<S>                                        <C>             <C>            <C>
Revenue .................................   $      --       $   4,857       $  66,661
Cost of revenue .........................          --           4,498          93,195
                                            ---------       ---------       ---------
Gross profit (loss) .....................          --             359         (26,534)
                                            ---------       ---------       ---------
Expenses:
  Product development ...................          --             368           6,674
  Selling, general and administrative ...         187           9,976          28,207
  Depreciation and amortization .........          --             943           8,811
  Warrant charges .......................          --           4,547          29,900
                                            ---------       ---------       ---------
     Total expenses .....................         187          15,834          73,592
                                            ---------       ---------       ---------
Loss from operations ....................        (187)        (15,475)       (100,126)
  Interest income, net ..................           3             263           5,306
                                            ---------       ---------       ---------
Net loss ................................   $    (184)      $ (15,212)      $ (94,820)
                                            =========       =========       =========

Net loss per common share:
  Basic and diluted .....................   $ (140.48)      $   (2.20)      $   (1.74)
                                            =========       =========       =========
Weighted average number of common shares
  outstanding:
  Basic and diluted .....................           1           6,906          54,491
                                            =========       =========       =========
</TABLE>



                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-4
<PAGE>   43
                                   EXULT, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                         CONVERTIBLE                  COMMON STOCK
                                                                       PREFERRED STOCK      ----------------------------------
                                                                   ----------------------                          ADDITIONAL
                                                                               PREFERRED                             PAID-IN
                                                                    SHARES      STOCK        SHARES        PAR       CAPITAL
                                                                   --------   -----------   ---------     ------   -----------
<S>                                                                <C>        <C>           <C>           <C>      <C>
INCEPTION, October 29, 1998
  Issuance of common stock for cash..........................            --   $        --           9     $   --   $        --
  Issuance of Series A convertible preferred stock for cash..            25         1,000          --         --            --
  Net loss...................................................            --            --          --         --            --
                                                                   --------   -----------   ---------     ------   -----------
BALANCE, December 31, 1998...................................            25         1,000           9         --            --
  Issuance of preferred stock:
    Series B.................................................         1,696         9,194          --         --            --
    Series C.................................................         4,470        45,950          --         --            --
  Issuance of common stock for cash..........................            --            --       8,856          1            38
  Issuance of common stock for services and subscription.....            --            --         307         --           200
  Common stock issued upon exercise of stock options.........            --            --         262         --           197
  Issuance of Series C preferred stock and common
    stock warrants for service contract......................            --         2,624          --         --           693
  Issuance of common stock warrants for services.............            --            --          --         --         1,230
  Deferred compensation related to the issuance
    of common stock..........................................            --            --          --         --         1,387
  Deferred compensation related to stock options granted.....            --            --          --         --         2,226
  Amortization of deferred compensation......................            --            --          --         --            --
  Net loss...................................................            --            --          --         --            --
                                                                   --------   -----------   ---------     ------   -----------
BALANCE, December 31, 1999...................................         6,191        58,768       9,434          1         5,971
  Issuance of preferred stock:
    Series C.................................................           386         3,966          --         --            --
    Series D.................................................         6,885        59,970          --         --            --
  Common stock issued upon warrant exercises.................            --            --       4,187         --         5,273
  Series C preferred stock issued upon warrant exercise......         3,339         7,192          --         --            --
  Issuance of common stock in initial public offering........            --            --       6,300          1        56,668
  Conversion of preferred stock into common stock............       (16,801)     (129,896)     65,485          7       129,889
  Issuance of common stock and common stock warrants for
    cash and assets..........................................            --            --       5,000         --        84,900
  Common stock issued upon exercise of stock options.........            --            --         514         --           436
  Common stock issued under employee stock purchase plan.....            --            --          36         --           370
  Issuance of common stock warrants for services.............            --            --          --         --            94
  Payment of subscription receivable.........................            --            --          --         --            --
  Deferred compensation related to stock options granted.....            --            --          --         --           792
  Amortization of deferred compensation......................            --            --          --         --            --
  Net loss...................................................            --            --          --         --            --
                                                                   --------   -----------   ---------     ------   -----------
BALANCE, December 31, 2000...................................            --   $        --      90,956     $    9   $   284,393
                                                                   ========   ===========   =========     ======   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                   DEFERRED       ACCUMULATED   SUBSCRIPTIONS   STOCKHOLDERS'
                                                                 COMPENSATION       DEFICIT      RECEIVABLE        EQUITY
                                                                 ------------    ------------   -------------   -------------
<S>                                                              <C>             <C>             <C>           <C>
INCEPTION, October 29, 1998
  Issuance of common stock for cash..........................      $     --        $      --       $     --      $       --
  Issuance of Series A convertible preferred stock for cash..            --               --             --           1,000
  Net loss...................................................            --             (184)            --            (184)
                                                                   --------        ---------       --------      ----------
BALANCE, December 31, 1998...................................            --             (184)            --             816
  Issuance of preferred stock:
    Series B.................................................            --               --             --           9,194
    Series C.................................................            --               --             --          45,950
  Issuance of common stock for cash..........................            --               --             --              39
  Issuance of common stock for services and subscription.....            --               --           (100)            100
  Common stock issued upon exercise of stock options.........            --               --             --             197
  Issuance of Series C preferred stock and common
    stock warrants for service contract......................            --               --             --           3,317
  Issuance of common stock warrants for services.............            --               --             --           1,230
  Deferred compensation related to the issuance
    of common stock..........................................        (1,387)              --             --              --
  Deferred compensation related to stock options granted.....        (2,226)              --             --              --
  Amortization of deferred compensation......................           479               --             --             479
  Net loss...................................................            --          (15,212)            --         (15,212)
                                                                   --------        ---------       --------      ----------
BALANCE, December 31, 1999...................................        (3,134)         (15,396)          (100)         46,110
  Issuance of preferred stock:
    Series C.................................................            --               --             --           3,966
    Series D.................................................            --               --             --          59,970
  Common stock issued upon warrant exercises.................            --               --             --           5,273
  Series C preferred stock issued upon warrant exercise......            --               --             --           7,192
  Issuance of common stock in initial public offering........            --               --             --          56,669
  Conversion of preferred stock into common stock............            --               --             --              --
  Issuance of common stock and common stock warrants for
    cash and assets..........................................            --               --             --          84,900
  Common stock issued upon exercise of stock options.........            --               --             --             436
  Common stock issued under employee stock purchase plan.....            --               --             --             370
  Issuance of common stock warrants for services.............            --               --             --              94
  Payment of subscription receivable.........................            --               --            100             100
  Deferred compensation related to stock options granted.....          (792)              --             --              --
  Amortization of deferred compensation......................         1,169               --             --           1,169
  Net loss...................................................            --          (94,820)            --         (94,820)
                                                                   --------        ---------       --------      ----------
BALANCE, December 31, 2000...................................      $ (2,757)       $(110,216)      $     --      $  171,429
                                                                   ========        =========       ========      ==========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                      F-5
<PAGE>   44

