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 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="4" COLOR="#000000"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"
COLOR="#000000"><B>WASHINGTON, D.C. 20549 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5" COLOR="#000000"><B>FORM 10-Q </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">[MARK ONE] </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">[X]</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES </FONT></DIV> </TD></TR></TABLE> <DIV STYLE="margin-left:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">EXCHANGE ACT OF 1934 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">For the quarterly period ended September 30, 2002 </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">OR </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">[_]</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES </FONT></DIV> </TD></TR></TABLE> <DIV STYLE="margin-left:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">EXCHANGE ACT OF 1934 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">For the transition period from
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Commission File No. 000-22195 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"
COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Exact name of registrant as specified in its charter) </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B><U>GEORGIA</U></B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B><U>58-2277249</U></B></FONT></DIV> </TD> </TR>
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(State or other jurisdiction of</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(I.R.S. Employer</FONT></DIV> </TD> </TR>
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">incorporation or organization)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Identification No.)</FONT></DIV> </TD> </TR>
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<TD HEIGHT="32"> </TD> </TR>
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>1000 WILSON BLVD, STE 910</B></FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ARLINGTON,
VA&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B><U>22209</U></B></FONT></DIV> </TD> </TR>
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Address of principal executive offices)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Zip Code)</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Registrant&#146;s telephone number,
including area code&nbsp;&nbsp;&nbsp;&nbsp;<U><B>(703) 528-9688</B></U> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B><U>Not
Applicable</U> </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Former name, former address and former fiscal year, if changed since last report. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">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. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Yes&nbsp;&nbsp;&nbsp;&nbsp;[X]&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;&nbsp;&nbsp;[_] </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of the latest practicable
date: 15,246,792 shares on November 1, 2002. </FONT></DIV>

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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>
<A NAME="toc"></A>TABLE OF CONTENTS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>PAGE</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" ALIGN="center" WIDTH="88%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PART I&#151;FINANCIAL INFORMATION</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
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<TD HEIGHT="8"> </TD> </TR>
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<TD VALIGN="top" WIDTH="5%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Item&nbsp;1.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Financial Statements</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_1">Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1</FONT></DIV> </TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_2">Condensed Consolidated Statements of Operations for the three and nine month periods ended<BR>September 30, 2002 and 2001</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2</FONT></DIV> </TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_3">Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 </A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3</FONT></DIV> </TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_4">Notes to Condensed Consolidated Financial Statements</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4</FONT></DIV> </TD> </TR>
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<TD HEIGHT="8"> </TD> </TR>
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<TD VALIGN="top" WIDTH="5%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Item&nbsp;2.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_5">Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">8</FONT></DIV> </TD> </TR>
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<TD HEIGHT="8"> </TD> </TR>
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<TD VALIGN="top" WIDTH="5%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Item&nbsp;3.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_6">Quantitative and Qualitative Disclosures About Market Risk</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16</FONT></DIV> </TD> </TR>
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<TD HEIGHT="8"> </TD> </TR>
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<TD VALIGN="top" WIDTH="5%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Item&nbsp;4.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_7">Controls and Procedures</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">17</FONT></DIV> </TD> </TR>
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<TD HEIGHT="16"> </TD> </TR>
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="88%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PART II&#151;OTHER INFORMATION</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
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<TD VALIGN="top" WIDTH="5%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Item&nbsp;6.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="88%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_9">Exhibits and Reports on Form 8-K</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18</FONT></DIV> </TD> </TR>
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<TD HEIGHT="8"> </TD> </TR>
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<TD VALIGN="top" COLSPAN="3" WIDTH="88%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_10">SIGNATURE</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19</FONT></DIV> </TD> </TR>
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<TD VALIGN="top" COLSPAN="3" WIDTH="88%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx396_11">CERTIFICATIONS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="5%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">20</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>

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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">PART I&#151;FINANCIAL INFORMATION </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">ITEM 1&#151;FINANCIAL STATEMENTS </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_1"></A>CONDENSED CONSOLIDATED BALANCE SHEETS </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(Amounts in thousands, except share and per share data) </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September&nbsp;30,</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>December&nbsp;31,</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
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<TD VALIGN="bottom" WIDTH="78%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ASSETS</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(Unaudited)</B></FONT></DIV> </TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2"> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current assets:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
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<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash and cash equivalents</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,526</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6,817</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accounts receivable, net of allowance of $5,791 and $7,650 in 2002 and 2001, respectively</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19,312</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16,349</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Unbilled services</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,849</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7,873</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Work in process</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,097</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,350</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reimbursable customer expenses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,786</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,542</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Prepaid expenses and other</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,056</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,144</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income taxes receivable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">462</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10,997</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Deferred income taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,473</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,675</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net current assets of discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">288</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,022</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total current assets</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">42,849</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">54,769</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Property and equipment, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">21,164</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">22,553</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Other assets</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">451</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">341</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Intangibles, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4,104</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4,300</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Goodwill</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">78,272</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">98,995</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Notes receivable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net noncurrent assets of discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">30,453</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">58,725</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total assets</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">177,293</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">244,683</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" ALIGN="center" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current liabilities:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accounts payable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,778</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6,465</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accrued expenses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14,160</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">17,426</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Customer deposits</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,614</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4,961</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current portion of self-insurance reserves</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,114</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,296</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current portion of settlement obligation</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current portion of debt</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">75,848</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">27,035</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total current liabilities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">106,514</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">57,183</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Self-insurance reserves, less current portion</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,146</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,475</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Settlement obligations, less current portion</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Debt, less current portion</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">77,114</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total liabilities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">116,660</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">153,772</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Shareholders&#146; equity:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Common stock, $.01 par value:<BR>17,427,392 shares issued; 15,246,792 shares outstanding</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">175</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">175</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Preferred stock, no par value: no shares outstanding</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Paid-in capital</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">177,011</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">177,011</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accumulated deficit</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(96,553</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(66,275</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Treasury stock at cost: 2,180,600 shares</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(20,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(20,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total shareholders&#146; equity</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">60,633</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">90,911</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total liabilities and shareholders&#146; equity</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">177,293</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">244,683</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The accompanying notes are an integral part of these condensed consolidated
financial statements. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_2"></A>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(UNAUDITED) </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>(Amounts in thousands, except per share data) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Three Months Ended</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September
30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Nine Months Ended</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September
30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Revenues</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">30,108</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">32,791</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">96,038</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">106,045</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cost of services</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">12,531</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14,704</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">41,834</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">47,902</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Gross margin</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">17,577</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18,087</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">54,204</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">58,143</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Costs and expenses:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Operating</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">13,957</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">31,460</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">45,338</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">64,060</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Corporate general and administrative</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">674</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,155</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,409</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">11,677</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Depreciation and amortization</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,363</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,667</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,988</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14,042</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Final PIMMS severance costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,523</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Operating income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,583</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(32,195</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,469</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(34,159</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Interest expense, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,047</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,101</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5,401</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,877</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Other expense</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,775</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations before income taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(464</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(33,296</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,707</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(37,036</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income tax benefit</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3,489</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,985</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(464</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(29,807</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,707</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(32,051</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Discontinued operations:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income (loss) from discontinued operations, net of taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">European specialized staffing services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,363</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(7,483</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(739</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(7,508</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss on sale of businesses, net of taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">European specialized staffing services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(25,001</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,109</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(25,001</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">U.S. and European aviation and facility services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(8,326</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(8,326</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income (loss) from discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,363</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(40,810</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,848</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(40,835</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income (loss) before cumulative effect of change in accounting principle</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,899</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(70,617</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(9,555</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(72,886</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cumulative effect of change in accounting principle</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(20,723</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,899</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(70,617</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(30,278</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(72,886</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Basic and diluted income (loss) per share:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(0.03</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.95</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(0.31</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2.09</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income (loss) from discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.15</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2.68</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(0.32</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2.67</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cumulative effect of change in accounting principle</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> &#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> &#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.36</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> &#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.12</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.63</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.99</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.76</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Basic and diluted weighted average common shares:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15,247</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15,247</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15,247</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15,295</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The accompanying notes are an integral part of these condensed consolidated
financial statements </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_3"></A>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(UNAUDITED) </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>(Amounts in thousands) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Nine months ended September 30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net loss</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(30,278</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(72,886</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Less: Loss from discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,848</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(40,835</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations before cumulative effect of change in accounting principle</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(25,430</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(32,051</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cumulative effect of change in accounting principle</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">20,723</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Adjustments to reconcile loss from continuing operations to net cash used in operating activities of continuing
operations:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Depreciation and amortization</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,988</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14,042</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss on sale of assets</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,775</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Amortization of debt issuance costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">883</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Noncash impairment and other related charges</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,200</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Changes in operating assets and liabilities:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accounts receivable and unbilled services, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1,132</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">12,998</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Work in process, prepaid expenses and other</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1,531</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(5,498</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accounts payable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2,687</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,832</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accrued expenses and other liabilities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(5,706</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,671</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Self-insurance reserves</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(511</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">643</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income taxes receivable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10,535</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,489</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:15%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Deferred income taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">202</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3,000</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:19%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net cash provided by (used in) operating activities of continuing operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,109</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,652</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:19%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net cash used in operating activities of discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2,686</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(18,703</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:19%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net cash used in operating activities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1,577</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(23,355</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">CASH FLOWS FROM INVESTING ACTIVITIES:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Purchases of property and equipment, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2,914</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(9,540</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Proceeds from sale of note receivable</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,500</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Proceeds from sale of assets</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">604</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Proceeds from sale of discontinued operations, net of transaction costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">26,844</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Acquisition consideration paid</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(12,901</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:19%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net cash provided by (used in) investing activities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">28,034</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(22,441</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net borrowings (repayments) under Credit Facility</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(28,301</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">31,882</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Payment of debt issuance costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1,447</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Repurchases of AHL common stock</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2,335</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Proceeds from exercise of stock options</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">175</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:19%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net cash provided by (used in) financing activities</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(29,748</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">29,722</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net decrease in cash and cash equivalents</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3,291</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(16,074</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash and cash equivalents at beginning of period</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6,817</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19,926</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="83%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash and cash equivalents at end of period</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,526</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,852</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The accompanying notes are an integral part of these condensed consolidated
financial statements. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3 </FONT></DIV>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AHL SERVICES, INC. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_4"></A>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>SEPTEMBER 30, 2002 </B></FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(UNAUDITED) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">BUSINESS DESCRIPTION AND BASIS OF PRESENTATION </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">BUSINESS DESCRIPTION </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The continuing
operations of AHL Services, Inc. (&#147;AHL&#148; or the &#147;Company&#148;), a Georgia corporation incorporated in March 1997, provide outsourced marketing support services. The Company&#146;s service offerings include trade promotion and
fulfillment services, consumer promotion and fulfillment services and retail merchandising. The Company currently operates in one segment, with continuing operations in North America. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">BASIS OF PRESENTATION </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The condensed consolidated financial statements included herein,
except for the December 31, 2001 balance sheet, which was extracted from the audited financial statements of December 31, 2001, have been prepared by AHL without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (all of which are normal and recurring in nature) that are necessary for a fair presentation of the interim periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.
