Back to GetFilings.com

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

For the Fiscal Year Ended December 31, 2001

Commission File Number 0-20540

26651 West Agoura Road

Registrant’s telephone number, including area code: (818) 878-7900

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

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

Common Stock, $0.01 par value

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

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

    The aggregate market value of the 14,952,320 shares of voting stock (based on the closing price reported by the Nasdaq Stock Market on January 31, 2002) held by non-affiliates of the registrant as of January 31, 2002 was approximately $296,953,000. For purposes of this disclosure, shares of common stock held by persons who own 5% or more of the shares of outstanding common stock and shares of common stock held by each officer and director have been excluded in that such persons may be deemed to be “affiliates” as that term is defined under the Rules and Regulations of the Act. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

    As of January 31, 2002, the registrant had outstanding 22,678,259 shares of Common Stock, $0.01 par value.

Document Incorporated by Reference

    Portions of the On Assignment, Inc. Proxy Statement for the registrant’s Annual Meeting of Stockholders scheduled to be held on June 18, 2002 are incorporated by reference into part III of this Report on Form 10-K.

PART I

Item 1.     Business

      This Annual Report on Form 10-K contains forward-looking statements regarding the future financial condition and results of operations and the Company’s business operations. The words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements involve risks and uncertainties. The Company’s actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors that May Affect Future Results” in item 1 of this report, as well as those discussed elsewhere in this report and the registrant’s other filings with the Securities and Exchange Commission.

General

      On Assignment, Inc. (the “Company”), through its first temporary service, Lab Support, is a leading nationwide provider of temporary scientific professionals to laboratories in the biotechnology, pharmaceutical, food and beverage, chemical and environmental industries. In July 1998, the Company acquired substantially all of the assets, offices and operations of LabStaffers, Inc., which were added to the Lab Support temporary service. On May 12, 1997, the Company formed Assignment Ready Inc., a Canadian corporation and wholly owned subsidiary of the Company, and commenced operations in Toronto as Lab Support Canada, during the third quarter of 1997. On February 2, 1999, the Company formed On Assignment UK Limited, a UK corporation and wholly owned subsidiary of the Company. On February 16, 1999, On Assignment UK Limited formed Lab Support (UK) Limited, a UK corporation and wholly owned subsidiary of On Assignment UK Limited, and commenced operations as Lab Support UK during the first quarter of 1999. On June 5, 2000, the Company formed On Assignment Lab Support B.V., a Netherlands corporation and wholly owned subsidiary of the Company, and commenced operations during the second quarter of 2000. On August 25, 2000, the Company formed On Assignment Lab Support N.V., a Belgium corporation and wholly owned subsidiary of the Company, and commenced operations during the third quarter of 2000. On April 14, 2001, the company formed Lab Support Ireland Limited, an Ireland corporation and wholly owned subsidiary of the Company, and commenced operations during the second quarter of 2001. In January 1994, the Company established its second temporary service, Finance Support, with the acquisition of 1st Choice Personnel, Inc. Finance Support was expanded in December 1994, with the acquisition of substantially all of the assets, offices and operations of Sklar Resource Group, Inc. With a shift in Finance Support’s business development focus to medical billing and collections, in January 1997 the name of Finance Support was changed to Healthcare Financial Staffing. In the third quarter of 1999, the Company established its third temporary service, Clinical Lab Staff and in the third quarter of 2001 its fourth temporary service, Diagnostic Imaging Staff. Both of these temporary services provide scientific and medical professionals to hospitals, physicians’ offices, clinics, reference laboratories and HMOs. The Company has two operating segments: Lab Support and Healthcare Staffing, and all of the Company’s domestic operations in these segments are consolidated as divisions of the Company’s wholly-owned subsidiary, Assignment Ready, Inc., a Delaware Corporation. The Healthcare Staffing segment includes the combined results of Healthcare Financial Staffing, Clinical Lab Staff and Diagnostic Imaging Staff. The different temporary services were grouped under these two operating segments as they have similar economic characteristics and they meet the aggregation criteria of SFAS No. 131. As of December 31, 2001, the Company served 81 operational markets through a network of 171 branch offices.

      On March 27, 2002, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Health Personnel Options Corporation (“HPO”), which is primarily a temporary provider of travel nurses and other allied healthcare staff to its clients. Under the terms of the Merger Agreement, HPO will be merged into a wholly-owned subsidiary of the Company. The acquisition of HPO (the “HPO Transaction”) is scheduled to be completed in April, 2002. Other terms of the Merger Transaction are described in Note 12, “Subsequent Events”, of the Notes to Consolidated Financial Statements in Item 8. The Merger Agreement has been filed as an exhibit to this Form 10-K, to which reference is made for a full understanding of the HPO Transaction.

1

      The Company’s principal executive offices are located at 26651 West Agoura Road, Calabasas, California 91302 and its telephone number is (818) 878-7900. The Company was incorporated on December 30, 1985.

