<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
                                    ---------

                [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                     FOR THE QUARTER ENDED NOVEMBER 30, 1998

                                       OR

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

                         COMMISSION FILE NUMBER: 1-10583
                                     -------

                             ATC GROUP SERVICES INC.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)


          DELAWARE                                              46-0399408
---------------------------------                           -------------------
 (State or other jurisdiction of                             (I.R.S. Employer 
incorporation or organization)                              Identification No.)

104 EAST 25TH STREET, 10TH FLOOR
      NEW YORK, NEW YORK                                          10010
---------------------------------                           -------------------
(Address of principal executive                                (Zip Code)
offices)

       Registrant's telephone number, including area code: (212) 353-8280
                                 --------------

                                      NONE
    -------------------------------------------------------------------------
    (Former name, former address and former fiscal year if changed since last
                                     report)

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


The number of shares outstanding of the Registrant's Common Stock, par value
$0.01 per share, as of January 14, 1999 was 1,000.










                    ATC GROUP SERVICES INC. AND SUBSIDIARIES


<PAGE>

              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1998
    ------------------------------------------------------------------------

<TABLE>
<CAPTION>


                                                                                Page
                                                                                ----

PART I - FINANCIAL INFORMATION:

     <S>                                                                        <C>
     Item 1 - Unaudited Condensed Consolidated Financial Statements

           Condensed Consolidated Balance Sheets
           February 28, 1998 and November 30, 1998.............................  F-3

           Condensed Consolidated Statements of Operations
           Three and Nine months ended November 30, 1997 and 1998..............  F-4

           Condensed Consolidated Statements of Stockholders' Equity
           Nine months ended November 30, 1997 and 1998........................  F-5

           Condensed Consolidated Statements of Cash Flows
           Nine months ended November 30, 1997 and 1998........................  F-6

           Notes to Condensed Consolidated Financial Statements................  F-7

     Item 2 - Management's Discussion and Analysis of Financial
           Condition and Results of Operations.................................  F-20

PART II - OTHER INFORMATION:

     Items 1-6.................................................................  F-25

     Signatures................................................................  F-27

</TABLE>


                                       F-2




<PAGE>



                    ATC GROUP SERVICES INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                     FEBRUARY 28, 1998 AND NOVEMBER 30, 1998

                  (DOLLARS IN THOUSANDS, except per share data)
       ------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                        FEBRUARY 28,        NOVEMBER 30,
                                                                            1998               1998
                                             ASSETS
                                             ------
<S>                                                                          <C>                  <C>   
CURRENT ASSETS:
   Cash and cash equivalents................................                 $ 5,269              $1,412
   Trade accounts receivable, less allowance for doubtful
   accounts ($3,078 at February 28, 1998 and $5,559 at
   November 30,1998)........................................                  39,934              45,373
   Unbilled receivables, net of reserve.....................                  10,196               7,940
   Prepaid expenses and other current assets................                   2,423               1,111
   Deferred income taxes....................................                   2,041               2,041
   Refundable income taxes..................................                   4,233               2,832
                                                                    -----------------    ----------------
         Total current assets...............................                  64,096              60,709

PROPERTY AND EQUIPMENT, net (Note C) .......................                   5,794               5,994
GOODWILL, net of accumulated amortization ($3,261 at
   February 28, 1998 and $5,832 at November 30,1998)(Note B)                 106,829             112,566
COVENANTS NOT TO COMPETE, net of accumulated amortization
   ($775 at February 28,1998 and $2,078 at November 30,1998)
   (Note B) ................................................                   5,163               3,920
DEBT ISSUANCE COSTS, net of accumulated amortization ($108
   at February 28, 1998 and $843 at November 30, 1998)                         5,808               6,533
   (Note B)
OTHER ASSETS................................................                   1,365               3,800
                                                                    -----------------    ----------------
                                                                            $189,055            $193,522
                                                                    -----------------    ----------------
                                                                    -----------------    ----------------

                           LIABILITIES AND STOCKHOLDERS' EQUITY         
CURRENT LIABILITIES:
   Short-term debt..........................................                    $300                $530
   Current maturities of long-term debt.....................                   1,421               3,000
   Accounts payable.........................................                   7,738              13,001
   Accrued compensation.....................................                   5,097               6,247
   Tender Offer liability (Note B) .........................                  14,279               2,741
   Accrued interest expense.................................                   1,266               5,184
   Other accrued expenses...................................                   4,554               8,462
                                                                    -----------------    ----------------

         Total current liabilities............................                34,655              39,165

LONG-TERM DEBT, less current maturities (Note B) ...........                 120,420             127,614
OTHER LIABILITIES, including non-current payment obligations
   (Note B) ................................................                   2,737               1,608
DEFERRED INCOME TAXES.......................................                   4,607               4,607
                                                                    -----------------    ----------------
         Total liabilities....................................               162,419             172,994
                                                                    -----------------    ----------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                      FEBRUARY 28,         NOVEMBER 30,
COMMITMENTS AND CONTINGENCIES (Notes B and E)                             1998                 1998
<S>                                                                        <C>                  <C>     
STOCKHOLDERS' EQUITY:
   Common stock, par value $.01 per share/authorized 10,000
   Shares; issued and outstanding 1,000 shares at February                       --                   --
   28, 1998 and November 30, 1998...........................
   Additional paid-in capital...............................                 28,425               28,425
   Holdings restricted Common Stock net of deferred 
   executive compensation...................................                     --                 153
   Deficit..................................................                 (1,789)              (8,050)
                                                                     ----------------     ----------------
         Total stockholders' equity...........................               26,636               20,528
                                                                     ----------------     ----------------

                                                                           $189,055             $193,522
                                                                     ----------------     ----------------
                                                                     ----------------     ----------------
</TABLE>



            See notes to condensed consolidated financial statements.

                                       F-3

<PAGE>


                    ATC GROUP SERVICES INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          THREE MONTHS AND NINE MONTHS ENDED NOVEMBER 30, 1997 AND 1998
                             (Dollars in thousands)
           -----------------------------------------------------------

<TABLE>
<CAPTION>

                                                                Three Months Ended                  Nine Months Ended
                                                                   November 30,                        November 30,
                                                        ---------------- - ---------------    ---------------- --- -------------
                                                          Predecessor        Successor          Predecessor         Successor
                                                             1997               1998               1997                1998
                                                        ----------------   ---------------    ----------------     -------------
<S>                                                            <C>             <C>                   <C>             <C>     
REVENUES                                                       $ 38,167        $41,316               $104,263        $121,511
  Reimbursable Costs                                              5,513          7,725                 15,874          20,283
                                                        ----------------   ---------------    ----------------     -------------

NET REVENUES                                                     32,654         33,591                 88,389         101,228
COST OF NET REVENUES                                             17,528         18,661                 47,941          56,782
                                                        ----------------   ---------------    ----------------     -------------
         Gross Profit                                            15,126         14,930                 40,448          44,446

OPERATING EXPENSES:
  Selling                                                         1,187          1,475                  3,226           4,361
  General and administration                                     10,648         12,267                 28,077          36,138
  Provision for bad debts                                           416            461                  1,161           1,542
                                                        ----------------   ---------------    ----------------     -------------
                                                                 12,251         14,203                 32,464          42,041
                                                        ----------------   ---------------    ----------------     -------------
         Operating income                                         2,875            727                  7,984           2,405

NONOPERATING EXPENSE (INCOME)
  Interest expense                                                  902          3,976                  2,163          11,680
  Interest income                                                  (16)             (4)                 (165)             (11)
  Other                                                            (32)             --                   (44)              --
                                                        ----------------   ---------------    ----------------     -------------
                                                                    854          3,972                  1,954          11,669
                                                        ----------------   ---------------    ----------------     -------------

         Income (loss) before income taxes                        2,021         (3,245)                 6,030          (9,264)
INCOME TAX EXPENSE (BENEFIT)                                        841         (1,059)                 2,426          (3,003)
                                                        ----------------   ---------------    ----------------     -------------

NET INCOME (LOSS)                                                $1,180        $(2,186)                $3,604         $(6,261)
                                                        ----------------   ---------------    ----------------     -------------
                                                        ----------------   ---------------    ----------------     -------------
</TABLE>







            See notes to condensed consolidated financial statements.

                                       F-4

<PAGE>


                    ATC GROUP SERVICES INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  NINE MONTHS ENDED NOVEMBER 30, 1997 AND 1998

                  (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>


                                                                                      1997
                                            ---------------------------------------------------------------------------------------

                                                                                       Holdings
                                                 Common Stock         Additional      Restricted       Retained
                                            ------------------------
                                                                        Pain-In         Stock-        Earnings/
                                               Shares      Amount       Capital           Net         (Deficit)         Total
                                            ------------- -------------------------- -------------- --------------- ---------------
<S>                                            <C>               <C>        <C>                            <C>             <C>    
BALANCE, February 28, 1997.....                7,800,187        $78         $28,997              --        $16,365        $45,440
Sale of common stock at $1.88 to $10.00
per share, upon exercise of stock options
and warrants...........................
                                                  96,920          1             289              --             --            290
Issuance of common stock in connection
with the acquisition of Bing Yen &
Associates, Inc.........                          33,000         --             365              --             --            365
Continuing registration costs applied
against additional paid-in
capital............................                   --         --             (55)             --             --            (55)
Net income of predecessor.........                    --         --              --              --          3,604          3,604
                                            ------------- -------------------------  -------------- --------------- ---------------
BALANCE, November 30, 1997.........            7,930,107        $79         $29,596          $   --        $19,969        $49,644
                                            ------------- -------------------------  -------------- --------------- ---------------
                                            ------------- -------------------------  -------------- --------------- ---------------
</TABLE>


<TABLE>
<CAPTION>


                                                                                      1998
                                            ---------------------------------------------------------------------------------------

                                                                                       Holdings
                                                 Common Stock         Additional      Restricted
                                            ------------------------
                                                                        Pain-In         Stock-
                                               Shares      Amount       Capital           Net           Deficit         Total
                                            ------------- -------------------------- -------------- --------------- ---------------
<S>                                                <C>                      <C>                            <C>              <C>   
BALANCE, February 28, 1998.........                1,000         --         $28,425             --      $  (1,789)      $  26,636
Amortization of deferred   
   compensation costs..............                   --         --              --            153             --             153
Net loss of successor..............                   --         --              --             --         (6,261)         (6,261)
                                            ------------- -------------------------  -------------- --------------- ---------------
BALANCE, November 30, 1998.........                1,000         --        $ 28,425           $153        $(8,050)        $20,528
                                            ------------- -------------------------  -------------- --------------- ---------------
                                            ------------- -------------------------  -------------- --------------- ---------------
</TABLE>








            See notes to condensed consolidated financial statements.
                                      F-5

<PAGE>

                    ATC GROUP SERVICES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   NINE MONTHS ENDED NOVEMBER 30, 1997 AND 1998
                            (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                               Nine Months Ended
                                                                                                  November 30,
                                                                                      ---------------------------------------
                                                                                         Predecessor            Successor
                                                                                             1997                 1998
                                                                                      -------------------    ----------------
<S>                                                                                               <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)....................................                                           $3,604          $(6,261)
  Adjustments to reconcile net income (loss) to net
  cash from operating activities:
  Depreciation and leasehold amortization..............                                              889            1,287
  Amortization of goodwill and covenants...............                                            1,392            4,124
  Provision for bad debts..............................                                            1,160            1,542
  Other................................................                                           (2,230)            (581)
  Changes in operating assets and liabilities, net of Amounts acquired in
  acquisitions:
         Receivables......................................                                        (2,725)          (7,742)
         Prepaid expenses and other assets................                                         1,991           (1,123)
         Accounts payable and other liabilities...........                                        (6,514)           8,595
         Income taxes payable.............................                                           888               --
         Refundable income taxes..........................                                            --            1,401
                                                                                      -------------------    ----------------
  Net cash flows from operating activities.............                                           (1,545)           1,242