                                   EXULT, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                     OCTOBER 29, 1998
                                                                      (INCEPTION) TO     YEAR ENDED      YEAR ENDED
                                                                        DECEMBER 31,     DECEMBER 31,    DECEMBER 31,
                                                                           1998             1999            2000
                                                                     ----------------    -----------     -----------
<S>                                                                  <C>                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss ........................................................      $    (184)       $ (15,212)      $ (94,820)
  Adjustments to reconcile net loss to net cash
    used in operating activities --
    Depreciation and amortization .................................             --              943           8,811
    Charge for warrants and options ...............................             --            4,547          29,994
  Changes in operating assets and liabilities --
    Investments ...................................................             --               --          (5,000)
    Receivables ...................................................             --             (824)        (19,307)
    Prepaid expenses and other current assets .....................             --             (287)         (5,477)
    Other assets ..................................................             (3)            (410)            455
    Accounts payable ..............................................              4            1,449           2,022
    Accrued liabilities ...........................................             34            2,235          22,588
                                                                         ---------        ---------       ---------
        Net cash used in operating activities .....................           (149)          (7,559)        (60,734)
                                                                         ---------        ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment ..............................             --           (4,363)        (23,831)
  Cash paid in acquisition of intangible assets ...................             --           (5,210)             --
                                                                         ---------        ---------       ---------
        Net cash used in investing activities .....................             --           (9,573)        (23,831)
                                                                         ---------        ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of preferred stock .......................          1,000           55,144          71,128
  Proceeds from issuance of common stock ..........................             --              139          73,312
  Payment of subscription receivable ..............................             --               --             100
  Exercise of stock options .......................................             --              197             436
  Payments on long-term obligations ...............................             --               --          (4,720)
                                                                         ---------        ---------       ---------
        Net cash provided by financing activities .................          1,000           55,480         140,256
                                                                         ---------        ---------       ---------
Net increase in cash and cash equivalents .........................            851           38,348          55,691
Cash and cash equivalents, beginning of period ....................             --              851          39,199
                                                                         ---------        ---------       ---------
Cash and cash equivalents, end of period ..........................      $     851        $  39,199       $  94,890
                                                                         =========        =========       =========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest ......................................................      $      --        $       5       $     321
                                                                         =========        =========       =========
    Income taxes ..................................................      $      --        $       1       $      34
                                                                         =========        =========       =========
SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Common stock issued on subscriptions ............................      $      --        $     100       $      --
                                                                         =========        =========       =========
  Preferred and common stock warrants issued in
    connection with a service contract ............................      $      --        $   3,317       $      --
                                                                         =========        =========       =========
  Common stock warrants issued for services .......................      $      --        $   1,230       $      94
                                                                         =========        =========       =========
  Acquisition of equipment through capital lease ..................      $      --        $     139       $      --
                                                                         =========        =========       =========
  Common stock issued for prepaid rent and intangible asset .......      $      --        $      --       $  44,000
                                                                         =========        =========       =========
  Common stock warrants issued in connection with common stock ....      $      --        $      --       $  29,900
                                                                         =========        =========       =========
DETAILS OF ACQUISITION:
  November 1999 -- Acquired intangibles and fixed
    assets of Gunn Partners, Inc.
  The following table outlines those assets and
    intangibles acquired and cash paid:
    Fair value of assets and intangibles acquired .................      $      --        $  14,005       $      --
    Less: Present value of note issued ............................             --           (8,795)             --
                                                                         ---------        ---------       ---------
    Cash paid in acquisition of intangible assets .................      $      --        $   5,210       $      --
                                                                         =========        =========       =========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-6
<PAGE>   45

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      DESCRIPTION OF BUSINESS

Organization

        Exult, Inc. and subsidiaries ("Exult" or the "Company") designs,
implements, and manages comprehensive web-enabled human resources processes,
generally under long-term contracts. In addition, the Company provides
consulting services for measuring and improving the efficiency of human capital
productivity and human resource, finance and accounting processes.

        Exult (formerly BPO-US, Inc.) was incorporated in the State of Delaware
on October 29, 1998. The Company began marketing its services in 1999. In August
1999, the Company changed its name to Exult, Inc.

        In November 1999, the Company formed two subsidiaries, Exult Limited in
the United Kingdom to establish operations in that country, and Exult Equity
Partners, Inc. for the purpose of acquiring most of the assets of Gunn Partners,
Inc., a consulting business (Gunn).

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RISK FACTORS

Accounting Estimates

        The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingencies at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from estimated amounts.

Reclassifications

        Certain amounts in the 1998 and 1999 financial statements have been
reclassified to conform with the 2000 presentation.

Cash Equivalents

        The Company considers all highly liquid temporary cash investments with
an initial maturity of three months or less to be cash equivalents. The carrying
amount of cash equivalents approximates fair value because of the short maturity
period of these investments.

Investments

        As of December 31, 2000, the Company had approximately $5,000,000
invested in certificates of deposit which bear interest at 5.87 percent and
mature on January 4, 2001.

Accounts Receivable

        As of December 31, 2000, approximately $3,922,000 of unbilled
receivables was included in accounts receivable. Unbilled receivables consists
of net amounts generated in the course of providing services to clients which
have not been billed due to the timing in which the Company prepares, records
and sends bills to its clients.

Property and Equipment

        Property and equipment is stated at cost. Depreciation and amortization
of property and equipment are recorded using either the double declining balance
or straight-line methods over the estimated useful life of the assets. When
assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed and any gain or loss is reflected in the results of
operations.

        Maintenance, repairs and minor renewals are charged directly to expense
as incurred. Significant additions and improvements to property and equipment
are capitalized.


                                      F-7
<PAGE>   46

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


Software Development

        In accordance with Statement of Position (SOP) 98-1, Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use, the Company
expenses all costs associated with the development or purchase of internal use
software other than those incurred during the application development stage.
Costs related to application development are capitalized and amortized over the
estimated useful life of the software, which ranges from three to five years.
The Company adopted SOP 98-1 on January 1, 1999. Prior to 1999, the Company did
not engage in the development of software.

Intangibles, Net

        Intangible assets consist of the portion of the purchase price of assets
acquired from a client and a business acquired in excess of the fair value of
identifiable net tangible assets acquired. Amortization is computed using the
straight-line method over the estimated useful lives of the assets. The
intangible asset acquired from a client is being amortized as a reduction of
revenue over the life of the contract.

Long-Lived Assets

        In accordance with Statement of Financial Accounting Standards (SFAS)
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, the Company assesses the recoverability of its
long-lived assets on an annual basis or whenever adverse events or changes in
circumstances of business climate indicate that expected undiscounted future
cash flows related to such long-lived assets may not be sufficient to recover
the net book value of such assets. If undiscounted cash flows are not sufficient
to recover the recorded assets, an impairment is recognized to reduce the
carrying value of the long-lived assets to the estimated fair value. Cash flow
projections, although subject to a degree of uncertainty, are based on trends of
historical performance and management's estimate of future performance, giving
consideration to existing and anticipated competitive and economic conditions.
Additionally, in conjunction with the review for impairment, the remaining
estimated lives of certain of the Company's long-lived assets are assessed. As
of December 31, 2000, the Company has not recognized any impairment of
long-lived assets.