On Assignment’s Approach

      The Company’s strategy is to serve the needs of targeted industries for quality assignments of temporary professionals. In contrast to the mass market approach used for temporary office/clerical and light industrial personnel, the Company believes effective assignments of temporary professionals require the person making assignments to have significant knowledge of the client’s industry and be able to assess the specific needs of the client as well as the temporary professionals’ qualifications. As a result, the Company has developed a tailored approach to the assignment process — the Account Manager System. Unlike traditional approaches, the Account Manager System is based on the use of experienced professionals, Account Managers, to manage the assignment process. Account Managers meet with clients’ managers to understand position descriptions and workplace environments, and with temporary employee candidates to assess their qualifications and interests. With this information, Account Managers can make quality assignments of temporary professionals to clients, typically within 24 to 48 hours of client requests. The Company’s corporate office performs many functions that allow Account Managers to focus more effectively on the assignment of temporary professionals. These functions include recruiting, ongoing training and coaching, appointment making, business development and administrative support. The corporate office also selects, opens and maintains branch offices according to a standardized model. Temporary personnel assigned to clients are employees of the Company, though clients provide on-the-job supervisors for temporary personnel. Therefore, clients control and direct the work of temporary personnel and approve hours worked, while the Company is responsible for many of the activities typically handled by the client’s personnel department.

Branch Office Network

      At December 31, 2001, the Company had 81 Lab Support segment branch offices and 90 Healthcare Staffing segment branch offices. Of this total of 171 branch offices, 61 branch offices involved shared office space among divisions. Through this network of branch offices, the Company served the following operational markets:

Clients

      The Lab Support segment’s clients primarily include biotechnology, pharmaceutical, food and beverage, chemical and environmental companies. The Healthcare Staffing segment’s clients primarily include hospitals, central billing offices, physicians’ groups, HMO’s, clinics, reference labs and university research and student health centers. During the year ended December 31, 2001, the Company provided assignment professionals to

2

The Temporary Professional

      The skill and experience levels of the Lab Support segment’s temporary professional employees range from scientists, engineers, geologists, industrial hygienists and safety professionals with bachelor and/or masters degrees and considerable experience to technicians with limited chemistry or biology background and lab experience and environmental field technicians with some applicable experience. The skill and experience levels of the Healthcare Staffing segment’s temporary professional employee range from medical and laboratory clinical technologists to phlebotomists and medical assistants or they typically have two or more years of medical billing and collection experience.

      Hourly wage rates are established according to local market conditions. The Company pays the related costs of employment including social security taxes, federal and state unemployment taxes, workers’ compensation insurance and other similar costs. After minimum service periods and hours worked, the Company also provides paid holidays, allows participation in the Company’s 401(k) Retirement Savings Plan and Employee Stock Purchase Plan, creates eligibility for an annual bonus, and facilitates access to and supplements the cost of health insurance for its temporary employees.

Expansion in Existing Professions and into Other Professions

      The Company intends to expand its services internationally and domestically in the laboratory and scientific, clinical laboratory, medical staffing and medical billing and collections fields it currently serves and to apply its approach to the assignment of temporary professionals in other fields. The Company believes that its experience with the Account Manager System and centralized operational support will enable it to enter new markets effectively. The Company continually reviews opportunities in various industries, evaluating the current volume and profitability of temporary assignments, the length of assignments, the degree of specialization necessary to be successful, the competitive environment and the applicability of its Account Manager approach. If attractive markets are identified, the Company may enter these markets through acquisition or internal growth. The Company’s January 1994 acquisition of 1st Choice Personnel, Inc., December 1994 acquisition of substantially all of the assets of Sklar Resource Group, Inc., July 1998 acquisition of substantially all of the assets of LabStaffers, Inc. and its proposed acquisition during April 2002 as described in Note 12, “Subsequent Events”, of the Notes to Consolidated Financial Statements in Item 8, were consistent with this ongoing activity, and the Company periodically engages in discussions with possible acquisition candidates.

Competition

      The temporary services industry is highly competitive and fragmented and has low barriers to entry. The Company believes Lab Support is one of the few nationwide temporary service providers that specialize exclusively in scientific laboratory personnel. Although other nationwide temporary personnel companies compete with the Company with respect to scientific, clinical laboratory and medical technologist, environmental services and medical billing and collecting personnel, many of these companies focus on office/clerical and light and heavy industrial personnel, which account for approximately 80% of the overall temporary personnel services market. These companies include Manpower, Inc., Kelly Services, Inc., Adecco, and Aerotech, Inc., each of which is larger and has substantially greater financial and marketing resources than the Company.

      The Company also competes with temporary personnel agencies on a regional and local basis. Frequently, the strongest competition in a particular market is a local company with established relationships. The Company also competes with its clients that directly advertise or seek referrals of qualified candidates on their own behalf.

