Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

Commission File Number 0-20540

ON ASSIGNMENT, INC.
(Exact name of registrant as specified in its charter)

26651 West Agoura Road
Calabasas, California 91302
(Address of Principal Executive Offices)

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
(Title of Class)

        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 ý    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

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý  No o

        The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the price at which the common equity was last sold as of the last business day of the registrant's most recently completed second quarter was approximately $101,350,737.

        As of March 8, 2004, the registrant had outstanding 25,228,475 shares of Common Stock, $0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the registrant's proxy statement, to be filed within 120 days of the close of the registrant's fiscal year, are incorporated by reference into Part III of this report on Form 10-K.

TABLE OF CONTENTS

2

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

        This report, including the information it incorporates by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, our financing plans, economic trends relating to our industry and similar matters are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect" or "intend." We cannot promise you that our expectations in such forward-looking statements will turn out to be correct. Our actual results could be materially different from our expectations because of various factors, including those discussed under "Business—Risk Factors" in this report, which we encourage you to read.

3

PART I

Item 1. Business

Overview and History

        On Assignment, Inc. is a leading provider of skilled temporary professionals to clients in the healthcare and science industries. We provide clients in these markets with short-term or long-term assignments of temporary professionals and temporary-to-permanent placement of these professionals. Our business consists of two operating segments: Healthcare Staffing and Lab Support.

        The Healthcare Staffing segment includes our Nurse Travel, Allied Travel and Local Healthcare Staffing (offering Healthcare Financial, Clinical Lab and Diagnostic Imaging staffing services) lines of business. Healthcare Staffing segment revenues totaled $116,642,000 and represented approximately 56 percent of our total revenues for 2003. Through our 2002 acquisition of Health Personnel Options Corporation (HPO), we were able to enter the travel nurse business and supplement our locally-based allied temporary professionals with temporary travel professionals. We are now able to offer our healthcare clients and potential clients, temporary professionals from more than ten healthcare and medical financial occupations. These temporary staffing specialties include nurses, specialty nurses, surgical technicians, imaging technicians, x-ray technicians, medical technologists, phlebotomists, coders, billers, claims processors and collections staff. In 2003, we expanded our service offerings to include respiratory therapists and traditional 13-week nurse travel assignments.

        Our Lab Support segment includes domestic and international operations offering scientific staffing services. We provide locally-based temporary and temporary-to-permanent placement of scientists and other professionals to industrial laboratories in the biotechnology, pharmaceutical, food and beverage, personal care, chemical and environmental industries. Our temporary professionals include chemists, biologists, biochemists, microbiologists, molecular biologists, food scientists, lab assistants and other skilled technicians. Lab Support revenues for 2003 totaled $92,912,000. In 2003, we expanded our service offerings to include clinical research and engineering.

        We were incorporated on December 30, 1985 and commenced operation of Lab Support, our first temporary staffing line of business. Utilizing our experience and unique approach in servicing our clients and temporary professionals, we have expanded our operations into other industries requiring specialty staffing. In 1994, through our acquisition of 1^st Choice Personnel, Inc. and Sklar Resource Group, Inc., we established our Healthcare Financial Staffing line of business. Originally named Finance Support, this line of business changed its name in 1997 along with a shift in its business development focus to medical billing and collections for hospitals, HMO's and physician groups. In 1996, through our acquisition of EnviroStaff, we began providing temporary professionals to the environmental services industry. LabStaffers, Inc. was acquired in 1998 to enhance our domestic Lab Support business. In 1999, we expanded our Lab Support operations into Europe. Also in 1999, we formed our Clinical Lab Staff line of business and in 2001, we formed our Diagnostic Imaging Staff line of business. Both of these lines of business provide scientific and medical professionals to hospitals, physicians' offices, clinics, reference laboratories and HMO's. In 2002, through our acquisition of HPO, we established our Nurse Travel and Allied Travel lines of business. Our Nurse Travel line of business provides registered nurses to hospitals, clinics and managed healthcare organizations. Our rapid response nurse travel assignments are typically 4 to 12 weeks in length and are branded Best Express. In 2003, we launched a traditional 13-week nurse travel line of business that we have branded Best Traveler. Our Allied Travel division provides radiologic technologists, laboratory technicians and respiratory therapists to hospitals for contract periods of 13 weeks or more.

        Financial information regarding our operating segments and our domestic and international revenues are included under "Financial Statements and Supplementary Data" in Part II, Item 8 of this annual report.

4

        Our principal executive offices are located at 26651 West Agoura Road, Calabasas, California 91302, and our telephone number is (818) 878-7900. Field support offices for our Lab Support and Local Healthcare lines of business are located at our principal executive offices. Field support offices for our Nurse Travel and Allied Travel lines of business are located at 8150 Corporate Park Drive, Suite 300, Cincinnati, Ohio 45242, and the telephone number is (513) 936-3468. We have approximately 55 branch offices in nearly 30 states and 3 foreign countries.

Industry and Market Dynamics

        The Staffing Industry Report (February 13, 2004), an independent staffing industry publication, forecasts that, following a period of slight contraction in 2003, the staffing industry will grow 6.4% to $100.8 billion in 2004, from $94.7 billion in 2003. The biggest industry segment, temporary help, is forecast to grow at an annual rate of 6.1% in 2004 to $80.6 billion according to the Staffing Industry Report. The Bureau of Labor Statistics reinforced that view in the February 2004 Monthly Labor Review when it projected that the catalyst for the industry's positive momentum will be increased demand for temporary staff as flexible work arrangements continue to proliferate. Professional and business services, education and health services are among the staffing industry groups with the most employment growth potential in the 2002—2012 period according to the Staffing Industry Report. We believe that management at healthcare and scientific facilities are realizing the cost advantages, improved flexibility to meet unexpected increases in business and access to greater expertise provided by outsourcing to temporary professionals.

        Our staffing service offerings are grouped under two operating segments: Healthcare Staffing and Lab Support.

Healthcare Staffing

        The Staffing Industry Report estimates that the market size of the healthcare segment of the temporary staffing industry was $10 billion in 2003 and for it to grow slightly in 2004. The combination of increased demand for health services and advances in life science and medical technology is expected to create significant demand for workers with specialized science and medical skills. Also influencing the demand for workers is the departure of mature professionals from the ranks of full-time employment as they retire, reduce hours worked or elect other career opportunities.