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of On-Site Technologies, Inc. ..............                                               --              (59)
  Purchase of Aerovironment Environmental Services,Inc.                                               --             (100)
  Purchase of BCM Engineers, Inc. .....................                                           (5,425)              --
  Purchase of American Testing and Engineering Corp.,
  net of cash acquired.................................                                           (2,421)              --
  Purchase of Bing Yen & Assoc., net of cash acquired..                                           (2,093)              --
  Purchase of Environment Warranty Inc., net of cash
  Acquired.............................................                                               19               --
  Purchase of property and equipment...................                                           (1,503)          (1,670)
  Other................................................                                               92              392
                                                                                      -------------------    ----------------
Net cash flows from investing activities...............                                          (11,331)          (1,435)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of long-term debt and
  Notes payable........................................                                           41,100            9,003
  Proceeds from issuance of common stock, net of                                                     
  Expenses.............................................                                              290               --
  Payment of Tender Offer obligations..................                                               --          (12,667)
  Principal payments on long-term debt and notes       
  Payable..............................................                                          (24,623)              --
  Other capital transactions...........................                                              (55)              --
                                                                                      -------------------    ----------------
  Net cash flows from financing activities.............                                           16,712           (3,664)
                                                                                      -------------------    ----------------
  Net change in cash and cash equivalents..............                                            3,836           (3,857)
CASH AND CASH EQUIVALENTS, Beginning of period                                                     2,004            5,269
                                                                                      -------------------    ----------------
CASH AND CASH EQUIVALENTS, End of period                                                          $5,840           $1,412
                                                                                      -------------------    ----------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash payments for:
    Interest...........................................                                             $745           $7,111
                                                                                      -------------------    ----------------
                                                                                      -------------------    ----------------
    Income taxes.......................................                                           $1,753             $214
                                                                                      -------------------    ----------------
                                                                                      -------------------    ----------------
</TABLE>

            See notes to condensed consolidated financial statements.
                                      F-6
<PAGE>

                    ATC GROUP SERVICES INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                       NINE MONTHS ENDED NOVEMBER 30, 1998
-------------------------------------------------------------------------------
A.  GENERAL

    ACQUISITION OF THE COMPANY BY ACQUISITION HOLDINGS, INC.---ATC Group
Services Inc. and subsidiaries ("ATC" or the "Company") became a wholly owned
subsidiary of Acquisition Holdings, Inc. ("Holdings") effective February 5, 1998
(the "Merger Date") upon the merger of the Company with Acquisition Corp., a
wholly owned subsidiary of Holdings, with ATC being the surviving corporation
(the "Merger"). Holdings, through Acquisition Corp., completed an offer to
purchase the outstanding common stock of ATC at $12.00 per share using the
proceeds from the issuance of 12% senior subordinated notes (the "Notes"), bank
borrowings (the "Bank Credit Facilities") and new equity investments. The
accompanying financial statements for the Company from February 5, 1998 and
subsequent thereto (the "Successor Period"), are attributable to operations of
the Company under the successor ownership of Holdings. The predecessor financial
statements, representing the period prior to February 5, 1998 (the "Predecessor
Period"), relate to the previous ownership of the Company.

    PRINCIPALS OF CONSOLIDATION--The consolidated financial statements include
the accounts of ATC Group Services Inc. and its wholly owned subsidiaries. All
significant inter-company accounts and transactions have been eliminated.

    In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly, in all material
respects, the financial position, the results of operations and the cash flows
for the periods presented herein. These results of operations are not
necessarily indicative of the results to be expected for the full year due to
certain seasonality factors and the effects and timing of large service
projects.

    Certain information and footnote disclosures normally included in 
financial statements prepared in accordance with generally accepted 
accounting principles have been omitted. These condensed-consolidated 
financial statements should be read in conjunction with the consolidated 
financial statements and notes to the consolidated financial statements for 
the fiscal year ended February 28, 1998, which are included in the Company's 
Annual Report on Form 10-K and amendments thereto.

    NATURE OF BUSINESS--The Company is a national business services firm
providing technical and project management services relating to environmental
consulting (the "environmental consulting and engineering" segment) and
information technology consulting services (the "information technology
consulting" segment). The Company's environmental consulting and engineering
segment provides environmental and geotechnical engineering services,
architectural engineering services, construction materials testing and
analytical testing. The Company's information technology consulting segment
provides analysis and design services and system programming services to assist
clients in building new or modifying existing computer systems. This business
unit also provides support to clients in maintaining computer systems.

    RECLASSIFICATIONS -- Certain reclassifications have been made to the prior
period's financial statements to conform to the current year's presentation.


B.  MERGER AND BUSINESS ACQUISITIONS

    MERGER, NOTE OFFERING, AND TENDER OFFER TRANSACTIONS---Acquisition
Holdings,Inc. ("Holdings" or "Parent") and its wholly owned subsidiary,
Acquisition Corp.("Issuer"), were organized to effect the acquisition of the
Company under the terms and conditions of a Merger Agreement dated November 26,
1997 (the "Merger Agreement").

                                       F-7



<PAGE>


    Pursuant to the Merger Agreement, the Issuer offered (the "Tender Offer")to
purchase all the issued and outstanding shares of the Company's Common Stock at
a price of $12.00 per share. The Tender Offer was conditioned upon Issuer
issuing $100,000,000 of Senior Subordinated Notes (the "Notes"; see Note D) and
obtaining sufficient bank financing necessary to consummate the Tender Offer.
Effective February 5, 1998, (the "Merger Date") upon satisfaction of the
necessary conditions, the Issuer was merged into ATC, with ATC being the
surviving corporation (the "Merger").

     The Merger Agreement followed the execution of a stockholders agreement
(the "Stockholders Agreement") with George Rubin and Morry F. Rubin
(collectively the "Stockholders") requiring the Stockholders to vote 14.8% of
their interest in the Company in favor of the Merger. In connection with the
Stockholders Agreement, the Stockholders each agreed to and entered into
Severance Consulting and Non-Competition Agreements (the "Severance
Agreements"). Under these agreements, the Stockholders resigned from their
officer positions, agreed to provide certain consulting services as requested by
the Company for a period of three years following the consummation of the
transactions, and agreed to restrict the Stockholders from competing with the
Company's business and restricting certain other activities for a period ranging
from three to four years from the effective date of the Merger. In consideration
of the Severance Agreements, the Company paid the Stockholders
$3.1 million on the Merger Date. The Severance Agreements also provide for the
Company to pay to the Stockholders a quarterly payment of $553,430 on each of
the six succeeding quarters commencing April 1, 1998. The Company has not
made the January 1, 1999 payment of $553,430 due under the Severance Agreements.

    In connection with the Merger and Tender Offer, the Company, through the
Issuer, entered into a new bank credit agreement which provided for a
$20,000,000 Term Loan and $30,000,000 Revolving Credit Facility (collectively
the "Bank Credit Facilities"). The proceeds of the Term Loan along with the
proceeds of the Notes and equity investments in Holdings were used to finance
the Tender Offer, repay certain indebtedness including related accrued interest
and prepayment penalties, pay a portion of the Severance Agreement
consideration, and to pay financing costs and expenses.

    The acquisition of the Company by Holdings has been accounted for as a
purchase. The excess of the purchase cost over the historical book value of the
net assets acquired was allocated to the Severance Agreements and the remainder,
to goodwill, is being amortized over 30 years. The purchase price allocation 
was preliminary, pending completion of appraisal and other 
information-gathering activities.

    The accompanying consolidated balance sheet reflects the following sources
and uses of funds related to the Tender Offer, Merger, Stockholders Agreement
and the Bank Credit Facilities (collectively the "Transactions").

<TABLE>
<CAPTION>

   <S>                                                             <C>         
   Sources of Funds:
     Notes........................................................ $100,000,000
     Bank Term Loan...............................................   20,000,000
     Equity investment from Holdings..............................   30,714,639
     Tender Offer obligations to be funded from cash on hand and
      revolving credit borrowings. (The outstanding balance of 
      Tender Offer obligation at November 30, 1998 
      was $2,741,110).............................................   16,082,850
                                                                   ------------
                                                                   $166,797,489
                                                                   ------------
                                                                   ------------
Uses of Funds:
     Purchase of common stock, warrants and stock options......... $105,473,603
     Repay existing debt:
       Principal..................................................   42,076,461
       Accrued interest...........................................      577,345
       Accrued ATEC obligations...................................      754,250

     Shareholder Agreement Consideration:

       Amount paid at Merger Date.................................    3,100,002
       Amounts payable in quarterly installments..................    3,320,578
       Financing costs and expenses, including debt prepayment
         penalty..................................................   11,495,250
                                                                   ------------
                                                                   $166,797,489
                                                                   ------------
                                                                   ------------
</TABLE>

Adjustments to goodwill have been recorded by the Company in fiscal 1999 
related to the finalization of amounts to be allocated to a certain business 
venture and estimated costs to settle certain litigation which was 
outstanding at the date of the Transactions. Predecessor management was 
contesting certain matters with the belief that they would prevail and any 
adverse outcome would not be significant to the predecessor's financial 
position or results of operations. The new owners of the Company have 
directed successor management to use its best efforts to settle certain 
litigation and due to this change in approach, the company has recorded its 
best estimate of the expected costs. Should such estimate be in excess of 
amounts ultimately paid, goodwill will be reduced in future periods.

                                       F-8


<PAGE>

The total consideration paid in connection with the Transactions and allocation
of the consideration to the historical book value of assets, covenant not to
compete and goodwill is as follows:

<TABLE>
   <S>                                                            <C>
   Consideration:
     Purchase price of common stock, warrants, and stock options. $105,473,603
     Severance Agreements consideration..........................    6,420,580
     Financing costs and expenses less amount related to debt
       issuances.................................................    4,828,614
                                                                  ------------
                                                                   116,722,797
   Allocation of Consideration:
     Net assets acquired.........................................   51,214,836
   Fair value adjustments:
     Non-compete agreement.......................................    4,700,000
     Other.......................................................     (301,537)
                                                                  ------------
   Excess purchase consideration.................................   61,109,498
   Predecessor basis adjustment..................................   (2,289,050)
                                                                  ------------
     Goodwill.................................................... $ 58,820,448
                                                                  ------------
                                                                  ------------
</TABLE>

   Holdings is not engaged in any activities other than those related to its
ownership interest in ATC. A majority interest in Holdings is owned by
affiliates of Weiss, Peck & Greer, L.L.C. ("Weiss Peck"), who was also a
party to the Merger Agreement. Other actual and beneficial owners of Holdings
include ATC management and employees who made equity contributions or elected to
receive options to purchase common stock of Holdings in replacement of their
"in-the-money" ATC stock options.

    Weiss Peck is a private investment firm, founded in 1970, which manages in
excess of $14 billion in public equities and fixed-income securities for
institutional and individual clients worldwide. In addition to its money
management activities, the firm has a twenty-seven year history as an investor
of equity capital in over 200 venture capital and private equity transactions.
Investments of its Private Equity Group are made through affiliated funds with
$230 million of committed capital.

    BUSINESS ACQUISITIONS--The following acquisitions have been accounted for 
as purchases. The acquired company's assets and liabilities are included in 
the accompanying condensed consolidated balance sheets at fair value at the 
date of purchase. The acquired company's operations subsequent to the 
acquisition are included in the accompanying condensed consolidated 
statements of operations. The preliminary purchase price allocation is 
subject to change when additional information concerning asset and liability 
valuations is obtained. Therefore, the final allocation may differ from the 
preliminary allocation.

Fiscal 1999

    AEROVIRONMENT ENVIRONMENTAL SERVICES INC.--On July 31, 1998 ATC acquired
certain assets and assumed certain liabilities of AeroVironmental Environmental
Services, Inc. ("AVES"), a regional provider of engineering and technical
consulting services, with emphasis on the air quality and pollution fields. AVES
is located in Monrovia, CA. During its fiscal year ended April 30, 1998, AVES
reported $2.3 million in revenues. ATC paid $642,000, $100,000 of which was cash
paid at closing, $312,000 in assumed liabilities and transaction costs, and
$230,000 in a non-interest bearing note, payable six months from the date of
purchase. Assets purchased included work in progress, property and equipment,
certain intangible assets, and an ownership interest in Aerovironment/NESA LLC,
a subsidiary of AVES.

    ON-SITE TECHNOLOGIES, INC--On July 10, 1998 ATC acquired certain assets and
assumed certain liabilities of On-Site Technologies, Inc. ("OST"), a remediation
engineering services company based in Hayward, CA. OST reported revenues of
approximately $1.2 million for its year ended December 31, 1997. ATC acquired
property and intangible assets including customer contracts. The consideration
paid totaled $204,000 consisting of $59,000 in cash paid at closing and $145,000
in assumed liabilities and transaction costs.