Revenue Recognition

        The Company recognizes revenue at the time services are performed,
either on a fee-for-service basis for process management clients or per diem
basis for consulting clients. Fee-for-service contracts are generally structured
so that the Company receives a fee that is no greater than the client's
historical cost of operating the functions assumed by the Company. After the
Company has achieved a negotiated minimum cost reduction, in certain instances
the Company may be required to share further savings with its clients in a
negotiated gain sharing arrangement. The amount of savings to be shared with
clients is determined on a periodic basis in accordance with the terms of the
applicable contracts. In cases where the Company anticipates that, based upon
the amount of costs incurred and estimated future costs to be incurred, amounts
will be due to clients, revenue is recorded net of such amounts. If the Company
miscalculates the resources or time needed to perform under these contracts or
is not able to perform human resource management more cost effectively than its
clients, the costs of providing services could exceed the fixed amount the
Company would receive and a provision for such loss is recorded at the time such
determination is made. For consulting contracts, revenue is recognized based on
contracted billing rates times actual days worked.

        In the course of acquiring new clients, the Company performs significant
due diligence work. In certain cases, the Company may receive a guarantee that
its clients will pay or reimburse the Company for work performed in the due
diligence phase whether or not a contract is consummated. The Company records
these amounts as revenue and the corresponding direct costs as cost of revenue.

Concentration and Other Outsourcing Risk Factors

        During the years ended December 31, 1999 and 2000, approximately 84
percent and 67 percent, respectively, of the Company's revenue was generated
from a single process management client. No other client accounted for 10
percent or more of the Company's total revenue in either year. The Company
currently has a total of five process management clients. Two of the process
management clients have not yet begun to generate significant revenue, including
one of the Company's two largest process management clients. If any of the three
largest process management clients were to substantially reduce or stop using
the Company's services, future revenues would be seriously impaired. These
contracts are still at early stages. As such, management believes that the
Company's ability to secure future clients and revenues will be largely
dependent upon managing and administering these clients' human resource


                                      F-8
<PAGE>   47

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


processes effectively and efficiently, and achieving service levels and cost
savings specified in the contracts. Although these contracts are not scheduled
to expire until December 2004, August 2007 and November 2010, the clients may
terminate their contracts prior to those dates for significant nonperformance by
the Company; for any reason after December 2002, August 2001 and November 2001,
respectively, with twelve months prior written notice; or in the event there is
a change in control of the Company, as defined.

        The Company has and plans to continue to enter into fixed price or
relatively fixed priced process management contracts. These contracts typically
are structured so that the Company receives fixed amounts that are generally
equal to or less than the client's historical costs incurred in connection with
the services the Company is assuming. After the Company has achieved a
negotiated minimum cost reduction, in certain instances the Company may be
required to share further savings with its clients in a negotiated gain sharing
arrangement. If the Company miscalculates the resources or time needed to
perform under these contracts or is not able to perform human resource
management more cost effectively than its clients, the costs of providing
services could exceed the fixed amount the Company would receive. If that
occurs, the Company would lose money on the contract. The contracts also contain
certain minimum service level requirements that must be met. The Company
currently depends on third parties to provide a number of specialized human
resource services to the clients, such as recruiting and relocation services. If
the Company and its third-party vendors are not able to meet these requirements,
the clients can assess penalties against the Company in accordance with the
terms of the contracts. The assessment of any penalties could adversely affect
future operating results.

Income Taxes

        The Company recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using enacted tax rules and laws that are expected to be in effect
when the differences are expected to be recovered. Under the Tax Reform Act of
1986, the benefits from net operating losses carried forward may be impaired or
limited in certain circumstances. A valuation allowance has been provided for
deferred tax assets when it is more likely than not that all or some portion of
the deferred tax asset will not be realized.

Loss Per Share

        Basic loss per share is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted earnings per share
is computed using the weighted average number of shares of common stock and
common stock equivalent shares outstanding during the period. Common stock
equivalent shares have been excluded from the computations as their effect is
antidilutive.

Comprehensive Income (Loss)

        As of October 29, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income, which establishes standards for the reporting and display
of comprehensive income (loss) and its components in the financial statements.
Components of comprehensive income (loss) include amounts that, under SFAS No.
130, are excluded from net income (loss). There were no significant differences
between the Company's net loss and comprehensive loss for each of the periods
presented.

Stock-Based Compensation

        The Company has elected to follow Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to Employees, and related
interpretations, in accounting for employee stock options rather than the
alternative fair value accounting allowed by SFAS No. 123, Accounting for Stock
Based Compensation. APB No. 25 provides that compensation expense relative to
the Company's employee stock options is measured based on the intrinsic value of
stock options granted. Companies that continue to follow APB No. 25 are required
to provide pro forma disclosure of the impact of applying the fair value method
of SFAS No. 123. This method recognizes the fair value of stock options granted
at the date of grant in earnings over the vesting period of the options.

Foreign Currency Translation

        The functional currency of the Company's foreign subsidiary is the local
currency. Assets and liabilities of subsidiaries with international operations
are translated into U.S. dollars at year-end exchange rates, and revenues and
expenses are translated at average exchange rates prevailing as they occur.
Translation adjustments, if material, are included in accumulated other
comprehensive income (loss), a separate component of stockholders' equity.
Transaction gains and losses arising from transactions denominated in a currency
other than the functional currency of the entity involved, which are immaterial,
are included in the


                                      F-9
<PAGE>   48

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


consolidated statements of operations. The Company has not entered into any
foreign currency exchange contracts or other derivative financial instruments.

Segment Information

        The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. Management has determined that the Company
operates in only one business segment. Prior to 2000, substantially all of the
Company's revenue was derived from with the United States. For the year ended
December 31, 2000, 76 percent of the Company's revenue was derived from within
the United States with the balance being derived primarily from within the
United Kingdom.

Recent Accounting Pronouncements

        In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued SOP 98-1, Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use. SOP 98-1 requires all costs related to the
development of internal use software other than those incurred during the
application development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized and amortized
over the estimated useful life of the software. We adopted SOP 98-1 on January
1, 1999. The adoption of SOP 98-1 did not have a material effect on our
consolidated financial position or results of operations.

        In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of
Start-Up Activities. SOP 98-5 was adopted by the Company on January 1, 1999, and
requires costs of start-up activities and organization costs to be expensed as
incurred. Adoption did not have a material effect on the Company's consolidated
financial position or results of operations.

        In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133,
as amended by SFAS No. 137, is effective for fiscal years beginning after June
15, 2000. SFAS No. 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive income
(loss) depending on whether a derivative is designed as part of a hedge
transaction and, if so, the type of hedge transaction involved. The Company does
not expect that adoption of SFAS No. 133 will have a material impact on its
consolidated financial position or results of operations as the Company does not
currently hold any derivative financial instruments.

        On December 3, 1999, the Securities and Exchange Commission staff
released Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition, to
provide guidance on the recognition, presentation and disclosure of revenue in
financial statements. While SAB No. 101 provides a framework by which to
recognize revenue in the financial statements, the Company believes that
adherence to this SAB will not have a material impact on the Company's financial
statements.

        In March 2000, the Financial Accounting Standards Board issued
Interpretation (FIN) No. 44, Accounting for Certain Transactions Involving Stock
Compensation -- an Interpretation of APB No. 25. FIN No. 44 clarifies (a) the
definition of employee for purposes of applying APB No. 25, (b) the criteria for
determining whether a plan qualifies as a non-compensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN No. 44 became effective July
1, 2000, but certain conclusions in FIN No. 44 cover specific events that occur
after either December 15, 1998, or January 12, 2000. To the extent that FIN No.
44 covers events occurring during the period after December 15, 1998, or January
12, 2000, but before the effective date of July 1, 2000, the effects of applying
FIN 44 are recognized on a prospective basis from July 1, 2000. Such effects are
considered by management to be immaterial to the Company's financial position
and results of operations.