        We serve a diverse collection of healthcare clients, including hospitals, integrated delivery systems, clinics, physician offices, managed care organizations and third-party administrators. These healthcare clients face large shortages of mission-critical staff that allow them to generate revenue. For example, the American Hospital Association reported there were 126,000 nursing positions unfilled in hospitals across the country in 2002. As reported by the Joint Commission on Accreditation of Healthcare Organizations report titled "Health Care at the Crossroads," this situation is expected to worsen as the baby boom generation, approximately 78 million people, continue to age. As baby boomers age, they will represent the largest ever population of seniors requiring essential medical services. Aging baby boomers will have access to scientific advances and technologies that will help them live longer, if the healthcare delivery system can deliver. At the same time, nurses are aging along with their baby boomer peers, and as they age over the next decade, they will be retiring, working on a part-time basis or working in non-essential medical settings. The compounding of this increased demand and shrinking labor force is expected to produce a nursing shortage that the Joint Commission on Accreditation of Healthcare Organizations estimates by 2020 will be at least 400,000 fewer nurses available to provide care than needed to meet demand. The shortage of healthcare professionals is not limited to nurses, and in many settings, allied medical professionals are in shorter supply than nurses. Within the next 10 years, the shortage of labor in Radiology will exceed 40,000 full-time employees, according to the Occupational Outlook Quarterly published by the Bureau of Labor Statistics.

5

        Nurses and allied professionals are increasingly electing to work as temporary employees rather than as full-time staff. Temporary employment has many advantages, but key among them are withdrawal from workplace politics, varied clinical experience, highly flexible schedules and superior hourly pay. The attractiveness of temporary employment is compounding the overall shortage of qualified staff. Many healthcare providers must now aggressively rely on temporary nurses and allied staff to meet essential staffing needs. The use of temporary personnel helps healthcare providers deal with their labor shortages and enables them flexibility to vary their staffing levels to match the changes in demand caused by vacancies and seasonal changes in patient occupancy rates.

Lab Support

        Janney Montgomery Scott, (JMS) estimates that the domestic temporary scientific staffing market totaled more than $750 million in 2001 and that the market will reach $2 billion in sales by 2010. According to JMS, growth should be driven by further penetration of essential occupations by outsourced staffing.

        Our Lab Support segment operates in the United States and Europe, and places scientists on temporary assignments in many industries including biotechnology, pharmaceutical, food and beverage, chemical, personal care, petrochemical and other science industries. Our temporary professionals include chemists, biologists, biochemists, microbiologists, molecular biologists, food scientists, lab assistants and other skilled technicians on temporary assignments that vary from three to six months. Lab Support recruits staff and clients from local branch offices in the United States, the United Kingdom, The Netherlands and Belgium. Our initial focus and source of growth was our Lab Support business. Today, we are a multinational company with an industry reputation for quality, speed and personalized service. As a provider of specialty science staff, we address a client base that has been economically sensitive during recent periods of reduced economic activity. We believe reduced demand for Lab Support's services was influenced by broader weakness in the economy, including reduced spending on research and development and quality control.

Sales and Fulfillment

        Our strategy is to serve the needs of our targeted industries by effectively matching client staffing needs with qualified temporary healthcare and scientific professionals. In contrast to the mass market approach generally used for temporary office/clerical and light industrial personnel, we believe effective assignments of temporary healthcare and scientific professionals require the people involved in making assignments to have significant knowledge of the client's industry and the ability to assess the specific needs of the client as well as the temporary healthcare and science professionals' qualifications. We believe that face-to-face selling is significantly more effective than the telephonic solicitation of potential clients, a strategy favored by many of our competitors. Our strategy of using industry professionals to develop personal relationships provides us with a competitive advantage with our clients.

Lab Support and Local Healthcare Staffing

        We have developed a tailored approach to the assignment-making process that utilizes Staffing Consultants. Unlike traditional approaches that tend to be focused on telephonic solicitation, Staffing Consultants are experienced professionals who work in our branch office network in the United States, the United Kingdom, The Netherlands and Belgium to enable face-to-face meetings with clients and temporary professionals. At December 31, 2003, we had approximately 40 Lab Support segment branch offices and 40 Healthcare Staffing segment branch offices. Approximately 25 branch offices utilized shared office space among segments. Previously, Staffing Consultants managed all aspects of the assignment-making process, including selling, business development, recruiting and assignment-making. We have evolved our model to allow for more specialization. Many of our Staffing Consultants now are

6

either focused on sales and business development or on fulfillment. Sales Staffing Consultants meet with clients' managers to understand client needs, formulate position descriptions and assess workplace environments. Fulfillment Staffing Consultants meet with temporary professional candidates to assess their qualifications and interests and place temporary professionals on quality assignments with clients, typically within 24 to 48 hours of client requests.

        Our corporate office is organized to perform many functions that allow Staffing Consultants to focus more effectively on business development and fulfillment. These functions include the recruiting and hiring of Staffing Consultants and support staff, ongoing training, coaching and administrative support. Our corporate office also selects, opens and maintains branch offices.

        Temporary professionals assigned to clients are employees of On Assignment, although clients provide on-the-job supervisors for temporary professionals. Therefore, clients control and direct the work of temporary professionals and approve hours worked, while we are responsible for many of the activities typically handled by the client's human resources department.

Nurse Travel and Allied Travel

        The sales and fulfillment functions of our Nurse Travel and Allied Travel lines of business are aligned with more traditional nurse and allied travel companies. We employ Regional Sales Directors and Account Managers to identify and sell services to healthcare clients who need nurses and allied professionals. We employ Recruiters to find nurses and allied medical professionals and place them on assignment as temporary professionals with healthcare providers for periods ranging from two weeks to thirteen weeks and longer. We serve a diverse collection of healthcare clients, including hospitals, integrated delivery systems, clinics and managed care organizations on a national basis. We seek to address occupations that represent "high-value" staff, like operating room nurses and diagnostic imaging professionals, that are essential to maintaining the hospital's ability to care for patients and maintain business and revenue. The critical nature of these occupations to drive revenue motivates clients to respond to our ability to rapidly fill open positions with experienced nurses and allied professionals. The recruitment and assignment of nurses and other allied healthcare professionals placed on travel assignments remains primarily centralized at our locations in Cincinnati, Ohio and Tupelo, Mississippi. During 2003, we also opened small recruiting offices in Las Vegas, Nevada and Ft. Lauderdale, Florida. The Ft. Lauderdale branch focuses on our new traditional 13-week nurse travel assignments. We plan to open another recruiting branch in San Diego, California in the first quarter of 2004, which will also focus on traditional 13-week nurse travel assignments.