                                       F-9
<PAGE>

Fiscal 1998

    BING YEN & ASSOCIATES, INC.--On November 26, 1997 ATC purchased all of the 
outstanding stock of Bing Yen & Associates, Inc. ("Bing Yen"). Bing Yen provides
geotechnical and structural forensic services to a wide variety of clients in
the western United States and is located in Tustin, California.

    The purchase price was comprised of the following consideration:

<TABLE>
<CAPTION>
     <S>                                                             <C>
     Amounts paid to seller:
       Cash.........................................................  $2,200,000
       Note payable at 8% due January 2, 1998.......................     550,000
       Notes payable at 8% due in three annual installments
        commencing January 1999.....................................   1,150,000
                                                                     -----------
                                                                       3,900,000
     Liabilities assumed:
       Current liabilities..........................................     313,254
       Direct expenses of transaction...............................      50,000
                                                                     -----------
                                                                      $4,263,254
                                                                     -----------
                                                                     -----------
</TABLE>

    In addition, a maximum aggregate principal amount of $1,500,000 in unsecured
contingent achievement promissory notes will be issued if certain minimum net
revenue levels are achieved, resulting in a maximum total consideration to
seller of $5,400,000.

    The notes payable of $1,150,000 are subject to setoffs if actual net assets
as of the closing date are below warranted amounts, for trade receivables not
collected within one year of the closing date and under certain other specified
conditions.

    During the quarter ended November 30, 1998, Bing Yen achieved the minimum 
net revenue levels required to earn the $1,500,000 in contingent achievement 
promissory notes. The Company has not paid the initial installment of 
$354,371, net of setoffs, on the notes payable due January 4, 1999 and the 
initial payment of $750,000 under the contingent achievement promissory notes 
due January 4, 1999.

    The preliminary purchase price allocation is as follows:
<TABLE>


     <S>                                                             <C>       
     Cash...........................................................  $  163,680
     Accounts receivable, net.......................................   2,292,191
     Unbilled receivables...........................................       5,122
     Prepaid expense................................................      10,746
     Property and equipment.........................................     142,241
     Covenant not to compete........................................      50,000
     Goodwill.......................................................   1,595,324
     Other assets...................................................       3,950
                                                                     -----------
                                                                      $4,263,254
                                                                     -----------
                                                                     -----------
</TABLE>


    ENVIRONMENTAL WARRANTY, INC.--On November 4, 1997, ATC purchased 90.9% of
the outstanding stock of Environmental Warranty, Inc. ("E.W.I."), a property and
casualty insurance brokerage firm specializing in environmental insurance
products.


<PAGE>

    The purchase price was comprised of the following consideration:

<TABLE>
     <S>                                                              <C>       
     Amounts paid to sellers:
       Cash......................................................... $  150,000
       Notes payable, net of imputed interest at 8.0%...............    582,424
       Payment commitments..........................................    275,000
       ATC Common Stock (33,000 shares).............................    365,062
                                                                     ----------
                                                                      1,372,486
     Liabilities assumed:
       Current liabilities..........................................    314,811
       Direct expenses of transaction...............................     25,000
                                                                     ----------
                                                                     $1,712,297
                                                                     ----------
                                                                     ----------
</TABLE>


                                      F-10

<PAGE>

    The notes payable are due in three annual installments commencing November
1998 and are subject to certain setoffs. The payment commitments are due in four
installments. The first two installments were paid in connection with
the closing and the final two installments are due in November 1999 and November
2000. ATC issued 33,000 shares of restricted common stock valued at 11 1/16 per
share.

    The preliminary purchase price allocation is as follows:

<TABLE>


     <S>                                                             <C>       
     Cash........................................................... $  169,350
     Receivables....................................................    158,391
     Prepaid and other current assets...............................      2,875
     Property and other.............................................     15,384
     Goodwill.......................................................  1,366,297
                                                                     ----------
                                                                     $1,712,297
                                                                     ----------
                                                                     ----------
</TABLE>

    BCM ENGINEERS, INC.--On August 20, 1997 ATC purchased certain assets and
assumed certain liabilities of the environmental consulting and engineering
services division of the Smith Technology Corporation, which operated primarily
as BCM Engineers, Inc. ("BCM"). BCM is a leading municipal water and wastewater
environmental engineering firm and provides services in water, environmental
compliance and site investigations, remedial design and engineering, asbestos,
and air quality management. BCM serves major industrial clients in the chemical,
petrochemical, oil and gas manufacturing, water supply, commercial development
and utilities industries from multiple locations in the east and Gulf Coast.

    The purchase price was comprised of the following consideration:
<TABLE>
     <S>                                                            <C>
     Amounts paid to seller or to others on behalf of seller:
       Cash........................................................ $5,425,539
       Notes payable...............................................  2,950,000
       Less note payable offset....................................   (200,000)
                                                                    -----------
                                                                     8,175,539
     Liabilities assumed:
       Current liabilities.........................................  2,833,665
       Non current liabilities.....................................  1,356,151
       Direct expenses related to acquisition......................    112,133
                                                                    -----------
                                                                   $12,477,488
                                                                    -----------
                                                                    -----------
</TABLE>

    Notes payable includes a $200,000 note which became due September 20, 1997
and was subject to offset for reductions in net assets and for unrecorded
liabilities arising through the closing date of the transaction. Based on the
closing balance sheet provided by the Seller, the Company offset the $200,000 in
full. In addition, based on unrealized unbilled receivables warranted by the
seller and other claims, an additional $2,750,000 has been reflected as an
offset of short-term debt in the accompanying consolidated balance sheet.

    The preliminary purchase price allocation is summarized as follows:

<TABLE>

     <S>                                                            <C>        
     Accounts receivable, net of allowance..........................$ 4,710,960
     Unbilled receivables..........................................   3,684,939
     Other current assets..........................................       7,357
     Other assets..................................................   1,327,270
     Covenants not to compete......................................     100,000
     Goodwill......................................................   2,646,962
                                                                    -----------
                                                                    $12,477,488
                                                                    -----------
                                                                    -----------
</TABLE>

                                      F-11



<PAGE>


    Prior Acquisitions

    AMERICAN TESTING AND ENGINEERING CORPORATION--On May 24, 1996 ATC purchased
certain assets and assumed certain liabilities of American Testing and
Engineering Corporation ("ATEC"), a national environmental consulting firm. ATEC
provides environmental engineering and consulting services through a large
network of branch and regional offices.

    Under the original purchase agreement, the Company was contingently liable
to ATEC for additional purchase consideration up to $10,750,000 if certain
conditions were met. The seller since met certain of these contingent
consideration requirements in the quarter ended May 31, 1997 and the Company
began to amortize the associated goodwill in this period. In addition, in
connection with the issuance of Senior Secured Notes on May 29, 1997 (since
repaid), the Company and the seller executed an amendment to the original
purchase agreement and agreed to remove or modify the remaining contingent
consideration requirements. As a result of the foregoing, the Company paid
$2,420,766 on May 30, 1997. In connection with the issuance of the 12% Senior
Subordinated Notes and Tender Offer transactions, the Company paid $754,250 on
January 29, 1998 and is obligated to make monthly payments through February
1999. Additionally, the Company has the option to purchase certain properties
from the seller for $1,700,000 in fiscal 2002.

    As a result of sellers warranties of purchased trade receivables and
unbilled receivables that were not realized, the Company is entitled to set-offs
of $618,835 against the option price to acquire certain properties in fiscal
2002. The set-off amount is included in other assets in the accompanying
consolidated balance sheets.

    In connection with the purchase agreement, the Company has issued an
irrevocable letter of credit in the amount of $500,000 to secure the Company's
performance of its payment obligations. The letter of credit is renewable by the
seller until such time the Company has paid the purchase obligations in full. No
amounts have been drawn against the letter of credit.

     PRO FORMA FINANCIAL INFORMATION (UNAUDITED) - The following unaudited pro
forma information sets forth the results of operations of ATC as if the Merger
and Tender Offer and ATC's purchases of BCM, EWI and Bing Yen had occurred on
March 1, 1997:

(Dollars in thousands)
<TABLE>
<CAPTION>

                                                PRO FORMA                                      PRO FORMA
                                     THREE MONTHS ENDED NOVEMBER 30,                NINE MONTHS ENDED NOVEMBER 30,
                                 ----------------------------------------        --------------------------------------
                                      1997                     1998                   1997                  1998
                                 ---------------------    ---------------------     ----------------      -------------
<S>                                    <C>                     <C>                   <C>                  <C>      
Revenues                               $39,181                 $ 41,316              $123,453             $ 121,511
Operating Income                         2,366                      727                 6,071                 2,405
Net income (loss)                         (898)                  (2,186)               (2,987)               (6,261)
</TABLE>





                                      F-12

<PAGE>

C.   PROPERTY AND EQUIPMENT

     Property and equipment is comprised of the following:

     (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                               FEBRUARY 28, 1998         NOVEMBER 30, 1998
                                                                              --------------------      --------------------
<S>                                                                                  <C>                        <C>   
Office equipment                                                                     $ 5,345                    $6,464
Laboratory and field equipment                                                         3,968                     3,904
Transportation equipment                                                                 582                       593
Leasehold improvements                                                                 1,112                     1,145
                                                                              --------------------      --------------------
                                                                                      11,007                    12,106
Less accumulated depreciation                                                         (5,213)                   (6,112)
                                                                              --------------------      --------------------
Property and Equipment, net                                                          $ 5,794                    $5,994
                                                                              --------------------      --------------------
                                                                              --------------------      --------------------
</TABLE>




D. DEBT AND CREDIT AGREEMENTS

   BANK CREDIT FACILITIES--On January 29, 1998, a credit facility with
variouslending institutions was established providing the Company senior secured
credit facilities consisting of a $20 million Term Loan and a $30 million
Revolving Credit Facility (the "Bank Credit Facilities").

   On October 30, 1998, the Revolving Credit Facility available to the Company
for working capital and general corporate purposes was reduced from the original
$15 million to $13 million, with $15 million available for certain permitted
acquisitions. Revolving loans mature on January 29, 2003. At the Company's
option, revolving loans will accrue interest at either (a) an adjusted rate
based on the Eurodollar rate plus a margin of 2.25% or (b) the base rate
(effectively the prime rate) plus a margin of 1.25%. The loan margins are
subject to quarterly decreases based upon improvements in the Company's leverage
ratio. Interest is payable monthly and the Company pays a revolving loan
commitment fee of 1/2 of 1% on a quarterly basis.

   The Term Loan amortizes quarterly commencing in February 1999 initially at
$750,000 per quarter, increasing to $1,000,000 per quarter in February 2000,
$1,500,000 per quarter in February 2001 and $1,750,000 per quarter in February
2002 with the final loan maturity on January 29, 2003.

   The Bank Credit Facilities require the Company to meet certain financial
tests, including minimum interest coverage and maximum leverage ratios beginning
as of and for the quarter ended May 31, 1998. The Bank Credit Facilities also
contain covenants which, among other things, limit the ability of the Company to
incur additional indebtedness, pay dividends, enter into transactions with
affiliates, form subsidiaries, enter into sale-leaseback transactions, make
capital expenditures, loans, investments or lease payments, merge, consolidate
or acquire or dispose of assets, voluntarily prepay or amend other indebtedness,
incur liens and encumbrances and other matters customarily restricted in loan
agreements of this type.

   For the quarters ended May 31, 1998, August 31, 1998 and November 30, 
1998, the Company was in default of certain financial covenants. The 
Company's lenders had provided an interim waiver with respect to the defaults 
which waiver expired on December 4, 1998. Due to the expiration of the waiver 
on December 4, 1998, the Company is unable to borrow any additional amounts 
under the Revolving Credit Agreement. The total amount outstanding under the 
Revolving Credit Agreement at January 14, 1999 approximates $11.7 million.

                                      F-13


<PAGE>

   The Company is in discussion with its lenders and believes the covenant
provisions of the credit agreement, among other items, will be amended.
Accordingly, the Company continues to classify its outstanding debt as long term
in accordance with the existing loan maturity dates.