                                      F-10
<PAGE>   49
                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


3.      DETAIL OF SELECTED BALANCE SHEET ACCOUNTS

        Accounts Receivable

        Accounts receivable consists of the following:

                                   DECEMBER 31,    DECEMBER 31,
                                      1999            2000
                                   -----------     -----------
                                        (in thousands)
Billed ........................      $   802         $13,791
Unbilled ......................           --           3,922
                                     -------         -------
                                     $   802         $17,713
                                     =======         =======

Property and Equipment

        Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,  DECEMBER 31,
                                                        USEFUL LIFE       1999          2000
                                                        -----------    -----------   -----------
                                                                            (in thousands)
<S>                                                     <C>            <C>           <C>
Furniture and fixtures .............................      5 years        $  1,605       $ 3,323
Equipment, computers and software ..................    3 to 5 years        1,532        10,683
Leasehold improvements .............................     Lease term           992         5,063
Construction-in-progress ...........................                          418         9,401
                                                                         --------       -------
                                                                            4,547        28,470
Less: Accumulated depreciation and amortization ....                         (107)       (3,525)
                                                                         --------       -------
Property and equipment, net ........................                     $  4,440       $24,945
                                                                         ========       =======
</TABLE>


Intangible Assets

        Intangible assets consists of the following:

                                            DECEMBER 31,   DECEMBER 31,
                                               1999           2000
                                            -----------    -----------
                                                 (in thousands)
Gross intangible assets ...............      $ 13,960       $ 41,039
Less: Accumulated amortization ........          (357)        (4,592)
                                             --------       --------
Intangible assets, net ................      $ 13,603       $ 36,447
                                             ========       ========

Other Assets

        Other assets consists of the following:

                                            DECEMBER 31,  DECEMBER 31,
                                               1999          2000
                                            -----------   -----------
                                                 (in thousands)
Prepaid rent, net of current portion .....    $    --       $15,189
Other ....................................        414         1,815
                                              -------       -------
                                              $   414       $17,004
                                              =======       =======

Accrued Liabilities

        Accrued liabilities consists of the following:

                                                 DECEMBER 31,  DECEMBER 31,
                                                    1999          2000
                                                 -----------   -----------
                                                     (in thousands)
Accrued employee compensation benefits
  and related costs .............................  $ 1,174       $ 5,929
Accrued outsourcing third-party arrangements ....       --         5,562
Bank liability ..................................       --         4,513
Other accrued liabilities .......................    1,096         8,854
                                                   -------       -------
                                                   $ 2,270       $24,858
                                                   =======       =======

                                      F-11
<PAGE>   50

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


4.      COMMITMENTS AND CONTINGENCIES

Lease Obligations

        The Company leases space in the building it uses as its international
headquarters under a noncancellable operating lease agreement, which expires in
April 2003, and leases space in the building it uses as its European
headquarters under a noncancellable operating lease agreement, which expires in
June 2010. The Company also leases space to house its processing and shared
service center staffs in Charlotte, Glasgow and Houston under noncancellable
operating lease agreements expiring in November 2010, March 2010 and March 2006,
respectively. Under the lease agreement for the Glasgow facility, the landlord
or the Company may terminate the agreement in March 2005 with 12 months prior
notice. The Company also leases certain amounts of limited office space for
various employees and office equipment under operating lease agreements expiring
through October 2003.

        Future minimum rental commitments under all operating leases as of
December 31, 2000, are as follows:

                                                     COMMITMENTS
                                                     -----------
                                                    (in thousands)
2001....................................                $ 5,355
2002....................................                  5,311
2003....................................                  4,549
2004....................................                  4,039
2005....................................                  4,039
Thereafter..............................                 14,668
                                                         ------
Future minimum lease payments...........                $37,961
                                                        =======

        Rental expense for the period from October 29, 1998 (Inception) through
December 31, 1998, and for the years ended December 31, 1999 and 2000, was
$6,000, $272,000, and $3,394,000, respectively.

Service Agreement

        In December 1999, the Company entered into a seven-year Framework
Agreement with BP Amoco p.l.c. (BP Amoco) to create a comprehensive human
resource services organization and provide a broad range of human resources
management services to BP Amoco and its affiliates. The terms of the Framework
Agreement required the Company to maintain a letter of credit against certain
contingencies for the first four years of the contract or until certain net
equity requirements are met. In connection therewith, the Company provided an
irrevocable two-year letter of credit expiring in January 2001 from a financial
institution in the amount of $5,000,000. In February 2000, the Company met the
net equity requirements as specified in the Framework Agreement, resulting in
the elimination of its obligation to provide letters of credit in connection
with the agreement.

Employment Agreements

        The Company entered into employment agreements with key management
personnel. These agreements provide for a defined level of compensation and
additional compensation in the form of bonuses based on performance. The
agreements also provide for severance benefits in the event of termination
without cause or in connection with a change in control, as defined.

Bonus Plan

        During 1999, the Company adopted an annual incentive program (Incentive
Plan) for all personnel. The Incentive Plan provides bonuses based upon the
achievement of various targets, both financial and non-financial, as well as the
participants' contributions to the Company. The Company expensed approximately
$997,000 and $1,977,000 in connection with the Incentive Plan during the years
ended December 31, 1999 and 2000, respectively, approximately $597,000 and
$2,477,000 of which was included in accrued liabilities as of December 31, 1999
and 2000, respectively.


                                      F-12
<PAGE>   51

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


5.      NOTE PAYABLE

        In connection with the Company's purchase of Gunn's assets, the Company
issued a note payable in the amount of $10,000,000. The note is due in two equal
installments of $5,000,000 each. The November 2000 payment was made as scheduled
with the remaining payment due in November 2001. Interest on the note accrues at
an annual rate of approximately 15 percent.

6.      STOCKHOLDERS' EQUITY

Preferred Stock

        The Company was originally authorized to issue 50,000 shares of
Preferred Stock at $0.01 par value per share. On November 25, 1998, the Company
filed a Certificate of the Powers, Designations, Preferences and Rights of the
Series A convertible Preferred Stock, par value $0.01 per share, designating
25,000 shares of the Company's Preferred Stock as Series A convertible Preferred
Stock. On April 27, 1999, December 20, 1999, and February 9, 2000, the Company
amended and restated its certificate of incorporation to authorize the issuance
of 5,000,000, 15,000,000, and 15,000,000 shares of Preferred Stock,
respectively, at $0.0001 par value per share. At December 31, 1999, 25,000
shares were designated as Series A convertible Preferred Stock, 1,696,369 shares
as Series B convertible Preferred Stock, and 5,500,000 shares as Series C
convertible Preferred Stock. On February 9, 2000, the third amended and restated
Certificate of Incorporation designated 7,650,533 shares as Series D convertible
Preferred Stock. Concurrent with the consummation of the Company's June 2000
initial public offering, all of the outstanding shares of Preferred Stock were
converted into Common Stock.

Common Stock

        The Company was originally authorized to issue 300,000 shares of Common
Stock at $0.01 par value per share. On April 27, 1999, December 20, 1999, and
February 9, 2000, the Company amended and restated its certificate of
incorporation to authorize the issuance of 25,000,000, 40,000,000, and
500,000,000 shares of Common Stock, respectively, at $0.0001 par value per
share.