Clients

        In our Healthcare Staffing segment, we serve a diverse collection of healthcare clients, including hospitals, integrated delivery systems, clinics, physician offices, managed care organizations and third-party administrators. In doing so, we address occupations that are "high-value" staff, like operating room nurses and diagnostic imaging professionals, that are essential to maintaining the hospital's ability to care for patients and maintain business and revenue. Today, our healthcare clients face large shortages of these mission-critical staff. Clients and prospective clients are inundated with solicitations and options to satisfy their temporary staffing needs. Many healthcare professionals are dissatisfied with their compensation and workload and are frequently electing to work in non-critical care occupations, where work is less stressful and the pay better than that offered at hospitals. The same dissatisfaction is preventing significant growth in enrollment in nursing and allied healthcare education. In addition, baby boomers make up a large percentage of healthcare professionals, many of whom will be getting to retirement age shortly. All of these circumstances have created opportunities for large, established companies as well as small, start-up staffing companies, which offer clients service that varies dramatically in quality. There is an increased preference among nurses and allied professionals to work on a temporary basis, and they have a range of options for temporary work.

7

        Our clients in the Lab Support segment include primarily biotechnology and pharmaceutical companies, along with a broad range of clients in food and beverage, chemical, petrochemical and environmental companies and agribusiness. Our primary interfaces with our clients are a mix of end users and process facilitators. End users consist of lab directors and managers and department heads. Facilitators consist of human resource managers, procurement departments and administrators and are more price sensitive than end users who typically are more focused on technical capabilities.

        During the year ended December 31, 2003, we provided temporary professionals to approximately 7,300 clients. Contracts for our Lab Support segment typically have a term of three to six months. Contracts for our Healthcare Staffing segment typically have a term of four to eight weeks, with the exception of contracts for Allied Travel, which typically have a term of 13 weeks or more. In 2003, we launched a traditional 13-week nurse travel line of business. All temporary assignments, regardless of their planned length, may be terminated without prior notice by the client or the temporary professional.

The Temporary Professional

        Our Healthcare Staffing segment's temporary professionals include nurses, specialty nurses, surgical technicians, imaging technicians, x-ray technicians, medical technicians, cytotechnologists, phlebotomists, coding, billing, claims processing and collections staff. During 2003, we expanded Healthcare Staffing's service offerings to include respiratory therapists. Our temporary professionals typically have at least two years of experience.

        Our Lab Support segment's temporary professionals include chemists, biologists, biochemists, microbiologists, molecular biologists, food scientists, lab assistants and other skilled technicians. These temporary professionals range from individuals with bachelor's and/or master's degrees and considerable experience, to technicians with limited chemistry or biology backgrounds and lab experience. During 2003, we expanded Lab Support's service offerings to include engineers and clinical research assistants.

        Hourly wage rates for our temporary professionals are established according to local market conditions. We pay 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, we also provide paid holidays, allow participation in our 401(k) Retirement Savings Plan and Employee Stock Purchase Plan, create eligibility for an annual bonus, and facilitate access to and supplement the cost of health insurance for our temporary professionals. In order to help ensure that we are able to attract and retain qualified temporary professionals, particularly in the healthcare industry, we offer temporary professionals benefits, rewards and opportunities that are linked to concentration of work, quality of work and loyalty behaviors with us. For travel assignments, we pay for all travel-related costs including airfare, car rentals, mileage and housing, or we provide per diem allowances.

        Temporary professionals often work with a number of staffing companies and develop relationships or loyalty based on competitive salaries and benefits, availability and variety of assignments, quality and duration of assignments and responsiveness to requests for placement and other needs of temporary professionals. Temporary professionals seeking traveling positions are also interested in the quality of travel and housing accommodations as well as the quality of the clinical experience while on assignment.

Growth Strategy

        During 2003, our primary focus was on cost containment. Given our decline in revenue, we acted aggressively in 2003 to reduce costs, including headcount reductions of 72 employees and 18 branch office closings. Preservation of cash and cash equivalent balances were also key focal areas. For 2004

8

and beyond, we intend to grow our operations domestically in the healthcare, laboratory and scientific and clinical research fields that we currently serve primarily through internal organic growth. In particular, our strategy is to focus on expanding our service offerings targeted to clients needing nurse and allied temporary professionals and increasing the productivity of our existing branch network. In 2003, our expanded service offerings included engineering, clinical research, respiratory therapy, licensed vocational nurses and traditional 13-week nurse travel assignments. Internationally, our growth strategy is focused on expanding our existing Lab Support segment operations in the United Kingdom, The Netherlands and Belgium.

        Since the hiring of Peter T. Dameris as Executive Vice President and Chief Operating Officer in November 2003, our senior management team has been focused on building a solid revitalization plan to grow revenues and increase our market share. This plan was built from the bottom up, market by market by analyzing each of our staffing service offerings. The plan was approved by our Board of Directors on February 12, 2004, and we are now aggressively implementing the plan. The plan involves investing ahead of the market recovery in order to improve our sales capabilities, the effectiveness of our marketing efforts and depth of our sales operations management. We are also focused on completing the company-wide implementation of PeopleSoft, an enterprise wide information system, and on training our field staff to improve automation and efficiency. In addition, we have tactically hired skilled industry veterans to augment our already experienced field management team.

        Our revitalization plan includes the expected hiring of 24 incremental sales and fulfillment personnel in Local Healthcare, 22 in Lab Support and 10 in Nurse Travel. Local Healthcare continues to be our most challenged line of business while Nurse Travel and Lab Support stabilized in the fourth quarter of 2003. Another area of particular focus in 2004 will be the reduction of travel and housing costs at Nurse Travel and Allied Travel to improve our gross profit margins. The plan also provides for upgraded training and mentoring of new and existing personnel. Each new hire has specific productivity and revenue quotas that, if achieved, will permit us to post positive revenue growth on a year over year basis. However, due to the timing of resource investments associated with our revitalization plan and the current performance of Local Healthcare, at this time we do not expect to generate positive net income for the full 2004 year.

        In addition, we will continue to review acquisition opportunities, particularly in the healthcare industry, that may enable us to leverage our current infrastructure and capabilities, increase our staffing offering and expand our geographic reach. In this regard, we will continue to evaluate companies in the nurse travel business. Our acquisitions of 1st Choice Personnel, Inc. and Sklar Resource Group, Inc. in 1994, EnviroStaff, Inc. in 1996, LabStaffers, Inc. in 1998 and HPO in 2002 were consistent with this strategy. We periodically engage in discussions with other possible acquisition candidates.