The results of operations for the three and nine month periods ended September 30, 2002 are not necessarily indicative of the results to be expected for any subsequent quarter or the year ending December 31, 2002. These unaudited consolidated
financial statements and the notes included herein should be read in conjunction with the financial statements and the notes thereto included in the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2001. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reported results from operations for 2002 include the continuing marketing support services businesses. Results from operations for 2001 include the
continuing marketing services businesses as well as the PIMMS store set-up business which ceased operations on March 16, 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On July
20, 2001, AHL announced, as part of the strategic transformation of the business, its intention to divest the European specialized staffing services business. On March 19, 2002, the Company sold its United Kingdom specialized staffing services
business for $29.5 million in cash. AHL is in discussions with potential acquirers of the German staffing business. See Note 2 for a discussion of these divestitures. In accordance with the provisions of Accounting Principles Board Opinion No. 30,
the Company has reflected the results of its European specialized staffing businesses as discontinued operations in the accompanying condensed consolidated balance sheets and statements of operations and cash flows. For all periods presented, this
presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the results of continuing operations. The accompanying notes to the
condensed consolidated financial statements, except Note 2, relate only to the continuing operations of AHL. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">RECLASSIFICATIONS
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certain prior period amounts have been reclassified to conform with current year presentation. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">DIVESTITURES AND ABANDONMENTS </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">DISCONTINUED OPERATIONS </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On March 19, 2002, AHL sold its United Kingdom specialized staffing services business for $29.5
million in cash. Net of transaction costs of $2.7 million, the sale yielded $26.8 million of proceeds, which were used to reduce outstanding debt. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">As announced on July 20, 2001, AHL is currently attempting to sell its German specialized staffing
services business. Deutsche Bank was retained as the Company&#146;s advisors and discussions are underway with potential acquirers. Management believes that the Company will be able to dispose of the German specialized staffing business in the
upcoming months. Net proceeds from the divestiture will be used to further reduce outstanding debt. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">After a comprehensive review of the
European specialized staffing services business by Deutsche Bank, and due to economic and capital market conditions, the Company adjusted the net basis of the business in the third quarter of 2001 to approximately $92.0 million, taking a charge of
$25.0 million. Based on negotiations for the sale of the German specialized staffing services business, and concurrent with a $9.4 million charge taken for the UK business, AHL recorded an additional charge of $20.8 million related to the impairment
of goodwill on the German business in the fourth quarter of 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In order to reflect the current status of negotiations for the sale of
the German staffing business, the Company recorded an additional impairment charge of $4.1 million in the second quarter of 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Revenues of discontinued operations were $41.1 million and $62.7 million for the three months ended September 30, 2002 and 2001, respectively, and $118.7 million and $168.1 million for the nine months ended September 30, 2002 and
2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued operations were $41.1 million and $36.0 million for the three months ended September 30, 2002 and 2001, respectively, and
$100.0 million and $102.9 million for the nine months ended September 30, 2002 and 2001, respectively. It is the Company&#146;s policy to allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of
the discontinued operations relative to the total net assets plus debt of the consolidated company. Interest allocated to discontinued operations was $765,000 and $865,000 for the three months ended September 30, 2002 and 2001, respectively, and
$2.2 million and $2.5 million for the nine months ended September 30, 2002 and 2001, respectively. Income (loss) from discontinued operations of $2.4 million and ($7.5) million for the three months ended September 30, 2002 and 2001, respectively,
are net of income tax provision (benefit) of ($193,000) and $726,000 for the same period in 2002 and 2001, respectively. Loss from discontinued operations of ($739,000) and ($7.5) million for the nine months ended September 30, 2002 and 2001,
respectively, are net of income tax provision (benefit) of ($148,000) and $579,000 for the same period in 2002 and 2001, respectively. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">OTHER DIVESTITURES AND ABANDONMENTS </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On December 29, 2000, AHL sold its U.S. and European aviation and facility services
businesses for $185 million in cash to Securicor plc (&#147;Securicor&#148;), a business services company headquartered in the United Kingdom. The sale price for the U.S. and European aviation and facilities services businesses was subject to
post-closing adjustments based upon the 2001 actual performance of the businesses and a reconciliation of actual closing-date working capital to a target level of working capital. At December 31, 2001, the Company had reserved $18.0 million for the
final adjustments. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On April 12, 2002, AHL entered into a definitive settlement agreement with Securicor pursuant to which AHL agreed to
pay Securicor $13.0 million with respect to the amount of the adjustments to the purchase price. Securicor also released the Company from all pending and potential indemnity claims related to the sale of the U.S. and European aviation and facility
services businesses, with limited exceptions. In connection with the settlement, AHL agreed to pay Mr. Frank Argenbright, the Chairman of AHL&#146;s board of directors, $5.0 million. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">AHL&#146;s obligation to pay Securicor the $13.0 million settlement payment is evidenced by two secured, subordinated promissory notes in the amounts of $10.0 million and $3.0 million. The
Company&#146;s obligation to pay the $13.0 million settlement payment matures in two installments. The first installment, in the amount of $9.0 million, matures on April 12, 2003; the remaining installment of $4.0 million matures on October 12,
2003. AHL may prepay the notes at any time without premium or penalty. The notes are secured by a lien on substantially all of the Company&#146;s assets. AHL&#146;s obligation to pay the settlement amount, and the lien securing its obligation, is
subordinate to its obligation to pay all amounts outstanding or due pursuant to its existing Credit Facility and any substitute or replacement senior secured bank credit arrangement. The notes bear interest at a rate of 7% per annum. Interest on the
notes will accrue and be added to the principal until the Company repays or refinances the amounts outstanding under its Credit Facility, at which time interest on the notes will be payable quarterly. AHL&#146;s obligation to pay Mr. Argenbright
$5.0 million is unsecured and does not bear interest. The obligation matures on October 12, 2003. In addition, in connection with satisfaction and termination of the Performance Bonus Program approved by AHL&#146;s shareholders in May 2001, AHL
</FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5 </FONT></DIV>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">agreed to guarantee up to $10,000,000 of Mr. Argenbright&#146;s personal debt for a period of three
years from the date of the sale of our European staffing business or such earlier time as allowed by our Credit Facility with such guaranty subject to approval by the holders of the Credit Facility. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">DEBT </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Company obtains its
working capital from borrowings pursuant to a Credit Facility with a syndicate of commercial banks. Wachovia Bank, National Association is the Administrative Agent for the lenders. The Company&#146;s borrowings under the Credit Facility are secured
by a lien on substantially all of its assets and the assets of its operating subsidiaries. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Company was not in compliance with
certain of its covenants as of December 31, 2001, and received a waiver from its bank group with respect to the non-compliance with these covenants through April 15, 2002. On April 12, 2002, AHL reached an agreement with its banks to amend the
facility. The amendment eliminated the defaults, extended the maturity of the Credit Facility from April 15, 2002 to January 3, 2003, reduced the amount the Company is permitted to borrow, increased the interest rates on the Credit Facility and
modified the financial covenants. Under the amended agreement, at September 30, 2002, the Company was permitted to borrow up to $85.5 million. Approximately $75.7 million was outstanding under the Credit Facility at September 30, 2002. The amount
that the Company is permitted to borrow decreases incrementally each month to approximately $77.3 million as of December 31, 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Under
the Credit Facility, AHL is required to satisfy covenants relating to minimum consolidated adjusted EBITDA, fixed charge coverage ratios and limitations on capital expenditures, among others. The Company has monthly targets for each financial
covenant that it must meet. AHL is also required to pursue a sale of its German specialized staffing business. Finally, AHL is required to pursue opportunities to raise cash through the sale of debt or equity securities. If the Company fails to
pursue these transactions, it will be in default. Upon the occurrence of a default, unless the lenders grant a further waiver, the Company will not be permitted to borrow additional amounts under the Credit Facility, and the outstanding amounts will
become immediately due and payable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">At September 30, 2002, AHL had complied with all financial covenants included in the Credit
Facility, but was pursuing a business combination transaction because it had not completed the sale of its German specialized staffing business or repaid the facility in full. AHL has engaged CIBC World Markets to assist it in this process. It is
anticipated that this process will run in parallel with its continued efforts to complete the sale of the German specialized staffing business and to raise cash through a sale of debt or equity securities, in addition to the other measures which AHL
is pursuing to obtain sufficient funds to repay the borrowings under the Credit Facility. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Company cannot provide assurance that it
will successfully complete the disposition of its German business, the issuance of debt or equity securities or the refinancing of any amounts that may remain outstanding under the Credit Facility. The Company is dependent on the availability of
borrowings pursuant to the Credit Facility to meet its working capital needs, capital expenditure requirements and other cash flow requirements. If borrowings under the Credit Facility are unavailable, the Company will be required to seek additional
sources of financing in order to fund its working capital needs. If the Company is unable to obtain additional sources of financing and cannot repay the outstanding balance of its Credit Facility when it becomes due, it is likely that a business
combination transaction, restructuring or liquidation will be required, or absent this the Company may not be able to continue as a going concern and may require some form of restructuring or disposition of selected operating subsidiaries.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">RESTRUCTURE AND OTHER UNUSUAL ITEMS </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Due to the difficult economic environment, the Company performed a strategic review of continuing operations and recorded charges totaling $37.5 million during the third and fourth quarters of 2001. Charges to operating expenses
totaled $15.8 million and consisted of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers&#146; compensation claims, legal and
other expenses related to the abandoned PIMMS operation, and $4.7 million for legal, bonus, severance for 66 employees and other costs associated with the Company&#146;s efforts to streamline operations. In the fourth quarter of 2001, the Company
recorded an additional charge of $2.9 million to reserve against an outstanding receivable for a customer in bankruptcy proceedings. Charges to corporate general and administrative expenses totaled $10.9 million and included a charge of $3.7 million
to adjust the note receivable balance due from the sale of the Company&#146;s U.S. specialized staffing businesses to its estimated net realizable value. The remaining $7.2 million of corporate general and administrative charges included $3.8
million to expense various business development costs incurred which, based </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">on the current economic environment, will not be realized and charges of $2.6 million and $823,000 for
severance for twelve employees and lease costs, respectively, incurred in conjunction with the closing of the Atlanta corporate offices. Finally, the Company recorded additional charges to depreciation and amortization expense of $7.9 million during
2001, consisting of $4.4 million for various equipment and leasehold improvements at the facilities replaced during 2001 and $3.5 million for internally developed software which was replaced during 2001. During the third quarter of 2002, the
settlement of two legal disputes resulted in the release of reserves totaling $0.4 million. In addition, the 2002 collection of amounts charged against bad debt expense in the fourth quarter of 2000 resulted in a release of $0.2 million and $0.3
million in reserves in the second and third quarters of 2002, respectively. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On December 28, 2000, AHL decided to abandon operations of
its store set-up business unit, formerly called PIMMS. The Company completed the closing of the PIMMS business unit on March 16, 2001, and recorded a final charge for the related severance expense for 188 employees of approximately $2.5 million in
2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The restructure charges are recorded in accordance with EITF No. 94-3, &#147;Liability Recognition for Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)&#148;. The following table summarizes the activity in the restructuring liability accounts from December 31, 2001 to September 30, 2002: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>December&nbsp;31,</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Usage</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Reversal</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September&nbsp;30,</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="13" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(In thousands)</B></FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Severance and related personnel expenses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,719</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2,444</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> &#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">275</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Lease termination costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4,361</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1,633</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(188</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,540</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7,080</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4,077</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(188</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,815</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Management believes that the remaining reserves for restructuring are adequate to complete
its plan. The restructuring reserves are included in accrued expenses. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">OTHER EXPENSE </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Other expense
includes losses incurred in the May 2002 sale of a non-core marketing division and a note receivable. The total includes a $1.5 million loss on the sale of a note receivable arising from the sale of the Company&#146;s U.S. staffing business in 2000.
The note, with a book value of $5.0 million, was sold for $3.5 million, resulting in the $1.5 million loss. Also in May 2002, the sale of a non-core marketing division for approximately $604,000 resulted in a loss on sale of $275,000. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">NEW ACCOUNTING PRONOUNCEMENTS </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">In July 2001, SFAS No. 142, &#147;Goodwill and Other Intangible Assets&#148;, was issued. Under SFAS No. 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separable
intangible assets that are not deemed to have indefinite life will continue to be amortized over their useful lives. The Company adopted the provisions of SFAS No. 142 effective January 1, 2002. The following table presents the results of the
Company for all periods presented on a comparable basis (in thousands expect per share information): </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Three months ended</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September
30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Nine months ended</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>September
30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reported net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,899</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(70,617</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(30,278</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(72,886</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Add: Goodwill amortization</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">864</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,592</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Adjusted net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,899</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(69,753</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(30,278</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(70,294</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Basic and diluted net income (loss) per share:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reported net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.12</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.63</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.99</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.76</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Add: Goodwill amortization</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.06</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.17</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Adjusted net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0.12</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.57</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.99</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.59</FONT></DIV> </TD>
<TD NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The standard also requires a reassessment of the useful lives of identifiable intangible
assets other than goodwill and a test for impairment of goodwill and intangibles with indefinite lives annually, unless events and circumstances indicate that the carrying amounts may not be recoverable. Following the impairment analysis under SFAS
No. 142, as of January 1, 2002 the Company recorded an impairment charge in the amount of $20.7 million as a cumulative change in accounting principle in the accompanying condensed consolidated statements of operations. The Company will be
completing its annual impairment analysis in the fourth quarter of 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In August 2001, SFAS No. 143, &#147;Accounting for Asset
Retirement Obligations&#148; (effective for AHL January 1, 2003) and SFAS No. 144, &#147;Accounting for Impairment or Disposal of Long-Lived Assets&#148; (effective for AHL January 1, 2002) were issued. SFAS No. 143 requires that entities recognize
the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of. The statement supersedes SFAS No. 121, &#147;Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of&#148;, and among other factors, establishes criteria
beyond those previously specified in SFAS No. 121 to determine when a long-lived asset is to be considered as held for sale. The Company is assessing the impact of the adoption of SFAS No. 143 and SFAS No. 144 on its financial position and results
of operations. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">ITEM 2&#151;
<A NAME="tx396_5"></A>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION </FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">AND RESULTS OF OPERATIONS </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certain statements made in this Quarterly Report on Form 10-Q and other written or oral statements made by or on behalf of AHL may
constitute &#147;forward-looking statements&#148; within the meaning of the federal securities laws. When used in this report, the words &#147;believes&#148;, &#147;expects&#148;, &#147;anticipates&#148;, &#147;estimates&#148; and similar
expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, estimates or projections relating to the future, are
forward-looking statements within the meaning of these laws. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. Management believes that these
forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, other than as required by law. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Among the important factors that could cause actual results to differ materially from those indicated in our forward-looking statements are: our ability to find a buyer for, and to negotiate and close
the sale of our German specialized staffing business; our ability to close on a sale of debt or equity securities in the upcoming months; our ability to obtain an additional source of financing to refinance the indebtedness outstanding under our
Credit Facility; our ability to continue to satisfy our covenants under our Credit Facility; reliance on the trend toward outsourcing marketing services; reliance on a small number of clients for a significant portion of our revenues; dependence on
our labor force; </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">8 </FONT></DIV>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">competition in our industry; and general economic conditions. These and other risks are discussed in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 16, 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The following discussion and analysis of the financial
condition and results of operations of AHL should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2001, and included in our Annual Report on Form 10-K as filed with the Securities
and Exchange Commission. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In our Form 10-K filed with the Securities and Exchange Commission for the year ended
December 31, 2001, we identified critical accounting policies and estimates for our business. There have been no material changes to these policies and estimates for our business. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">OVERVIEW </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">AHL Services,