        Certain preferred stockholders and common stockholders have registration
rights associated with their stock.

Stock Split

        On April 26, 1999, the Board of Directors declared a 180-for-1 stock
split on all Common Stock and Preferred Stock then outstanding. Further, on
January 31, 2000, the Board of Directors declared a 5-for-1 split on all Common
Stock then outstanding. All common share and per share data have been
retroactively restated to give effect to these splits.

Capital Transactions

        On November 9, 1998, the Company issued 9,000 shares of Common Stock,
par value $0.0001 for total consideration of $1.

        On November 25, 1998, the Company issued 25,000 shares of Series A
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $1,000,000. Each share of Series A
convertible Preferred Stock is convertible into 900 shares of Common Stock.

        On April 1, 1999, the Company issued 8,856,000 shares of Common Stock,
par value of $0.0001 per share, to a key employee for total consideration of
$39,000. The Company estimated the fair value as of November 1998, when his
employment and the stock purchase was negotiated, based on recent cash sales to
third parties, adjusting the valuation for differences in rights associated with
each class of stock. Of the 8,856,000 shares, 922,500 shares were immediately
vested with the balance vesting in 43 equal monthly installments. If the
holder's employment terminates for cause or voluntarily, no further shares vest.
If the holder's employment terminates for any reason other than cause, including
death or disability, 50 percent of all unvested shares will vest, except that
all unvested shares will vest upon termination of the holder's employment by the
Company without cause or by the holder with good reason in connection with a
change in control, as defined. Following termination of employment, the Company
has the right to repurchase any or all unvested shares at their original
purchase price. Subsequent to the lapse of the Company's repurchase right, the
Series A institutional investors have a right to purchase the remaining unvested
shares.


                                      F-13
<PAGE>   52

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


        On April 27, 1999, the Company issued 1,696,369 shares of Series B
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $9,194,000. Each share of Series B
convertible Preferred Stock was convertible into five shares of Common Stock.
The Company reserved 8,481,845 shares of Common Stock for the conversion.

        On June 6, 1999, the Company issued 306,750 shares of Common Stock to a
consultant in connection with services rendered valued at approximately $100,000
and for a subscription receivable of $100,000. The subscription receivable was
paid during the first quarter of 2000.

        On June 6, 1999, the Company became obligated to issue warrants
exercisable for 691,880 and 182,390 shares of Common Stock at an exercise price
of approximately $1.08 and $2.06 per share, respectively, as consideration for
consulting services performed. In connection therewith, the Company recorded
expenses of $750,000 and $375,000, respectively, which was deemed to be the fair
market value of the services performed. The warrants included a provision for a
cashless exercise whereby shares to be issued upon exercise of the warrants
could be used to pay the exercise price using the fair market value of a share
of Common Stock on the date of exercise. On November 2, 2000, the warrants
exercisable for 691,880 and 182,390 shares of Common Stock were exercised in
full using the cashless exercise feature resulting in the net issuance of
643,617 and 158,149 shares of Common Stock, respectively,

        On July 29, 1999, and on October 12, 1999, the Company issued 70,320 and
46,875 shares of Common Stock, respectively, to a director for the exercise of
non-statutory stock options for total consideration of $46,000 and $30,000,
respectively. The shares are subject to repurchase under the terms of the 1999
Stock Option/Stock Issuance Plan.

        On September 22, 1999, the Company became obligated to issue warrants
exercisable for 47,770 and 46,155 shares of Common Stock at an exercise price of
approximately $1.57 and $0.65 per share, respectively, as consideration for
consulting services performed. In connection therewith, the Company recorded
expenses of $75,000 and $30,000, respectively, which was deemed to be the fair
market value of the services performed. The warrant exercisable for 46,155
shares of Common Stock was exercised in full during 2000 generating net proceeds
of $30,000. No portion of the warrant exercisable for 47,770 shares of Common
Stock has been exercised as of December 31, 2000.

        On October 22, 1999, the Company issued 1,478,600 shares of Series C
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $15,200,000. Each share of Series C
convertible Preferred Stock was convertible into five shares of Common Stock.
The Company reserved 7,393,000 shares of Common Stock for the conversion.

        On November 17, 1999 the Company issued 58,364 shares of Series C
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $600,000. Each share of Series C
convertible Preferred Stock was convertible into five shares of Common Stock.
The Company reserved 291,820 shares of Common Stock for the conversion.

        On December 7, 1999, the Company issued a Common Stock warrant and a
Series C Preferred Stock warrant to BP International Limited. The Common Stock
warrant had a five-year term and was exercisable for 3,339,220 shares of Common
Stock at an exercise price of $1.57 per share. The Series C Preferred Stock
warrant had a one-year term and was exercisable for 667,844 shares of Series C
Preferred Stock, which were convertible into 3,339,220 shares of Common Stock,
at an initial exercise price of $10.28 which increased at an annual rate of 12
percent compounded daily over the term of the warrant. The value of these
warrants is approximately $3,317,000 and was expensed. The value of these
warrants was determined using the Black-Scholes options pricing model with the
following assumptions: risk free interest rate of 5.82%; expected life of 5
years; weighted average volatility of 77.70% and weighted average dividend yield
of 0.00%. On April 28, 2000, BP International Limited exercised the warrants to
acquire 3,339,220 shares of Common Stock and 667,844 shares of Series C
Preferred Stock for net consideration of $5,243,000 and $7,192,000,
respectively.

        On December 15, 1999, the Company issued 117,195 shares of Common Stock
to a director for the exercise of non-statutory stock options for total
consideration of $76,000. The shares are subject to repurchase under the terms
of the 1999 Stock Option/Stock Issuance Plan.

        On December 21, 1999, the Company issued 28,160 shares of Common Stock
to an officer for the exercise of non-statutory stock options for total
consideration of $44,000. The shares are subject to repurchase under the terms
of the 1999 Stock Option/Stock Issuance Plan.


                                      F-14
<PAGE>   53

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


        On December 22, 1999, the Company issued 2,932,879 shares of Series C
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $30,150,000. Each share of Series C
convertible Preferred Stock was convertible into five shares of Common Stock.
The Company reserved 14,664,395 shares of Common Stock for the conversion.

        On February 7, 2000, BP International Limited, subject to the terms of a
stockholders agreement which contains certain preemptive and anti-dilution
provisions, exercised its right to purchase 385,805 shares of Series C Preferred
Stock for total consideration of $3,966,000.

        On February 10, 2000, the Company issued 6,885,480 shares of Series D
convertible Preferred Stock in a private placement with institutional investors
for total consideration of approximately $59,970,000. Each share of Series D
convertible Preferred Stock was convertible into one share of Common Stock.

        On June 2, 2000, the Company completed its initial public offering of
its Common Stock issuing 6,000,000 shares. On July 6, 2000, Exult issued an
additional 300,000 shares of Common Stock in connection with the underwriters'
exercise of their over-allotment option. The Company received net consideration
after the underwriting discount and offering costs of $56,669,000 for the
issuance of the 6,300,000 shares at a gross offering price of $10.00 per share.
Concurrent with the consummation of the initial public offering, all of the
outstanding shares of the Company's Preferred Stock were converted into
65,484,786 shares of Common Stock.