Competition

        The temporary staffing industry is highly competitive and fragmented, with low barriers to entry. We believe Lab Support is one of the few nationwide temporary staffing providers that specializes exclusively in scientific laboratory personnel. Although other nationwide temporary staffing companies compete with us with respect to scientific, clinical laboratory and medical technologist and medical billing and collection personnel, many of these companies focus on office/clerical and light and heavy industrial personnel, which account for a significant portion of the overall temporary personnel services market. These companies include Manpower, Inc., Kelly Services, Inc., and Adecco International. In the Nurse Travel and Allied Travel businesses, our competitors include AMN Healthcare Services, Inc., Medical Staffing Network Holding, Inc., RehabCare Group Inc., and Cross Country, Inc. Several of these competitors are larger and have substantially greater financial and marketing resources than we do.

9

        We also compete with privately-owned temporary staffing companies on a regional and local basis. Frequently, the strongest competition in a particular market is a privately-held local company with established relationships. These companies oftentimes are extremely competitive on pricing; more often than not, their pricing strategies are not sustainable, but they can be problematic in the short-term. We also compete with our 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, availability and variety of assignments, quality and duration of assignments and responsiveness to requests for placement and other needs of temporary professionals. We believe that many people seeking temporary employment through us are also pursuing employment through other means, including other temporary staffing companies. Therefore, the speed at which we place prospective temporary professionals and the availability of appropriate assignments are important factors in our ability to complete assignments of qualified candidates. In addition to having high quality temporary professionals to assign in a timely manner, the principal competitive factors in obtaining and retaining clients in the temporary staffing industry are correctly understanding the clients' specific job requirements, the appropriateness of the temporary professional assigned to the client, the price of services and the monitoring of client satisfaction. Although we believe we compete favorably with respect to these factors, we expect competition to continue to increase.

Seasonality

        Our results of operations have historically been subject to seasonal fluctuations. From November through February, revenues, operating income and net income in both our Healthcare Staffing and Lab Support segments, have been negatively impacted by fewer business days and the fall off of the number of temporary professionals willing to work during the holiday period. In particular, many of our temporary professionals who like travel assignments often end their assignments before the holiday season in December to spend time with family and friends. As is common in the staffing industry, we run special incentive programs to keep our temporary professionals, particularly nurses, working through the holidays. Additionally, demand for our temporary professionals in our Lab Support segment 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.

Employees

        At December 31, 2003, we employed approximately 380 full-time employees, including Staffing Consultants, Regional Sales Directors, Account Managers, Recruiters and corporate office employees. During the year ended December 31, 2003, we employed approximately 11,800 temporary professionals.

Government Regulation

        The healthcare industry is subject to extensive and complex federal and state laws and regulations related to professional licensure, conduct of operations, payment for services and payment for referrals. Our operations are subject to applicable state and local regulations, both domestically and internationally, governing the provision of temporary staffing that require temporary staffing companies to be licensed or separately registered. To date, we have not experienced any material difficulties in complying with such regulations.

        Some states require state licensure for businesses that employ and/or assign healthcare personnel to provide healthcare services on-site at hospitals and other healthcare facilities. We are currently licensed in the states that require such licenses.

        Most of the temporary healthcare professionals that we employ are required to be individually licensed or certified under applicable state laws. We take reasonable steps to ensure that our employees

10

possess all necessary licenses and certifications in all material respects. Currently, we provide state mandated workers' compensation and unemployment insurance premiums for our temporary professionals and regular employees. These expenses have a direct effect on our cost of services, margins and likelihood of achieving or maintaining profitability.

Executive Officers of the Registrant

        The executive officers of On Assignment are as follows:

        Joseph Peterson, M.D. joined On Assignment in July 2001 and has served as Chief Executive Officer and President since September 2001. Dr. Peterson also serves as a Director on our Board of Directors and as a Director of Global Health Council, the world's largest membership alliance dedicated to improving health worldwide. From April 2000 through May 2001, Dr. Peterson founded and was Chief Executive Officer of Advocates on Call, formally, Neoplan, Inc., which offered subscription-based services related to the healthcare industry. Dr. Peterson co-founded and from January 1994 through March 2000 was Chief Executive Officer of MAXWorldwide, LLC, a company that provided customer care services to Fortune 500 clients. From January 1992 through March 1996, Dr. Peterson co-founded and was Chief Executive Officer of MAXCanada, a Canadian company that provided customer care services to major Canadian financial institutions. From 1988 through 1991, Dr. Peterson served as Medical Director and ultimately Chief Operating Officer of World Access, Inc., a subsidiary of Blue Cross & Blue Shield of the National Capital Area. Dr. Peterson is a Board-certified emergency physician and practiced his specialty for ten years in the Emergency Department of the George Washington University Hospital, in Washington, D.C., where he was an Associate Professor of Emergency Medicine and a Fellow of the American Board of Emergency Medicine.

        Peter T. Dameris joined the Company in November 2003 as Executive Vice President, Chief Operating Officer. From February 2001 through October 2002, Mr. Dameris served as Executive Vice President and Chief Operating Officer of Quanta Services, Inc. (NYSE: PWR), a leading provider of specialized contracting services for the electric and gas utility, cable and telecommunications industries. Revenues at Quanta Services are in excess of $1.5 billion. From December 1994 through September 2000, Mr. Dameris served in a number of different positions at Metamor Worldwide, Inc. (formerly, NASDAQ: MMWW), an international, publicly-traded IT consulting/staffing company, including Chairman of the Board, President and Chief Executive Officer, Executive Vice President, General Counsel, Senior Vice President and Secretary. In June 2000, Mr. Dameris successfully negotiated the sale of Metamor for $1.9 billion. Since November 2002, Mr. Dameris has been a member of the Board of Directors of Bindview Corporation, a Texas corporation. Mr. Dameris holds a Juris Docturate from the University of Texas Law School and a Bachelor's in Business Administration from Southern Methodist University.

        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,

11

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 On Assignment 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 Inc., 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.