Inc. is a leading provider of outsourced marketing support services. Our 1998 acquisition of Gage Marketing Services, which has been in the marketing support services business for over 45 years, provided us with experienced personnel that have an
understanding of the industry. Our integrated marketing execution solutions enhance the effectiveness and efficiency of many of the world&#146;s most respected marketing companies. We deliver programs developed by manufacturers, retailers, service
providers and advertising agencies, and are active in both business-to-consumer and business-to-business arenas. Our strategic offerings include trade promotion and fulfillment services, consumer promotion and fulfillment services and retail
merchandising. Our successful delivery of these product offerings has enabled us to establish long-term client relationships with many of the largest companies in the world, with partnerships extending over several decades. Clients span a range of
Global 500 companies including major enterprises in the automotive, consumer products, entertainment, retail and technology sectors. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Historically we also have operated specialized staffing businesses in the United Kingdom and Germany. On March 19, 2002, we sold our United Kingdom specialized staffing services business for $29.5 million in cash. We are
currently in the process of divesting our German staffing business. Deutsche Bank was retained as our advisors and discussions are underway with potential acquirers. Management believes that AHL will be able to dispose of the German specialized
staffing business in the upcoming months. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">RESULTS OF OPERATIONS </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We derive our revenue primarily from three sources: (1) consumer promotion and fulfillment services, (2) trade promotion and fulfillment
services and (3) retail merchandising services. Within our consumer promotion and fulfillment services division, our call centers recognize revenue based on the number of calls and agents assigned, according to written pricing agreements. Our
consumer and trade promotion and fulfillment services divisions record revenue at the conclusion of the material selection, packaging and shipping process. Our retail merchandising services division recognizes revenue as services are rendered, based
on contracted hourly billing rates. In general, we recognize revenues as programs are completed, services are rendered and/or as products are shipped in accordance with the terms of the contracts. Some of the contracts include postage and other
items purchased by us as an agent on behalf of our client. For these items, we record the net billings to our customers as revenue. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Cost of services represents the direct costs, consisting primarily of wages and related benefits, attributable to a specific contract, as well as certain related expenses such as workers&#146; compensation and other direct
labor-related expenses. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Operating expenses represent primarily fixed expenses which directly support business
operations, such as plant management, facility expenses (such as rent, utilities and communication costs), equipment leasing, maintenance, information technology expenses, sales, marketing, finance, human resources and divisional management.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Corporate general and administrative expenses include the cost of the corporate management team and corporate,
legal, audit and outside service fees incurred to support and manage our operations and facilities. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The following
table sets forth consolidated statements of operations data as a percentage of revenues for the periods indicated: </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9 </FONT></DIV>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="4" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Three&nbsp;Months&nbsp;Ended September&nbsp;30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="4" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Nine&nbsp;Months&nbsp;Ended September&nbsp;30,</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2002</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>2001</B></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Revenues</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cost of services</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">41.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">44.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">43.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">45.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Gross margin</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">58.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">55.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">56.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">54.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Costs and expenses:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Operating</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">46.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">95.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">47.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">60.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Corporate general and administrative</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">27.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">11.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Depreciation and amortization</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">29.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.1</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">13.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Final PIMMS severance costs</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Operating income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(98.1</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(32.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Interest expense, net</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.7</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Other expense</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations before income taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(101.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(34.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income tax benefit</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(10.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.7</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss from continuing operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(90.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(30.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Discontinued operations:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income (loss) from discontinued operations, net of taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">European specialized staffing services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(22.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(0.7</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(7.1</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:6%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Loss on sale of businesses, net of taxes</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">European specialized staffing services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(76.2</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(23.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:10%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">U.S. and European aviation and facility services businesses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(25.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(7.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income (loss) from discontinued operations</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7.8</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(124.4</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(5.0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(38.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income (loss) before cumulative effect of accounting change</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(215.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(9.9</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(68.7</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cumulative effect of accounting change</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(21.6</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#151;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="1" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="67%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income (loss)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(215.3</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">31.5</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(68.7</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%)</FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD> <HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD> <HR SIZE="3" NOSHADE WIDTH="0" ALIGN="left" COLOR="#ffffff"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">COMPARISON OF RESULTS&#151;THREE MONTHS ENDED
SEPTEMBER 30, 2002 AND 2001 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Revenues.</I> Revenues decreased $2.7 million, or 8%, to $30.1 million for the
three months ended September 30, 2002 from $32.8 million for the same period in 2001. Revenues for the three months ended September 30, 2001 included $989,000 from a non-core marketing division that was sold in May 2002. Excluding the effect of this
division, revenues decreased $1.7 million, or 5%, from the same period in 2001, primarily as a result of the general economic decline. Sales in our consumer promotion and fulfillment division and our trade fulfillment division decreased from the
same period of 2001 due to the economic slowdown and resulting cost reduction programs at our clients. Our retail merchandising division has experienced a decline in revenue between periods due to the decrease in sales to a customer in bankruptcy
proceedings. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Cost of Services.</I> Cost of services decreased $2.2 million, or 15%, to $12.5 million for the
three months ended September 30, 2002 from $14.7 million for the same period in 2001. Cost of services for the three months ended September 30, 2001 included approximately $456,000 from the sold non-core marketing division. Excluding the effects
from the sold division, cost of services decreased $1.7 million, or 12%. The decrease in cost of services is a result of the direct reduction in variable costs, including labor related costs and material costs, associated with the reduction in sales
between periods, as well as cost savings from the implementation of labor and shipping cost reduction programs across all divisions. As a percentage of revenues, cost of services decreased to 41.6% for the three months ended September 30, 2002 from
44.8% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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 <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Gross Margin.</I> Gross margin decreased $510,000, or 3%, to $17.6 million for the three months ended September 30,
2002 from $18.1 million for the same period in 2001. Excluding the effect of the sold non-core marketing division, gross margin increased slightly. As a percentage of revenues, gross margin increased to 58.4% for the three months ended September 30,
2002, from 55.2% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Operating.</I> Operating expenses decreased $17.5 million, or
56%, to $14.0 million for the three months ended September 30, 2002 from $31.5 million for the same period in 2001. Operating expenses for the three months ended September 30, 2001 included $619,000 in costs from the sold non-core marketing division
and special charges of $15.3 million, consisting of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers&#146; compensation
claims, legal and other expenses related to the abandoned PIMMS operation, and $4.2 million for severance, legal, bonus and other costs associated with efforts to streamline operations. Excluding the effects of the sold division and the special
charges, operating expenses decreased $1.5 million, or 10%. Approximately $0.8 million of the decrease can be attributed to cost savings gained on lease, maintenance and utility costs from the consolidation of several warehouses into one new
facility in late 2001, and to cost savings gained from initiatives implemented in early 2002 to reduce operating costs across all divisions. In addition, approximately $0.4 million of the decrease is due to the settlement of two legal disputes
within the third quarter for less that the amount reserved in the third quarter of 2001, with the final $0.3 million of the decrease due to the collection of amounts charged against bad debt expense in the fourth quarter of 2000. As a percentage of
revenues, excluding the special charges and the sold non-core marketing division, operating expenses decreased to 46.4% for the three months ended September 30, 2002 as compared to 48.7% for the same period in 2001. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Corporate General and Administrative.</I> Corporate general and administrative expenses decreased $8.5 million, or 93%, to $674,000 for
the three months ended September 30, 2002 from $9.2 million for the same period in 2001. The Company recorded special charges to corporate general and administrative expenses of $8.0 million in the period ending September 30, 2001, consisting of
$3.7 million to adjust the note receivable balance due from the sale of the Company&#146;s U.S. industrial staffing businesses to its estimated net realizable value, a charge of $3.5 million to expense various business development costs incurred
which, based on the economic environment, would not be realized and $800,000 for lease costs incurred in conjunction with the closing of the Atlanta corporate offices. Excluding the special charges, corporate general and administrative charges
decreased $493,000 or 42%. The decrease is attributed to the reduction in personnel and occupancy costs from the closing of the Atlanta corporate headquarters. As a percentage of revenues, excluding the special charges, corporate general and
administrative expenses decreased to 2.2% for the three months ended September 30, 2002, from 3.7% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><I>Depreciation and Amortization</I>. Depreciation and amortization decreased $8.3 million, or 86%, to $1.4 million for the three months ended September 30, 2002 from $9.7 million for the same period in 2001. Depreciation and
amortization expense for 2001 included special charges to depreciation and amortization expense of $7.3 million consisting of $3.8 million for various equipment and leasehold improvements at the facilities replaced during the third quarter of 2001
and $3.5 million for internally developed software which was replaced during the third quarter of 2001. Depreciation and amortization expense for the three months ended September 30, 2001 includes approximately $864,000 of amortization of goodwill
which is no longer being amortized in 2002 in accordance with SFAS No. 142. Excluding the special charges and the amortization of goodwill in 2001, depreciation and amortization decreased 4% between periods. As a percentage of revenues, excluding
the special charges and the amortization of goodwill and intangibles, depreciation and amortization remained consistent at 4.5% between periods. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Operating Income (Loss)</I>. Operating income was $1.6 million for the three months ended September 30, 2002 as compared to an operating loss of ($32.2) million for the same period in 2001.
Excluding the special charges, amortization of goodwill and the sold non-core marketing division, operating loss was ($531,000) in 2001. As a percentage of revenues, operating income was 5.3% for the three months ended September 30, 2002 as compared
to an operating loss of (1.7%) for the same period in 2001, primarily due to the improvement in margin and the reduction in operating costs in 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Interest Expense, Net.</I> Interest expense, net, represents the interest on our outstanding debt allocated to continuing operations. Net interest expense increased $946,000, or 86%, to $2.0 million
for the three months ended September 30, 2002 from $1.1 million for the same period in 2001. The increase is due to additional amortization of fees arising from the amendment of the Credit Facility in April 2002 and higher interest rates charged in
the three months ended </FONT></DIV>
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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">September 30, 2002 compared to the same period in 2001. As a percentage of revenues, net interest expense was 6.8% for the three months ended
September 30, 2002 as compared to 3.4% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Income Tax Benefit.</I> Income tax benefit
was $3.5 million for the three months ended September 30, 2001. Due to the uncertainty regarding the realization of our federal general business credit carryforwards, we have recorded a valuation allowance against our income tax benefit for 2002. In
2001, we provided for income taxes at a rate of 40%. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>DISCONTINUED OPERATIONS
</I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On March 19, 2002, we sold our United Kingdom specialized staffing services business. As announced on July
20, 2001, we are currently attempting to sell our German specialized staffing business. On December 29, 2000, we sold our U.S. and European aviation and facility services businesses. In accordance with the provisions of Accounting Principles Board
Opinion No. 30, we have reflected the results of our European specialized staffing businesses and our U.S. and European aviation and facility services businesses as discontinued operations in the condensed consolidated balance sheets and statements
of operations and cash flows. For all periods presented, this presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the
results of continuing operations. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Income (Loss) From Discontinued Operations, Net of Taxes. </I>Revenues of
discontinued operations were $41.1 million and $62.7&nbsp;million for the three months ended September 30, 2002 and 2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued
operations were $36.0 million for the three months ended September 30, 2001. It is the Company&#146;s policy to allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of the discontinued
operations relative to the total net assets plus debt of the consolidated company. Income from discontinued operations of $2.4 million for the three months ended September 30, 2002 is net of the applicable interest expense of $765,000 and income tax
benefit of ($193,000). Loss from discontinued operations of ($7.5) million for the three months ended September 30, 2001 is net of the applicable interest expense of $865,000 and income tax expense of $726,000. The loss from discontinued operations
for 2001 included $6.4 million in special charges for potential uncollectible accounts receivable and the positioning of the business for sale. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Loss on Sale of Businesses&#151;European Specialized Staffing Services. </I>After a comprehensive review of the business by Deutsche Bank, and due to economic and capital market conditions, the
Company adjusted the net basis of the European specialized staffing services business in the third quarter of 2001 to approximately $92.0 million, taking a charge of $25.0 million. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Loss on Sale of Businesses&#151;U.S. and European Aviation and Facility Services Businesses. </I>On December 29, 2000, we sold our U.S. and European aviation and
facility services businesses for $185 million in cash to Securicor plc. The sale price for the U.S. and European aviation and facilities services businesses was subject to post-closing adjustments based upon the 2001 actual performance of the
businesses and a reconciliation of actual closing-date working capital to a target level of working capital. In 2001, we recorded an additional reserve of $5.2 million to accrue to the final settlement, and we expensed $4.3 million for various costs
related to the sale, including $2.0 million paid to Mr. Argenbright in satisfaction and termination of his performance bonus agreement, $1.0 million in estimated legal fees and $1.3 million in working capital adjustments. We recorded a related tax
benefit of $974,000. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>NET INCOME (LOSS) </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net income increased $72.5 million to $1.9 million for the three months ended September 30, 2002 from a loss of ($70.6) million for the
same period in 2001. The difference is primarily due to the special charges recorded in the third quarter of 2001 and the impairment charge recorded against the net assets of discontinued operations. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">COMPARISON OF RESULTS&#151;NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reported continuing operating results for 2002 include the marketing support services businesses and the non-core marketing division that
was sold in May 2002. Reported continuing operating results for 2001 include the marketing support services businesses, the non-core marketing division that was sold in May 2002 as well as the PIMMS store set-up business, which ceased operations
during the first quarter of 2001. </FONT></DIV>
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 <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Revenues.</I> Revenues decreased $10.0 million, or 9%, to $96.0 million for the nine months ended September 30, 2002
from $106.0 million for the same period in 2001. Revenues for the nine months ended September 30, 2002 included $1.5 million for the sold non-core marketing division, while revenues for the nine months ended September 30, 2001 included $918,000 for
the abandoned PIMMS operation and $3.5 million for the sold non-core marketing division. Excluding PIMMS and the sold division, revenues for the period decreased $7.1 million, or 7%. The decrease is a result of the general economic decline. Sales in
our consumer promotion and fulfillment division and our trade fulfillment division decreased from the same period of 2001 due to the economic slowdown and resulting cost reduction programs at our clients. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Cost of Services.</I> Cost of services decreased $6.1 million, or 13%, to $41.8 million for the nine months ended September 30, 2002
from $47.9 million for the same period in 2001. Cost of services for the nine months ended September 30, 2002 included $707,000 for the sold non-core marketing division, while cost of services for the nine months ended September 30, 2001 included
$389,000 for the abandoned PIMMS operation and $1.6 million for the sold marketing division. Excluding PIMMS and the sold division, cost of services decreased $4.8 million, or 10%. The decrease in cost of services is a result of the direct reduction
in variable costs, including labor related costs and material costs, associated with the reduction in sales between periods and to labor and shipping cost reduction programs implemented across all divisions. As a percentage of revenues, excluding
PIMMS and the sold division, cost of services decreased to 43.5% for the nine months ended September 30, 2002 from 45.2% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Gross Margin.</I> Gross margin decreased $3.9 million, or 7%, to $54.2 million for the nine months ended September 30, 2002 from $58.1 million for the same period in 2001. Gross margin for the nine
months ended September 30, 2002 included $829,000 for the sold non-core marketing division. Gross margin for the nine months ended September 30, 2001 included $529,000 from the abandoned PIMMS operation and $1.9 million for the sold division.