   The Bank Credit Facilities also contain customary events of default,
including payment defaults, breach of representations and warranties, covenant
defaults, cross defaults, certain events of bankruptcy and insolvency, ERISA,
judgement defaults, failure of any guarantee or security agreement supporting
the Company's obligations under the Bank Credit Facilities to be in full force
and effect, and a change of control of the Company's Parent or the Company.

   The obligations of the Company under the Bank Credit Facilities are
unconditionally guaranteed by the Company's Parent and any direct or indirect
subsidiaries of the Company. In addition, the obligations of the Company under
the Bank Credit Facilities are secured by substantially all of the assets of the
Company.

   12% SENIOR SUBORDINATED NOTES DUE 2008--The 12% Senior Subordinated Notes 
due 2008 were issued January 29, 1998 pursuant to the indenture dated as of 
January 29, 1998 between Acquisition Corp. and State Street Bank and Trust 
Company (the "Indenture") and became obligations of the Company as of the 
Merger Date. Interest accrues at 12% per annum and is payable semiannually in 
arrears on each January 15 and July 15, commencing July 15, 1998. The Notes 
are unsecured obligations of the Company, ranking subordinate in right of 
payment to all Senior Indebtedness (as defined in the Indenture), and ranking 
pari passu in right of payment with any future senior subordinated 
indebtedness and senior in right of payment to all other subordinated 
obligations of the Company. The Notes will be redeemable, in whole of in 
part, at the Company's option on or after January 15, 2003 at redemption 
prices set forth in the Indenture. Up to 35% of the aggregate principal 
amount of the Notes may be redeemed on or prior to January 15, 2001 with the 
net cash proceeds of a public offering at redemption prices and terms in 
accordance with the Indenture. The Indenture provides noteholders the 
option to have their notes purchased in the event of a change in control. In 
addition, the Indenture contains covenants restricting the incurrence of 
additional indebtedness, payment of dividends, sales of assets, incurrence of 
liens, mergers and acquisitions and conduct of the business to existing 
businesses.

    The Company will be unable to make the interest payment due on January 15,
1999 on the Notes. The Company is unable to make the interest payment for two
reasons. The Company's cash flow is insufficient. In addition, as a result of a
payment default with respect to certain Senior Indebtedness as defined in the
Indenture dated as of January 29, 1998 between Acquisition Corp. and State
Street Bank and Trust Company (the "Indenture"), the Company is prohibited,
pursuant to the terms of the Indenture, from making any payments on the Notes
until the payment default is cured or waived. The payment default stems from the
failure to pay on January 4, 1999 $1.1 million owing with respect to certain
seller notes issued in connection with the acquisition by the Company of Bing
Yen & Associates, Inc. in November 1997.

    The Company is in the process of retaining Houlihan Lokey Howard & Zukin 
Capital, investment bankers ("Houlihan Lokey"). Houlihan Lokey is expected to 
review the Company's financial position, cash flow requirements, financial 
history, operations, competitive environment and assets to assist the Company 
in developing a business plan which will serve as the basis in determining 
its various financial alternatives, and ultimately the proposed terms of a 
comprehensive financial restructuring. In doing so, Houlihan Lokey is 
expected to work with the Company's senior management to complete, and review 
the Company's new business plan. Once the review of the Company is begun, a 
proposed timetable is expected to be communicated to the holders of the Notes.

   8.18% SENIOR SECURED NOTES--On May 29, 1997, the Company issued $32,500,000
of 8.18% Senior Secured Notes to a group of financial institutions. The proceeds
were used in part to repay the Company's bridge credit facility outstanding as
of February 28, 1997. In connection with the issuance of the 8.18% Senior
Secured Notes, the Company had entered into a bank credit agreement providing a
$15,000,000 revolving line of credit. Amounts outstanding under the bank
revolver and the 8.18% Senior Secured Notes were repaid in full using proceeds
of the 12% Senior Subordinated Notes due 2008 and the Bank Credit Facilities.


                                      F-14


<PAGE>

E.       COMMITMENTS AND CONTINGENCIES

Joseph I. Peters v. George Rubin, et al, Civ. Action No. 16026-NC, Court of
Chancery, New Castle County, Delaware. On or about November 12, 1997, a summons
and complaint were filed in the Delaware Court on behalf of Joseph I. Peters, as
plaintiff. On or about December 18, 1997, an amended complaint was filed (the
"Amended Complaint"). The Amended Complaint names the Company, the members of
the Company's board of directors, Weiss, Peck & Greer ("Weiss Peck") and the WPG
Corporate Development Associates V, L.P., a Weiss Peck affiliate, as defendants.
The Amended Complaint challenges the Tender Offer and Merger. The Amended
Complaint seeks class action status on behalf of the stockholders of the
Company. The plaintiff in the action claims that the offer price for the
Company's Common Stock is inadequate and that the defendants have breached their
fiduciary duties to the plaintiff and other stockholders of the Company. The
plaintiff seeks unspecified damages. On January 7, 1998, a motion to dismiss was
filed by Weiss Peck and WPG Corporate Development Associates V, L.P. On January
13, 1998, answers to the complaint were filed by the Company and the remaining
defendants. The parties to the action are currently conducting discovery. The
Company believes the allegations contained in the Amended Complaint are without
merit and intends to defend the action vigorously.

First Fidelity Bank, N.A., et al v. Hill International, Inc. et al.,
Superior Court of New Jersey, Law Division, Burlington County, Docket No.
Bur-L-03400-95, filed December 19, 1995. Irvin E. Richter, et al v. ATC Group
Services Inc., et al. United States District Court, District of New Jersey, Civ.
No. 96 CV 5818 (JBS) filed December 6, 1996. On December 19, 1995, a second
amended complaint was filed in the above-entitled action which joined the
Company as a defendant and included a count against the Company seeking recovery
of certain assets purchased from Hill International, Inc. ("Hill") on the
grounds that plaintiff banks held security interests in the assets and that Hill
was in default under the security agreement creating such alleged security
interests. The original plaintiffs in this action were First Fidelity Bank, N.A.
and United Jersey Bank, N.A. The primary defendants were Hill and certain of its
subsidiaries, and Irvin Richter, David Richter, Janice Richter and William
Doyle. Irvin Richter and David Richter are officers and stockholders of Hill. In
April 1996, the Company filed a cross-claim against Hill, Irvin Richter and
David Richter alleging breach of contract and fraud, among other allegations,
and seeking unspecified damages, including punitive damages, and equitable
relief.

In August, 1996, Hill and the Richters filed an answer denying ATC's 
Cross-claims, a cross-claim against ATC and a third party claim against 
certain members of ATC's management and an employee. The cross-claim and 
third party claim seek unspecified damages, including punitive damages, for 
defamation, breach of the Richters' non-competition agreements and securities 
fraud. The defamation claims are based (i) on plaintiff banks' allegation of 
fraud against Hill and the Richters in their amended complaint, which Hill 
and the Richters allege was based on defamatory statements made by ATC in 
settlement discussions with the plaintiff banks and (ii) on a letter alleged 
to contain defamatory statements which was sent to an account debtor of the 
Company by an employee. In its answer, the Company both denies that it made 
defamatory statements and asserts that the defamation allegations fail to 
state legally valid claims. The breach of contract and securities claims are 
based on allegations that ATC made representations concerning a registration 
rights agreement to be provided in connection with options issued to the 
Richters as consideration for their non-competition agreements. In its 
answer, the Company denies that an agreement concerning registration rights 
was ever reached and asserts that any such rights were forfeited or suspended 
by the Richters in any case as a result of their conduct in connection with 
the asset purchase. ATC also disputes that the Richters sustained damages on 
the grounds, among others, that the options were non-transferable and because 
ATC's stock price never exceeded the exercise price at any point where the 
options would have been exercisable. In January, 1997, the plaintiff banks 
dismissed their claim against ATC. The remaining claims are subject to a stay 
pending the federal action described below.

On December 6, 1996, Hill and the Richters commenced an action against ATC and
the same officers and employees of ATC alleging essentially the same claims in
federal court as in the state action. This action is entitled Irwin E. Richter
et al. v. ATC Group Services, et al., Civ. No. 96-5818 (JBS), U.S. District
Court for the District of New Jersey, December 6, 1996. ATC has answered,
raising the same defenses and additional defenses related to the timeliness of
the federal securities claims. The case is currently in the discovery and
pretrial motion phase. ATC filed a motion for Summary Judgement on the Federal
Court claims. This motion was heard on January 8, 1999 and the Court dismissed
the Plaintiff's state and federal securities fraud claims and common law fraud
claims and reserved judgement on the other counts. The dual forum litigation
does not create a risk of double recovery.

Commonwealth of Massachusetts v. TLT Construction Corp. et al., Civ. Action No.
96-02281 F, Superior Court of Middlesex County, Massachusetts. This is an action
brought by the Commonwealth of Massachusetts in April 1996, against the
architects and general contractor on a renovation and construction project on
the Suffolk County Courthouse in Massachusetts. The basis of the lawsuit is that
one or more damp-proofing products specified by the architect defendants and
installed by the contractor defendant made employees in the courthouse ill
because of the off-gassing of harmful vapors. Dennison Environmental Services
Inc., ("Dennison") an ATC subsidiary, was joined on August 13, 1996, as a third
party defendant by TLT Construction Corporation, the general contractor, because
Dennison performed some air quality testing of the air in the courthouse for the
Commonwealth of Massachusetts during the construction process. The contractor
alleges that it acted in reliance on these tests in continuing to install the
material after the test report was given to it by the state. ATC's position is
that it did not commit any error or omission in this case, that ATC made no
representation to the contractors or material supplier and had no privity with
them and that Dennison's opinion concerning short term, during- construction
health effects of the off-gassing could not be justifiably relied upon with
respect to the long-term performance and health effects of the product or its
installation. This case is in the discovery phase. At this point, ATC considers
the case to be without merit, and ATC intends to vigorously defend the action.
Notice of this claim has been made to ATC's professional liability insurer. At
the time that notice of Suffolk County claims was filed, the Company had in
effect a professional liability insurance policy in the amount of $10.0 million
with a deductible of $250,000.

Barrett-Moeller et al. v. ATC Associates Inc., Civ. Action No. 97-01037D, 
Superior Court of Middlesex County, Massachusetts and Joan Spencer v. TLT 
Construction et al., Civ. Action No. 97-4161C, Superior Court of Middlesex 
County, Massachusetts . These actions arise out of the same set of 
occurrences as gave rise to Commonwealth of Massachusetts v. TLT 
Construction, Corp. described above. One action( Barrett-Moeller) was brought 
by a group of employees who worked in the Suffolk County Courthouse during 
the period in which the off-gassing of harmful vapors was alleged to have 
occurred. The other action (Spencer)was brought by an employee who worked in 
the Suffolk County Courthouse during the period in which the off-gassing of 
harmful vapors was alleged to have occurred. Both suits seeks damages for 
personal injury in an unspecified amount. ATC, AIG ( our insurer) and the 
manufacturer-defendant, Pecora, reached settlement with the Barrett-Moeller 
and Spencer plaintiffs in January of 1999. As a result of this settlement, 
ATC has expended its deductible portion for these claims and AIG will now 
assume the defense of the Commonwealth of Massachusetts claim.

Cambridge Housing Authority v. CON-TEST, Inc. and ATC Group Services Inc., Civil
Action No. MICV 97-04893, Superior Court of Middlesex County, Massachusetts.
This action was brought on October 1, 1997 for damages in the amount of
$3,381,805 alleging that Con-Test, Inc. breached its contract with Cambridge
Housing Authority and was negligent in performing asbestos survey work
preparatory to a housing project re-modernization project. ATC was joined as a
party on the theory of successor liability. ATC has filed an answer denying that
it was a successor to Con-Test under Massachusetts's law and asserting that it
should therefore have no liability for Con-Test's alleged acts or omissions. The
Company believes that the case is without merit because ATC does not meet the
criteria for a finding of successor liability in the State of Massachusetts. ATC
has filed a notice of claim with Con-Test's insurance company which has assumed
the defense of the action. Con-Test's insurance company made an offer to settle
for $460,001 alleging that their damage expert had determined this sum was the
amount of actual damages incurred by Cambridge Housing Authority. Cambridge
Housing Authority rejected the offer and countered with $2,150,000 as a
settlement figure.