        Michael T. Jones has served as Senior Vice President of Travel Healthcare since April 2003. From October 1, 2002 through April 2003, Mr. Jones was Chief Operating Officer of our Healthcare segment, with responsibility for local healthcare staffing through our branch network as well as Nurse and Allied Travel. From April 26, 2002 through September 30, 2002, Mr. Jones was Chief Operating Officer of the then newly acquired HPO nurse and allied travel business. Mr. Jones joined On Assignment in February 2002 as Senior Vice President, International Operations with responsibility for the European operations of Lab Support. From October 2000 to December 2001, Mr. Jones was Chief Executive Officer of Quest Holdings, a tour operating business. From January 1998 to October 2000, Mr. Jones was Chief Operating Officer of Abercrombie and Kent, a luxury tour operator, in charge of their European business. He also served as Chief Operating Officer of Brymon Airways, an air regional carrier operating in Europe, and prior to that he held senior positions with British Airways in the USA, Portugal, The Middle East, Australia, the UK, Africa, Asia and Canada.

        Michael Payne has served as Senior Vice President of Shared Services and Chief Information Officer since July 2003 with responsibility for information technology, marketing, call center operations, payroll, real estate and travel. Mr. Payne joined On Assignment in April of 2003 as Vice President of the Information Technology group. From June 1999 to April 2003, Mr. Payne managed the technology group supporting the recorded music and publishing companies of Warner Music Group and Warner Chappell as Vice President—Development and Deputy Chief Information Officer. He also served as a member of the Chief Information Officer council of AOL Time Warner focusing on post-merger synergies and cross-channel development of numerous web properties. Mr. Payne managed multiple shared service teams focused on packaged software implementations (Oracle and PeopleSoft) along with Internet Business Development, Digital Supply Chain and Product Delivery and several new media marketing projects. From April 1997 to June 1999, as a senior manager at Ernst & Young LLP, Mr. Payne managed the re-engineering effort and deployed a new business system and service center at the Jet Propulsion Laboratory to support NASA's space exploration missions. He also was responsible for the professional services of the West Coast Oracle service line. His professional experience also includes over 10 years with Nestle USA (Carnation Company) in a variety of Engineering and IT Management roles, including the deployment of a home video worldwide manufacturing and distribution system for Technicolor. He holds a Bachelor of Science degree from De Paul University in Chicago, Illinois.

12

        Michael A. Tatum has served as Senior Vice President of Sales for Lab Support and Local Healthcare Staffing since April 2003. From July 2002 through April 2003, Mr. Tatum was Senior Vice President of our Lab Support segment. He joined On Assignment in March 2002 initially serving as Senior Vice President, Sales & Marketing. From 2000 through 2001, Mr. Tatum was the Executive Vice President and Chief Operating Officer for Gluecode, Inc., a venture funded enterprise application software company. From 1999 through 2000, Mr. Tatum served as President, Chief Executive Officer and a director of Zanova, Inc. where he successfully guided Zanova through its merger with Onvia, Inc. in July 2000. From 1998 through 1999, Mr. Tatum was the Group Vice President of MicroAge, Inc. a Fortune 500 company that distributed and integrated hardware and software products for commercial accounts within North America, Latin America and Europe. From 1996 through 1998, Mr. Tatum was the Vice President of North American Sales for NEC Technologies, Inc. Mr. Tatum received a Bachelor of Arts degree from Wake Forest University in Winston-Salem, North Carolina.

Available Information and Access to Reports

        We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (SEC). You may read and copy any of our reports that are filed with the SEC in the following manner:

•

At the SEC's Public Reference Room at 450 Fifth Street NW, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330;



•

At the SEC's website, http://www.sec.gov;



•

At our website, http://www.onassignment.com; and



•

By contacting our Investors Relations Department at (818) 878-7900.

        Our reports are available through any of the foregoing means and are available for free on our website as soon as practicable after such material is electronically filed with or furnished to the SEC. Also available on our website, free of charge, are copies of our Code of Ethics for Principal Executive Officer and Senior Financial Officers, Code of Business Conduct and Ethics, and the charters for the committees of our Board of Directors. We intend to disclose any amendment to, or waiver from, a provision of our Code of Ethics for Principal Executive Officer and Senior Financial Officers on our website within five business days following the date of the amendment or waiver.

Risk Factors

        Our business is subject to a number of risks, including the following:

Our results of operations may vary from quarter to quarter as a result of a number of factors, which may make it difficult to evaluate our business and could cause instability in the trading price of our common stock.

        Factors that may cause our quarterly results to fluctuate include:

•

the level of demand for our temporary staffing services and the efficiency with which we source and assign our temporary professionals and support our sales personnel and Staffing Consultants in the execution of their duties;



•

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



•

our ability to control costs and manage our accounts receivable balances.

        In addition, most temporary staffing companies typically experience seasonal declines in demand during and after the year-end holiday season and to a lesser degree during June, July and August.

13

Historically, we have experienced variability in the duration and depth of these seasonal declines, which in turn have materially affected our quarterly results of operation and made period-to-period comparisons of our financial and operating performance difficult.

        As a result of these and other factors, including the risks described in this report, there can be no assurance that we will be able to achieve revenue growth or achieve or maintain profitability on a quarterly or annual basis. If our operating results are below the expectations of public market analysts or investors in a given quarter, the trading price of our common stock could decline.

If we are unable to attract and retain qualified temporary professionals for our Lab Support and Healthcare Staffing segments, our business could be negatively impacted.

        Our business is substantially dependent upon our ability to attract and retain healthcare and lab support temporary professionals who possess the skills, experience and, as required, licenses to meet the specified requirements of our clients. We compete for such temporary professionals with other temporary staffing companies and with our clients and potential clients. Currently, there is a shortage of qualified nurses in most areas of the United States. Competition for nursing personnel is increasing and salaries and benefits have risen. Further, there can be no assurance that qualified laboratory and scientific, clinical laboratory and medical technologist, allied healthcare and medical billing and collections personnel will be available to us in adequate numbers to staff our operating segments. Moreover, our temporary professionals are often hired to become regular employees of our clients. Attracting and retaining temporary professionals depends on several factors, including our ability to provide temporary professionals with attractive assignments and competitive benefits and wages. The cost of attracting and retaining temporary professionals may be higher than we anticipate and, as a result, if we are unable to pass these costs on to our clients, our likelihood of achieving or maintaining profitability could decline. If we are unable to attract and retain a sufficient number of temporary professionals to meet client demand, we may be required to forgo staffing and revenue opportunities which may hurt the growth of our business.

Execution of our revitalization plan and growth of our business are substantially dependent upon our ability to attract, develop and retain qualified and skilled sales personnel and Staffing Consultants.