Excluding PIMMS and the sold division, gross margin decreased $2.3 million, or 4%. As a percentage of revenues, excluding PIMMS and the sold division, gross margin increased to 56.5% for the nine months ended September 30, 2002 from 54.8% for the
same period in 2001, due to the reasons discussed above. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Operating.</I> Operating expenses decreased $18.8
million, or 29%, to $45.3 million for the nine months ended September 30, 2002 from $64.1 million for the same period in 2001. Operating expenses for the nine months ended September 30, 2002 included $957,000 for the non-core marketing division sold
in May 2002, while operating expenses for the nine months ended September 30, 2001 included $529,000 for the abandoned PIMMS operations and $2.1 million for the sold non-core marketing division. Operating expenses in 2001 also included special
charges of $15.3 million consisting of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers&#146; compensation claims, legal and
other expenses related to the abandoned PIMMS operation, and $4.2 million for severance, legal, bonus and other costs associated with our efforts to streamline operations. Excluding PIMMS, the sold division and the special charges, operating
expenses decreased $1.8 million, or 4%. Approximately $0.9 million of the decrease can be attributed to cost savings gained on lease, maintenance and utility costs from the consolidation of several warehouses into one new facility in late 2001 and
to cost savings gained from initiatives implemented in early 2002 to reduce operating costs across all divisions. In addition, approximately $0.4 million of the decrease is due to the settlement of two legal disputes within the quarter for less that
the amount reserved in the third quarter of 2001, with an additional $0.5 million of the decrease due to the collection of amounts charged against bad debt expense in the fourth quarter of 2000. As a percentage of revenues, excluding PIMMS, the sold
division and the special charges, operating expenses increased to 47.0% for the nine months ended September 30, 2002 as compared to 45.4% for the same period in 2001 due to the fixed nature of certain operating costs in relation to the reduction in
revenues. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Corporate General and Administrative.</I> Corporate general and administrative expenses decreased
$9.3 million, or 79%, to $2.4&nbsp;million for the nine months ended September 30, 2002 from $11.7 million for the same period in 2001. The Company recorded special charges to corporate, general and administrative expenses of $8.0 million in 2001,
consisting of $3.7 million to adjust the note receivable balance due from the sale of the Company&#146;s U.S. industrial staffing businesses to its estimated net realizable value, a charge of $3.5 million to expense various business development
costs incurred which, based on the current economic environment, would not be realized and $800,000 for lease costs incurred in conjunction with the closing of the Atlanta corporate offices. Excluding these costs, corporate general and
administrative expenses decreased $1.3 million, or 35%, due to reductions in personnel and occupancy costs from the closing of the Atlanta corporate offices. As a percentage of revenues, excluding the special charges, these expenses decreased to
2.5% for the nine months ended September 30, 2002 from 3.6% for the same period in 2001. </FONT></DIV>
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 <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Depreciation and Amortization</I>. Depreciation and amortization decreased $10.0 million, or 71%, to $4.0 million for
the nine months ended September 30, 2002 from $14.0 million for the same period in 2001. Depreciation and amortization expense for 2001 included special charges to depreciation and amortization expense of $7.3 million consisting of $3.8 million for
various equipment and leasehold improvements at the facilities replaced during the third quarter of 2001 and $3.5 million for internally developed software which was replaced during the third quarter of 2001. Depreciation and amortization expense
for the nine months ended September 30, 2001 included approximately $2.6 million of amortization of goodwill, which is no longer being amortized in 2002 in accordance with SFAS No. 142. Excluding the special charges and the amortization of goodwill
and intangibles in 2001, depreciation and amortization remained consistent between periods. As a percentage of revenues, depreciation and amortization increased to 4.2% for the nine months ended September 30, 2002 from 3.9% for the same period in
2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Final PIMMS Severance Costs</I>. Final PIMMS severance costs represent severance costs related to the
abandonment of the PIMMS operation. We completed the closing of the PIMMS operation on March 16, 2001, and took a charge for the related severance expense of $2.5 million in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Operating Income (Loss)</I>. Operating income was $2.5 million for the nine months ended September 30, 2002 as compared to an operating loss of ($34.2) million for the
same period in 2001. The sold non-core marketing business contributed an operating loss of ($0.2) million to the 2002 results. The operating loss for the nine months ended September 30, 2001 included special charges of $30.7&nbsp;million,
amortization of goodwill of $2.6 million, a $2.5 million charge for the abandoned PIMMS operation and an operating loss of ($0.3) million from the sold non-core marketing business. Excluding these items, operating income for the nine months ended
September 30, 2002 increased to $2.7 million, or 2.8% of revenues, from operating income for the same period in 2001 of $1.9 million, or 1.9% of revenues. The increase was primarily a result of the margin improvement and operating efficiencies
gained in 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Interest Expense, Net.</I> Interest expense, net, represents the interest on our outstanding
debt allocated to continuing operations. Net interest expense increased $2.5 million, or 88%, to $5.4 million for the nine months ended September 30, 2002, from $2.9 million for the same period in 2001. The increase is due to additional amortization
of fees arising from the amendment of the Credit Facility in April 2002 and higher interest rates charged in the nine months ended September 30, 2002 compared to the same period in 2001. As a percentage of revenues, net interest expense was 5.6% for
the nine months ended September 30, 2002 as compared to 2.7% for the same period in 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Other Expense.</I>
Other expense includes losses incurred in the sale of a non-core marketing division and a note receivable. The total includes a $1.5 million loss on the May 2002 sale of a note receivable arising from the sale of the Company&#146;s U.S. staffing
business in 2000. The note, with a book value of $5.0 million, was sold for $3.5 million, resulting in the $1.5 million loss. Also in May 2002, the sale of a non-core marketing division for approximately $604,000 resulted in a loss on sale of
$275,000. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Income Tax Benefit.</I> Income tax benefit was $5.0 million for the nine months ended September 30,
2001. Due to the uncertainty regarding the realization of our federal general business credit carryforwards, we have recorded a valuation allowance against our income tax benefit for 2002. In 2001, we provided for income taxes at a rate of 40%.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>DISCONTINUED OPERATIONS </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">On March 19, 2002, we sold our United Kingdom specialized staffing services business. As announced on July 20, 2001, we are currently attempting to sell our German
specialized staffing business. On December 29, 2000, we sold our U.S. and European aviation and facility services businesses. In accordance with the provisions of Accounting Principles Board Opinion No. 30, we have reflected the results of our
European specialized staffing businesses and our U.S. and European aviation and facility services businesses as discontinued operations in the condensed consolidated balance sheets and statements of operations and cash flows. For all periods
presented, this presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the results of continuing operations. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Loss From Discontinued Operations, Net of Taxes. </I>Revenues of discontinued operations were $118.7 million and $168.1
million for the nine months ended September 30, 2002 and 2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued operations were $100.0 million and $102.9 million for the nine
months ended September 30, 2002 and 2001, respectively. It is the Company&#146;s policy to </FONT></DIV>
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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of the discontinued operations
relative to the total net assets plus debt of the consolidated company. The loss from discontinued operations of ($739,000) for the nine months ended September 30, 2002 is net of the applicable interest expense of $2.2 million and income tax
(benefit) of ($148,000). Loss from discontinued operations of ($7.5) million for the nine months ended September 30, 2001 is net of the applicable interest expense of $2.5 million and income tax expense of $579,000. The loss from discontinued
operations for 2001 included $6.4 million in special charges for potential uncollectible accounts receivable and the positioning of the business for sale. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Loss on Sale of Businesses&#151;European Specialized Staffing Services. </I>In order to reflect the current status of negotiations for the sale of the German staffing business, the Company recorded
an additional impairment charge of $4.1 million in the second quarter of 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Loss on Sale of
Businesses&#151;U.S. and European Aviation and Facility Services Businesses. </I>On December 29, 2000, we sold our U.S. and European aviation and facility services businesses for $185 million in cash to Securicor plc. The sale price for the U.S. and
European aviation and facilities services businesses was subject to post-closing adjustments based upon the 2001 actual performance of the businesses and a reconciliation of actual closing-date working capital to a target level of working capital.
In 2001, we recorded an additional reserve of $5.2 million to accrue to the final settlement, and we expensed $4.3 million for various costs related to the sale, including $2.0 million paid to Mr. Argenbright in satisfaction and termination of his
performance bonus agreement, $1.0 million in estimated legal fees and $1.3 million in working capital adjustments. We recorded a related tax benefit of $974,000. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Cumulative effect of change in accounting principle</I>. The completion of the initial impairment analysis under SFAS No. 142 resulted in an impairment charge in the amount of $20.7 million recorded
in 2002 as a cumulative change in accounting principle. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>NET LOSS </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Net loss decreased $42.6 million to a loss of ($30.3) million for the nine months ended September 30, 2002 from ($72.9) million for the
same period in 2001, due primarily to the special charges recorded in the third quarter of 2001 and the write down of the European staffing business, offset by the $20.7 million charge recorded in 2002 as a cumulative effect of change in accounting
principle. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">LIQUIDITY AND CAPITAL RESOURCES </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash used in operating activities was $1.6 million for the nine months ended September 30, 2002, compared to $23.4 million for the same period in 2001. Of the $1.6
million of cash used in operating activities for the period ended September 30, 2002, $2.7&nbsp;million of cash was used by discontinued operations. For the same period in 2001, cash used by discontinued operations was $18.7&nbsp;million. The
continuing operations provision of cash in 2002 is primarily the result of a federal tax refund offset in part by an increase in working capital. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash provided by investing activities for the nine months ended September 30, 2002 was $28.0 million compared to cash used by investing activities of $22.4 million for the same period in 2001. In 2002,
cash was generated through the sale of the United Kingdom specialized staffing business for $26.8 million, a note receivable for $3.5 million and a non-core marketing business for approximately $604,000. Additions to property and equipment used cash
of $2.9 million. Cash used in 2001 included a $12.9 million earn-out payment made for our 1999 acquisition of ServiceAdvantage and additions to property and equipment of $9.5 million. Capital expenditures for 2002 are anticipated to be significantly
lower than 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Cash used in financing activities for the nine months ended September 30, 2002 was $29.7 million
compared to cash provided by financing activities of continuing operations of $29.7 million for the same period in 2001. The March 19, 2002 sale of the United Kingdom specialized staffing services business and the sale of the note receivable and
non-core marketing asset provided funds for repayments on our Credit Facility of $28.3 million. Approximately $1.5 million in cash was used for costs associated with amending the Credit Facility in 2002. In 2001, we had net borrowings under our
Credit Facility of $31.9 million, using $2.3 million of these funds to repurchase 172,500 shares of our common stock. The exercise of stock options generated $175,000 in proceeds in 2001. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15 </FONT></DIV>


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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Credit Facility </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">We obtain our working capital from borrowings pursuant to a Credit Facility with a syndicate of commercial banks. Wachovia Bank, National Association is the Administrative Agent for the lenders. Our borrowings under the Credit
Facility are secured by a lien on substantially all of our assets and the assets of our operating subsidiaries. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">We were not in compliance with certain of our covenants under the Credit Facility as of December 31, 2001, and received a waiver from our bank group with respect to the non-compliance with these covenants through April 15, 2002. On
April 12, 2002, we reached an agreement with our banks to amend the facility. The amendment eliminated the defaults, extended the maturity of the Credit Facility from April 15, 2002 to January 3, 2003, reduced the amount we are permitted to borrow,
increased the interest rates that we are required to pay and modified our financial covenants. Under the amended agreement, at September 30, 2002, we were permitted to borrow up to $85.5 million. Approximately $75.7 million was outstanding under the
Credit Facility at September 30, 2002. The amount that we are permitted to borrow decreases incrementally each month to approximately $77.3 million as of December 31, 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Under the Credit Facility, we are required to satisfy covenants relating to minimum consolidated adjusted EBITDA, fixed charge coverage ratios and limitations on capital
expenditures, among others. We have monthly targets for each financial covenant that we must meet. We are also required to pursue the sale of our German specialized staffing business and opportunities to raise cash through the sale of debt or equity
securities. If we fail to pursue these transactions, we will be in default. Upon the occurrence of a default, unless our lenders grant a further waiver, we will not be permitted to borrow additional amounts under the Credit Facility, and the
outstanding amounts will become immediately due and payable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">At September 30, 2002, we had complied with all
financial covenants included in the Credit Facility, but were pursuing a business combination because we had not completed the sale of our German specialized staffing business or repaid the facility in full. We have engaged CIBC World Markets to
assist us in this process. It is anticipated that this process will run in parallel with our continued efforts to complete the sale of our German specialized staffing business and to raise cash through a sale of debt or equity securities, in
addition to the other measures which we are pursuing to obtain sufficient funds to repay the borrowings under the Credit Facility. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">We cannot assure you that we will successfully complete the disposition of our German business, the issuance of debt or equity securities or the refinancing of any amounts that remain outstanding under the Credit Facility.