Professional Service Industries, Inc. v. ATC Group Services Inc. and Thomas
Bowker, Superior Court, Norfolk County, Massachusetts, June 19, 1997, Civ. No.
97-01146. The complaint alleges that ATC interfered with a Non-competition
agreement between Mr. Bowker, an ATC employee, and PSI. An injunction has been
issued by the court against ATC and Mr. Bowker prohibiting them from competitive
acts within certain geographic areas. The parties to this suit have reached a
settlement effective December 19, 1998.


                                     F-15

<PAGE>



Etzel Place II, L.P. v. ATC Environmental Inc. Action No. 982-01473,
Missouri Circuit Court, Twenty-Second Judicial Circuit (St. Louis City). This
action was brought on June 2, 1998 and alleges that ATC breached its contract
with the plaintiff and was negligent in performing asbestos survey services in
connection with an asbestos removal project. Plaintiff requests damages in the
amount of $207,310. Plaintiff has offered to settle this matter for $103,655.
ATC is currently engaged in settlement discussions with plaintiff and is
reviewing their offer to settle. Notice of this claim has been made under ATC's
professional liability and pollution liability insurance policy. The insurance
policy is subject to a $150,000 self-insured retention amount.

1100 Airport North Partnership v. ATC Group Services Inc., Case No.
02D01-9804-CP-813, Superior Court of Allen County Indiana. This action was filed
on May 1, 1998 and arises out of ATC's lease of office space in Fort Wayne,
Indiana. The Plaintiff seeks damages and attorneys fees for ATC's alleged breach
of the lease. On July 1, 1998, a default judgment was entered against ATC in the
amounts of $302,116.13 and $1,443.00 for damages and attorneys fees,
respectively. The default judgment against ATC was vacated on November 5, 1998,
and the case has been settled between all parties involved.

QST Environmental Inc. v. ATC Group Services Inc. and Environmental Warranty
Inc.("EWI"), Case No. 98-421, Circuit Court of the Tenth Judicial Circuit,
Peoria County, Ilinois. This action was brought on December 4, 1998 and alleges
that ATC and its subsidiary, EWI, violated the Illinois Trade Secrets Act as
well as committed common law conversion. The claim arises out of ATC's
submission of a proposal to remediate a parcel of property in the City of Olney,
Illinois and EWI's underwriting of a policy to insure the parcel. Plaintiff
alleges that the ATC and EWI used their proprietary data and information in this
transaction. Notice of this claim has been made under both ATC's and EWI's
professional liability and commercial liability insurance policy.

Borough of Kane Authority v. BCM Engineers, Inc. a Division of ATC Group 
Services Inc., et al., Case No. 1074 CD 1998, Court of Common Pleas of McKean 
County, Pennsylvania. This action was filed on October 22, 1998 and arises 
out of an alleged breach of warranty, breach of contract and professional 
negligence by Smith Technology Corporation ("Smith") in a design project at a 
wastewater treatment facility for the Borough of Kane. ATC did not purchase 
this contract in the Smith Transaction and is wrongly named in the case as a 
successor. The Company believes the case against ATC is without merit because 
ATC was not involved in the project and the contract in question was not 
assumed by ATC in the Smith transaction. ATC has filed a notice of claim with 
Smith's professional liability carrier as well as ATC's carrier. This claim 
is subject to a $150,000 self insured retention. 

Morry F. Rubin and George Rubin v. ATC Group Services Inc. (Index No. 
600130/99), Supreme Court of the State of New York County of New York. This 
action was brought on January 11, 1999 by Morry Rubin and George Rubin and 
seeks damages of $553,430 in connection with the failure by the Company to 
pay amounts owed the Rubins on January 1, 1999 pursuant to a Severance, 
Consulting and Non Competition Agreement entered into by the Company with 
each of Morry Rubin and George Rubin.

                                     F-16


<PAGE>

PROBABLE CLAIMS

One Parkway Project. ATC has received notice of related claims by R.M.
Shoemaker Co., a Pennsylvania construction firm, and four of its workers
arising out of ATC's performance of asbestos abatement survey, design and
project monitoring services. The services were performed by ATC's Burlington,
New Jersey office on a project known as the One Parkway Project. The claims
allege that ATC: (i) failed to locate certain asbestos-containing materials in a
high rise building during its inspection of the facility; (ii) failed to include
these undiscovered materials in the design specifications for an asbestos
abatement project in connection with a renovation project on the building; and
(iii) failed to properly clearance inspect and test the areas on which abatement
had been performed prior to demobilization of the asbestos abatement project.
The claimants allege that ATC's acts or omissions resulted in additional
corrective actions including remobilization of certain areas, delays of the
renovation project and exposure of construction workers to asbestos
contamination. R.M. Shoemaker has alleged that it sustained damages in the
reduced amount of $883,955 for additional abatement costs plus additional
damages for delay. The workers' exposure claims have not been quantified. ATC
has been engaged in settlement discussions with RM Shoemaker. No suit has been
filed.

The Company believes that it was not responsible for the alleged problems
on this project. ATC's responsibilities on the project were limited, and ATC
believes that the alleged omissions which allegedly resulted in the alleged
losses were outside the scope of the Company's contractual responsibilities. The
Company has served notice of these claims upon its professional liability
insurer. This coverage is subject to a $250,000 deductible.

Bob Moore Construction/Garden Ridge, Inc. ATC received notice of a claim
arising out of ATC's performance of soil compaction testing for Bob Moore
Construction, Inc., the general contractor on a retaining wall construction
project for Garden Ridge, Inc., a garden supply chain, in Norcross, Georgia. ATC
settled this claim for $88,000 during the three months ended August 31, 1998.

Argosy Casino, Lawrenceburg, Indiana. ATC has received notice of claim arising
out of geotechnical analyses for which American Testing and Engineering
Corporation originally provided the geotechnical analyses and on which ATC
subsequently performed the design of a Tensar/soil stabilized earth slope. A
tentative settlement reached among the parties to this claim would result in
ATC's payment of $266,000 in corrective costs, of which ATC expects contribution
from other parties in an amount of up to $80,000. ATC is currently negotiating
with the Subcontractor for contribution toward this settlement. Notice of this
claim has been made under ATC's professional liability insurance policy. The
professional liability insurance is subject to a $250,000 deductible.

TG Kentucky, Lebanon, Kentucky. The potential claim arises out of a contract to
perform preliminary geotechnical investigations at the TG Kentucky Facility,
Lebanon, Kentucky, for James M. Gray Construction Company ("Gray"). ATC issued
geotechnical engineering reports based on its investigations. Gray alleges that
it encountered differing site conditions from those identified in ATC's
geotechnical reports. Gray asserts it could incur over $500,000 in additional
costs to finish the project considering these alleged unexpected conditions.
Allegations have been made against ATC for costs over budget. ATC believed it
performed all services properly and that it should incur no liability. Gray has
not pursued ATC any further on this matter. Notice has been given to ATC's
professional liability insurer. The policy is subject to the $150,000
self-insured retention amount.

                                     F-17

<PAGE>

Marina Bay Development Group. On October 7, 1998, ATC received a notice of claim
from Marina Bay Development Group, LLC and related parties alleging a breach of
contract and negligence by ATC or its subcontractor in the performance of
geophysical survey and environmental assessment services on a property in
Quincy, Massachusetts. The claimants allege that ATC failed to disclose
operations formerly conducted on the site and that ATC's subcontractor failed to
locate an underground storage tank. The claimants have alleged damages in an
amount ranging from $100,000 to $250,000. ATC has entered into settlement
negotiations with the claimants. ATC has served a notice of claim regarding this
matter on its professional liability insurance policy, which is subject to a
$150,000 self-insured retention.

Smith Technology Acquisition Claims. ATC has filed two claims for
recoupment against Smith Technology Corporation ("Smith") arising out of the
Agreement for Sale and Purchase of Business Assets of August 19, 1997, between
ATC and Smith ("the Agreement"). The first claim asserted a recoupment against
the full amount of the $200,000 30-day note and a return of conditionally
assumed liabilities in the total amount of $135,000. These remedies were
asserted to partially recoup a deficiency in the Adjusted Equity Value as stated
on Smith's closing Engineering Division Balance Sheet from that warranted in the
purchase agreement.

On March 27, 1998, ATC asserted a second set of recoupment claims arising
under the Agreement for various value, liability, and loss issues in the amount
of $5,127,859 against the $2,750,000 note payable to Smith which had been
assigned to Chase Manhattan Bank. On April 13, 1998, ATC served a corrective
amendment to this claim asserting an additional claim amount of $21,475. This
resulted in a total claim amount of $5,149,334.

On May 22, 1998, ATC filed notice to Smith and Chase Bank of Smith's
breach of the covenants of the Agreement in failing to turn over $606,604.39 of
ATC's cash receipts. Smith and Chase have thus far refused to turn over these
funds on the basis of their allegation that a dispute between Smith and ATC
exists concerning certain payments and recoupment claims under the Agreement as
described above. Although ATC believes it is entitled to these funds under the
Agreement, the release of such funds will not be obtained without legal action
or settlement of the matters in dispute.

On August 21, 1998, ATC filed a claim in the case entitled Plymouth Nine
Hundred, Inc./DE f/k/a BCM Engineers, Inc. of Delaware, Case No. 97-2066
(HSB), U.S. Bankruptcy Court for the District of Delaware, asserting claims
against Smith in the aggregate amount of $5,287,727. Since the filing of this
original claim, status changes in certain of the claim items has reduced the
claim amount to $4,745,906. ATC has made a settlement offer to Smith and Chase
Bank, assignee of the Smith notes, to resolve the parties respective claims
arising out of the notes, the purchase agreement and the related joint services
agreement. The general terms of the settlement are as follows:

ATC pays $264,346 to Smith to satisfy its obligation for the joint services
costs and ATC is released from any further liability for joint services. ATC
releases its claim to the $606,604.39 held by Chase in the Smith lock box. Chase
and Smith agree to release ATC from any obligations under the notes. The payment
obligations are contingent on ATC receiving a channeling order to protect ATC
from claims from Smith's creditors. In addition, the court would issue an order
declaring that ATC is not a successor to Smith. ATC would also gain the ability
to pursue Smith's rights against third parties who have committed acts that
resulted in losses that ATC had to pay on behalf of Smith. The parties are in
the process of negotiating a stipulation that will address the settlement terms.

There are several non-litigation matters and potential claims that arise out of
Smith's performance of services or Smith's business prior to the Sale Agreement
which are non-assumed liabilities. In general these relate to performance or
business errors by Smith that require ATC to perform corrective services to
preserve a client relationship under a Smith assumed contract. These potential
costs were factored into the decision to settle with Smith and Chase. The terms
of the settlement will allow ATC several avenues to minimize losses incurred in
resolving these Smith related non-litigation, potential claims.

    ATC has recorded reserves which the Company believes are appropriate,
representing actual or estimated losses arising from the above claims, or
revisions to litigation reserves previously established. The ultimate outcomes
of the above matters can not be assured, and accordingly, the actual costs may
differ from recorded estimates.