        In February of 2004, we announced a revitalization plan that focuses on the growth of our businesses and capturing additional market share. A key component of this plan includes our ability to attract, develop and retain qualified and skilled sales personnel and Staffing Consultants, particularly persons with industry experience. The available pool of qualified sales personnel and Staffing Consultant candidates is limited. We expect to commit substantial resources to these upcoming hiring needs, including expenses associated with salary, as well as costs for recruitment, training, development and operational support. There can be no assurance that we will be able to recruit, develop and retain qualified sales personnel and Staffing Consultants in sufficient numbers or that our sales personnel and Staffing Consultants will achieve productivity levels sufficient to enable growth of our business. Failure to attract and retain productive sales personnel and Staffing Consultants could adversely affect our business, financial condition and results of operations.

Difficulties integrating acquisitions, including our HPO acquisition, into our operations could result in increased costs or exposure to unforeseen liabilities.

        We acquired Health Personnel Options Corporation (HPO) in the second quarter of 2002. We have also acquired four other businesses since 1994, including 1st Choice Personnel, Inc. and Sklar Resource Group, Inc. in 1994, EnviroStaff, Inc. in 1996 and LabStaffers, Inc. in 1998. We review acquisition opportunities, particulary in the healthcare industry, that complement or enhance our existing business. We also evaluate opportunities to acquire businesses that enable us to increase

14

staffing offerings, expand our geographic reach and leverage our current infrastructure and capabilities. Acquisitions involve numerous risks, including:

•

potential loss of key employees or clients of acquired companies;



•

difficulties integrating acquired personnel and distinct cultures;



•

difficulties integrating acquired companies into operating, financial planning and financial reporting systems;



•

diversion of management attention from existing operations; and



•

assumption of liabilities and exposure to unforeseen liabilities of acquired companies.

        Acquisitions of other businesses may also involve significant expenditures, the incurrence of debt and integration expenses that could adversely affect our financial condition and results of operations. Any acquisition may ultimately have a negative impact on our business and financial condition.

The temporary staffing industry is highly competitive and the success and future growth of our business depend upon our ability to remain competitive in obtaining and retaining temporary staffing clients.

        The temporary staffing industry is highly competitive and fragmented, with limited barriers to entry. We compete in national, regional and local markets with full-service agencies and in regional and local markets with specialized temporary staffing agencies. Some of our competitors in the Nurse Travel and Allied Travel businesses include AMN Healthcare Services, Inc., Cross Country, Inc., Medical Staffing Network Holdings, Inc. and RehabCare Group Inc. Some of our competitors in the Lab Support and Local Healthcare Staffing businesses include Kelly Services, Inc., Manpower, Inc., and Adecco International. Several of these companies have significantly greater marketing and financial resources than we do. Our ability to attract and retain clients is based on the value of the service we deliver, which in turns depends principally on the speed with which we fill assignments and the appropriateness of the match based on clients' requirements and the skills and experience of our temporary employees. Our ability to attract skilled, experienced temporary professionals is based on our ability to pay competitive wages, to provide competitive benefits, to provide multiple, continuous assignments and thereby increase the retention rate of these employees. To the extent that competitors seek to gain or retain market share by reducing prices or increasing marketing expenditures, we could lose revenues and our margins could decline, which could seriously harm our operating results and cause the trading price of our stock to decline. As we expand into new geographic markets, our success will depend in part on our ability to gain market share from competitors. We expect competition for clients to increase in the future, and the success and growth of our business depend on our ability to remain competitive.

Because our temporary staffing agreements may be terminated by clients and temporary professionals at will, the termination of a significant number of such agreements would adversely affect our revenues and results of operations.

        Our arrangements with clients and temporary professionals are terminable at will, without advance notice, regardless of the length of the agreed-upon term. There can be no assurance that existing clients will continue to use our services at historical levels, if at all. If clients terminate a significant number of our staffing agreements, and we are unable to generate new temporary staffing orders to replace lost revenues, our revenues and results of operations could be materially adversely affected.

15

We are subject to business risks associated with international operations, which could make our international operations significantly more costly.

        We currently have international operations in the United Kingdom, The Netherlands and Belgium. We have limited experience in marketing, selling and, particularly, supporting our services outside of North America.

        Operations in certain of our markets are subject to risks inherent in international business activities, including:

•

fluctuations in currency exchange rates;



•

complicated work permit requirements;



•

varying economic and political conditions;



•

seasonal reductions in business activity during the summer months in Europe;



•

overlapping or differing tax structures;



•

difficulties collecting accounts receivable; and



•

regulations concerning pay rates, benefits, vacation, union membership, redundancy payments and the termination of employment.

        Our inability to effectively manage our international operations could result in increased costs and adversely affect our results of operations.

Improper activities of our temporary professionals could result in damage to our business reputation, discontinuation of our client relationships and exposure to liability.

        We may be subject to possible claims by our clients related to errors and omissions, misuse of proprietary information, discrimination and harassment, theft and other criminal activity, malpractice, and other claims stemming from the improper activities or alleged activities of our temporary professionals. There can be no assurance that our current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims. Claims raised by clients stemming from the improper actions of our temporary professionals, even if without merit, could cause us to incur significant expense associated with the costs or damages related to such claims. Further, such claims by clients could damage our business reputation and result in the discontinuation of client relationships.

Claims against us by our temporary professionals for damages resulting from the negligence or mistreatment by our clients could result in significant costs and adversely affect our recruitment and retention efforts.

        We may be subject to possible claims by our temporary professionals alleging discrimination, sexual harassment, negligence and other similar activities by our clients. There can be no assurance that our current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims. Claims raised by our temporary professionals, even if without merit, could cause us to incur significant expense associated with the costs or damages related to such claims. Further, any associated negative publicity could adversely affect our ability to attract and retain qualified temporary professionals in the future.

We recorded a write down of $79.9 million in 2003 related to impairment of goodwill and continue to have approximately $43.5 million in goodwill on our balance sheet at December 31, 2003. If we are required to further write down goodwill, the related charge could materially reduce reported net income or result in a net loss for the period in which the write down occurs.

        As of December 31, 2003, we had $43.5 million of goodwill on our balance sheet. This amount primarily represents the remaining excess of the total purchase price of our acquisition of HPO in

16

April 2002 over the fair value of the net assets acquired. At December 31, 2003, goodwill represented 33 percent of our total assets.