We are dependent on the availability of borrowings pursuant to the Credit Facility to meet our working capital needs, capital expenditure requirements and other cash flow requirements. If borrowings under the Credit Facility are unavailable, we will
be required to seek additional sources of financing in order to fund our working capital needs. If we are unable to obtain additional sources of financing and cannot repay the outstanding balance of our Credit Facility when it becomes due, it is
likely that a business combination transaction, restructuring or liquidation will be required, or absent this the Company may not be able to continue as a going concern and may require some form of restructuring or disposition of selected operating
subsidiaries. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A NAME="tx396_6"></A>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">FOREIGN CURRENCY RISK </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Our discontinued operations include the European specialized staffing business. Revenues included in discontinued operations are received,
and operating costs are incurred, in foreign currencies (primarily the British pound and the Euro). The denomination of foreign subsidiaries&#146; account balances in their local currency exposes us to certain foreign exchange rate risks. We address
the exposure by financing most working capital needs in the applicable foreign currencies. However, our Credit Facility requires that we convert indebtedness outstanding in foreign currencies into dollars for purposes of determining the total amount
of indebtedness outstanding. An increase in the value of a foreign currency relative to the dollar has the effect of reducing the amount we are otherwise permitted to borrow pursuant to the Credit Facility. We have not engaged in hedging
transactions to reduce exposure to fluctuations in foreign currency exchange rates. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">INTEREST
RATE RISK </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We maintain a Credit Facility which subjects us to the risk of increased interest expense associated
with movements in market interest rates. Our Credit Facility had a balance outstanding of $75.7 million at September 30, 2002, which was at a variable rate of interest. Due to the short-term nature of the Credit Facility, the carrying value
approximates fair </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16 </FONT></DIV>


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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">value. Based on outstanding borrowings, it is estimated that an increase in the prevailing interest rates of 100 basis points would result in a
decrease in net income of approximately $125,000, or $0.01 per share, for the year ended December 31, 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">
<A NAME="tx396_7"></A>ITEM 4. CONTROLS AND PROCEDURES </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">As required by SEC rules, we have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing of this quarterly report. This evaluation was carried out under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no significant changes to our
internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the SEC&#146;s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure. </FONT></DIV>
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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">PART II&#151;OTHER INFORMATION </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A NAME="tx396_9"></A>ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Exhibits: </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>EXHIBIT</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>NUMBER</B></FONT></DIV> <HR
SIZE="1" NOSHADE WIDTH="56" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>DESCRIPTION</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="87" ALIGN="left" COLOR="#000000"></TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;3.1&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Restated and Amended Articles of Incorporation of AHL (incorporated by reference to the Registration Statement on Form 8-A dated March 3, 1997).</FONT></DIV>
</TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;3.2&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Bylaws of AHL (incorporated by reference to AHL&#146;s Annual Report on Form 10-K for the year ended December 31, 2001).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.1&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Specimen Common Stock Certificate (incorporated by reference to AHL&#146;s Registration Statement on Form S-1 (File No. 333-20315)).</FONT></DIV> </TD> </TR>

<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10.1*</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Third Amendment to Third Amended and Restated Credit Agreement and Consent, dated as of August 30, 2002, by and among AHL Services, Inc. and certain of its
subsidiaries, Wachovia Bank, National Association (London Branch), as European Swingline Lender, the financial institutions named therein and Wachovia Bank, National Association, as Administrative Agent.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">11.1*</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Computation of Earnings Per Share.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.1*</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="8"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="8%"> <DIV STYLE="margin-left:2%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.2*</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="91%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Filed herewith. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Reports on Form 8-K: </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">There were no reports on Form 8-K filed during the quarter ended September 30, 2002. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_10"></A>SIGNATURE </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">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. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD COLSPAN="3"> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5" WIDTH="44%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">AHL SERVICES, INC. (REGISTRANT)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="32"> </TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="44%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Date:&nbsp;&nbsp;&nbsp;&nbsp;November 14, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="4%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3" WIDTH="44%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;H<SMALL>EINZ</SMALL> S<SMALL>TUBBLEFIELD</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD>
</TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3" WIDTH="44%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Heinz Stubblefield</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Chief Financial Officer</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Duly Authorized Officer, Principal Financial and</FONT></DIV> <DIV
STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chief Accounting Officer)</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx396_11"></A><U>CERTIFICATIONS</U> </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">I, A. Clayton Perfall, certify that: </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">I have reviewed this quarterly report on Form 10-Q of AHL Services, Inc.; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">a) designed such
disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly
report is being prepared; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">b) evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly report (the &#147;Evaluation Date&#148;); and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the equivalent function): </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant&#146;s ability to record, process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">b) any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. </FONT></DIV>
</TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Date:&nbsp;&nbsp;&nbsp;&nbsp;November 14, 2002 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;A. C<SMALL>LAYTON</SMALL> P<SMALL>ERFALL</SMALL></FONT></DIV> <HR SIZE="1"
NOSHADE COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">A. Clayton Perfall</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Chief Executive Officer</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">20 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">I, Heinz Stubblefield, certify that: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">I have reviewed this quarterly report on Form 10-Q of AHL Services, Inc.; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">a) designed such
disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly
report is being prepared; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">b) evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly report (the &#147;Evaluation Date&#148;); and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the equivalent function): </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant&#146;s ability to record, process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">b) any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6.</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The registrant&#146;s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. </FONT></DIV>
</TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Date:&nbsp;&nbsp;&nbsp;&nbsp;November 14, 2002 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;H<SMALL>EINZ</SMALL> S<SMALL>TUBBLEFIELD</SMALL></FONT></DIV> <HR SIZE="1"
NOSHADE COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Heinz Stubblefield</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Chief Financial Officer</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">21 </FONT></DIV>

 </BODY></HTML>
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{"company-data": {"conformed-name": "AHL SERVICES INC", "cik": "0001030740", "assigned-sic": "7381", "irs-number": "582277249", "state-of-incorporation": "GA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-22195", "film-number": "02824800"}, "business-address": {"street1": "3353 PEACHTREE RD NE", "street2": "SUITE 1120", "city": "ATLANTA", "state": "GA", "zip": "30326", "phone": "404267222"}, "mail-address": {"street1": "3353 PEACHTREE RD NE", "street2": "SUITE 1120", "city": "ATLANTA", "state": "GA", "zip": "30326"}}
Form 10-Q
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[MARK ONE]
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[_]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission File No. 000-22195
AHL SERVICES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA
58-2277249
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
1000 WILSON BLVD, STE 910
ARLINGTON,
VA
22209
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number,
including area code
(703) 528-9688
Not
Applicable
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    [_]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable
date: 15,246,792 shares on November 1, 2002.
Table of Contents
AHL SERVICES, INC.
TABLE OF CONTENTS
PAGE
PART I—FINANCIAL INFORMATION
Item 1.
Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001
1
Condensed Consolidated Statements of Operations for the three and nine month periods ended
September 30, 2002 and 2001
2
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001
3
Notes to Condensed Consolidated Financial Statements
4
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
8
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
16
Item 4.
Controls and Procedures
17
PART II—OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K
18
SIGNATURE
19
CERTIFICATIONS
20
Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1—FINANCIAL STATEMENTS
AHL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
September 30,
2002
December 31,
2001
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
3,526
$
6,817
Accounts receivable, net of allowance of $5,791 and $7,650 in 2002 and 2001, respectively
19,312
16,349
Unbilled services
5,849
7,873
Work in process
1,097
1,350
Reimbursable customer expenses
5,786
5,542
Prepaid expenses and other
5,056
3,144
Income taxes receivable
462
10,997
Deferred income taxes
1,473
1,675
Net current assets of discontinued operations
288
1,022
Total current assets
42,849
54,769
Property and equipment, net
21,164
22,553
Other assets
451
341
Intangibles, net
4,104
4,300
Goodwill
78,272
98,995
Notes receivable
—
5,000
Net noncurrent assets of discontinued operations
30,453
58,725
Total assets
$
177,293
$
244,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
3,778
$
6,465
Accrued expenses
14,160
17,426
Customer deposits
2,614
4,961
Current portion of self-insurance reserves
1,114
1,296
Current portion of settlement obligation
9,000
—
Current portion of debt
75,848
27,035
Total current liabilities
106,514
57,183
Self-insurance reserves, less current portion
1,146
1,475
Settlement obligations, less current portion
9,000
18,000
Debt, less current portion
—
77,114
Total liabilities
116,660
153,772
Shareholders' equity:
Common stock, $.01 par value:
17,427,392 shares issued; 15,246,792 shares outstanding
175
175
Preferred stock, no par value: no shares outstanding
—
—
Paid-in capital
177,011
177,011
Accumulated deficit
(96,553
)
(66,275
)
Treasury stock at cost: 2,180,600 shares
(20,000
)
(20,000
)
Total shareholders' equity
60,633
90,911
Total liabilities and shareholders' equity
$
177,293
$
244,683
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
Table of Contents
AHL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended
September
30,
Nine Months Ended
September
30,
2002
2001
2002
2001
Revenues
$
30,108
$
32,791
$
96,038
$
106,045
Cost of services
12,531
14,704
41,834
47,902
Gross margin
17,577
18,087
54,204
58,143
Costs and expenses:
Operating
13,957
31,460
45,338
64,060
Corporate general and administrative
674
9,155
2,409
11,677
Depreciation and amortization
1,363
9,667
3,988
14,042
Final PIMMS severance costs
—
—
—
2,523
Operating income (loss)
1,583
(32,195
)
2,469
(34,159
)
Interest expense, net
2,047
1,101
5,401
2,877
Other expense
—
—
1,775
—
Loss from continuing operations before income taxes
(464
)
(33,296
)
(4,707
)
(37,036
)
Income tax benefit
—
(3,489
)
—
(4,985
)
Loss from continuing operations
(464
)
(29,807
)
(4,707
)
(32,051
)
Discontinued operations:
Income (loss) from discontinued operations, net of taxes
European specialized staffing services businesses
2,363
(7,483
)
(739
)
(7,508
)
Loss on sale of businesses, net of taxes
European specialized staffing services businesses
—
(25,001
)
(4,109
)
(25,001
)
U.S. and European aviation and facility services businesses
—
(8,326
)
—
(8,326
)
Income (loss) from discontinued operations
2,363
(40,810
)
(4,848
)
(40,835
)
Net income (loss) before cumulative effect of change in accounting principle
1,899
(70,617
)
(9,555
)
(72,886
)
Cumulative effect of change in accounting principle
—
—
(20,723
)
—
Net income (loss)
$
1,899
$
(70,617
)
$
(30,278
)
$
(72,886
)
Basic and diluted income (loss) per share:
Loss from continuing operations
$
(0.03
)
$
(1.95
)
$
(0.31
)
$
(2.09
)
Income (loss) from discontinued operations
$
0.15
$
(2.68
)
$
(0.32
)
$
(2.67
)
Cumulative effect of change in accounting principle
$
—
$
—
$
(1.36
)
$
—
Net income (loss)
$
0.12
$
(4.63
)
$
(1.99
)
$
(4.76
)
Basic and diluted weighted average common shares:
15,247
15,247
15,247
15,295
The accompanying notes are an integral part of these condensed consolidated
financial statements
2
Table of Contents
AHL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
Nine months ended September 30,
2002
2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(30,278
)
$
(72,886
)
Less: Loss from discontinued operations
(4,848
)
(40,835
)
Loss from continuing operations before cumulative effect of change in accounting principle
(25,430
)
(32,051
)
Cumulative effect of change in accounting principle
20,723
—
Adjustments to reconcile loss from continuing operations to net cash used in operating activities of continuing
operations:
Depreciation and amortization
3,988
14,042
Loss on sale of assets
1,775
—
Amortization of debt issuance costs
883
—
Noncash impairment and other related charges
—
9,200
Changes in operating assets and liabilities:
Accounts receivable and unbilled services, net
(1,132
)
12,998
Work in process, prepaid expenses and other
(1,531
)
(5,498
)
Accounts payable
(2,687
)
1,832
Accrued expenses and other liabilities
(5,706
)
1,671
Self-insurance reserves
(511
)
643
Income taxes receivable
10,535
(4,489
)
Deferred income taxes
202
(3,000
)
Net cash provided by (used in) operating activities of continuing operations
1,109
(4,652
)
Net cash used in operating activities of discontinued operations
(2,686
)
(18,703
)
Net cash used in operating activities
(1,577
)
(23,355
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net
(2,914
)
(9,540
)
Proceeds from sale of note receivable
3,500
—
Proceeds from sale of assets
604
—
Proceeds from sale of discontinued operations, net of transaction costs
26,844
—
Acquisition consideration paid
—
(12,901
)
Net cash provided by (used in) investing activities
28,034
(22,441
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under Credit Facility
(28,301
)
31,882
Payment of debt issuance costs
(1,447
)
—
Repurchases of AHL common stock
—
(2,335
)
Proceeds from exercise of stock options
—
175
Net cash provided by (used in) financing activities
(29,748
)
29,722
Net decrease in cash and cash equivalents
(3,291
)
(16,074
)
Cash and cash equivalents at beginning of period
6,817
19,926
Cash and cash equivalents at end of period
$
3,526
$
3,852
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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AHL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
1.
BUSINESS DESCRIPTION AND BASIS OF PRESENTATION
BUSINESS DESCRIPTION
The continuing
operations of AHL Services, Inc. ("AHL" or the "Company"), a Georgia corporation incorporated in March 1997, provide outsourced marketing support services. The Company's service offerings include trade promotion and
fulfillment services, consumer promotion and fulfillment services and retail merchandising. The Company currently operates in one segment, with continuing operations in North America.
BASIS OF PRESENTATION
The condensed consolidated financial statements included herein,
except for the December 31, 2001 balance sheet, which was extracted from the audited financial statements of December 31, 2001, have been prepared by AHL without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (all of which are normal and recurring in nature) that are necessary for a fair presentation of the interim periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.
The results of operations for the three and nine month periods ended September 30, 2002 are not necessarily indicative of the results to be expected for any subsequent quarter or the year ending December 31, 2002. These unaudited consolidated
financial statements and the notes included herein should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.
Reported results from operations for 2002 include the continuing marketing support services businesses. Results from operations for 2001 include the
continuing marketing services businesses as well as the PIMMS store set-up business which ceased operations on March 16, 2001.
On July
20, 2001, AHL announced, as part of the strategic transformation of the business, its intention to divest the European specialized staffing services business. On March 19, 2002, the Company sold its United Kingdom specialized staffing services
business for $29.5 million in cash. AHL is in discussions with potential acquirers of the German staffing business. See Note 2 for a discussion of these divestitures. In accordance with the provisions of Accounting Principles Board Opinion No. 30,
the Company has reflected the results of its European specialized staffing businesses as discontinued operations in the accompanying condensed consolidated balance sheets and statements of operations and cash flows. For all periods presented, this
presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the results of continuing operations. The accompanying notes to the
condensed consolidated financial statements, except Note 2, relate only to the continuing operations of AHL.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform with current year presentation.
2.
DIVESTITURES AND ABANDONMENTS
DISCONTINUED OPERATIONS
On March 19, 2002, AHL sold its United Kingdom specialized staffing services business for $29.5
million in cash. Net of transaction costs of $2.7 million, the sale yielded $26.8 million of proceeds, which were used to reduce outstanding debt.
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As announced on July 20, 2001, AHL is currently attempting to sell its German specialized staffing
services business. Deutsche Bank was retained as the Company's advisors and discussions are underway with potential acquirers. Management believes that the Company will be able to dispose of the German specialized staffing business in the
upcoming months. Net proceeds from the divestiture will be used to further reduce outstanding debt.
After a comprehensive review of the
European specialized staffing services business by Deutsche Bank, and due to economic and capital market conditions, the Company adjusted the net basis of the business in the third quarter of 2001 to approximately $92.0 million, taking a charge of
$25.0 million. Based on negotiations for the sale of the German specialized staffing services business, and concurrent with a $9.4 million charge taken for the UK business, AHL recorded an additional charge of $20.8 million related to the impairment
of goodwill on the German business in the fourth quarter of 2001.
In order to reflect the current status of negotiations for the sale of
the German staffing business, the Company recorded an additional impairment charge of $4.1 million in the second quarter of 2002.
Revenues of discontinued operations were $41.1 million and $62.7 million for the three months ended September 30, 2002 and 2001, respectively, and $118.7 million and $168.1 million for the nine months ended September 30, 2002 and
2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued operations were $41.1 million and $36.0 million for the three months ended September 30, 2002 and 2001, respectively, and
$100.0 million and $102.9 million for the nine months ended September 30, 2002 and 2001, respectively. It is the Company's policy to allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of
the discontinued operations relative to the total net assets plus debt of the consolidated company. Interest allocated to discontinued operations was $765,000 and $865,000 for the three months ended September 30, 2002 and 2001, respectively, and
$2.2 million and $2.5 million for the nine months ended September 30, 2002 and 2001, respectively. Income (loss) from discontinued operations of $2.4 million and ($7.5) million for the three months ended September 30, 2002 and 2001, respectively,
are net of income tax provision (benefit) of ($193,000) and $726,000 for the same period in 2002 and 2001, respectively. Loss from discontinued operations of ($739,000) and ($7.5) million for the nine months ended September 30, 2002 and 2001,
respectively, are net of income tax provision (benefit) of ($148,000) and $579,000 for the same period in 2002 and 2001, respectively.