                                     F-18


<PAGE>

F. INDUSTRY SEGMENT DATA

   The Company provides services through its environmental consulting and
engineering segment and its information technology consulting segment.
Industry segment data is as follows:

   (Dollars in thousands)
<TABLE>
<CAPTION>

                                                  Environmental      Information       Adjustments &
                                                  & Engineering      Technology        Eliminations           Total
                                                ------------------ ----------------  -----------------  ------------------
<S>                                                       <C>                <C>                  <C>              <C>    
FISCAL 1999
Quarter Ended November 30, 1998
   Revenues........................                      $ 39,142            $2,249            $   (75)           $ 41,316
   Operating income................                           656                72                 --                 727
   Depreciation and amortization...                         1,809                63                 --               1,872
   Capital expenditures............                           470                12                 --                 482
Nine Months Ended November 30, 1998  
   Revenues........................                      $115,376            $7,197            $(1,062)           $121,511
   Operating income................                         1,845               560                 --               2,405
   Depreciation and amortization...                         5,229               182                                  5,411
   Capital Expenditures............                         1,606                64                                  1,670
Identifiable Assets as of November 30,
1998...............................                      $191,188            $5,749            $(3,415)           $193,522

FISCAL 1998
Quarter Ended November 30, 1997
   Revenues........................                      $ 35,874            $2,293            $    --            $ 38,167
   Operating income................                         2,723               152                 --               2,875
   Depreciation and amortization...                           845                12                 --                 857
   Capital expenditures............                           820                15                 --                 835
Nine Months Ended November 30, 1997
   Revenues........................                       $98,086            $6,480            $  (303)           $104,263
   Operating income................                         7,608               376                 --               7,984
   Depreciation and amortization...                         2,249                32                 --               2,281
   Capital expenditures............                         1,447                56                 --               1,503
Identifiable Assets as of November 
30, 1997...........................                      $114,456            $5,760            $(2,671)           $117,545
</TABLE>






                                      F-19


<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RECENT DEVELOPMENTS

    The Company is currently in default under its Bank Credit Facilities. In
addition, the Company will be unable to make the $6.0 million interest payment
due on January 15, 1999 on the Notes. The Company is unable to make the interest
payment for two reasons. The Company's cash flow is insufficient. In addition,
as a result of a payment default with respect to certain Senior Indebtedness as
defined in the Indenture dated as of January 29, 1998 between Acquisition Corp.
and State Street Bank and Trust Company (the "Indenture"), the Company is
prohibited, pursuant to the terms of the Indenture, from making any payments on
the Notes until the payment default is cured or waived. The payment default
stems from the failure to pay on January 4, 1999 $1.1 million owing with respect
to certain seller notes issued in connection with the acquisition by the Company
of Bing Yen & Associates, Inc. in November 1997. In addition, on January 1,
1999, the Company failed to pay $553,430 owed to Morry Rubin and George Rubin,
pursuant to the Severance Agreements described below. On January 11, 1999 the
Rubins filed suit against the Company in New York Supreme Court seeking $553,430
in damages as a result of this failure to pay.

  During the nine months ended November 30, 1998, the Company completed two
acquisitions. On July 31, 1998, ATC acquired certain assets and assumed certain
liabilities of AeroVironmental Environmental Services, Inc. ("AVES"); a southern
California provider of engineering and technical consulting services. On July
10, 1998, ATC acquired certain assets and assumed certain liabilities of On-Site
Technologies, Inc. ("OST"), a remediation engineering services company
headquartered in Hayward, California. AVES and OST reported revenues of $2.3
million and $1.2 million, respectively, for their latest fiscal years.

Fiscal 1998

  Tender Offer and Merger. The Company became a wholly owned subsidiary of
Acquisition Holdings, Inc. ("Holdings") upon the merger of ATC with Acquisition
Corp., a wholly owned subsidiary of Holdings, with ATC being the surviving
corporation (the "Merger"). Acquisition Corp. offered (the "Tender Offer") and
completed the purchase of the issued and outstanding shares of the Company's
Common Stock at a price of $12.00 per share. The Tender Offer was consummated
using the proceeds from the issuance of $100,000,000 of 12% Senior Subordinated
Notes (the "Notes"), borrowings under a new bank credit facility (the "Bank
Credit Facilities") and equity investments in Holdings. The accompanying
condensed consolidated financial statements for the Company from February 5,
1998 (the "Successor Period") are attributable to operations of the Company
under the successor ownership of Holdings. The predecessor condensed
consolidated financial statements, representing the period prior to February 5,
1998 (the "Predecessor Period"), relate to the previous ownership of the
Company. Prior to the Tender Offer and Merger, the Company had entered into two
separate Severance, Consulting and Noncompetition Agreements (the "Severance
Agreements") with two officers of the Company. The Severance Agreements provided
for the resignation of the officers upon completion of the Merger and the terms
of a non-compete agreement. The Tender Offer and Merger, issuance of the Notes,
execution of the Bank Credit Facilities and Severance Agreements, are
collectively referred to as the "Transactions".

  As a result of the Merger, the consolidated financial statements for the
Successor Period are presented on a different basis of accounting than that of
the Predecessor Period and are therefore not directly comparable.

  Through fiscal 1998 the Company acquired twelve businesses since 1993. Three
acquisitions include: (i) the purchase by the Company of all of the stock of
Bing Yen & Associates, Inc. ("Bing Yen") on November 26, 1997; (ii) the purchase
by the Company of substantially all of the stock of Environmental Warranty, Inc.
("EWI") on November 4, 1997; and (iii) the purchase by the Company of certain
assets and the assumption by the Company of certain liabilities on August 20,
1997 of the Engineering Division of Smith Technology Corporation which operated
primarily as BCM Engineers Inc.("BCM").

OVERVIEW

   ATC is a leading national provider of professional consulting,
engineering and testing services within the environmental and construction
materials industries. Management believes the Company is also a leading provider
of integrated environmental information management technology services. The
Company provides a broad range of services to a diverse client base of over
8,000 customers. The Company provides its services through a network of 74
branch offices located in 35 states covering every major market of the United
States.

  The Company's rapid growth is primarily attributable to the acquisition of
assets of American Testing and Engineering Corporation ("ATEC") in May 1996 and
the acquisition of assets of BCM in August 1997. ATEC, with its large network of
regional and branch offices, positioned the Company as a national provider of
professional environmental consulting, testing and engineering services. As a
result of the BCM acquisition, ATC has become a high quality provider of
consulting, engineering and design services in water supply and treatment,
wastewater systems, air quality management, traditional environmental site
investigations, site assessments and storage tank management services.
Subsequent to each acquisition that it has made, the Company has implemented
cost reduction measures, including integration of Offices, introduction of
flexible staffing programs and reduction of duplicate corporate overhead costs.


                                     F-20

<PAGE>


RESULTS OF OPERATIONS

Three Months Ended November 30, 1998 Compared with Three Months Ended November
30, 1997

    Revenues in the three months ended November 30, 1998 increased 8.3% to $41.3
million, compared with $38.2 million in the three months ended November 30,
1997. This increase was primarily attributable to revenues associated with the
acquisitions of EWI and Bing Yen which were completed in November 1997 and the
acquisitions of OST and AVES which were completed in July 1998. Revenues in the
three months ended November 30, 1998 attributable to the acquisitions of EWI,
Bing Yen, OST and AVES totaled $1.6 million or 3.9% of revenues in the three
months ended November 30, 1998. Revenues were not affected by the Transactions.

     Reimbursable costs represent direct project expenses billed to 
environmental and engineering segment clients. For the three months ended 
November 30, 1998, reimbursable costs increased 40.1% to $7.7 million 
compared with $5.5 million in the three months ended November 30, 1997. 
Reimbursable costs as a percentage of revenues increased to 18.7% in the 
three months ended November 30, 1998 from 14.4% in the comparable prior year 
period, principally due to changes in Sales mix, which required increased use 
of various subcontractor services in the 1998 period. Reimbursable costs were 
not affected by the Transactions.

     Cost of net revenues in the three months ended November 30, 1998 increased
by $1.2 million or 6.5% to $18.7 million compared with $17.5 million in the
three months ended November 30, 1997. Cost of net revenues as a percentage of
net revenues increased to 55.6% in the three months ended November 30, 1998
compared to 53.7% in the three months ended November 30, 1997. The increase in
cost of net revenues as a percentage of net revenues for the three months ended
November 30, 1998 over the prior year's comparable period was principally
impacted by the Company's Sales mix during the three months ended November 30,
1998.

     Gross profit in the three months ended November 30, 1998 decreased 1.3% to
$14.9 million, compared with $15.1 million in the three months ended November
30, 1997. Gross margin decreased to 44.4% in the three months ended November 30,
1998, compared to 46.3% in the three months ended November 30,1997. The
reduction in the gross margin percentage of 1.9% for the three months ended
November 30, 1998 was principally caused by the Company's Sales mix during the
three months ended November 30, 1998.

     Operating expenses in the three months ended November 30, 1998 increased 
15.9% to $14.2 million, compared with $12.3 million in the three months ended 
November 30, 1997. Operating expenses increased as a percentage of net 
revenues to 42.3% in the three months ended November 30, 1998, compared with 
37.5% in the three months ended November 30, 1997. The increase in operating 
expenses was attributable to an increase in Employee costs. Employee costs 
increased 16.1% to $6.5 million, or 19.4% of net revenues in the three months 
ended November 30, 1998 compared with $5.6 Million, or 17.1% of net revenues, 
in the three months ended November 30, 1997. These increases in total 
employee costs were due to employees hired in connection with the expansion 
of ATC's operations. The increase in operating expenses also resulted from 
higher facility costs and administrative expenses resulting from the growth 
in operations, increased employee levels and costs related to the 
establishment of the Company's corporate administrative group, and 
implementation of new accounting systems and processes. Additionally, in the 
three months ended November 30, 1998, amortization of goodwill and 
intangibles increased to $1.4 million, compared with $0.5 million in the 
three months ended November 30, 1997 reflecting the additional goodwill 
amortization resulting from acquisitions and the Transactions.

      For the reasons set forth above, operating income in the three months
ended November 30, 1998 totaled $0.7 million compared with operating income of
$2.9 million in the three months ended November 30, 1997. Operating income
decreased as a percentage of net revenues to 2.2% in the three months ended
November 30, 1998, compared with 8.8% in the three months ended November 30,
1997.

                               F-21

<PAGE>

     Non-operating expense in the three months ended November 30, 1998
increased to $4.0 million compared with $0.9 million in the three months ended
November 30, 1997. The increase in non-operating expense is attributable to
increased interest expense related to the 12% Senior Subordinated Notes and bank
debt outstanding during the quarter ended November 30, 1998.

     Income tax (benefit) expense in the three months ended November 30, 1998
was $(1.1 million), compared with $0.8 million in the three months ended
November 30, 1997. During the three months ended November 30, 1998 and 1997, the
Company's effective tax rates were 32.6% and 41.6%, respectively. The lower
effective tax rate for the three months ended November 30, 1998 is due
principally to non deductible goodwill amortization related to the Transactions.

     As a result of the foregoing, the Company incurred a net loss of $2.2
million compared with net income of $1.2 million in the three months ended
November 30, 1997. Net income (loss) decreased as a percentage of net revenues
to (6.5)% in the three months ended November 30, 1998 compared with 3.6% in the
three months ended November 30, 1997.

Nine Months Ended November 30, 1998 Compared with Nine Months Ended November 30,
1997

     Revenues in the nine months ended November 30, 1998 increased 16.5% to 
$121.5 million, compared with $104.3 million in the nine months ended 
November 30, 1997. This increase was primarily attributable to revenues 
associated with the BCM acquisition which was consummated on August 20, 1997 
and the acquisitions of EWI and Bing Yen which were completed in November 
1997 and the acquisitions of OST and AVES in July, 1998. Revenues for the 
nine months ended November 30, 1998 reflected certain one time adjustments to 
revenue related to unbilled receivables reserves, cost overruns and billing 
adjustments. Revenues in the nine months ended November 30, 1998 attributable 
to the acquisition of BCM totaled $13.2 million. Revenues attributable to the 
acquisition of EWI, Bing Yen, AVES and OST totaled $4.5 million or 3.7% of 
revenues in the nine months ended November 30, 1998. Revenues were not 
affected by the Transactions.

     Reimbursable costs represent direct project expenses billed to 
environmental and engineering segment clients. For the nine months ended 
November 30, 1998, reimbursable costs increased 27.8% to $20.3 million, 
compared with $15.9 million in the nine months ended November 30, 1997. 
Reimbursable costs as a percentage of revenues increased to 16.7% for the 
nine months ended November 30, 1998 from 15.2% in the comparable prior year 
period, principally due to changes in sales mix, which required increased use 
of various subcontractor services in the 1998 period. Reimbursable costs were 
not affected by the Transactions.

     Cost of net revenues in the nine months ended November 30, 1998 
increased by $8.9 million or 18.4% to $56.8 million compared with $47.9 
million in the nine months ended November 30, 1997. Cost of net revenues as a 
percentage of net revenues increased to 56.1% in the nine months ended 
November 30, 1998 compared to 54.2% in the nine months ended November 30, 
1997, principally due to changes in sales mix during the 1998 period.

     Gross profit in the nine months ended November 30, 1998 increased 9.9% to
$44.4 million, compared with $40.4 million in the nine months ended November 30,
1997. Gross margin decreased to 43.9% in the nine months ended November 30, 1998
compared to 45.8% in the nine months ended November 30, 1997. The decrease in
gross profit percentage was principally impacted by both one time adjustments to
revenue and the Company's sales mix during the 1998 nine month period.