        We adopted Statement of Financial Accounting Standards (FAS) No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002. FAS No. 142 requires that we review and test goodwill and indefinite lived intangible assets for impairment rather than amortize them. During the second quarter of 2003, we concluded that significant events had occurred for purposes of our goodwill impairment analysis, requiring management to perform an analysis of goodwill impairment prior to the next regularly scheduled test. We reached this determination in the second quarter of 2003 based, in part, upon our reduced market capitalization compared to December 31, 2002, our implementation of personnel reductions and office closures in the first two quarters of 2003 and a reduction in our then current and projected operating results. In connection with this analysis, we determined that goodwill related to one of our reporting units in our Healthcare Staffing segment was impaired. A goodwill impairment charge of $79.9 million was expensed as a non-cash charge to continuing operations during the second quarter of 2003, which contributed to a net loss of $80.0 million in that quarter. Based on our estimates, we have concluded there is no additional impairment of our goodwill or other intangible assets at December 31, 2003. However, if conditions cause the assumptions we used to determine the carrying value of our businesses to change, we could be required to record impairment charges related to goodwill and other intangible assets, which could adversely affect our profitability for the period in which the write down occurs.

        Although further impairment of the $43.5 million in goodwill remaining on our balance sheet at December 31, 2003 will not affect our cash flow, a write down would have the effect of decreasing our earnings or increasing our losses in such period. If we are required to take a substantial impairment charge, our earnings per share would be negatively impacted in such period.

If we are subject to material uninsured liabilities under our partially self-insured workers' compensation program, our financial results could be adversely affected.

        We maintain a partially self-insured workers' compensation program. In connection with this program, we pay a base premium plus actual losses incurred up to certain levels. We are insured for losses greater than certain levels per occurrence and in the aggregate. There can be no assurance that our loss reserves and insurance coverage will be adequate in amount to cover all workers' compensation claims. If we become subject to substantial uninsured workers compensation liabilities, our results of operations and financial condition could be adversely affected.

Our business is dependent upon the proper functioning of our information systems.

        In 2003, we continued the implementation of PeopleSoft, an enterprise wide information system, intended to yield greater efficiency from automation of processes and improved information management. We expect to incur an additional $4,000,000 to $4,500,000 in capital expenditures over the next 12 months related to PeopleSoft, leasehold improvements and various equipment purchases. The operation of our business is dependent on the proper functioning of our information systems. Critical information systems used in daily operations identify and match staffing resources and client assignments, track regulatory credentialing, manage scheduling and also perform billing and accounts receivable functions. If the system fails to perform reliably or otherwise does not meet our expectations, or if we fail to successfully complete the implementation of other modules of the system, we could experience business interruptions that could result in deferred or lost sales. Our information systems are vulnerable to fire, storm, flood, power loss, telecommunications failures, physical or software break-ins and similar events. If our information systems fail or become unavailable, these functions would have to be accomplished manually, which could impact our ability to identify business opportunities quickly, to pay our staff in a timely fashion and to bill for services efficiently.

17

Our costs of providing travel and housing for nurses and other healthcare personnel may be higher than we anticipate and, as a result, our margins could decline.

        If our travel and housing costs, including the costs of airline tickets, rental cars, apartments and rental furniture for our nurses and other temporary healthcare personnel exceed the levels we anticipate, and we are unable to pass such increases on to our clients, our margins may decline. To the extent the length of our apartment leases exceed the terms of our staffing contracts, we bear the risk that we will be obligated to pay rent for housing we do not use. In some housing markets we have had, and believe we will continue to have, difficulty identifying short-term leases. If we cannot source a sufficient number of appropriate short-term leases in regional markets, or if, for any reason, we are unable to efficiently utilize the apartments we do lease, we may be required to pay rent for unutilized or underutilized housing. As we continue to expand our travel nurse business, effective management of travel costs will be necessary to prevent a decrease in gross profit and operating margins.

Demand for our services is significantly impacted by changes in the general level of economic activity and continued periods of reduced economic activity could negatively impact our business and results of operations.

        Demand for the temporary staffing services that we provide is significantly impacted by changes in the general level of economic activity, particularly any negative effect on healthcare, research and development and quality control spending. As economic activity slows, many clients or potential clients for our services reduce their usage of and reliance upon temporary professionals before laying off their regular, full-time employees. During periods of reduced economic activity, we may also be subject to increased competition for market share and pricing pressure. As a result, continued periods of reduced economic activity could have a material adverse impact on our business and results of operations.

We do not have long-term or exclusive agreements with our temporary staffing clients and growth of our business depends upon our ability to continually secure and fill new orders.

        We do not have long-term agreements or exclusive guaranteed order contracts with our temporary staffing clients. Contracts for our Lab Support segment typically have a term of three to six months. Contracts for our Healthcare Staffing segment typically have a term of four to eight weeks, with the exception of contracts for Allied Travel, which typically have a term of 13 weeks or more. The success of our business depends upon our ability to continually secure new orders from clients and to fill those orders with our temporary professionals. Our agreements do not provide for exclusive use of our services, and clients are free to place orders with our competitors. As a result, it is imperative to our business that we maintain positive relationships with our clients. If we fail to maintain positive relationships with these clients, we may be unable to generate new temporary staffing orders, and the growth of our business could be adversely affected.

Fluctuation in patient occupancy rates at client facilities could adversely affect demand for services of our Healthcare Staffing segment and our results of operations.

        Client demand for our temporary Healthcare Staffing segment services is significantly impacted by changes in patient occupancy rates at our hospital and healthcare clients' facilities. Increases in occupancy often result in increased client need for temporary professionals before full-time employees can be hired. During periods of decreased occupancy, however, hospitals and other healthcare facilities typically reduce their use of temporary professionals before laying off their regular, full-time employees. During periods of decreased occupancy, we may experience increased competition to service clients, including pricing pressure. Occupancy at certain healthcare clients' facilities also fluctuates due to the seasonality of some elective procedures. Periods of decreased occupancy at client healthcare facilities could materially adversely affect our results of operations.

18

The loss of key members of our senior management team could adversely affect the execution of our business strategy and our financial results.

        We believe that the successful execution of our business strategy and our ability to build upon the significant infrastructure investments and restructuring we have undertaken in the past year depends on the continued employment of key members of our senior management team. If any members of our senior management team become unable or unwilling to continue in their present positions, our financial results and our business could be materially adversely affected.

Future changes in reimbursement trends could hamper our Healthcare Staffing segment clients' ability to pay us.