      The principal competitive factors in attracting qualified candidates for temporary employment are salaries and benefits, speed, quality and duration of assignments and responsiveness to the needs of employees. The

3

Employees

      At December 31, 2001, the Company employed approximately 346 regular employees, including Account Managers and corporate office employees. During the year ended December 31, 2001, the Company employed approximately 16,000 temporary employees. None of the Company’s employees, including its temporary employees, are represented by a collective bargaining agreement. The Company believes its employee relations are good.

Regulation

      The Company’s operations are subject to applicable state and local regulations, both domestically and internationally, governing the provision of personnel placement services which require personnel companies to be licensed or separately registered. To date, the Company has not experienced any material difficulties in complying with such regulations. State mandated workers’ compensation and unemployment insurance premiums, which the Company pays for its temporary and regular employees, can have a direct effect on the Company’s cost of services and thereby, profitability.

Proprietary Rights

      The Company has registered its OnAssignment®, Lab Support® Healthcare Financial Staffing® and Clinical Lab Staff® service marks with the United States Patent and Trademark Office. The Company has also registered “The Quality Assignment” mark with the United States Patent and Trademark Office. The Company has also registered its Lab Support service mark in Canada and the UK and has applied for the use of the Lab Support service mark in the Netherlands and Belgium. The Company has also obtained European Community registration for its “On Assignment Employer of Knowledge Workers” logo and for “On Assignment Lab Support Science Professionals On Assignment” logo. The Company has rights in other trademarks used in connection with its business and has other applications pending for the international use of its service marks.

Health Personnel Options Corporation

      If the HPO Transaction is consummated under the terms of the Merger Agreement executed by the Company on March, 2002, the business of HPO will be operated by a wholly-owned subsidiary of the Company. HPO’s current business includes three operating divisions: Nurse Travel, Allied Travel, and Local Staffing.

      The Nurse Travel division provides Registered Nurses (“RNs”) for contract assignments of 4 to 14 weeks or more. As of February 3, 2002, the Nurse Travel division had over 536 traveling nurse professionals on assignment and maintained contracts with approximately 325 hospitals throughout the United States. The Nurse Travel division is operated from HPO’s headquarters in Cincinnati, Ohio.

      The Allied Travel division provides radiology professionals, laboratory professionals, respiratory therapists and surgical techs for contract periods of 13 weeks or more. As of February 3, 2002, Allied Travel division had 63 traveling allied healthcare professionals on assignment, and has placed personnel at over 60 hospitals during 2002. The Allied Travel division is operated from HPO’s headquarters in Cincinnati, Ohio.

4

      The Local Staffing division places health care personnel and medical clerical personnel typically for periods of one week or longer. As of February 3, 2002, the Local Staffing division had 236 local allied and medical clerical professionals on assignment. The Local Staffing division’s clients include hospitals, physician practices, clinics and dentists. As of January 31, 2002, the Local Staffing division had 850 active clients. HPO has local staffing offices in Minneapolis, MN, Milwaukee, WI, Columbus, OH, Cincinnati, OH and Indianapolis, IN.

Risk Factors that May Affect Future Results

      The Company operates in a highly competitive environment that involves a number of risks, many of which are beyond the Company’s control. The following discussion highlights some of the risks that may affect the Company’s future results.

     Risks Related to Acquisition

      The HPO Transaction, as discussed in Note 12, “Subsequent Events”, of the Notes to Consolidated Financial Statements in Item 8, is subject to closing conditions that could prevent the Company from completing the merger on the scheduled timetable or at all. The Company has incurred significant costs with respect to its due diligence procedures specifically related to the HPO Transaction. If the merger is not consummated, the Company will be required to expense all of the costs associated with the HPO Transaction.

      Integrating the Company’s operations with those of HPO may strain the Company’s resources. The significant expansion of the Company’s business and operations, both in terms of geography and magnitude resulting from the HPO Transaction will require the dedication of management resources that may temporarily detract from the Company’s day-to-day business. These types of demands and uncertainties could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company may not be able to manage the combined operations and businesses effectively or realize any of the anticipated benefits of the HPO Transaction.

      Future sales of the Company’s common stock to be issued under the terms of the Merger Agreement, may depress the Company’s stock price. Terms of the Merger Agreement require approximately 50% of the purchase price to be paid through the issuance of the Company’s common stock. Approximately 3,900,000 million shares of the Company’s common stock or 17% of its outstanding shares will be issued in connection with the HPO Transaction. The Company is obligated to register approximately 95% of these shares for resale by the holders thereof in the public market. Sales of a substantial number of these shares in the public market, or the perception that such sales could occur, could adversely affect the market price of the Company’s common stock.

     Other Risks

      Uncertainty of Future Operating Results, Quarterly Fluctuations and Seasonality. Future operating results will depend on many factors, including demand for the Company’s services, the market’s acceptance of price changes, the productivity, recruitment and retention of Account Managers, the results of the Company’s expansion into new geographic markets, the degree and nature of competition, the effectiveness of the Company’s expansion into other professions, and the Company’s ability to control costs and manage its accounts receivable. The Company and the temporary services industry as a whole typically experience seasonal declines in demand from the year-end holiday season through early February and during June, July and August. The Company has experienced variability in the duration and depth of these seasonal declines, which in turn have materially affected period-to-period and current period-to-prior period comparisons of its financial and operating performance. As a result of these and other factors, there can be no assurance that the Company will be able to grow in future periods, sustain its past rate of revenue growth or maintain profitability on a quarterly or annual basis. If in some future quarter or quarters the Company’s operating results are below the expectations of public market analysts or investors, the market price of its common stock may decline significantly.

5

      Reliance on and Ability to Attract, Develop and Retain Account Managers. The Company relies significantly on the performance of its Account Managers, who have primary responsibility for all aspects of the process of assigning the Company’s temporary employees to clients. The Company is highly dependent on its ability to hire, develop and retain qualified Account Managers, as well as on the productivity of its Account Managers. The available pool of qualified Account Manager candidates is limited. In addition, prior to joining the Company, the typical Account Manager has no prior experience in the temporary employment industry. The Company commits substantial resources to the recruitment, training, development and operational support of its Account Managers. There can be no assurance that the Company will be able to continue to recruit, train and retain sufficient numbers of qualified Account Managers or that Account Managers will achieve desired productivity levels. Failure to achieve planned numbers of Account Managers or productivity of Account Managers could result in a material adverse effect on the Company’s financial condition, results of operations and business.

      Expansion in Existing Professions and into Other Professions. The Company plans to expand its services domestically and internationally within the laboratory and scientific, clinical laboratory and medical staffing, and medical billing and collections fields it currently serves and to other professional fields. The success of the Company’s expansion efforts will depend on a number of factors, including the Company’s ability to adapt the Account Manager system used in its divisions to other industries and professions, recruit and train new Account Managers with the particular industry or professional experience, establish client relationships in new industries and successfully recruit, qualify and orient new temporary professionals. The ability to manage these factors may be more difficult or take more resources than the Company anticipates, particularly since they may involve industries, clients and professionals that the Company has no experience with. The Company may decide to pursue future expansion by internal growth or acquisition. The rate at which the Company establishes new services may significantly affect the Company’s operating and financial results, especially in the quarters of and immediately following expansion into new domestic and international professional markets. There can be no assurance that the Company will be able to successfully expand its services in the fields it currently serves, identify new professional fields suitable for expansion or continue to grow.

      Planned International Operations Face Special Risks. In the first quarter of 1999, the Company expanded its operations to the UK and during 2000, the Company expanded into the Netherlands and Belgium. In the second quarter of 2001, the Company expanded its operations to Ireland. The Company intends to expand its operations in Europe in the future. The Company has limited experience in marketing, selling, and particularly, supporting its services outside of North America. Development of such skills may be more difficult or take longer than the Company anticipates, especially due to the fact that its centralized support functions in Calabasas, California will not be able to provide the same level of support to operations outside of North America as it does to its current North American operations. In addition to establishing operations support functions outside North America, the Company will have to address language barriers and different regulations of temporary employment. Moreover, international operations are subject to a variety of additional risks associated with conducting business internationally that could seriously harm the Company’s financial condition and results of operations. These risks may include the following: problems in collecting accounts receivable; the impact of recessions in economies outside the United States; unexpected changes in regulatory requirements; fluctuations in currency exchange rates; seasonal reductions in business activity during the summer months in Europe; and potentially adverse tax consequences.

      Dependence on Availability of Qualified Temporary Professional Employees. The Company is dependent upon continuing to attract qualified laboratory and scientific, clinical laboratory and medical technologist, environmental services and medical billing and collecting personnel with a broad range of skills and experience in order to meet client needs. The Company competes for such personnel with other temporary personnel companies, as well as actual and potential clients, some of which seek to fill positions with either regular or temporary employees. In addition, the Company’s temporary employees sometimes become regular employees of the Company’s clients. There can be no assurance that qualified laboratory and scientific, clinical laboratory and medical technologist, environmental services, and medical billing and collections personnel will be available to the Company in adequate numbers.

6

      Highly Competitive Market. The temporary services industry is highly competitive and fragmented, with limited barriers to entry. The Company competes in national, regional and local markets with full-service agencies and in regional and local markets with specialized temporary services agencies. Several of these companies have significantly greater marketing and financial resources than those of the Company. As the Company expands into new geographic markets, its success will depend in part on its ability to gain market share from competitors. The Company expects that competition will increase in the future and there can be no assurance that the Company will remain competitive.

      Effect of Fluctuations in the General Economy. Demand for temporary services is significantly affected by the general level of economic activity. As economic activity slows, many companies reduce their usage of temporary employees before undertaking layoffs of their regular employees. As economic activity increases, many clients convert their temporary employees to regular employees which, depending on the Company’s agreement with the client and when such conversion occurs, may not result in any conversion fee revenue for the Company. The Company is unable to predict the level of economic activity at any particular time and its effect on the Company’s operating and financial results.

      Terminability of Client Arrangements. The Company’s arrangements with clients are terminable at will and do not require clients to use the Company’s services. All temporary assignments, regardless of their planned length, may be terminated without advance notice. There can be no assurance that existing clients will continue to use the Company’s services at historical levels, if at all.

      Employment Liability Risks. The Company employs and assigns temporary employees to the workplaces of other businesses. Inherent risks of such activity include possible claims of errors and omissions, misuse of customers’ proprietary information, discrimination and harassment, theft of client property, and other criminal activity or torts by temporary employees. The Company seeks to reduce its liability for the acts of its temporary employees by providing in its arrangements with most clients that temporary personnel work under the client’s supervision, control and direction. There can be no assurance that such arrangements will be enforceable or that, if enforceable, would be sufficient to preclude liability as a result of the actions of the Company’s temporary personnel. In addition, there can be no assurance that current liability insurance coverage will be adequate or will continue to be available in sufficient amounts.

      Workers’ Compensation Expense. The Company maintains a partially self-insured workers’ compensation program. In connection with this program, the Company pays a base premium plus actual losses incurred up to certain levels, and is insured for losses greater than certain levels per occurrence and in the aggregate. The Company seeks to minimize the impact of workers’ compensation losses through a proactive claims management and accident reduction program. While the Company believes that current loss reserves are reasonable based on claims filed and an estimate of claims incurred but not yet reported, there can be no assurance that loss reserves and insurance coverage will be adequate in amount to cover all workers’ compensation claims.

      Dependence on Key Officers. The Company’s future success depends in significant part upon the continued service of its key officers. Competition for such personnel is intense and there can be no assurance that the Company will retain its key officers or that it can attract or retain other highly qualified managerial personnel in the future. The loss of certain of its key officers could have a material adverse effect upon the Company’s business, operating results and financial condition.

      On February 14, 2001 the Company announced that H. Tom Buelter, its Chief Executive Officer and Chairman of the Board intended to retire during 2001 as Chief Executive Officer once a successor to his position had been hired. On June 27, 2001, the Company announced the hiring of Joseph Peterson, M.D. to succeed H. Tom Buelter. On August 7, 2001, the Company announced the election of Dr. Peterson as Chief Executive Officer, effective September 1, 2001. The Company also announced that Dr. Peterson would succeed Kathy West, who announced her retirement effective September 1, 2001, as President of the Company. On February 1, 2002, the Company announced the resignation of H. Tom Buelter as Chairman of the Board effective immediately.

7

      Government Regulations. In many states and foreign countries, the temporary services industry is regulated, and firms such as the Company must be registered or qualify for an exemption from registration. While these regulations have not materially affected the conduct of the Company’s business to date, there can be no assurance that future domestic or foreign regulations will not have such effect. Mandated workers’ compensation and unemployment insurance premiums, which the Company pays for its temporary as well as its regular employees in both its domestic and international operations, can have a direct effect on cost of services and thereby, profitability. In the past, federal legislative proposals for national health insurance have included provisions extending health insurance benefits to temporary employees and some states could impose sales taxes or raise sales tax rates on temporary services. Further increases in such premiums or rates or the introduction of new regulatory provisions could substantially raise the costs associated with hiring temporary employees and there is no assurance that these increased costs could be passed on to clients without a significant decrease in the demand for temporary employees.

      Many of the risk factors relating to the Company that are described above may also affect the future results of HPO, and therefore those of the Company if the HPO transaction is completed.

Item 2.     Properties

      The Company has leased approximately 30,500 square feet of office space through March 2004, for its corporate headquarters in Calabasas, California. In addition, the Company leases office space in 100 branch office locations in the metropolitan areas listed under the caption “Branch Office Network” in Item 1 hereof. A branch office typically occupies space ranging from approximately 1,500 to 2,500 square feet with lease terms that typically range from six months to five years.

Item 3.     Legal Proceedings

      (a) There is no material legal proceeding to which the Company is a party or to which its properties are subject.

      (b) No material legal proceedings were terminated in the fourth quarter of 2001.

Item 4.     Submission of Matters to a Vote of Security Holders

      None.

Executive officers of the registrant

      The executive officers of the Company and their ages as of December 31, 2001 were:

(1)	Senior Vice President, Review and Analysis effective January 14, 2002.

      Joseph Peterson, M.D. joined the company in July 2001 and has served as Chief Executive Officer and President since September 2001. Dr. Peterson also serves as a Director of the Company and as a Director of Global Health Council, the world’s largest membership alliance dedicated to improving health worldwide. From 1992 through 2001, Dr. Peterson co-founded and was Chief Executive Officer of three companies providing innovative customer care to large institutional clients primarily in the financial services industry. From 1988 through 1991, Dr. Peterson served as Medical Director and ultimately Chief Operating Officer of

8

      Ronald W. Rudolph has served as Executive Vice President, Finance and Chief Financial Officer since March 2000. From January 1999 through March 2000, Mr. Rudolph served as Senior Vice President, Finance and Chief Financial Officer. From October 1996 through December 1998, Mr. Rudolph served as Senior Vice President, Finance and Operations Support, and Chief Financial Officer. From January 1996 through October 1996, Mr. Rudolph served as Senior Vice President, Finance and Administration, and Chief Financial Officer. Mr. Rudolph joined the Company in April 1995, as Vice President, Finance and Administration, and Chief Financial Officer. From April 1987 to September 1994, Mr. Rudolph was Vice President, Finance and Administration, and Chief Financial Officer of Retix, a manufacturer of enterprise networking devices, and from June 1993 to September 1994, Mr. Rudolph was a director of Retix. Mr. Rudolph holds an MBA from the University of Chicago, a Bachelor of Industrial Engineering from Ohio State University and is a Certified Public Accountant.

      Dana Hallberg has served as Senior Vice President, Review and Analysis since January 2002. From July 2001 through January 2002, Ms. Hallberg served as Senior Vice President, Global Operations. From October 2000 through June 2001, Ms. Hallberg served as Senior Vice President, International Operations. From January 1999 through October 2000, Ms. Hallberg served as Vice President, International Operations. From January 1996 through December 1998, Ms. Hallberg served as Vice President with responsibilities including Business Development, U.S. and Canadian Operations. From April 1993 through December 1995, Ms. Hallberg served as Director of Operations, supporting branch offices throughout the east coast of the U.S. Ms. Hallberg joined the Company in 1991 as an Account Manager for the Piscataway, New Jersey office and served in that role through March 1993. Prior to joining the Company, Ms. Hallberg worked for Hoechst-Roussel Pharmaceuticals, Inc. (renamed Aventis) in Bridgewater, New Jersey as an Analytical Research Chemist from 1986 to 1990. From 1984 to 1986, Ms. Hallberg worked for Mobil Oil Corporation in Princeton, New Jersey as an Analytical Chemist. Ms. Hallberg holds a BS in Chemistry.

      Stephen T. Minihan joined the Company in December 2001 as Senior Vice President, Field Support. From November 1995 to April 2001, Mr. Minihan was President and Director of PayPoint Electronic Payment Systems, Inc. PayPoint is a diversified electronic transactions service provider and network, operating as an incorporated subsidiary of ARCO. From August 1994 to November 1995, Mr. Minihan served as the Manager of Credit for ARCO Products Company, the petroleum refining and marketing subsidiary of ARCO. From June 1992 to August 1994, Mr. Minihan was the Manager, Corporate Finance for ARCO, an integrated petroleum and chemical company. Mr. Minihan holds an MBA with specialization in financial management from the University of Chicago and a BS in Economics from Florida State University.

      Shelly Carolan has served as Senior Vice President, Lab Support Domestic Operations since November 2001. From December 1999 through November 2001, Ms. Carolan served as Vice President, East Coast Operations. From February 1999 through November 1999, Ms. Carolan served as Director of Operations. From April 1997 through January 1999, Ms. Carolan served as Manager of Operations. Ms. Carolan joined the Company in September 1994 as an Account Manager in the Piscataway, New Jersey office before opening the Elmwood Park, New Jersey office in November 1994 and continuing in the role of Account Manager through March 1997. Prior to joining the Company, Ms. Carolan worked as a Volatile Organics Department Supervisor at IEA, Inc. from April 1991 through August 1994. Ms. Carolan holds a BS from Boston University.

9

PART II

Item 5.     Market for Registrant’s Common Equity and Related Stockholder Matters

      The Company’s Common Stock trades on the Nasdaq Stock Market under the symbol ASGN. The following table sets forth the range of high and low sales prices, as reported on the Nasdaq Stock Market for the period from January 1, 2000 to December 31, 2001. At January 31, 2002, the Company had approximately 100 holders of record of its Common Stock (although the Company has been informed there are in excess of approximately 3,600 beneficial owners) and 22,678,259 shares outstanding.

      On March 7, 2000, the Board of Directors authorized a two-for-one stock split, effected as a 100 percent common stock dividend, to be distributed on April 3, 2000 to shareholders of record as of March 27, 2000. All references to number of shares, sales prices and per share amounts of the Company’s common stock have been retroactively restated to reflect the increased number of common shares outstanding.

      Since inception, the Company has not declared or paid any cash dividends on its Common Stock and currently plans to retain all earnings to support the development and expansion of its business. The Company has no present intention of paying any dividends on its Common Stock in the foreseeable future. However, the Board of Directors of the Company periodically reviews the Company’s dividend policy to determine whether the declaration of dividends is appropriate.

10

Item 6.     Selected Financial Data

      The following table presents selected financial data of the Company. This historical data should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Form 10-K.

11

      The discussion in this Report contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, management of growth, particularly in international markets, risks inherent in expansion into new international markets and new professions, the integration of acquired operations, the Company’s ability to attract, train and retain qualified Account Managers and temporary employees in the laboratory, science, financial and environmental fields, and other risks discussed in “Risk Factors That May Affect Future Results” in Item 1 of this Annual Report, beginning on page 5, as well as those discussed elsewhere in this Report and from time to time in the Company’s other reports filed with the Securities and Exchange Commission.

Seasonality

      The Company’s results have historically been subject to seasonal fluctuations. Demand for the Company’s temporary employees typically declines from the year-end holiday season through February, resulting in a corresponding decrease in revenues, operating income and net income. Demand for the Company’s temporary employees also often declines in June, July and August due to decreases in clients’ activity during vacation periods and the availability of students to perform temporary work. As a result, the Company has experienced slower growth or declines in revenues, operating income and net income during the first quarter and from the second quarter to third quarter.

Years ended December 31, 2000 and 2001

      Revenues. Revenues decreased by 0.2% from $195,080,000 in the year ended December 31, 2000, to $194,620,000 in the year ended December 31, 2001, as a result of the decreased revenues of both the Lab Support and the Healthcare Staffing segments.

      The Lab Support segment’s revenues decreased by 0.3% from $139,986,000 in the year ended December 31, 2000, to $139,558,000 in the year ended December 31, 2001. The decrease in revenue was primarily attributable to a 4.6% decrease in the number of temporary employees on assignment from December 31, 2000 to December 31, 2001, partially offset by a 4.8% increase in average hourly billing rates during 2001. The decrease in the number of temporary employees on assignment was primarily attributable to the overall economic slowdown beginning in February 2001.

      The Healthcare Staffing segment’s revenues remained relatively unchanged at $55,094,000 in the year ended December 31, 2000 and $55,062,000 in the year ended December 31, 2001. The consistency in revenue was primarily attributable to a 5.1% decrease in the number of temporary employees on assignment, offset by a 5.8% increase in average hourly billing rates during 2001. The decrease in the number of temporary employees on assignment was primarily attributable to the overall economic slowdown beginning in February 2001.

      Cost of Services. Cost of services consists solely of compensation for temporary employees and payroll taxes, benefits and employment related expenses paid by the Company in connection with such compensation. Cost of services remained relatively unchanged at $131,351,000 in 2000 to $131,343,000 in 2001. The Lab Support segment’s cost of services as a percentage of revenues increased by 0.2% from 67.1% in 2000 to 67.3% in 2001. This increase was primarily attributable to a 0.3% increase in workers’ compensation and a 0.2% increase in employer paid benefits, partially offset by a 0.3% decrease in temporary employee compensation and payroll taxes in 2001. The Healthcare Staffing segment’s cost of service as a percentage of revenues remained consistent at 67.9% in 2000 and 2001. This result was primarily attributable to a 0.3% increase in workers’ compensation and a 0.2% increase in employer paid benefits, offset by a 0.5% decrease in temporary employee compensation and payroll taxes in 2001. The increase in workers’ compensation expense in both segments resulted from higher insurance policy costs and an increase in actual workers’ compensation claims reported and estimated incurred but not yet reported claims in 2001.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses include the costs associated with the Company’s network of Account Managers and branch offices, including Account

12

      Interest Income. Interest income increased 5.5% from $2,442,000 in 2000 to $2,575,000 in 2001, primarily as a result of interest earned on higher interest-bearing cash, cash equivalent and marketable security account balances in 2001, partially offset by lower interest yields earned in 2001.

      Provision for Income Taxes. Provision for income taxes decreased 11.8% from $11,392,000 in 2000 to $10,046,000 in 2001. The Company’s effective tax rate decreased slightly from 37.2% in 2000 to 37.1% in 2001.

Years ended December 31, 1999 and 2000

      Revenues. Revenues increased by 22.3% from $159,473,000 in the year ended December 31, 1999, to $195,080,000 in the year ended December 31, 2000, as a result of the increased revenues of both the Lab Support and the Healthcare Staffing segments.

      The Lab Support segment’s revenues increased by 17.0% from $119,668,000 in the year ended December 31, 1999, to $139,986,000 in the year ended December 31, 2000. The increase in revenue was primarily attributable to a 10.6% increase in the number of temporary employees on assignment from December 31, 1999 to December 31, 2000 and to a lesser extent to a 5.2% increase in average hourly billing rates during 2000. The increase in the number of temporary employees on assignment was primarily attributable to the strong performance in most of the markets in which the Lab Support segment has older, better established branches and to a lesser extent the contribution of new offices opened in the past year.

      The Healthcare Staffing segment’s revenues increased by 38.4% from $39,805,000 in the year ended December 31, 1999 to $55,094,000 in the year ended December 31, 2000. The increase in revenue was primarily attributable to a 36% increase in the number of temporary employees on assignment and to a lesser extent to a 5.2% increase in average hourly billing rates during 2000. The increase in the number of temporary employees on assignment was primarily attributable to the strong performance in most of the markets in which the Healthcare Staffing segment has older, better established branches and to a lesser extent the contribution of new offices opened in the past year.

      Cost of Services. Cost of services consists solely of compensation for temporary employees and payroll taxes, benefits and employment related expenses paid by the Company in connection with such compensation. Cost of services increased 22.0% from $107,652,000 in 1999 to $131,351,000 in 2000. The Lab Support segment’s cost of services as a percentage of revenues decreased by 0.4% from 67.5% in 1999 to 67.1% in 2000. This decrease was primarily attributable to a 0.9% decrease in temporary employee compensation and payroll taxes, partially offset by a 0.4% increase in workers’ compensation and a 0.1% increase in employer paid benefits in 2000. The Healthcare Staffing segment’s cost of service as a percentage of revenues increased by 0.4% from 67.5% in 1999 to 67.9% in 2000. This increase was attributable to an increase in workers’ compensation expense. The increase in workers’ compensation expense in both segments resulted from an increase in actual workers’ compensation claims reported and estimated incurred but not yet reported claims in 2000.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses include the costs associated with the Company’s network of Account Managers and branch offices, including Account Manager compensation, rent, other office expenses and advertising for temporary employees, and corporate office expenses, such as the salaries of corporate operations and support personnel, management compensation, Account Manager recruiting and training expenses, corporate advertising and promotion, rent and other

13

      Interest Income. Interest income increased 49.4% from $1,635,000 in 1999 to $2,442,000 in 2000, primarily as a result of interest earned on higher interest-bearing cash, cash equivalent and marketable security account balances in 2000.

      Provision for Income Taxes. Provision for income taxes increased 33.0% from $8,566,000 in 1999 to $11,392,000 in 2000. The Company’s effective tax rate remained unchanged at 37.2% in 1999 and 2000.

Liquidity and Capital Resources

      The change in the Company’s liquidity during the year ended December 31, 2001 is the net effect of funds generated by operations and from equity through employee stock incentive plans and the funds used for repurchases of common stock and purchases of marketable securities net of sales and, to a lesser extent, capital expenditures. As of December 31, 2001, the Board of Directors has authorized the repurchase, from time to time, of up to 2,941,000 shares of the Company’s common stock. During the year ended December 31, 2001, the Company repurchased 473,500 shares of common stock on the open market bringing the total shares repurchased under the authorization to 1,133,500. For the year ended December 31, 2001, the Company generated $25,481,000 from operations, used $10,860,000 in investing activities and used $127,000 in financing activities.

      The Company’s working capital at December 31, 2001 was $105,851,000, including $65,694,000 in cash and cash equivalents and $22,886,000 in short-term marketable securities. The Company’s working capital requirements consist primarily of the financing of accounts receivables. At December 31, 2001, the Company has no long-term debt outstanding or other financing agreements in place and had no material capital commitments.

      As discussed in Note 12, “Subsequent Events”, of the Notes to Consolidated Financial Statements in Item 8, the Company intends to complete a significant acquisition during April 2002. Under the proposed terms of the Merger Agreement, total consideration of $150 million is to be paid 50% in cash, net of outstanding debt, and 50% to be paid in the Company’s common stock, consisting of approximately 3,900,000 shares which upon issuance will represent approximately 17% of the Company’s outstanding common stock shares. The Company believes it has sufficient cash available as noted in the paragraph above, and if additional cash is required, has the ability to enter into financing agreements in order to satisfy cash requirements under the Merger Agreement as well as meeting its working capital requirements for day-to-day operations on both a short and long term basis.

Recent Accounting Pronouncements

      In June 2001, the Financial Accounting Standards Board issued Statement No. 141 (SFAS No. 141), “Business Combinations,” and Statement No. 142 (SFAS No. 142), “Goodwill and Other Intangible Assets”. The adoption of SFAS No. 141 as of July 1, 2001 did not have a material impact on the Company’s financial statements. Amortization of goodwill for the year ended December 31, 2001 was $151,000. SFAS No. 142 includes requirements to test goodwill and indefinite lived intangible assets for impairment rather than amortize them. The Company has adopted SFAS No. 142 on January 1, 2002. The Company is currently evaluating the impairment provisions of SFAS No. 142 and has not determined the impact, if any, they will have on its financial statements.

      In August 2001, the FASB issued SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 addresses the financial accounting and reporting issues for the impairment or disposal of long-lived assets. This statement supersedes FASB 121 but retains the fundamental provisions for

14