     Operating expenses in the nine months ended November 30, 1998 increased 
29.5% to $42.0 million, compared with $32.5 million in the nine months ended 
November 30, 1997. Operating expenses increased as a percentage of net 
revenues to 41.5% in the nine months ended November 30, 1998, compared with 
36.7% in the nine months ended November 30, 1997. The increase in operating 
expense was principally attributable to an increase in employee costs. 
Employee costs increased 27.4% to $18.6 million, or 18.4% of net revenues, in 
the nine months ended November 30, 1998 compared with $14.6 million, or 16.5% 
of net revenues, in the nine months ended November 30, 1997. These increases 
in employee cost were due to employees hired in connection with the expansion 
of ATC's operations including acquisitions completed during the period. 
Increases in operating expenses also resulted from higher facility costs and 
administrative expenses resulting from the growth in operations and increased 
employee levels and increased allowance for doubtful accounts. Additionally, 
in the nine months ended November 30, 1998, amortization of goodwill and 
intangibles increased to $4.1 million, compared with $1.4 million in the nine 
months ended November 30, 1997 reflecting the additional goodwill 
amortization resulting from acquisitions and the Transactions.

     Operating income in the nine months ended November 30, 1998 decreased 69.9%
to $2.4 million compared with $8.0 million in the nine months ended November 30,
1997. Operating income decreased as a percentage of net revenues to 2.4% in the
nine months ended November 30, 1998, compared with 9.0% in the nine months ended
November 30, 1997.

                                      F-22

<PAGE>

     Non-operating expense in the nine months ended November 30, 1998 increased
to $11.7 million compared with $2.0 million in the nine months ended November
30, 1997. The increase in non-operating expense is attributable to increased
interest expense related to the 12% Senior Subordinated Notes and bank debt
outstanding during the 1998 period.

     Income tax (benefit) expense in the nine months ended November 30, 1998 was
$(3.0 million), compared with $2.4 million in the nine months ended November 30,
1997. During the nine months ended November 30, 1998 and 1997, the Company's
effective tax rates were 32.4% and 40.2%, respectively. The lower effective tax
rate for the nine months ended November 30, 1998 is due principally to
non-deductible goodwill amortization related to the Transactions.

     As a result of the foregoing, the Company incurred a net loss of $6.3 
million for the nine months ended November 30, 1998, compared with net income 
of $3.6 million in the nine months ended November 30, 1997. Net income (loss) 
decreased as a percentage of net revenues to (6.2)% in the nine months ended 
November 30, 1998 compared with 4.1% in the nine months ended November 30, 
1997.

SEASONALITY

     ATC typically experiences a slow down in business activities during the
winter months and an increase in business activities during the summer months.
This is due to seasonal fluctuations in construction and remediation activities.
As a result, operating results may vary from period to period. For fiscal 1998,
comparable quarterly revenues as a percentage of relevant annual revenues were
24.6%, 26.6%, 25.0% and 23.8%.

LIQUIDITY AND CAPITAL RESOURCES

     As a result of the consummation of the Transactions, the Company is highly
leveraged. As described in Note D, due to defaults under the Bank Credit
Facilities with respect to certain financial covenants for the quarters ended
May 31, 1998, August 31, 1998 and November 30, 1998, the Company is presently
unable to borrow any additional amounts under its Revolving Credit Agreement. As
a result, the Company's only source of liquidity is cash flow from operations.
It is expected that the Company's principal uses of liquidity will be to provide
working capital for operations and fund necessary capital expenditures. There
can be no assurance, however, that cash flow from operations will be sufficient
for these purposes and to the extent it is not sufficient for such purposes, the
Company's financial condition and results of operations will be materially and
adversely affected.

     The Company is in discussion with the lenders under its Bank Credit 
Facilities and believes the covenants in the Bank Credit Facilities will be 
amended and the existing defaults waived. There can be no assurance, however, 
that any such amendment or waiver will be entered into and to the extent 
these defaults continue, the lenders under the Bank Credit Facilities could 
accelerate all amounts owing thereunder. The Company would not have 
sufficient cash to repay all amounts owing under the Bank Credit Facilities 
if the lenders accelerated amounts owing thereunder. The Bank Credit 
Facilities are secured by substantially all of the Company's assets. Proceeds 
from any sale of assets securing the Bank Credit Facilities would be used 
first to repay in full amounts outstanding thereunder.

     In addition, as a result of its lack of liquidity, the Company has not 
made and will not make certain payments it is contractually obligated to make.

     The Company will be unable to make the $6.0 million interest payment due 
on January 15, 1999 on the Notes. The Company is unable to make the interest 
payment for two reasons. The Company's cash flow is insufficient. In 
addition, as a result of a payment default with respect to certain Senior 
Indebtedness as defined in the Indenture dated as of January 29, 1998 between 
Acquisition Corp. and State Street Bank and Trust Company (the "Indenture"), 
the Company is prohibited, pursuant to the terms of the Indenture, from 
making any payments on the Notes until the payment default is cured or 
waived. The payment default stems from the failure to pay on January 4, 1999 
$1.1 million owing with respect to certain seller notes issued in connection 
with the acquisition by the Company of Bing Yen & Associates, Inc. in 
November 1997. In addition, on January 1, 1999, the Company failed to pay 
$553,430 owed to Morry Rubin and George Rubin, pursuent to the Severance 
Agreements. On January 11, 1999 the Rubins filed suit against the Company in 
New York Supreme Court seeking $553,430 in damages as a result of this 
failure to pay.

     The Company is in the process of retaining Houlihan Lokey Howard & Zukin 
Capital, investment bankers ("Houlihan Lokey"). Houlihan Lokey is expected to 
review the Company's financial position, cash flow requirements, financial 
history, operations, competitive environment and assets to assist the Company 
in developing a business plan which will serve as the basis for determining 
its various financial alternatives, and ultimately the proposed terms of a 
comprehensive financial restructuring. In doing so, Houlihan Lokey is 
expected to work with the Company's senior management to complete and review 
the Company's new business plan. Once the review of the Company has begun, a 
proposed timetable is expected to be communicated to the holders of the 
Notes. There can be no assurance, however, that the Company will be able to 
successfully develop and execute alternative financial, and operating plans, 
ultimately resulting in a comprehensive restructuring plan.

     The Notes impose certain limitations on the ability of the Company and 
its subsidiaries to, among other things, incur additional indebtedness, incur 
liens, pay dividends or make certain other restricted payments, consummate 
certain asset sales, enter into certain transactions with affiliates, issue 
preferred stock, merge or consolidate with any other person or sell, assign, 
transfer, lease, convey or otherwise dispose of all or substantially all of 
the assets of the Company and its subsidiaries. In addition, the New Credit 
Facility contains other and more restrictive covenants effectively 
prohibiting the Company from prepaying the Notes. The Bank Credit Facility 
also requires the Company to maintain specified financial ratios and satisfy 
certain financial tests. The Company's ability to meet such financial ratios 
and tests may be affected by events beyond its control. As mentioned above, 
the Company is currently in default with respect to certain of these 
financial ratios.

                                      F-23

<PAGE>


    The Company conducts part of its operations through its subsidiaries. As 
a result, the Company relies, in part, upon payment from its subsidiaries for 
the funds necessary to meet its obligations, including the payment of 
interest on and principal of the Notes. The ability of the subsidiaries to 
make such payments will be subject to, among other things, applicable state 
laws. Claims of creditors of the Company's subsidiaries will generally have 
priority as to the assets of such subsidiaries over the claims of the Company.

    The Company has historically financed its operations through internally
generated funds, public and private equity and debt financings and borrowings
under its credit facilities. As of November 30, 1998, working capital was $21.5
million, compared with working capital of $29.4 million at February 28, 1998, a
decrease of $7.9 million. The decrease in working capital was primarily due to
allowances for doubtful accounts and unbilled receivables reserves, increased
litigation reserves and expenditures relating to the Transactions. As a result
of the Tender Offer and Merger and the Company's prior acquisitions, the Company
has a negative tangible net worth, primarily as a result of goodwill amounts
recognized in connection with these transactions.

    During the nine months ended November 30, 1998, net cash flows generated
from operating activities were $1.2 million primarily due to operating income
offset by interest expense on the 12% Senior Subordinated Notes, the Bank Term
Loan and the Revolving Credit Facility. Net cash flows used in investing
activities were $1.4 million, resulting from purchases of property and
equipment, the acquisition of OST and AVES less the proceeds from the sale of
certain assets relating to a laboratory operation. Net cash flows used by
financing activities were $3.7 million, primarily representing payments of
Tender Offer obligations and net bank borrowings under the Company's Revolving
Credit Facility.

    During the nine months ended November 30, 1997, net cash flows used in 
operating activities were $1.5 million, primarily due to the increase in 
billed and unbilled receivables and decreases in accounts payable and other 
liabilities, representing payments of property facility rentals, non-compete 
consideration and assumed liabilities of ATEC and other acquisitions. Net 
cash flows used in investing activities were $11.3 million, resulting from 
the acquisitions of BCM and ATEC and purchases of property and equipment. Net 
cash flows provided by financing activities were $16.7 million, primarily 
representing the proceeds of the Senior Secured Notes less repayment of 
outstanding bank debt and a bank borrowing of $5.5 million made in connection 
with the BCM acquisition.

QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES

    The market risk exposure inherent in the Company's financial instruments and
consolidated financial position represents the potential losses arising from
adverse changes in interest rates. The Company is exposed to such interest rate
risk primarily in the use of fixed and variable rate debt.

    The Company utilizes both fixed and variable rate debt to fund its
operations. At November 30, 1998, the carrying value and estimated fair value of
the Company's fixed rate debt was approximately $101.7 million. The Company also
had approximately $29.4 million of variable rate borrowings outstanding, which
amount approximated fair value. Market risk for the fixed rate borrowings is
estimated as the potential change in the fair value of the debt resulting from a
hypothetical 10% adverse change in interest rates, which would have approximated
$5.4 million at November 30, 1998. The effect of a similar hypothetical change
in interest rates on the Company's variable rate debt would have had a negative
impact on the Company's consolidated interest expense of approximately $200,000
for the nine months ended November 30, 1998.

    For additional information about the Company's financial instruments, see
Notes to Consolidated Financial Statements in the Company's annual report on
Form 10-K for the year ended February 28, 1998.

INFORMATION SYSTEMS AND THE YEAR 2000

    The Company is in the process of addressing Year 2000 issues. The Company is
currently engaged in a comprehensive project to convert its accounting and
management information system to a system consisting of new hardware and
packaged software recently purchased from a large vendor who has represented
that these systems are Year 2000 compliant. The Company's information technology
segment, which provides information system support services to both the Company
and the Company's clients, is currently operating on systems that are Year 2000
compliant. ATC's remaining operations are generally dependent only on personal
computers and off-the-shelf commercial word processing, drafting, spreadsheet
and engineering software. Year 2000 compliant versions of these systems are
currently available, and the Company will convert to these compliant systems
during calendar year 1999 as the Company upgrades its operational personal
computer systems in the ordinary course to the most recently issued software
releases.

                                     F-24

<PAGE>

                           PART II - OTHER INFORMATION
Item 1.  LEGAL PROCEEDINGS

LITIGATION--Joseph I. Peters v. George Rubin, et al, Civ. Action No. 
16026-NC, Court of Chancery, New Castle County, Delaware. On or about 
November 12, 1997, a summons and complaint were filed in the Delaware Court 
on behalf of Joseph I. Peters, as plaintiff. On or about December 18, 1997, 
an amended complaint was filed (the "Amended Complaint"). The Amended 
Complaint names the Company, the members of the Company's board of directors, 
Weiss, Peck & Greer ("Weiss Peck") and the WPG Corporate Development 
Associates V, L.P., a Weiss Peck affiliate, as defendants. The Amended 
Complaint challenges the Tender Offer and Merger. The Amended Complaint seeks 
class action status on behalf of the stockholders of the Company. The 
plaintiff in the action claims that the offer price for the Company's Common 
Stock is inadequate and that the defendants have breached their fiduciary 
duties to the plaintiff and other stockholders of the Company. The plaintiff 
seeks unspecified damages. On January 7, 1998, a motion to dismiss was filed 
by Weiss Peck and WPG Corporate Development Associates V, L.P. On January 13, 
1998, answers to the complaint were filed by the Company and the remaining 
defendants. The parties to the action are currently conducting discovery. The 
Company believes the allegations contained in the Amended Complaint are 
without merit and intends to defend the action vigorously.