OTHER DIVESTITURES AND ABANDONMENTS
On December 29, 2000, AHL sold its U.S. and European aviation and facility services
businesses for $185 million in cash to Securicor plc ("Securicor"), a business services company headquartered in the United Kingdom. The sale price for the U.S. and European aviation and facilities services businesses was subject to
post-closing adjustments based upon the 2001 actual performance of the businesses and a reconciliation of actual closing-date working capital to a target level of working capital. At December 31, 2001, the Company had reserved $18.0 million for the
final adjustments.
On April 12, 2002, AHL entered into a definitive settlement agreement with Securicor pursuant to which AHL agreed to
pay Securicor $13.0 million with respect to the amount of the adjustments to the purchase price. Securicor also released the Company from all pending and potential indemnity claims related to the sale of the U.S. and European aviation and facility
services businesses, with limited exceptions. In connection with the settlement, AHL agreed to pay Mr. Frank Argenbright, the Chairman of AHL's board of directors, $5.0 million.
AHL's obligation to pay Securicor the $13.0 million settlement payment is evidenced by two secured, subordinated promissory notes in the amounts of $10.0 million and $3.0 million. The
Company's obligation to pay the $13.0 million settlement payment matures in two installments. The first installment, in the amount of $9.0 million, matures on April 12, 2003; the remaining installment of $4.0 million matures on October 12,
2003. AHL may prepay the notes at any time without premium or penalty. The notes are secured by a lien on substantially all of the Company's assets. AHL's obligation to pay the settlement amount, and the lien securing its obligation, is
subordinate to its obligation to pay all amounts outstanding or due pursuant to its existing Credit Facility and any substitute or replacement senior secured bank credit arrangement. The notes bear interest at a rate of 7% per annum. Interest on the
notes will accrue and be added to the principal until the Company repays or refinances the amounts outstanding under its Credit Facility, at which time interest on the notes will be payable quarterly. AHL's obligation to pay Mr. Argenbright
$5.0 million is unsecured and does not bear interest. The obligation matures on October 12, 2003. In addition, in connection with satisfaction and termination of the Performance Bonus Program approved by AHL's shareholders in May 2001, AHL
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agreed to guarantee up to $10,000,000 of Mr. Argenbright's personal debt for a period of three
years from the date of the sale of our European staffing business or such earlier time as allowed by our Credit Facility with such guaranty subject to approval by the holders of the Credit Facility.
3.
DEBT
The Company obtains its
working capital from borrowings pursuant to a Credit Facility with a syndicate of commercial banks. Wachovia Bank, National Association is the Administrative Agent for the lenders. The Company's borrowings under the Credit Facility are secured
by a lien on substantially all of its assets and the assets of its operating subsidiaries.
The Company was not in compliance with
certain of its covenants as of December 31, 2001, and received a waiver from its bank group with respect to the non-compliance with these covenants through April 15, 2002. On April 12, 2002, AHL reached an agreement with its banks to amend the
facility. The amendment eliminated the defaults, extended the maturity of the Credit Facility from April 15, 2002 to January 3, 2003, reduced the amount the Company is permitted to borrow, increased the interest rates on the Credit Facility and
modified the financial covenants. Under the amended agreement, at September 30, 2002, the Company was permitted to borrow up to $85.5 million. Approximately $75.7 million was outstanding under the Credit Facility at September 30, 2002. The amount
that the Company is permitted to borrow decreases incrementally each month to approximately $77.3 million as of December 31, 2002.
Under
the Credit Facility, AHL is required to satisfy covenants relating to minimum consolidated adjusted EBITDA, fixed charge coverage ratios and limitations on capital expenditures, among others. The Company has monthly targets for each financial
covenant that it must meet. AHL is also required to pursue a sale of its German specialized staffing business. Finally, AHL is required to pursue opportunities to raise cash through the sale of debt or equity securities. If the Company fails to
pursue these transactions, it will be in default. Upon the occurrence of a default, unless the lenders grant a further waiver, the Company will not be permitted to borrow additional amounts under the Credit Facility, and the outstanding amounts will
become immediately due and payable.
At September 30, 2002, AHL had complied with all financial covenants included in the Credit
Facility, but was pursuing a business combination transaction because it had not completed the sale of its German specialized staffing business or repaid the facility in full. AHL has engaged CIBC World Markets to assist it in this process. It is
anticipated that this process will run in parallel with its continued efforts to complete the sale of the German specialized staffing business and to raise cash through a sale of debt or equity securities, in addition to the other measures which AHL
is pursuing to obtain sufficient funds to repay the borrowings under the Credit Facility.
The Company cannot provide assurance that it
will successfully complete the disposition of its German business, the issuance of debt or equity securities or the refinancing of any amounts that may remain outstanding under the Credit Facility. The Company is dependent on the availability of
borrowings pursuant to the Credit Facility to meet its working capital needs, capital expenditure requirements and other cash flow requirements. If borrowings under the Credit Facility are unavailable, the Company will be required to seek additional
sources of financing in order to fund its working capital needs. If the Company is unable to obtain additional sources of financing and cannot repay the outstanding balance of its Credit Facility when it becomes due, it is likely that a business
combination transaction, restructuring or liquidation will be required, or absent this the Company may not be able to continue as a going concern and may require some form of restructuring or disposition of selected operating subsidiaries.
4.
RESTRUCTURE AND OTHER UNUSUAL ITEMS
Due to the difficult economic environment, the Company performed a strategic review of continuing operations and recorded charges totaling $37.5 million during the third and fourth quarters of 2001. Charges to operating expenses
totaled $15.8 million and consisted of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers' compensation claims, legal and
other expenses related to the abandoned PIMMS operation, and $4.7 million for legal, bonus, severance for 66 employees and other costs associated with the Company's efforts to streamline operations. In the fourth quarter of 2001, the Company
recorded an additional charge of $2.9 million to reserve against an outstanding receivable for a customer in bankruptcy proceedings. Charges to corporate general and administrative expenses totaled $10.9 million and included a charge of $3.7 million
to adjust the note receivable balance due from the sale of the Company's U.S. specialized staffing businesses to its estimated net realizable value. The remaining $7.2 million of corporate general and administrative charges included $3.8
million to expense various business development costs incurred which, based
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on the current economic environment, will not be realized and charges of $2.6 million and $823,000 for
severance for twelve employees and lease costs, respectively, incurred in conjunction with the closing of the Atlanta corporate offices. Finally, the Company recorded additional charges to depreciation and amortization expense of $7.9 million during
2001, consisting of $4.4 million for various equipment and leasehold improvements at the facilities replaced during 2001 and $3.5 million for internally developed software which was replaced during 2001. During the third quarter of 2002, the
settlement of two legal disputes resulted in the release of reserves totaling $0.4 million. In addition, the 2002 collection of amounts charged against bad debt expense in the fourth quarter of 2000 resulted in a release of $0.2 million and $0.3
million in reserves in the second and third quarters of 2002, respectively.
On December 28, 2000, AHL decided to abandon operations of
its store set-up business unit, formerly called PIMMS. The Company completed the closing of the PIMMS business unit on March 16, 2001, and recorded a final charge for the related severance expense for 188 employees of approximately $2.5 million in
2001.
The restructure charges are recorded in accordance with EITF No. 94-3, "Liability Recognition for Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". The following table summarizes the activity in the restructuring liability accounts from December 31, 2001 to September 30, 2002:
December 31,
2001
Usage
Reversal
September 30,
2002
(In thousands)
Severance and related personnel expenses
$
2,719
$
(2,444
)
$
—
$
275
Lease termination costs
4,361
(1,633
)
(188
)
2,540
Total
$
7,080
$
(4,077
)
$
(188
)
$
2,815
Management believes that the remaining reserves for restructuring are adequate to complete
its plan. The restructuring reserves are included in accrued expenses.
5.
OTHER EXPENSE
Other expense
includes losses incurred in the May 2002 sale of a non-core marketing division and a note receivable. The total includes a $1.5 million loss on the sale of a note receivable arising from the sale of the Company's U.S. staffing business in 2000.
The note, with a book value of $5.0 million, was sold for $3.5 million, resulting in the $1.5 million loss. Also in May 2002, the sale of a non-core marketing division for approximately $604,000 resulted in a loss on sale of $275,000.
6.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, SFAS No. 142, "Goodwill and Other Intangible Assets", was issued. Under SFAS No. 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separable
intangible assets that are not deemed to have indefinite life will continue to be amortized over their useful lives. The Company adopted the provisions of SFAS No. 142 effective January 1, 2002. The following table presents the results of the
Company for all periods presented on a comparable basis (in thousands expect per share information):
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Three months ended
September
30,
Nine months ended
September
30,
2002
2001
2002
2001
Reported net income (loss)
$
1,899
$
(70,617
)
$
(30,278
)
$
(72,886
)
Add: Goodwill amortization
—
864
—
2,592
Adjusted net income (loss)
$
1,899
$
(69,753
)
$
(30,278
)
$
(70,294
)
Basic and diluted net income (loss) per share:
Reported net income (loss)
$
0.12
$
(4.63
)
$
(1.99
)
$
(4.76
)
Add: Goodwill amortization
—
0.06
—
0.17
Adjusted net income (loss)
$
0.12
$
(4.57
)
$
(1.99
)
$
(4.59
)
The standard also requires a reassessment of the useful lives of identifiable intangible
assets other than goodwill and a test for impairment of goodwill and intangibles with indefinite lives annually, unless events and circumstances indicate that the carrying amounts may not be recoverable. Following the impairment analysis under SFAS
No. 142, as of January 1, 2002 the Company recorded an impairment charge in the amount of $20.7 million as a cumulative change in accounting principle in the accompanying condensed consolidated statements of operations. The Company will be
completing its annual impairment analysis in the fourth quarter of 2002.
In August 2001, SFAS No. 143, "Accounting for Asset
Retirement Obligations" (effective for AHL January 1, 2003) and SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets" (effective for AHL January 1, 2002) were issued. SFAS No. 143 requires that entities recognize
the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of. The statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", and among other factors, establishes criteria
beyond those previously specified in SFAS No. 121 to determine when a long-lived asset is to be considered as held for sale. The Company is assessing the impact of the adoption of SFAS No. 143 and SFAS No. 144 on its financial position and results
of operations.
ITEM 2—
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements made in this Quarterly Report on Form 10-Q and other written or oral statements made by or on behalf of AHL may
constitute "forward-looking statements" within the meaning of the federal securities laws. When used in this report, the words "believes", "expects", "anticipates", "estimates" and similar
expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, estimates or projections relating to the future, are
forward-looking statements within the meaning of these laws. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. Management believes that these
forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, other than as required by law.
Among the important factors that could cause actual results to differ materially from those indicated in our forward-looking statements are: our ability to find a buyer for, and to negotiate and close
the sale of our German specialized staffing business; our ability to close on a sale of debt or equity securities in the upcoming months; our ability to obtain an additional source of financing to refinance the indebtedness outstanding under our
Credit Facility; our ability to continue to satisfy our covenants under our Credit Facility; reliance on the trend toward outsourcing marketing services; reliance on a small number of clients for a significant portion of our revenues; dependence on
our labor force;
8
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competition in our industry; and general economic conditions. These and other risks are discussed in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 16, 2002.
The following discussion and analysis of the financial
condition and results of operations of AHL should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2001, and included in our Annual Report on Form 10-K as filed with the Securities
and Exchange Commission.
In our Form 10-K filed with the Securities and Exchange Commission for the year ended
December 31, 2001, we identified critical accounting policies and estimates for our business. There have been no material changes to these policies and estimates for our business.
OVERVIEW
AHL Services,
Inc. is a leading provider of outsourced marketing support services. Our 1998 acquisition of Gage Marketing Services, which has been in the marketing support services business for over 45 years, provided us with experienced personnel that have an
understanding of the industry. Our integrated marketing execution solutions enhance the effectiveness and efficiency of many of the world's most respected marketing companies. We deliver programs developed by manufacturers, retailers, service
providers and advertising agencies, and are active in both business-to-consumer and business-to-business arenas. Our strategic offerings include trade promotion and fulfillment services, consumer promotion and fulfillment services and retail
merchandising. Our successful delivery of these product offerings has enabled us to establish long-term client relationships with many of the largest companies in the world, with partnerships extending over several decades. Clients span a range of
Global 500 companies including major enterprises in the automotive, consumer products, entertainment, retail and technology sectors.
Historically we also have operated specialized staffing businesses in the United Kingdom and Germany. On March 19, 2002, we sold our United Kingdom specialized staffing services business for $29.5 million in cash. We are
currently in the process of divesting our German staffing business. Deutsche Bank was retained as our advisors and discussions are underway with potential acquirers. Management believes that AHL will be able to dispose of the German specialized
staffing business in the upcoming months.
RESULTS OF OPERATIONS
We derive our revenue primarily from three sources: (1) consumer promotion and fulfillment services, (2) trade promotion and fulfillment
services and (3) retail merchandising services. Within our consumer promotion and fulfillment services division, our call centers recognize revenue based on the number of calls and agents assigned, according to written pricing agreements. Our
consumer and trade promotion and fulfillment services divisions record revenue at the conclusion of the material selection, packaging and shipping process. Our retail merchandising services division recognizes revenue as services are rendered, based
on contracted hourly billing rates. In general, we recognize revenues as programs are completed, services are rendered and/or as products are shipped in accordance with the terms of the contracts. Some of the contracts include postage and other
items purchased by us as an agent on behalf of our client. For these items, we record the net billings to our customers as revenue.
Cost of services represents the direct costs, consisting primarily of wages and related benefits, attributable to a specific contract, as well as certain related expenses such as workers' compensation and other direct
labor-related expenses.
Operating expenses represent primarily fixed expenses which directly support business
operations, such as plant management, facility expenses (such as rent, utilities and communication costs), equipment leasing, maintenance, information technology expenses, sales, marketing, finance, human resources and divisional management.
Corporate general and administrative expenses include the cost of the corporate management team and corporate,
legal, audit and outside service fees incurred to support and manage our operations and facilities.
The following
table sets forth consolidated statements of operations data as a percentage of revenues for the periods indicated:
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Three Months Ended September 30,
Nine Months Ended September 30,
2002
2001
2002
2001
Revenues
100.0
%
100.0
%
100.0
%
100.0
%
Cost of services
41.6
44.8
43.6
45.2
Gross margin
58.4
55.2
56.4
54.8
Costs and expenses:
Operating
46.4
95.9
47.2
60.4
Corporate general and administrative
2.2
27.9
2.5
11.0
Depreciation and amortization
4.5
29.5
4.1
13.2
Final PIMMS severance costs
—
—
—
2.4
Operating income (loss)
5.3
(98.1
)
2.6
(32.2
)
Interest expense, net
6.8
3.4
5.6
2.7
Other expense
—
—
1.9
—
Loss from continuing operations before income taxes
(1.5
)
(101.5
)
(4.9
)
(34.9
)
Income tax benefit
—
(10.6
)
—
(4.7
)
Loss from continuing operations
(1.5
)
(90.9
)
(4.9
)
(30.2
)
Discontinued operations:
Income (loss) from discontinued operations, net of taxes
European specialized staffing services businesses
7.8
(22.8
)
(0.7
)
(7.1
)
Loss on sale of businesses, net of taxes
European specialized staffing services businesses
—
(76.2
)
(4.3
)
(23.6
)
U.S. and European aviation and facility services businesses
—
(25.4
)
—
(7.8
)
Income (loss) from discontinued operations
7.8
(124.4
)
(5.0
)
(38.5
)
Net income (loss) before cumulative effect of accounting change
6.3
(215.3
)
(9.9
)
(68.7
)
Cumulative effect of accounting change
—
—
(21.6
)
—
Net income (loss)
6.3
%
(215.3
%)
31.5
%)
(68.7
%)
COMPARISON OF RESULTS—THREE MONTHS ENDED
SEPTEMBER 30, 2002 AND 2001
Revenues.
Revenues decreased $2.7 million, or 8%, to $30.1 million for the
three months ended September 30, 2002 from $32.8 million for the same period in 2001. Revenues for the three months ended September 30, 2001 included $989,000 from a non-core marketing division that was sold in May 2002. Excluding the effect of this
division, revenues decreased $1.7 million, or 5%, from the same period in 2001, primarily as a result of the general economic decline. Sales in our consumer promotion and fulfillment division and our trade fulfillment division decreased from the
same period of 2001 due to the economic slowdown and resulting cost reduction programs at our clients. Our retail merchandising division has experienced a decline in revenue between periods due to the decrease in sales to a customer in bankruptcy
proceedings.
Cost of Services.
Cost of services decreased $2.2 million, or 15%, to $12.5 million for the
three months ended September 30, 2002 from $14.7 million for the same period in 2001. Cost of services for the three months ended September 30, 2001 included approximately $456,000 from the sold non-core marketing division. Excluding the effects
from the sold division, cost of services decreased $1.7 million, or 12%. The decrease in cost of services is a result of the direct reduction in variable costs, including labor related costs and material costs, associated with the reduction in sales
between periods, as well as cost savings from the implementation of labor and shipping cost reduction programs across all divisions. As a percentage of revenues, cost of services decreased to 41.6% for the three months ended September 30, 2002 from
44.8% for the same period in 2001.
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Gross Margin.
Gross margin decreased $510,000, or 3%, to $17.6 million for the three months ended September 30,
2002 from $18.1 million for the same period in 2001. Excluding the effect of the sold non-core marketing division, gross margin increased slightly. As a percentage of revenues, gross margin increased to 58.4% for the three months ended September 30,
2002, from 55.2% for the same period in 2001.
Operating.
Operating expenses decreased $17.5 million, or
56%, to $14.0 million for the three months ended September 30, 2002 from $31.5 million for the same period in 2001. Operating expenses for the three months ended September 30, 2001 included $619,000 in costs from the sold non-core marketing division
and special charges of $15.3 million, consisting of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers' compensation
claims, legal and other expenses related to the abandoned PIMMS operation, and $4.2 million for severance, legal, bonus and other costs associated with efforts to streamline operations. Excluding the effects of the sold division and the special
charges, operating expenses decreased $1.5 million, or 10%. Approximately $0.8 million of the decrease can be attributed to cost savings gained on lease, maintenance and utility costs from the consolidation of several warehouses into one new
facility in late 2001, and to cost savings gained from initiatives implemented in early 2002 to reduce operating costs across all divisions. In addition, approximately $0.4 million of the decrease is due to the settlement of two legal disputes
within the third quarter for less that the amount reserved in the third quarter of 2001, with the final $0.3 million of the decrease due to the collection of amounts charged against bad debt expense in the fourth quarter of 2000. As a percentage of
revenues, excluding the special charges and the sold non-core marketing division, operating expenses decreased to 46.4% for the three months ended September 30, 2002 as compared to 48.7% for the same period in 2001.
Corporate General and Administrative.
Corporate general and administrative expenses decreased $8.5 million, or 93%, to $674,000 for
the three months ended September 30, 2002 from $9.2 million for the same period in 2001. The Company recorded special charges to corporate general and administrative expenses of $8.0 million in the period ending September 30, 2001, consisting of
$3.7 million to adjust the note receivable balance due from the sale of the Company's U.S. industrial staffing businesses to its estimated net realizable value, a charge of $3.5 million to expense various business development costs incurred
which, based on the economic environment, would not be realized and $800,000 for lease costs incurred in conjunction with the closing of the Atlanta corporate offices. Excluding the special charges, corporate general and administrative charges
decreased $493,000 or 42%. The decrease is attributed to the reduction in personnel and occupancy costs from the closing of the Atlanta corporate headquarters. As a percentage of revenues, excluding the special charges, corporate general and
administrative expenses decreased to 2.2% for the three months ended September 30, 2002, from 3.7% for the same period in 2001.
Depreciation and Amortization
. Depreciation and amortization decreased $8.3 million, or 86%, to $1.4 million for the three months ended September 30, 2002 from $9.7 million for the same period in 2001. Depreciation and
amortization expense for 2001 included special charges to depreciation and amortization expense of $7.3 million consisting of $3.8 million for various equipment and leasehold improvements at the facilities replaced during the third quarter of 2001
and $3.5 million for internally developed software which was replaced during the third quarter of 2001. Depreciation and amortization expense for the three months ended September 30, 2001 includes approximately $864,000 of amortization of goodwill
which is no longer being amortized in 2002 in accordance with SFAS No. 142. Excluding the special charges and the amortization of goodwill in 2001, depreciation and amortization decreased 4% between periods. As a percentage of revenues, excluding
the special charges and the amortization of goodwill and intangibles, depreciation and amortization remained consistent at 4.5% between periods.
Operating Income (Loss)
. Operating income was $1.6 million for the three months ended September 30, 2002 as compared to an operating loss of ($32.2) million for the same period in 2001.
Excluding the special charges, amortization of goodwill and the sold non-core marketing division, operating loss was ($531,000) in 2001. As a percentage of revenues, operating income was 5.3% for the three months ended September 30, 2002 as compared
to an operating loss of (1.7%) for the same period in 2001, primarily due to the improvement in margin and the reduction in operating costs in 2002.
Interest Expense, Net.
Interest expense, net, represents the interest on our outstanding debt allocated to continuing operations. Net interest expense increased $946,000, or 86%, to $2.0 million
for the three months ended September 30, 2002 from $1.1 million for the same period in 2001. The increase is due to additional amortization of fees arising from the amendment of the Credit Facility in April 2002 and higher interest rates charged in
the three months ended
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September 30, 2002 compared to the same period in 2001. As a percentage of revenues, net interest expense was 6.8% for the three months ended
September 30, 2002 as compared to 3.4% for the same period in 2001.
Income Tax Benefit.
Income tax benefit
was $3.5 million for the three months ended September 30, 2001. Due to the uncertainty regarding the realization of our federal general business credit carryforwards, we have recorded a valuation allowance against our income tax benefit for 2002. In
2001, we provided for income taxes at a rate of 40%.
DISCONTINUED OPERATIONS
On March 19, 2002, we sold our United Kingdom specialized staffing services business. As announced on July
20, 2001, we are currently attempting to sell our German specialized staffing business. On December 29, 2000, we sold our U.S. and European aviation and facility services businesses. In accordance with the provisions of Accounting Principles Board
Opinion No. 30, we have reflected the results of our European specialized staffing businesses and our U.S. and European aviation and facility services businesses as discontinued operations in the condensed consolidated balance sheets and statements
of operations and cash flows. For all periods presented, this presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the
results of continuing operations.
Income (Loss) From Discontinued Operations, Net of Taxes.
Revenues of
discontinued operations were $41.1 million and $62.7 million for the three months ended September 30, 2002 and 2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued
operations were $36.0 million for the three months ended September 30, 2001. It is the Company's policy to allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of the discontinued
operations relative to the total net assets plus debt of the consolidated company. Income from discontinued operations of $2.4 million for the three months ended September 30, 2002 is net of the applicable interest expense of $765,000 and income tax
benefit of ($193,000). Loss from discontinued operations of ($7.5) million for the three months ended September 30, 2001 is net of the applicable interest expense of $865,000 and income tax expense of $726,000. The loss from discontinued operations
for 2001 included $6.4 million in special charges for potential uncollectible accounts receivable and the positioning of the business for sale.
Loss on Sale of Businesses—European Specialized Staffing Services.
After a comprehensive review of the business by Deutsche Bank, and due to economic and capital market conditions, the
Company adjusted the net basis of the European specialized staffing services business in the third quarter of 2001 to approximately $92.0 million, taking a charge of $25.0 million.
Loss on Sale of Businesses—U.S. and European Aviation and Facility Services Businesses.
On December 29, 2000, we sold our U.S. and European aviation and
facility services businesses for $185 million in cash to Securicor plc. The sale price for the U.S. and European aviation and facilities services businesses was subject to post-closing adjustments based upon the 2001 actual performance of the
businesses and a reconciliation of actual closing-date working capital to a target level of working capital. In 2001, we recorded an additional reserve of $5.2 million to accrue to the final settlement, and we expensed $4.3 million for various costs
related to the sale, including $2.0 million paid to Mr. Argenbright in satisfaction and termination of his performance bonus agreement, $1.0 million in estimated legal fees and $1.3 million in working capital adjustments. We recorded a related tax
benefit of $974,000.
NET INCOME (LOSS)
Net income increased $72.5 million to $1.9 million for the three months ended September 30, 2002 from a loss of ($70.6) million for the
same period in 2001. The difference is primarily due to the special charges recorded in the third quarter of 2001 and the impairment charge recorded against the net assets of discontinued operations.
COMPARISON OF RESULTS—NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
Reported continuing operating results for 2002 include the marketing support services businesses and the non-core marketing division that
was sold in May 2002. Reported continuing operating results for 2001 include the marketing support services businesses, the non-core marketing division that was sold in May 2002 as well as the PIMMS store set-up business, which ceased operations
during the first quarter of 2001.
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Revenues.
Revenues decreased $10.0 million, or 9%, to $96.0 million for the nine months ended September 30, 2002
from $106.0 million for the same period in 2001. Revenues for the nine months ended September 30, 2002 included $1.5 million for the sold non-core marketing division, while revenues for the nine months ended September 30, 2001 included $918,000 for
the abandoned PIMMS operation and $3.5 million for the sold non-core marketing division. Excluding PIMMS and the sold division, revenues for the period decreased $7.1 million, or 7%. The decrease is a result of the general economic decline. Sales in
our consumer promotion and fulfillment division and our trade fulfillment division decreased from the same period of 2001 due to the economic slowdown and resulting cost reduction programs at our clients.
Cost of Services.
Cost of services decreased $6.1 million, or 13%, to $41.8 million for the nine months ended September 30, 2002
from $47.9 million for the same period in 2001. Cost of services for the nine months ended September 30, 2002 included $707,000 for the sold non-core marketing division, while cost of services for the nine months ended September 30, 2001 included
$389,000 for the abandoned PIMMS operation and $1.6 million for the sold marketing division. Excluding PIMMS and the sold division, cost of services decreased $4.8 million, or 10%. The decrease in cost of services is a result of the direct reduction
in variable costs, including labor related costs and material costs, associated with the reduction in sales between periods and to labor and shipping cost reduction programs implemented across all divisions. As a percentage of revenues, excluding
PIMMS and the sold division, cost of services decreased to 43.5% for the nine months ended September 30, 2002 from 45.2% for the same period in 2001.
Gross Margin.
Gross margin decreased $3.9 million, or 7%, to $54.2 million for the nine months ended September 30, 2002 from $58.1 million for the same period in 2001. Gross margin for the nine
months ended September 30, 2002 included $829,000 for the sold non-core marketing division. Gross margin for the nine months ended September 30, 2001 included $529,000 from the abandoned PIMMS operation and $1.9 million for the sold division.
Excluding PIMMS and the sold division, gross margin decreased $2.3 million, or 4%. As a percentage of revenues, excluding PIMMS and the sold division, gross margin increased to 56.5% for the nine months ended September 30, 2002 from 54.8% for the
same period in 2001, due to the reasons discussed above.
Operating.
Operating expenses decreased $18.8
million, or 29%, to $45.3 million for the nine months ended September 30, 2002 from $64.1 million for the same period in 2001. Operating expenses for the nine months ended September 30, 2002 included $957,000 for the non-core marketing division sold
in May 2002, while operating expenses for the nine months ended September 30, 2001 included $529,000 for the abandoned PIMMS operations and $2.1 million for the sold non-core marketing division. Operating expenses in 2001 also included special
charges of $15.3 million consisting of $4.4 million for estimated uncollectible accounts receivable, $3.8 million for the estimated costs of buying out unattractive or redundant leases, $2.9 million for workers' compensation claims, legal and
other expenses related to the abandoned PIMMS operation, and $4.2 million for severance, legal, bonus and other costs associated with our efforts to streamline operations. Excluding PIMMS, the sold division and the special charges, operating
expenses decreased $1.8 million, or 4%. Approximately $0.9 million of the decrease can be attributed to cost savings gained on lease, maintenance and utility costs from the consolidation of several warehouses into one new facility in late 2001 and
to cost savings gained from initiatives implemented in early 2002 to reduce operating costs across all divisions. In addition, approximately $0.4 million of the decrease is due to the settlement of two legal disputes within the quarter for less that
the amount reserved in the third quarter of 2001, with an additional $0.5 million of the decrease due to the collection of amounts charged against bad debt expense in the fourth quarter of 2000. As a percentage of revenues, excluding PIMMS, the sold
division and the special charges, operating expenses increased to 47.0% for the nine months ended September 30, 2002 as compared to 45.4% for the same period in 2001 due to the fixed nature of certain operating costs in relation to the reduction in
revenues.
Corporate General and Administrative.
Corporate general and administrative expenses decreased
$9.3 million, or 79%, to $2.4 million for the nine months ended September 30, 2002 from $11.7 million for the same period in 2001. The Company recorded special charges to corporate, general and administrative expenses of $8.0 million in 2001,
consisting of $3.7 million to adjust the note receivable balance due from the sale of the Company's U.S. industrial staffing businesses to its estimated net realizable value, a charge of $3.5 million to expense various business development
costs incurred which, based on the current economic environment, would not be realized and $800,000 for lease costs incurred in conjunction with the closing of the Atlanta corporate offices. Excluding these costs, corporate general and
administrative expenses decreased $1.3 million, or 35%, due to reductions in personnel and occupancy costs from the closing of the Atlanta corporate offices. As a percentage of revenues, excluding the special charges, these expenses decreased to
2.5% for the nine months ended September 30, 2002 from 3.6% for the same period in 2001.
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Depreciation and Amortization
. Depreciation and amortization decreased $10.0 million, or 71%, to $4.0 million for
the nine months ended September 30, 2002 from $14.0 million for the same period in 2001. Depreciation and amortization expense for 2001 included special charges to depreciation and amortization expense of $7.3 million consisting of $3.8 million for
various equipment and leasehold improvements at the facilities replaced during the third quarter of 2001 and $3.5 million for internally developed software which was replaced during the third quarter of 2001. Depreciation and amortization expense
for the nine months ended September 30, 2001 included approximately $2.6 million of amortization of goodwill, which is no longer being amortized in 2002 in accordance with SFAS No. 142. Excluding the special charges and the amortization of goodwill
and intangibles in 2001, depreciation and amortization remained consistent between periods. As a percentage of revenues, depreciation and amortization increased to 4.2% for the nine months ended September 30, 2002 from 3.9% for the same period in
2002.
Final PIMMS Severance Costs
. Final PIMMS severance costs represent severance costs related to the
abandonment of the PIMMS operation. We completed the closing of the PIMMS operation on March 16, 2001, and took a charge for the related severance expense of $2.5 million in 2001.
Operating Income (Loss)
. Operating income was $2.5 million for the nine months ended September 30, 2002 as compared to an operating loss of ($34.2) million for the
same period in 2001. The sold non-core marketing business contributed an operating loss of ($0.2) million to the 2002 results. The operating loss for the nine months ended September 30, 2001 included special charges of $30.7 million,
amortization of goodwill of $2.6 million, a $2.5 million charge for the abandoned PIMMS operation and an operating loss of ($0.3) million from the sold non-core marketing business. Excluding these items, operating income for the nine months ended
September 30, 2002 increased to $2.7 million, or 2.8% of revenues, from operating income for the same period in 2001 of $1.9 million, or 1.9% of revenues. The increase was primarily a result of the margin improvement and operating efficiencies
gained in 2002.
Interest Expense, Net.
Interest expense, net, represents the interest on our outstanding
debt allocated to continuing operations. Net interest expense increased $2.5 million, or 88%, to $5.4 million for the nine months ended September 30, 2002, from $2.9 million for the same period in 2001. The increase is due to additional amortization
of fees arising from the amendment of the Credit Facility in April 2002 and higher interest rates charged in the nine months ended September 30, 2002 compared to the same period in 2001. As a percentage of revenues, net interest expense was 5.6% for
the nine months ended September 30, 2002 as compared to 2.7% for the same period in 2001.
Other Expense.
Other expense includes losses incurred in the sale of a non-core marketing division and a note receivable. The total includes a $1.5 million loss on the May 2002 sale of a note receivable arising from the sale of the Company's U.S. staffing
business in 2000. The note, with a book value of $5.0 million, was sold for $3.5 million, resulting in the $1.5 million loss. Also in May 2002, the sale of a non-core marketing division for approximately $604,000 resulted in a loss on sale of
$275,000.
Income Tax Benefit.
Income tax benefit was $5.0 million for the nine months ended September 30,
2001. Due to the uncertainty regarding the realization of our federal general business credit carryforwards, we have recorded a valuation allowance against our income tax benefit for 2002. In 2001, we provided for income taxes at a rate of 40%.
DISCONTINUED OPERATIONS
On March 19, 2002, we sold our United Kingdom specialized staffing services business. As announced on July 20, 2001, we are currently attempting to sell our German
specialized staffing business. On December 29, 2000, we sold our U.S. and European aviation and facility services businesses. In accordance with the provisions of Accounting Principles Board Opinion No. 30, we have reflected the results of our
European specialized staffing businesses and our U.S. and European aviation and facility services businesses as discontinued operations in the condensed consolidated balance sheets and statements of operations and cash flows. For all periods
presented, this presentation reflects the net assets of these operations segregated from the assets and liabilities of continuing operations, and the earnings of these businesses segregated from the results of continuing operations.
Loss From Discontinued Operations, Net of Taxes.
Revenues of discontinued operations were $118.7 million and $168.1
million for the nine months ended September 30, 2002 and 2001, respectively. Excluding the revenues of the sold United Kingdom specialized staffing business, revenues of discontinued operations were $100.0 million and $102.9 million for the nine
months ended September 30, 2002 and 2001, respectively. It is the Company's policy to
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allocate interest expense to discontinued operations in accordance with EITF 87-24, based on the net assets of the discontinued operations
relative to the total net assets plus debt of the consolidated company. The loss from discontinued operations of ($739,000) for the nine months ended September 30, 2002 is net of the applicable interest expense of $2.2 million and income tax
(benefit) of ($148,000). Loss from discontinued operations of ($7.5) million for the nine months ended September 30, 2001 is net of the applicable interest expense of $2.5 million and income tax expense of $579,000. The loss from discontinued
operations for 2001 included $6.4 million in special charges for potential uncollectible accounts receivable and the positioning of the business for sale.
Loss on Sale of Businesses—European Specialized Staffing Services.
In order to reflect the current status of negotiations for the sale of the German staffing business, the Company recorded
an additional impairment charge of $4.1 million in the second quarter of 2002.
Loss on Sale of
Businesses—U.S. and European Aviation and Facility Services Businesses.
On December 29, 2000, we sold our U.S. and European aviation and facility services businesses for $185 million in cash to Securicor plc. The sale price for the U.S. and
European aviation and facilities services businesses was subject to post-closing adjustments based upon the 2001 actual performance of the businesses and a reconciliation of actual closing-date working capital to a target level of working capital.
In 2001, we recorded an additional reserve of $5.2 million to accrue to the final settlement, and we expensed $4.3 million for various costs related to the sale, including $2.0 million paid to Mr. Argenbright in satisfaction and termination of his
performance bonus agreement, $1.0 million in estimated legal fees and $1.3 million in working capital adjustments. We recorded a related tax benefit of $974,000.
Cumulative effect of change in accounting principle
. The completion of the initial impairment analysis under SFAS No. 142 resulted in an impairment charge in the amount of $20.7 million recorded
in 2002 as a cumulative change in accounting principle.
NET LOSS
Net loss decreased $42.6 million to a loss of ($30.3) million for the nine months ended September 30, 2002 from ($72.9) million for the
same period in 2001, due primarily to the special charges recorded in the third quarter of 2001 and the write down of the European staffing business, offset by the $20.7 million charge recorded in 2002 as a cumulative effect of change in accounting
principle.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities was $1.6 million for the nine months ended September 30, 2002, compared to $23.4 million for the same period in 2001. Of the $1.6
million of cash used in operating activities for the period ended September 30, 2002, $2.7 million of cash was used by discontinued operations. For the same period in 2001, cash used by discontinued operations was $18.7 million. The
continuing operations provision of cash in 2002 is primarily the result of a federal tax refund offset in part by an increase in working capital.
Cash provided by investing activities for the nine months ended September 30, 2002 was $28.0 million compared to cash used by investing activities of $22.4 million for the same period in 2001. In 2002,
cash was generated through the sale of the United Kingdom specialized staffing business for $26.8 million, a note receivable for $3.5 million and a non-core marketing business for approximately $604,000. Additions to property and equipment used cash
of $2.9 million. Cash used in 2001 included a $12.9 million earn-out payment made for our 1999 acquisition of ServiceAdvantage and additions to property and equipment of $9.5 million. Capital expenditures for 2002 are anticipated to be significantly
lower than 2001.
Cash used in financing activities for the nine months ended September 30, 2002 was $29.7 million
compared to cash provided by financing activities of continuing operations of $29.7 million for the same period in 2001. The March 19, 2002 sale of the United Kingdom specialized staffing services business and the sale of the note receivable and
non-core marketing asset provided funds for repayments on our Credit Facility of $28.3 million. Approximately $1.5 million in cash was used for costs associated with amending the Credit Facility in 2002. In 2001, we had net borrowings under our
Credit Facility of $31.9 million, using $2.3 million of these funds to repurchase 172,500 shares of our common stock. The exercise of stock options generated $175,000 in proceeds in 2001.
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Credit Facility
We obtain our working capital from borrowings pursuant to a Credit Facility with a syndicate of commercial banks. Wachovia Bank, National Association is the Administrative Agent for the lenders. Our borrowings under the Credit
Facility are secured by a lien on substantially all of our assets and the assets of our operating subsidiaries.
We were not in compliance with certain of our covenants under the Credit Facility as of December 31, 2001, and received a waiver from our bank group with respect to the non-compliance with these covenants through April 15, 2002. On
April 12, 2002, we reached an agreement with our banks to amend the facility. The amendment eliminated the defaults, extended the maturity of the Credit Facility from April 15, 2002 to January 3, 2003, reduced the amount we are permitted to borrow,
increased the interest rates that we are required to pay and modified our financial covenants. Under the amended agreement, at September 30, 2002, we were permitted to borrow up to $85.5 million. Approximately $75.7 million was outstanding under the
Credit Facility at September 30, 2002. The amount that we are permitted to borrow decreases incrementally each month to approximately $77.3 million as of December 31, 2002.
Under the Credit Facility, we are required to satisfy covenants relating to minimum consolidated adjusted EBITDA, fixed charge coverage ratios and limitations on capital
expenditures, among others. We have monthly targets for each financial covenant that we must meet. We are also required to pursue the sale of our German specialized staffing business and opportunities to raise cash through the sale of debt or equity
securities. If we fail to pursue these transactions, we will be in default. Upon the occurrence of a default, unless our lenders grant a further waiver, we will not be permitted to borrow additional amounts under the Credit Facility, and the
outstanding amounts will become immediately due and payable.
At September 30, 2002, we had complied with all
financial covenants included in the Credit Facility, but were pursuing a business combination because we had not completed the sale of our German specialized staffing business or repaid the facility in full. We have engaged CIBC World Markets to
assist us in this process. It is anticipated that this process will run in parallel with our continued efforts to complete the sale of our German specialized staffing business and to raise cash through a sale of debt or equity securities, in
addition to the other measures which we are pursuing to obtain sufficient funds to repay the borrowings under the Credit Facility.
We cannot assure you that we will successfully complete the disposition of our German business, the issuance of debt or equity securities or the refinancing of any amounts that remain outstanding under the Credit Facility.
We are dependent on the availability of borrowings pursuant to the Credit Facility to meet our working capital needs, capital expenditure requirements and other cash flow requirements. If borrowings under the Credit Facility are unavailable, we will
be required to seek additional sources of financing in order to fund our working capital needs. If we are unable to obtain additional sources of financing and cannot repay the outstanding balance of our Credit Facility when it becomes due, it is
likely that a business combination transaction, restructuring or liquidation will be required, or absent this the Company may not be able to continue as a going concern and may require some form of restructuring or disposition of selected operating
subsidiaries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY RISK
Our discontinued operations include the European specialized staffing business. Revenues included in discontinued operations are received,
and operating costs are incurred, in foreign currencies (primarily the British pound and the Euro). The denomination of foreign subsidiaries' account balances in their local currency exposes us to certain foreign exchange rate risks. We address
the exposure by financing most working capital needs in the applicable foreign currencies. However, our Credit Facility requires that we convert indebtedness outstanding in foreign currencies into dollars for purposes of determining the total amount
of indebtedness outstanding. An increase in the value of a foreign currency relative to the dollar has the effect of reducing the amount we are otherwise permitted to borrow pursuant to the Credit Facility. We have not engaged in hedging
transactions to reduce exposure to fluctuations in foreign currency exchange rates.
INTEREST
RATE RISK
We maintain a Credit Facility which subjects us to the risk of increased interest expense associated
with movements in market interest rates. Our Credit Facility had a balance outstanding of $75.7 million at September 30, 2002, which was at a variable rate of interest. Due to the short-term nature of the Credit Facility, the carrying value
approximates fair
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value. Based on outstanding borrowings, it is estimated that an increase in the prevailing interest rates of 100 basis points would result in a
decrease in net income of approximately $125,000, or $0.01 per share, for the year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing of this quarterly report. This evaluation was carried out under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no significant changes to our
internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure.
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PART II—OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits:
EXHIBIT
NUMBER
DESCRIPTION
3.1
Restated and Amended Articles of Incorporation of AHL (incorporated by reference to the Registration Statement on Form 8-A dated March 3, 1997).
3.2
Bylaws of AHL (incorporated by reference to AHL's Annual Report on Form 10-K for the year ended December 31, 2001).
4.1
Specimen Common Stock Certificate (incorporated by reference to AHL's Registration Statement on Form S-1 (File No. 333-20315)).
10.1*
Third Amendment to Third Amended and Restated Credit Agreement and Consent, dated as of August 30, 2002, by and among AHL Services, Inc. and certain of its
subsidiaries, Wachovia Bank, National Association (London Branch), as European Swingline Lender, the financial institutions named therein and Wachovia Bank, National Association, as Administrative Agent.
11.1*
Computation of Earnings Per Share.
99.1*
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99.2*
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
*
Filed herewith.
(b)
Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended September 30, 2002.
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SIGNATURE
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.
AHL SERVICES, INC. (REGISTRANT)
Date:    November 14, 2002
By:
/s/    H
EINZ
S
TUBBLEFIELD
Heinz Stubblefield
Chief Financial Officer
(Duly Authorized Officer, Principal Financial and
Chief Accounting Officer)
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CERTIFICATIONS
I, A. Clayton Perfall, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of AHL Services, Inc.;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such
disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6.
The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date:    November 14, 2002
/s/    A. C
LAYTON
P
ERFALL
A. Clayton Perfall
Chief Executive Officer
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I, Heinz Stubblefield, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of AHL Services, Inc.;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such
disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6.
The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date:    November 14, 2002
/s/    H
EINZ
S
TUBBLEFIELD
Heinz Stubblefield
Chief Financial Officer
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