Results of Operations
1997 versus 1996

Sales reached a record level of $3.85 billion in 1997, an increase of 17% over 1996. Domestic sales grew 16% and international sales 20%. International sales were 22% of total company sales, the same as 1996.

Cost of services, representing payroll and related taxes and benefits for temporary employees, increased 18%. Increases in pay rates and related taxes and benefits accounted for the change. Gross profit rates held steady through all four quarters of 1997 and averaged 17.7%. Gross profit rates in 1996 averaged 18.6%. While generally higher than 1997, the 1996 rates were declining through much of that year. As in 1996, reduced margins on large contracts and other competitive conditions worldwide were factors in the reduced level of gross profit.

Selling, general and administrative expenses increased 11% over 1996. The increase reflects continued worldwide expansion including the cost of opening new offices in international locations. As a percentage of sales, expenses decreased for the second consecutive year and reached 14.2%, down from 14.9% in 1996.

Earnings from operations in 1997 were $136 million, a new record for the Company, and an increase of 12% over 1996. These earnings were 3.5% of sales, compared to 3.7% in 1996.

Interest income was $4.4 million in 1997, an increase of 4% over 1996. An improved cash and investments position during the year which resulted from improved collections of accounts receivable was a reason for the increase.

Interest expense increased to $3.2 million from $2.2 million in 1996. Short-term borrowings were used to finance continued business expansion in Europe.

Earnings before income taxes were a record $137 million, an increase of 11% over 1996. As a percentage of sales, earnings before taxes were 3.6% in 1997 and 3.7% in 1996. Income taxes increased 13% over 1996. The effective income tax rate was 41.0% in 1997 and 40.6% in 1996.

Net earnings were a record $80.8 million in 1997, 11% higher than the $73.0 million reported in 1996.

The rate of return on sales was 2.1% in 1997 and 2.2% in 1996. Basic earnings per share were $2.12 compared to $1.92 per share in 1996. Diluted earnings per share were $2.12 in 1997 compared to $1.91 per share in 1996.

Results of Operations
1996 versus 1995

Sales reached a record level of $3.3 billion in 1996, an increase of 23% over 1995. Domestic sales grew 24% and foreign sales 19%. Foreign sales accounted for 22% of total company sales.

Cost of services, representing payroll and related taxes and benefits for temporary employees, increased 25%. Increases in pay rates, payroll taxes and other direct costs accounted for these changes. Overall, the percentage of gross profit to sales decreased to 18.6% in 1996 from 20.1% in 1995. A major factor influencing the decrease was competitive conditions worldwide, including reduced margins on large national contracts and staff leasing.

Selling, general and administrative expenses increased 13% over 1995. The increase reflects normal growth, including opening and equipping new offices. As a percentage of sales, expenses decreased to 14.9%, from 16.2% in 1995.

Earnings from operations in 1996 were $121 million, a new record for the Company, and an increase of 14% over 1995. These earnings were 3.7% of sales, compared to 4.0% in 1995.

Interest income declined to $4.2 million in 1996 from $8.2 million in 1995. This decline was the result of the need for cash to be used for operating activities, including capital expenditures.

Interest expense, which grew from $1.2 million in 1995 to $2.2 million in 1996, was related to short-term borrowings in Europe to finance business expansion and operations.

Earnings before income taxes were a record $122.9 million, an increase of 8% over 1995. Pre-tax margins as a percentage of sales were 3.7% in 1996 and 4.2% in 1995. Income taxes increased 14% over 1995 with an effective tax rate of 40.6% of pre-tax income. The current tax rate rose primarily as a result of reduced tax exempt income, the expiration of the targeted jobs tax credit and higher foreign taxes.

Net earnings were a record $73.0 million in 1996, 5% higher than the 1995 results of $69.5 million. The rate of return on sales was 2.2% in 1996 and 2.6% in 1995. Basic earnings per share were $1.92, a 5% increase over the $1.83 per share earned in 1995. Diluted earnings per share were $1.91 in 1996 and $1.83 in 1995.

Liquidity and Capital Resources
Cash generated from operations continues to be the principal source of funds for financing the growth of the business, capital acquisitions including improvements to the Company's computer systems and the payment of dividends to stockholders. Lines of credit with banks are also used for short term needs at our foreign locations.

Cash and short-term investments totaled $144 million at the end of 1997 as compared with $61 million at the end of 1996. Amounts due under lines of credit totaled $55 million at the end of 1997, $42 million at the end of 1996 and $16 million at the end of 1995.

The Company's working capital was $364 million at the end of 1997, an increase of $27 million over 1996 and $48 million over 1995. The current ratio in 1997 was 1.9, compared to 2.0 and 2.3 in 1996 and 1995, respectively.

Stockholders' equity grew 8% in 1997, 9% in 1996 and 10% in 1995. The return on average stockholders' equity was 15.0% in 1997, 14.7% in 1996 and 15.3% in 1995. Dividends paid per common share were $.87 in 1997, an increase of 5% over the $.83 per share paid in 1996.

In 1998 the Company will begin implementation of a major information technology program which will extend over the next five years. The program includes completing work on Millennium 2000, deploying a new, worldwide telecommunications network, installing new hardware and software computer systems, and replacing the current branch automation system. The cost of the program will exceed $100 million, of which $15-20 million will be Millennium 2000 expense. In the long term, greater efficiency will enhance productivity and growth. In the short-term, earnings growth could moderate to 4-6% for each of the next two years in the absence of an economic slowdown.

The Company's financial position continues to be strong and the absence of long-term debt allows it to support its growth and capital requirements from internal resources.