First Fidelity Bank, N.A., et al v. Hill International, Inc. et al.,
Superior Court of New Jersey, Law Division, Burlington County, Docket No.
Bur-L-03400-95, filed December 19, 1995. Irvin E. Richter, et al v. ATC Group
Services Inc., et al. United States District Court, District of New Jersey, Civ.
No. 96 CV 5818 (JBS) filed December 6, 1996. On December 19, 1995, a second
amended complaint was filed in the above-entitled action which joined the
Company as a defendant and included a count against the Company seeking recovery
of certain assets purchased from Hill International, Inc. ("Hill") on the
grounds that plaintiff banks held security interests in the assets and that Hill
was in default under the security agreement creating such alleged security
interests. The original plaintiffs in this action were First Fidelity Bank, N.A.
and United Jersey Bank, N.A. The primary defendants were Hill and certain of its
subsidiaries, and Irvin Richter, David Richter, Janice Richter and William
Doyle. Irvin Richter and David Richter are officers and stockholders of Hill. In
April 1996, the Company filed a cross-claim against Hill, Irvin Richter and
David Richter alleging breach of contract and fraud, among other allegations,
and seeking unspecified damages, including punitive damages, and equitable
relief.

In August, 1996, Hill and the Richters filed an answer denying ATC's 
Cross-claims, a cross-claim against ATC and a third party claim against 
certain members of ATC's management and an employee. The cross-claim and 
third party claim seek unspecified damages, including punitive damages, for 
defamation, breach of the Richters' non-competition agreements and securities 
fraud. The defamation claims are based (i) on plaintiff banks' allegation of 
fraud against Hill and the Richters in their amended complaint, which Hill 
and the Richters allege was based on defamatory statements made by ATC in 
settlement discussions with the plaintiff banks and (ii) on a letter alleged 
to contain defamatory statements which was sent to an account debtor of the 
Company by an employee. In its answer, the Company both denies that it made 
defamatory statements and asserts that the defamation allegations fail to 
state legally valid claims. The breach of contract and securities claims are 
based on allegations that ATC made representations concerning a registration 
rights agreement to be provided in connection with options issued to the 
Richters as consideration for their non-competition agreements. In its 
answer, the Company denies that an agreement concerning registration rights 
was ever reached and asserts that any such rights were forfeited or suspended 
by the Richters in any case as a result of their conduct in connection with 
the asset purchase. ATC also disputes that the Richters sustained damages on 
the grounds, among others, that the options were non-transferable and because 
ATC's stock price never exceeded the exercise price at any point where the 
options would have been exercisable. In January, 1997, the plaintiff banks 
dismissed their claim against ATC. The remaining claims are subject to a stay 
pending the federal action described below.

On December 6, 1996, Hill and the Richters commenced an action against ATC and
the same officers and employees of ATC alleging essentially the same claims in
federal court as in the state action. This action is entitled Irwin E. Richter
et al. v. ATC Group Services, et al., Civ. No. 96-5818 (JBS), U.S. District
Court for the District of New Jersey, December 6, 1996. ATC has answered,
raising the same defenses and additional defenses related to the timeliness of
the federal securities claims. The case is currently in the discovery and
pretrial motion phase. ATC filed a motion for Summary Judgement on the Federal
Court claims. This motion was heard on January 8, 1999 and the Court dismissed
the Plaintiff's state and federal securities fraud claims and common law fraud
claims and reserved judgement on the other counts. The dual forum litigation
does not create a risk of double recovery.


                                     F-25
<PAGE>

Commonwealth of Massachusetts v. TLT Construction Corp. et al., Civ. Action No.
96-02281 F, Superior Court of Middlesex County, Massachusetts. This is an action
brought by the Commonwealth of Massachusetts in April 1996, against the
architects and general contractor on a renovation and construction project on
the Suffolk County Courthouse in Massachusetts. The basis of the lawsuit is that
one or more damp-proofing products specified by the architect defendants and
installed by the contractor defendant made employees in the courthouse ill
because of the off-gassing of harmful vapors. Dennison Environmental Services
Inc., ("Dennison") an ATC subsidiary, was joined on August 13, 1996, as a third
party defendant by TLT Construction Corporation, the general contractor, because
Dennison performed some air quality testing of the air in the courthouse for the
Commonwealth of Massachusetts during the construction process. The contractor
alleges that it acted in reliance on these tests in continuing to install the
material after the test report was given to it by the state. ATC's 
position is that it did not commit any error or omission in this case, that ATC
made no representation to the contractors or material supplier and had no
privity with them and that Dennison's opinion concerning short term, during-
construction health effects of the off-gassing could not be justifiably relied
upon with respect to the long-term performance and health effects of the product
or its installation. This case is in the discovery phase. At this point, ATC
considers the case to be without merit, and ATC intends to vigorously defend the
action. Notice of this claim has been made to ATC's professional liability
insurer. At the time that notice of Suffolk County claims was filed, the Company
had in effect a professional liability insurance policy in the amount of $10.0
million with a deductible of $250,000.

Cambridge Housing Authority v. CON-TEST, Inc. and ATC Group Services Inc., Civil
Action No. MICV 97-04893, Superior Court of Middlesex County, Massachusetts.
This action was brought on October 1, 1997 for damages in the amount of
$3,381,805 alleging that Con-Test, Inc. breached its contract with Cambridge
Housing Authority and was negligent in performing asbestos survey work
preparatory to a housing project re-modernization project. ATC was joined as a
party on the theory of successor liability. ATC has filed an answer denying that
it was a successor to Con-Test under Massachusetts's law and asserting that it
should therefore have no liability for Con-Test's alleged acts or omissions. The
Company believes that the case is without merit because ATC does not meet the
criteria for a finding of successor liability in the State of Massachusetts. ATC
has filed a notice of claim with Con-Test's insurance company which has assumed
the defense of the action. Con-Test's insurance company made an offer to settle
for $460,001 alleging that their damage expert had determined this sum was the
amount of actual damages incurred by Cambridge Housing Authority. Cambridge
Housing Authority rejected the offer and countered with $2,150,000 as a
settlement figure.

Etzel Place II, L.P. v. ATC Environmental Inc. Action No. 982-01473,
Missouri Circuit Court, Twenty-Second Judicial Circuit (St. Louis City). This
action was brought on June 2, 1998 and alleges that ATC breached its contract
with the plaintiff and was negligent in performing asbestos survey services in
connection with an asbestos removal project. Plaintiff requests damages in the
amount of $207,310. Plaintiff has offered to settle this matter for $103,655.
ATC is currently engaged in settlement discussions with plaintiff and is
reviewing their offer to settle. Notice of this claim has been made under ATC's
professional liability and pollution liability insurance policy. The insurance
policy is subject to a $150,000 self-insured retention amount.

QST Environmental Inc. v. ATC Group Services Inc. and Environmental Warranty
Inc.("EWI"), Case No. 98-421, Circuit Court of the Tenth Judicial Circuit,
Peoria County, Ilinois. This action was brought on December 4, 1998 and alleges
that ATC and its subsidiary, EWI, violated the Illinois Trade Secrets Act as
well as committed common law conversion. The claim arises out of ATC's
submission of a proposal to remediate a parcel of property in the City of Olney,
Illinois and EWI's underwriting of a policy to insure the parcel. Plaintiff
alleges that the ATC and EWI used their proprietary data and information in this
transaction. Notice of this claim has been made under both ATC's and EWI's
professional liability and commercial liability insurance policy.

Borough of Kane Authority v. BCM Engineers, Inc. a Division of ATC Group
Services Inc., et al., Case No. 1074 CD 1998, Court of Common Pleas of McKean
County, Pennsylvania. This action was filed on October 22, 1998 and arises out
of an alleged breach of warranty, breach of contract and professional negligence
by Smith Technology Corporation ("Smith") in a design project at a 
wastewater treatment facility for the Borough of Kane. ATC did not purchase this
contract in the Smith Transaction and is wrongly named in the case as a
successor. The company believes the case against ATC is without merit because
ATC was not involved in the project and the contract in question was not assumed
by ATC in the Smith transaction. ATC has filed a notice of claim with Smith's
professional liability carrier as well as ATC's carrier. This claim is subject
to a $150,000 self insured retention. 

Morry F. Rubin and George Rubin v. ATC Group Services Inc. (Index No. 
600130/99), Supreme Court of the State of New York County of New York. This 
action was brought on January 11, 1999 by Morry Rubin and George Rubin and 
seeks damages of $553,430 in connection with the failure by the Company to 
pay amounts owed the Rubins on January 1, 1999 pursuant to a Severance, 
Consulting and Non Competition Agreement entered into by the Company with 
each of Morry Rubin and George Rubin.

ITEM 2.  CHANGES IN SECURITIES:
         Not Applicable
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES:


             For the quarters ended May 31, 1998, August 31, 1998 and November
         30, 1998, the Company was in default of certain financial covenants.
         The Company's lenders had provided an interim waiver with respect to
         the defaults, which waiver expired on December 4, 1998. Due to the
         expiration of the waiver on December 4, 1998, the Company is unable to
         borrow any additional amounts under the Revolving Credit Agreement. The
         total amount outstanding under the Revolving Credit Agreement at
         January 14, 1999 approximates $11.7 million. 

             The Company is also in default under $2.65 million aggregate
         principal amount of promissory notes issued in connection with the
         acquisition by the Company of Bing Yen & Associates. This default
         results from the failure to pay $1.1 million owing with respect to
         such notes on January 4, 1999.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
         Not Applicable

ITEM 5.  OTHER INFORMATION:

         On September 22, 1998, Ron H. Danenberg, a principal at Weiss, Peck &
     Greer and a director of the Company, was named Chairman of the Board of
     Directors and replaced Nick Malino as ATC's Chief Executive Officer; Mr.
     Danenberg will serve as Interim Chief Executive Officer pending the
     appointment of a permanent Chief Executive Officer. Chris Vincze, ATC's
     Chief Operating Officer and Paul Grillo, the Company's Chief Financial
     Officer, will report to Mr. Danenberg.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K:
     (a)  Exhibits:
             Not applicable

     (b)  Reports on Form 8-K:
             None

     This Form 10-Q contains "forward-looking" statements within the meaning 
of the Securities Litigation Reform Act of 1995, including, without 
limitation, those concerning: the results of any discussions with the 
Company's creditors; the ability of the Company to make required future 
payments; the retention of Houlihan Lokey; whether the Company is able to 
propose a comprehensive financial restructuring in a timely manner or propose 
a timetable to holders of the Notes; the Company's future financial 
performance and cash flow; whether or not the Company's cash flow will be 
sufficient to meet its working capital and other cash needs; and the ability 
of the Company to meet its short-term cash needs, including the ability to 
make the January 15, 1999 $6.0 million interest payment on its senior 
subordinated notes. Such statements involve certain risks and uncertainties 
that could cause actual results to differ materially from those in the 
forward-looking statements. Potential risks and uncertainties include such 
factors as: the demand for the Company's services; the impact of cost 
reductions on revenues; utilization rates of Company personnel; changes in 
the pricing environment; general economic conditions in the Company's 
markets; competitors' actions; accuracy of assumptions regarding savings from 
restructuring activities; the status and effectiveness of the Company's Year 
2000 efforts; the ability to successfully restructure future cash payments, 
particularly in the short-term; whether or not the Company ultimately retains 
Houlihan Lokey, and if it does, whether or not the Company and Houlihan Lokey 
can propose in a timely manner a comprehensive financial restructuring 
acceptable to the Company's creditors; and other risks described in the 
Company's filings with the Securities and Exchange Commission.

                                     F-26
<PAGE>

                                   SIGNATURES

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


                                        ATC GROUP SERVICES INC.
                                             (Registrant)



Dated: January 14, 1999                 /s/ Christopher Vincze
                                            Christopher Vincze
                                            Executive Vice President and
                                            Chief Operations Officer
                                            (Principal Operating Officer)


Dated: January 14, 1999                /s/ Paul Grillo
                                           Paul Grillo
                                           Executive Vice President and
                                           Chief Financial Officer
                                           (Principal Financial Officer)


Dated: January 14, 1999                /s/ Rachel Trant
                                           Rachel Trant
                                           Controller
                                           (Principal Accounting Officer)







                                     F-27