        On October 12, 2000, Exult and Bank of America signed a non-binding
Memorandum of Understanding providing the framework for a broad business
relationship, including the provision of business process management services to
Bank of America by Exult. The business relationship and process management
services transaction were subject to ongoing negotiations and the Memorandum of
Understanding established a 60-day time period to reach a definitive agreement.
Upon executing the Memorandum of Understanding, Bank of America acquired
5,000,000 investment units, each unit consisting of one share of Exult Common
Stock and a warrant to buy one additional share of Exult Common Stock. Each
warrant is exercisable for three years at $11.00 per share. The purchase price
for the 5,000,000 units was $55,000,000, of which $11,000,000 was paid in cash
and the remainder in prepaid rent and intangible assets. In connection with the
issuance of the warrants, the Company incurred a charge of $29,900,000 during
the fourth quarter of 2000.

Common Stock and Stock Option Deferred Compensation

        The Company recorded aggregate deferred compensation for Common Stock
and stock options issued of approximately $3,613,000 and $792,000 for the years
ended December 31, 1999 and 2000, respectively. The amounts recorded represent
the difference between the grant price and the deemed fair value of the
Company's Common Stock at the date of grant. Deferred Common Stock and stock
option compensation is amortized to expense using the straight-line method over
the 48-month vesting period.

Employee Stock Purchase Plan

        In May 2000, the Company adopted the 2000 Employee Stock Purchase Plan
(2000 Stock Purchase Plan). Under the 2000 Stock Purchase Plan, employees may
elect to participate by contributing to the plan a portion, not in excess of 10
percent, of their after-tax pay for each pay period during the quarter. The
purchase price per share of Exult Common Stock will be the lesser of the fair
market value of a share of Exult Common Stock on the first day of the quarter or
the fair market value of a share of Exult Common Stock on the last day of the
quarter, minus a 15 percent discount. The total number of shares available for
purchase under the 2000 Stock Purchase Plan may not exceed 2,000,000 shares. As
of December 31, 2000, 36,191 shares have been issued under the 2000 Stock
Purchase Plan generating net cash proceeds of $370,000.

7.      STOCK OPTION PLANS

1999 Stock Option/Stock Issuance Plan

        In May 1999, the Company adopted the 1999 Stock Option/Stock Issuance
Plan (1999 Plan). The 1999 Plan was comprised of two separate equity programs:
(i) the Discretionary Option Grant Program, under which eligible persons could,
at the discretion of the Plan administrator, be granted options to purchase
shares of Common Stock, and (ii) the Stock Issuance Program under which eligible
persons could, at the discretion of the Plan administrator, be issued shares of
Common Stock directly, either through the immediate purchase of such shares or
as a bonus for services rendered to the Company. Upon the expiration,
termination for any reason, or cancellation of unexercised stock options, the
shares of Common Stock subject thereto will again be available for issuance
under the


                                      F-15
<PAGE>   54
                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)

terms of the 2000 Equity Incentive Plan. Upon any change in the outstanding
Common Stock without the Company's receipt of consideration, appropriate
adjustments shall be made to each outstanding option.

        Eligible participants in the Plan were employees, non-employee members
of the board of directors of the Company, non-employee members of the board of
directors of any parent or subsidiary, and consultants and other advisors who
provide services to the Company, or any parent or subsidiary. The Plan is
administered by the compensation committee of the Company's board of directors.

        The options were issued as incentive stock options (as defined by the
Internal Revenue Code of 1986) or as nonqualified options. Options under the
Plan were granted at prices not less than 85 percent of the fair market value at
the date of option grant and could become exercisable in installments ranging up
to 10 years from the date of grant. If the optionee is a 10 percent stockholder,
the exercise price could not be less than 110 percent of the fair market value
at the date of option grant. As of December 31, 1999, the non-qualified stock
options and incentive stock options are immediately exercisable by the optionee.
Upon exercise, and subject to Internal Revenue Service limitations for incentive
stock options, the option shares are initially unvested and subject to
repurchase by the Company upon termination of employment or services, at the
option exercise price per share. The optionee shall acquire a vested interest
in, and the Company's repurchase right shall lapse with respect to, 25 percent
of the optionee's shares upon completion of one year of service from the date of
grant, and the remainder vest either on an annual basis or on a monthly basis
over a 36-month period measured from the first anniversary of the grant date. At
December 31, 2000, there were 347,731 shares subject to repurchase.

1999 Special Executive Stock Option Plan

        On November 19, 1999, the Company adopted the Special Executive Stock
Option Plan (Executive Plan). Participation in the Executive Plan was limited to
officers and other highly compensated employees. The Executive Plan provided
that the exercise price for all options must be at least 85 percent of the fair
market of the option shares at the time of the option grant. Furthermore, no
option may have a term in excess of ten years, and each option will be subject
to early termination following the optionee's cessation of services with the
Company. The Executive Plan also provides that the exercise price for the shares
of Common Stock subject to option grants may be paid in cash or in shares of
Common Stock valued at fair market value on the exercise date. Options vest over
a period determined by the Company's board of directors. Since December 1999, no
options have been granted under this plan.

2000 Equity Incentive Plan

        In May 2000, the Company adopted the 2000 Equity Incentive Plan (2000
Plan). The 2000 Plan is the successor program to the 1999 Plan and the Executive
Plan and terminates in May 2010. The 2000 Plan provides various equity incentive
programs, including discretionary option grants for employees and consultants
and automatic option grants for non-employee directors. The initial number of
shares available for grant under the 2000 Plan is 20,000,000 shares, which
includes shares subject to outstanding awards under the 1999 Plan and the
Executive Plan as of the adoption date of the 2000 Plan. The share reserve under
the 2000 Plan automatically increases on the first trading day in January of
each year, beginning with calendar year 2001, by an amount equal to 5 percent of
the total number of shares of Exult Common Stock outstanding on the last trading
day in December of the immediately prior year, but in no event will any such
annual increase exceed 6,000,000 shares. Shares subject to awards that expire or
are otherwise cancelled or terminated are again available for future grant. At
December 31, 2000, 2,379,317 shares are available for future grant under the
2000 Plan.

        The 2000 Plan is administered by the Company's board of directors (the
"Plan Administrator"). The Plan Administrator generally determines which
eligible individuals receive option grants or other awards, the time or times
when the awards are made, the number of shares subject to each award, the
exercise price or other amount payable in connection with an award, the status
of any granted option as either an incentive stock option or a non-statutory
stock option under the federal tax laws, the vesting schedule to be in effect
for each award, and the maximum term for which any award is to remain
outstanding. The exercise price for any options and the issue price for shares
granted pursuant to the 2000 Plan may be paid in cash, vested shares in certain
circumstances, and a net-issuance basis. In addition, no participant in the 2000
Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances for more than 1,000,000 shares of Common Stock
per calendar year.

        In certain circumstances involving an acquisition or merger of the
Company, a sale of substantially all of the Company's assets, a change in more
than 30 percent of the ownership of the Company, or a change in control of the
Company's board of directors, all vesting of awards under the 1999 Plan, the
Executive Plan and the 2000 Plan may be accelerated or extended.


                                      F-16
<PAGE>   55
                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)

        The following is a summary of transactions relating to the 1999 Plan,
the Executive Plan and the 2000 Plan:

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31, 1999           YEAR ENDED DECEMBER 31, 2000
                                                         ------------------------------     --------------------------------
                                                                       WEIGHTED AVERAGE                     WEIGHTED AVERAGE
                                                            SHARES      EXERCISE PRICE        SHARES         EXERCISE PRICE
                                                         ----------    ----------------     ----------      ----------------
<S>                                                      <C>           <C>                  <C>             <C>
Options outstanding at beginning of period............           --          $  --          10,145,360           $ 0.93
  Granted.............................................   10,407,910           0.92           7,474,989            10.88
  Exercised...........................................    (262,550)           0.74           (513,867)             0.69
  Canceled............................................           --             --           (262,216)             5.01
                                                         ----------                         ----------
Options outstanding at end of the period..............   10,145,360          $0.93          16,844,266           $ 5.29
                                                         ==========          =====          ==========           ======

Options exercisable at end of period..................    5,809,270          $0.94          12,636,685           $ 3.15
                                                         ==========          =====          ==========           ======
</TABLE>

Of the options exercisable as of December 31, 2000, 3,428,717 are vested.

        The following table shows pro forma net loss as if the fair value method
had been used to account for stock-based compensation expense:

                                                 DECEMBER 31,       DECEMBER 31,
                                                    1999                2000
                                                 -----------        -----------
                                                         (in thousands)
Net loss, as reported ....................        $(15,212)          $ (94,820)
Pro forma adjustment .....................            (243)             (7,076)
                                                  --------           ---------
Pro forma net loss .......................        $(15,455)          $(101,896)
                                                  ========           =========

        The following outlines the significant assumptions used to calculate the
fair value information presented utilizing the Black-Scholes approach with
ratable amortization as of December 31, 1999 and 2000:

Risk-free interest rate......................................... 5.63% to 6.20%
Expected life...................................................      4.00
Expected volatility.............................................     77.70%
Expected dividends..............................................       --

8.      INCOME TAXES

        The Company did not record a tax provision at December 31, 1998, 1999
and 2000, as it had incurred only operating losses as of these dates.

        The components of the Company's net deferred income tax assets are as
follows:

                                                 DECEMBER 31,       DECEMBER 31,
                                                    1999               2000
                                                 -----------        -----------
                                                        (in thousands)
Net operating loss carryforwards ..........       $  4,826           $ 28,785
Gross deferred tax assets .................          1,107              2,028
                                                  --------           --------
                                                     5,933             30,813
Less: Valuation allowance .................         (5,933)           (30,813)
                                                  --------           --------
  Net deferred tax assets .................       $     --           $     --
                                                  ========           ========

        A full valuation allowance is provided because of the uncertainty of
realizing the deferred tax assets.

        At December 31, 2000, the Company had federal, state and foreign net
operating loss carryforwards of approximately $53.5 million, $67.9 million and
$14.5 million, respectively. The federal and state net operating loss
carryforwards will begin expiring in the years 2020 and 2008, respectively. The
foreign net operating loss may be carried forward indefinitely. The realization
of future tax benefits from utilization of the net operating loss carryforwards
may be subject to certain limitations as a result of ownership changes that have
occurred and may occur in the future.


                                      F-17
<PAGE>   56

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


9.      LOSS PER SHARE

        The following is the calculation for net loss per share (rounded):

<TABLE>
<CAPTION>
                                                    OCTOBER 29,
                                                       1998
                                                   (INCEPTION) TO        YEAR ENDED             YEAR ENDED
                                                    DECEMBER 31,         DECEMBER 31,           DECEMBER 31,
                                                        1998                 1999                   2000
                                                   --------------        ------------           ------------
<S>                                                <C>                   <C>                    <C>
Basic:
  Net loss ................................          $(184,000)          $(15,212,000)          $(94,820,000)
  Weighted average common shares ..........              1,000              6,906,000             54,491,000
                                                     ---------           ------------           ------------
  Net loss per common share (rounded) .....          $ (140.48)          $      (2.20)          $      (1.74)
                                                     =========           ============           ============
Diluted:
  Net loss ................................          $(184,000)          $(15,212,000)          $(94,820,000)
                                                     ---------           ------------           ------------
  Weighted average common shares ..........              1,000              6,906,000             54,491,000
  Stock options adjustment ................                 --                     --                     --
  Convertible preferred stock .............                 --                     --                     --
                                                     ---------           ------------           ------------
  Average common shares outstanding .......              1,000              6,906,000             54,491,000
                                                     ---------           ------------           ------------
  Net loss per common share (rounded) .....          $ (140.48)          $      (2.20)          $      (1.74)
                                                     =========           ============           ============
</TABLE>

        At December 31, 1998, 1999 and 2000, the impact of any outstanding
shares of Preferred Stock convertible into Common Stock, warrants to purchase
Common Stock or Preferred Stock convertible into Common Stock, and stock options
to purchase Common Stock was excluded from the respective computations of
diluted net loss per common share as the effect is antidilutive.

        Concurrent with the consummation of the June 2000 initial public
offering of the Company's Common Stock, all outstanding shares of Series A,
Series B, Series C, and Series D Preferred Stock were automatically converted
into Common Stock at the rate of 900 shares of Common Stock for each share of
Series A Preferred Stock, five shares of Common Stock for each share of Series B
and Series C Preferred Stock, and one share of Common Stock for each share of
Series D Preferred Stock.

10.     SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

        The following table sets forth selected quarterly financial data for the
eight quarters ended December 31, 2000.

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                     --------------------------------------------------------------
                                                     MARCH 31,         JUNE 30,       SEPTEMBER 30,     DECEMBER 31,
                                                       1999             1999              1999              1999
                                                     --------          -------        ------------      -----------
                                                                              (IN THOUSANDS)
<S>                                                  <C>               <C>            <C>               <C>
Revenue ...................................          $    --           $   213          $ 2,031            $ 2,613
Gross profit ..............................               --                --               --                359
Loss from operations ......................             (516)           (2,670)          (3,745)            (8,544)
Net loss ..................................             (510)           (2,609)          (3,678)            (8,415)
Net loss per share, basic and diluted .....          $(56.66)          $ (0.29)         $ (0.40)           $ (0.90)
                                                     =======           =======          =======            =======
</TABLE>

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                    ---------------------------------------------------------------
                                                    MARCH 31,         JUNE 30,       SEPTEMBER 30,      DECEMBER 31,
                                                      2000              2000             2000               2000
                                                    --------          --------       ------------       -----------
                                                                             (IN THOUSANDS)
<S>                                                 <C>               <C>            <C>                <C>
Revenue ...................................         $  5,577          $  8,172         $ 20,878          $ 32,034
Gross profit ..............................             (173)           (4,221)          (9,241)          (12,899)
Loss from operations ......................          (11,694)          (15,254)         (19,115)          (54,063)
Net loss ..................................          (10,902)          (13,802)         (17,640)          (52,476)
Net loss per share, basic and diluted .....         $  (1.16)         $  (0.40)        $  (0.21)         $  (0.60)
                                                    ========          ========         ========          ========
</TABLE>

For the three months ended December 31, 2000, excluding the $29.9 million
warrant charge, loss from operations, net loss and net loss per share would have
been $24,163,000, $ 22,576,000, and $0.26, respectively.


                                      F-18
<PAGE>   57

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


11.     BUSINESS ACQUISITION

        On November 22, 1999, the Company entered into an agreement to purchase
all the assets and business, except for cash, accounts receivable, and unbilled
work-in-progress of Gunn, for an aggregate purchase price of approximately
$14,000,000. The purchase price was allocated to various intangible intellectual
properties and fixed assets.

        The unaudited pro forma combined consolidated financial information, as
though the acquisition had occurred on January 1, 1999, would have resulted in
operating results as follows (amounts in thousands except per share data):

<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                                  DECEMBER 31, 1999
                                                                  -----------------
<S>                                                               <C>
Revenue ..........................................................   $ 15,245
Net loss .........................................................    (19,090)
Basic and diluted weighted average net loss per common share .....      (0.25)
</TABLE>

The pro forma net loss includes $4,260,000 in amortization of purchased
intangibles for the year ended December 31, 1999. This unaudited pro forma
combined consolidated financial information is presented for illustrative
purposes only and is not necessarily indicative of the consolidated results of
operations in future periods or the results that would have actually been
realized.

                                      F-19
<PAGE>   58

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
  EXHIBIT NO.       DESCRIPTION
  -----------       -----------
<S>                 <C>
     2.1(1)         Asset Purchase Agreement by and among Exult, Inc., Gunn
                    Partners, Inc., the shareholders of Gunn Partners, Inc. and
                    Michael Gibson dated as of November 22, 1999.

     2.2(1)         Asset Purchase Agreement dated as of December 20, 1999 among
                    Pactiv Corporation, Pactiv Business Services, Inc. and
                    Exult, Inc.

     3.1(1)         Fourth Amended and Restated Certificate of Incorporation of
                    Exult, Inc.

     3.2(1)         Amended and Restated Bylaws of Exult, Inc.

     4.1(1)         See Exhibits 3.1 and 3.2 for provisions of the Exult, Inc.'s
                    Certificate of Incorporation and Bylaws defining the rights
                    of holders of Exult, Inc.'s Common Stock.

     4.2(1)         Specimen Common Stock certificate.

    10.1.1(1)*      Registrant's 1999 Stock Option/Stock Issuance Plan.

    10.1.2(1)*      Form of Notice of Grant of Stock Option.

    10.1.3(1)*      Form of Stock Option Agreement.

    10.1.4(1)*      Form of Addendum to Stock Option Agreement.

    10.1.5(1)*      Form of Stock Purchase Agreement.

    10.1.6(1)*      Form of Addendum to Stock Purchase Agreement.

    10.1.7(1)*      Form of Stock Issuance Agreement.

    10.1.8(1)*      Form of Addendum to Stock Issuance Agreement.

    10.2.1(1)*      Registrant's 1999 Special Executive Stock Option/Stock
                    Issuance Plan.

    10.2.2(1)*      Form of Notice of Grant of Stock Option.

    10.2.3(1)*      Form of Stock Option Agreement.

    10.2.4(1)*      Form of Addendum to Stock Option Agreement.

    10.2.5(1)*      Form of Stock Purchase Agreement.

    10.2.6(1)*      Form of Addendum to Stock Purchase Agreement.

    10.2.7(1)*      Form of Stock Issuance Agreement.

    10.2.8(1)*      Form of Addendum to Stock Issuance Agreement.

    10.3(1)*        Form of Directors' and Officers' Indemnification Agreement.

    10.4(1)*        Founder Stock Purchase Agreement by and among BPO-US, Inc.,
                    James Madden and General Atlantic Partners, LLC dated April
                    1, 1999.

    10.5.1(1)*      Amended and Restated Registration Rights Agreement among
                    Exult, Inc. and the Stockholders identified therein dated
                    December 23, 1999.

    10.5.2(1)*      Amendment No. 1 to Amended and Restated Registration Rights
                    Agreement among Exult and the Stockholders identified
                    therein dated February 10, 2000.

    10.6.1(1)       Office Space Lease between The Irvine Company and BPO-US,
                    Inc. dated June 28, 1999.

    10.6.2(1)       First Amendment to Office Space Lease between The Irvine
                    Company and Exult, Inc. dated February 29, 2000

    10.7.1(1)       Lease Agreement Venture Technology Center VI Building, The
                    Woodlands, Montgomery County, Texas between The Woodlands
                    Corporation and Tenneco Business Services, Inc. dated August
                    15, 1995.

    10.7.2(1)       Assignment and Assumption of Lease between Pactiv Business
                    Services, Inc. (formerly known as Tenneco Business services,
                    Inc.) and Exult, Inc. dated January 1, 2000.
</TABLE>



<PAGE>   59
<TABLE>
<S>                 <C>
    10.8(1)@        Framework Agreement dated December 7, 1999 by and between
                    the Company and BP Amoco, p.l.c.

    10.9(1)@        US Country Agreement dated December 7, 1999 by and between
                    the Company and BP America, Inc.

    10.10(1)@       UK Country Agreement dated December 7, 1999 by and between
                    Exult Limited and BP International Limited.

    10.16(1)*       Registrant's 2000 Employee Stock Purchase Plan.

    10.17(1)        Lease among Scottish Mutual Assurance p.l.c. and Exult
                    Limited and Exult, Inc.

    10.18(1)        Registrant's 2000 Equity Incentive Plan.

    10.19(1)*       Loan Agreement dated May 30, 2000 by and between Exult,
                    Inc. and Kevin Campbell

    10.20(2)@@      Master Services Agreement by and between Exult, Inc. and
                    Unisys Corporation dated August 28, 2000.

    10.21*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for James C. Madden, V.

    10.22*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Stephen M. Unterberger.

    10.23*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Kevin M. Campbell.

    10.24*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Douglas L. Shurtleff.

    10.25*          Employment Agreement, Severance Agreement, and Stock Option
                    Addendum for Robert W. Gunn.

    10.26           Office Lease between Temple Property Holdings Limited and
                    Exult Limited dated June 13, 2000.

    10.27           Unit Purchase Agreement between Exult, Inc. and Bank of
                    America Corporation dated October 12, 2000.

    10.28           Common Stock Warrant Issued to Bank of America October 12,
                    2000.

    10.29@@         Master Services Agreement between Exult, Inc. and Bank of
                    America Corporation dated November 21, 2000.

    10.30@@         Office Space Lease between Bank of America, National
                    Association and Exult, Inc. dated November 21, 2000.

    21.1(1)         Subsidiaries of Exult, Inc.

    23.1            Consent of Independent Public Accountants

    99.1            Report of Independent Public Accountants on Supplemental
                    Schedule

    99.2            Supplemental Schedule - Schedule II - Valuation and
                    Qualifying Accounts
</TABLE>

-----------
(1)     Previously filed with the Registrant's Registration Statement on Form
        S-1, Registration Number 333-31754, and incorporated herein by
        reference.

(2)     Previously filed with the Registrant's quarterly report on Form 10-Q for
        the quarter ended September 30, 2000 and incorporated herein by
        reference.

@       Confidential treatment has been granted with respect to certain portions
        of this agreement. Such portions have been omitted from this filing and
        have been filed separately with the Securities and Exchange Commission.

@@      Confidential treatment is being sought with respect to certain portions
        of this agreement. Such portions have been omitted from this filing and
        have been filed separately with the Securities and Exchange Commission.

*       This exhibit is a management contract or a compensatory plan or
        arrangement.