        Many of our Healthcare Staffing segment clients are reimbursed under the federal Medicare program and state Medicaid programs for the services they provide. In recent years, federal and state governments have made significant changes in these programs that have reduced reimbursement rates. In addition, insurance companies and managed care organizations seek to control costs by requiring that healthcare providers, such as hospitals, discount their services in exchange for exclusive or preferred participation in their benefit plans. Future federal and state legislation or evolving commercial reimbursement trends may further reduce, or change conditions for, our clients' reimbursement. Limitations on reimbursement could reduce our clients' cash flows, hampering their ability to pay us.

If our insurance costs increase significantly, these incremental costs could negatively affect our financial results.

        The costs related to obtaining and maintaining workers' compensation insurance, professional and general liability insurance, and health insurance for our temporary professionals have been increasing. If the cost of carrying this insurance continues to increase significantly, we will recognize an associated increase in costs, which may negatively affect our margins and financial results.

Healthcare reform could negatively impact our business opportunities, revenues and margins.

        The U.S. government has undertaken efforts to control increasing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and drug companies. In the recent past, the U.S. Congress has considered several comprehensive healthcare reform proposals. The proposals were generally intended to expand healthcare coverage for the uninsured and reduce the growth of total healthcare expenditures. While the U.S. Congress did not adopt any comprehensive reform proposals, members of Congress may raise similar proposals in the future. If any of these proposals are approved, hospitals and other healthcare facilities may react by spending less on healthcare staffing, including nurses. If this were to occur, we would have fewer business opportunities, which could seriously harm our business.

        State governments have also attempted to control increasing healthcare costs. For example, the state of Massachusetts has recently implemented a regulation that limits the hourly rate payable to temporary nursing agencies for registered nurses, licensed practical nurses and certified nurses' aides. The state of Minnesota has also implemented a statute that limits the amount that nursing agencies may charge nursing homes. Other states have also proposed legislation that would limit the amounts that temporary staffing companies may charge. Any such current or proposed laws could seriously harm our business, revenues and margins.

        Furthermore, third party payors, such as health maintenance organizations, increasingly challenge the prices charged for medical care. Failure by hospitals and other healthcare facilities to obtain full reimbursement from those third party payors could reduce the demand or the price paid for our staffing services.

19

We operate in a regulated industry and changes in regulations or violations of regulations may result in increased costs or sanctions that could reduce our revenues and profitability.

        The healthcare industry is subject to extensive and complex federal and state laws and regulations related to professional licensure, conduct of operations, payment for services and payment for referrals. If we fail to comply with the laws and regulations that are directly applicable to our business, we could suffer civil and/or criminal penalties or be subject to injunctions or cease and desist orders.

        The extensive and complex laws that apply to our hospital and healthcare facility clients, including laws related to Medicare, Medicaid and other federal and state healthcare programs, could indirectly affect the demand or the prices paid for our services. For example, our hospital and healthcare facility clients could suffer civil and/or criminal penalties and/or be excluded from participating in Medicare, Medicaid and other healthcare programs if they fail to comply with the laws and regulations applicable to their businesses. In addition, our hospital and healthcare facility clients could receive reduced reimbursements, or be excluded from coverage, because of a change in the rates or conditions set by federal or state governments. In turn, violations of or changes to these laws and regulations that adversely affect our hospital and healthcare facility clients could also adversely affect the prices that these clients are willing or able to pay for our services.

The trading price of our common stock has experienced significant fluctuations, which could make it difficult for us to access the public markets for financing or use our common stock as consideration in a strategic transaction.

        In 2003, the trading price of our common stock experienced significant fluctuations, from a high of $9.14 to a low of $3.10. The closing price of our common stock on the NASDAQ National Market was $5.79 on March 1, 2004. Our common stock may continue to fluctuate widely as a result of a large number of factors, many of which are beyond our control, including:

•

period to period fluctuations in our financial results;



•

failure to meet previously announced guidance or analysts' expectations of our quarterly results; and



•

general economic and other external factors.

        The stock market has experienced extreme price and volume fluctuations that have affected the market prices of many companies involved in the temporary staffing industry. As a result of these fluctuations, we may encounter difficulty should we determine to access the public markets for financing or use our common stock as consideration in a strategic transaction.

Provisions in our corporate documents and Delaware law may delay or prevent a change in control of On Assignment that stockholders consider favorable.

        Our certificate of incorporation and by-laws contain provisions that may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our certificate of incorporation and bylaws contain provisions requiring a 66 percent stockholder vote or two-thirds vote of continuing Directors to effect certain amendments to such documents. Our certificate of incorporation also authorizes our Board of Directors to issue up to 1,000,000 shares of "blank check" preferred stock. Without stockholder approval, the Board of Directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire us. In addition, in June 2003, our Board of Directors adopted a stockholder rights plan. The rights plan has certain anti-takeover effects and will cause substantial dilution to a person or group that attempts to acquire our company in a manner or on terms not approved by our Board of Directors. These features of our

20

governing documents and the application of Delaware law may discourage, delay or prevent a third party from acquiring or merging with us.

Item 2. Properties

        We have leased approximately 30,500 square feet of office space through March 2011 for our field support and corporate headquarters in Calabasas, California and 22,900 square feet of office space through March 2006 for our field support offices in Cincinnati, Ohio. In addition, we lease office space in approximately 55 branch office locations in the United States, United Kingdom, The Netherlands and Belgium. 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

        From time to time, we are involved in litigation and proceedings arising out of the ordinary course of our business. As of the date of this report, there are no pending material legal proceedings to which we are a party or to which our property is subject.

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

        There were no matters submitted to a stockholder vote during the fourth quarter of the fiscal year ended December 31, 2003.

21

PART II

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

        On Assignment 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 each quarterly period within the two most recent fiscal years. At March 8, 2004, On Assignment had approximately 71 holders of record, approximately 2,500 beneficial owners of its Common Stock and 25,228,475 shares outstanding.

        Since inception, we have not declared or paid any cash dividends on our Common Stock, and we currently plan to retain all earnings to support the development and expansion of our business. We have no present intention of paying any dividends on our Common Stock in the foreseeable future. However, the Board of Directors periodically reviews our dividend policy to determine whether the declaration of dividends is appropriate.

22

Item 6. Selected Financial Data

        The following table presents selected financial data of On Assignment as, at and for the fiscal years ended December 31, 1999, 2000, 2001, 2002, and 2003. This selected financials data should be read in conjunction with the consolidated financial statements and notes thereto included under "Financial Statements and Supplementary Data" in Part II, Item 8 of this report. The financial data for 2002 includes the income statement data and balance sheet data from our acquisition of HPO on April 19, 2002 (See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations").