LAMALIE ASSOCIATES INC, S-1, 1998-05-07

LAMALIE ASSOCIATES INC
S-1, 1998-05-07
MANAGEMENT CONSULTING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1998

REGISTRATION STATEMENT NO.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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LAMALIE ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)

---------------------

<TABLE>
<S> <C> <C>
FLORIDA 8741 59-2776441
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

---------------------
200 PARK AVENUE, SUITE 3100
NEW YORK, NEW YORK 10166-0136
(212) 953-7900
(Address, including zip code, and telephone number including area code, of
Registrant's principal executive offices)
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JACK P. WISSMAN, EXECUTIVE VICE PRESIDENT
LAMALIE ASSOCIATES, INC.
3903 NORTHDALE BOULEVARD
TAMPA, FLORIDA 33624
(813) 961-7494
(Name, address, including zip code, and telephone number including area code, of
agent for service)
COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
RICHARD M. LEISNER, ESQUIRE HELEN N. KAMINSKI, ESQUIRE
TRENAM, KEMKER, SCHARF, BARKIN NEAL, GERBER & EISENBERG
FRYE, O'NEILL & MULLIS TWO NORTH LASALLE STREET
P.O. BOX 1102 SUITE 2200
TAMPA, FLORIDA 33601-1102 CHICAGO, ILLINOIS 60602
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.01 per share.................. $72,234,375 $21,309
==================================================================================================================
</TABLE>

(1) Estimated solely for the purposes of computing the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based on the
average of the high and low prices of the Common Stock as reported by the
Nasdaq National Market on May 5, 1998.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY , 1998

PROSPECTUS

3,000,000 SHARES

(LAI WARD HOWELL LOGO)
LAMALIE ASSOCIATES, INC.
COMMON STOCK

---------------------------

Of the 3,000,000 shares of Common Stock offered hereby, 2,050,000 shares
are being offered by Lamalie Associates, Inc. ("LAI" or the "Company") and
950,000 shares are being offered by certain stockholders of the Company named
herein (the "Selling Stockholders"). The Company will not receive any proceeds
from the sale of Common Stock by the Selling Stockholders. See "Principal and
Selling Stockholders."

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "LAIX." On May 6, 1998, the last reported sale price of the Company's
Common Stock on the Nasdaq National Market was $21.50 per share. See "Price
Range of Common Stock."

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED
UNDER THE CAPTION "RISK FACTORS" AT PAGE 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=======================================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNTS(1) COMPANY(2) STOCKHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.......................... $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(3)........................... $ $ $ $
=======================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses, estimated at $400,000, all of which are payable
by the Company.
(3) The Company has granted to the several Underwriters a 30-day option to
purchase up to 450,000 additional shares of Common Stock, on the same terms
and conditions as set forth above, to cover over-allotments, if any. If this
option is exercised in full, the total Price to Public, Underwriting
Discounts and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."

---------------------------

The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the certificates representing shares of Common Stock will be made on
or about , 1998 through the Depository Trust Company or at the
offices of Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin.

ROBERT W. BAIRD & CO.
INCORPORATED
THE ROBINSON-HUMPHREY
COMPANY
J.C. BRADFORD & CO.
THE DATE OF THIS PROSPECTUS IS MAY , 1998
<PAGE> 3

Inside front cover page of the prospectus:

Left hand column contains the following one sentence description of LAI.
"LAI Ward Howell is one of the largest and fastest growing executive search
firms in the world. Our global search consultancy offers in-depth expertise in
key industry sectors and specialized functional areas." The right hand column
lists LAI's eight practice groups and functional group. The text is superimposed
over a picture, that continues on the inside back cover of a hemisphere of a
globe on a light blue background.

At the bottom of the page, typed on a white background, is the following
text:

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT COVERING TRANSACTIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."

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<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes that the Underwriters' over-allotment option will not be
exercised and reflects financial and other data of acquired companies only from
the dates of acquisition. All references in this Prospectus to fiscal years are
to LAI's fiscal years ended on the last day of February each year (e.g., fiscal
1998 refers to LAI's fiscal year ended February 28, 1998). Unless the context
otherwise requires, references to the "Company" or "LAI" are to Lamalie
Associates, Inc. and its subsidiaries.

THE COMPANY

LAI is one of the largest and fastest growing executive search firms in the
world. LAI provides consulting services aimed specifically at solving its
clients' leadership needs by identifying, evaluating and recommending qualified
candidates for senior level positions. The Company, which conducts business
under the name "LAI Ward Howell," principally serves Fortune 500 and large
private companies. LAI provides executive search services exclusively on a
retained basis, and charges a fee typically equal to one-third of the first year
cash compensation for the position being filled. During fiscal 1998, the average
first year cash compensation for positions being filled by LAI was approximately
$226,000.

Industry

Revenue in the global executive search industry has grown at a 17% compound
annual growth rate from approximately $3.5 billion in 1993 to approximately $6.5
billion in 1997. The industry is expected to continue to grow at a 15% annual
rate with global revenue projected to reach $10.0 billion by the year 2000. LAI
believes that a number of favorable trends are generating significant growth in
the executive search industry, including: (i) a greater demand for managers with
broad leadership skills, (ii) the rapid growth in outsourcing non-core
activities, (iii) the growth in the number and scope of multinational
businesses, (iv) an increase in executive turnover and (v) an increase in
executive compensation levels. The executive search industry is highly
fragmented, consisting of more than 4,000 firms worldwide. Retained search firms
generally are compensated for an assignment whether or not they are successful
in placing a recommended candidate, while contingency search firms are not
compensated for an assignment unless they place a recommended candidate.

Business

LAI's objective is to be a global leader in providing comprehensive
consulting services aimed specifically at solving its clients' senior leadership
needs. To achieve this objective, LAI has developed a knowledge-based search
practice organized around eight industry groups and one functional group. The
industry groups execute searches for clients in the following business sectors:
automotive; communications, entertainment and technology; consumer products and
services; energy and natural resources; financial services; health care and
pharmaceuticals; industrial; and insurance and risk management. The functional
group executes searches for specific functional positions, including board of
directors, human resources and legal. These practice groups enable LAI's
consultants to better understand each client's business strategy and industry
and position LAI as a consulting partner to its clients. LAI's clients are among
the most prominent companies in their industries and include General Motors,
Lucent Technologies, PepsiCo, Enron, Lehman Brothers, Bristol-Myers Squibb,
AlliedSignal and Prudential. LAI emphasizes long-term relationships with
clients, rather than one-time projects or assignments, and has represented the
foregoing clients for an average of 14 years. More than 65% of the Company's
fiscal 1998 fee revenue was attributable to companies for which LAI conducted
one or more searches during the prior two fiscal years.
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<PAGE> 5

LAI's knowledge-based practice consists of 114 consultants supported by 116
associates, researchers and information technology ("IT") professionals as of
April 30, 1998. In order to readily identify the universe of qualified executive
candidates, search consultants must understand a client's business practices,
strategies, culture, industry and competitors. LAI's associates, researchers and
IT professionals support the Company's consultants by, among other things,
gathering and analyzing information obtained from numerous electronic databases,
trade journals and directories, the Internet and other sources. LAI's research
staff is organized by practice group, with most researchers specializing in one
or two specific industries. LAI also maintains a proprietary database containing
professional information on more than 100,000 executive candidates. Consultants
can query this database on a variety of attributes, including demographic
information, work experience, compensation and personal interview results. LAI's
wide area computer network provides remote document sharing and data search
capabilities, groupware features and real-time updates on ongoing search
engagements. LAI's support functions are coordinated from its Tampa, Florida
office. LAI believes that its industry specialization and technological
capabilities enable it to consistently provide superior research and,
ultimately, deliver higher quality search results to its clients.

LAI has been successful in attracting and retaining some of the most
productive executive search consultants in the industry, as measured by fee
revenue per consultant. The Company attributes its success to its premium
reputation, performance-based compensation system, entrepreneurial culture and
commitment to providing strong research, technology and administrative support.
The Company has increased its staff from 36 consultants located in seven
domestic offices at the end of fiscal 1993 to 114 consultants located in 17
domestic offices and one international office as of May 1998. The Company has
experienced an average annual turnover rate among its consultants of less than
8% over the last five fiscal years. Most of LAI's consultants held senior level
positions with leading companies in LAI's targeted industry sectors and many had
experience in the executive search business prior to joining LAI. The Company's
Practice Leaders and Managing Partners have an average of more than 14 years
experience in the executive search business. In addition, LAI believes its
status as a public company provides a further competitive advantage in
attracting and retaining highly qualified consultants. Common Stock and stock
options are broadly held among LAI's consultants, and the Company believes that
this equity ownership fosters a team-oriented working environment and aligns the
interests of its consultants with the Company's investors.

Strategy

LAI believes that several competitive factors distinguish it from other
executive search firms. These factors include (i) a focus on knowledge-based
practice groups, which enables LAI's consultants to provide more specialized
services and position LAI as a partner to its clients, (ii) a consultative
approach that emphasizes a thorough understanding of each client's
organizational structure, history, culture, strategic objectives and leadership
needs, (iii) a commitment to improving consultant productivity through the use
of industry focused research and innovative technology, (iv) an ability to
attract, motivate and retain some of the most productive search consultants in
the industry, (v) an entrepreneurial environment based on broad equity ownership
by consultants, a performance-based compensation system and stock incentive
plans and (vi) an ability to aggressively pursue acquisitions on a global scale
using its publicly traded stock, stock options and a well capitalized balance
sheet.

LAI believes that global search fulfillment capabilities are critical to
attracting and retaining multinational clients. To better leverage its
knowledge-based expertise and technological capabilities, capitalize on its
existing relationships with multinational clients and ensure the quality and
consistency of its services, LAI recently initiated an international strategy of
directly owning offices in major business and financial centers around the
world. In May 1998, LAI opened an office in London, England and is currently
targeting other major markets in which to establish offices. In international
markets where LAI does not own an office, it will continue to provide clients
with search fulfillment capabilities by using existing and developing new
referral
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<PAGE> 6

relationships with executive search firms located in those markets. Through
these referral relationships, LAI executes domestic search assignments on behalf
of non-U.S. executive search firms and refers to such firms international search
assignments for LAI's domestic clients.

Recent Acquisitions

LAI recently completed two acquisitions which have significantly expanded
the Company's practice group coverage, provided broader geographic reach and
enhanced the Company's competitive position. On February 27, 1998, LAI completed
the acquisition of Ward Howell International, Inc. ("WHI"), which was the ninth
largest executive search firm in the United States with fee revenue of $26.5
million for the year ended December 31, 1997. On January 2, 1998, LAI completed
the acquisition of Chartwell Partners International, Inc. ("CPI"), a prominent
executive search firm based in California specializing primarily in the
financial services industry. CPI had fee revenue of $3.4 million for the year
ended December 31, 1997. The acquisitions of WHI and CPI strengthened LAI's
existing practice groups, particularly in the areas of financial services,
health care and technology, and added new practice groups in the areas of
automotive, insurance, and media and entertainment. These acquisitions also have
expanded the Company's domestic office network, adding six new offices and
providing an active presence on the West Coast with offices in Los Angeles, San
Francisco and Phoenix.

LAI is a Florida corporation. Its headquarters are located at 200 Park
Avenue, Suite 3100, New York, NY 10166-0136, and its telephone number is (212)
953-7900. The Company's World Wide Web address is www.laix.com.

THE OFFERING

Common Stock offered by the Company..... 2,050,000 shares

Common Stock offered by the Selling
Stockholders............................ 950,000 shares

Common Stock to be outstanding after the
Offering................................ 7,722,416 shares(1)

Use of Proceeds......................... For general corporate purposes,
including additional acquisitions
and opening new offices in major
business and financial centers
around the world; computer software
and hardware purchases, upgrades
and enhancements; and working
capital. See "Use of Proceeds."

Nasdaq National Market symbol........... LAIX
- ---------------

(1) Does not include 1,238,115 shares of Common Stock issuable on the exercise
of stock options outstanding as of April 30, 1998. See
"Management -- Director Compensation" and "Management -- Incentive and
Benefit Plans."
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<PAGE> 7

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR 29,
---------------------------------------------------------------
PRO
FORMA
1994 1995 1996 1997 1998 1998(1)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Fee revenue, net............................. $ 21,144 $ 28,262 $ 35,088 $ 46,437 $ 61,803 $ 91,730
Compensation and benefits.................... 17,725 23,991 30,693 39,928 46,513 69,053
General and administrative expenses.......... 2,080 2,333 4,467 6,685 8,680 13,736
-------- -------- -------- -------- -------- --------
Operating income (loss)...................... 1,339 1,938 (72) (176) 6,610 8,941
Net interest income (expense)................ 14 (6) (40) (376) 197 (649)
-------- -------- -------- -------- -------- --------
Income (loss) before provision for income
taxes...................................... 1,353 1,932 (112) (552) 6,807 8,292
Provision for income taxes................... 97 671 90 15 2,927 3,807
-------- -------- -------- -------- -------- --------
Net income (loss)................... $ 1,256 $ 1,261 $ (202) $ (567) $ 3,880 $ 4,485
======== ======== ======== ======== ======== ========
Diluted earnings per share................... $ 0.82
========
Pro forma net income (loss)(2)............... $ 785 $ 1,121 $ (202) $ (567) $ 3,880 $ 4,485
======== ======== ======== ======== ======== ========
Pro forma diluted earnings per share......... $ 0.90
========
Diluted weighted average shares
outstanding................................ 4,751 4,961
OTHER DATA:
Number of consultants employed as of fiscal
year end................................... 38 46 54 62 111
Average fee revenue per consultant employed
during entire fiscal year.................. $602,000 $689,000 $706,000 $740,000 $989,000
Average cash compensation of positions
filled(3).................................. $172,000 $180,000 $196,000 $226,000 $226,000
</TABLE>

<TABLE>
<CAPTION>
AS OF
FEBRUARY 28, 1998
------------------------
ACTUAL AS ADJUSTED(4)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 9,815 $ 51,176
Total assets................................................ 88,916 130,277
Total long-term debt........................................ 9,125 9,125
Total stockholders' equity.................................. 35,471 76,832
</TABLE>

- ---------------

(1) The unaudited pro forma financial information for the year ended February
28, 1998 (i) reflects the results of operations of LAI as if the
acquisitions of WHI and CPI were completed on March 1, 1997, (ii) assumes
that the WHI and CPI consultants were paid according to the LAI consultant
compensation plan, the effect of which was to decrease compensation and
benefits expense and increase operating income by approximately $3.6
million, (iii) reflects an increase in goodwill amortization and a decrease
in net interest income as a result of the two acquisitions and (iv) was
prepared using the historical audited financial statements of WHI and CPI
for the year ended December 31, 1997. See Unaudited Pro Forma Combined
Statement of Operations.
(2) For periods prior to November 1, 1994, the Company had elected to be taxed
as an S corporation for federal and certain state income tax purposes. The
pro forma net income (loss) for each period shown reflects a provision for
income taxes as if the Company were a C corporation for income tax purposes
during such periods at an assumed effective tax rate of 42%.
(3) Represents the average first year cash compensation of positions for which
LAI conducted searches during the fiscal year.
(4) Adjusted to give effect to the sale of 2,050,000 shares of Common Stock
offered by the Company hereby and the application of the estimated net
proceeds therefrom. See "Use of Proceeds."
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<PAGE> 8

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, as well as the other information in this Prospectus, before
investing in shares of the Common Stock offered hereby. This Prospectus contains
certain forward-looking statements that involve risks and uncertainties. Future
events and the Company's actual results could differ materially from the results
reflected in these forward-looking statements.

DEPENDENCE ON ATTRACTING AND RETAINING QUALIFIED EXECUTIVE SEARCH CONSULTANTS

LAI's success depends upon its ability to attract and retain qualified
executive search consultants who possess the skills and experience necessary to
fulfill its clients' executive search needs. Competition for qualified
consultants is intense and many firms in LAI's industry have experienced high
consultant turnover rates. There can be no assurance that LAI will continue to
be successful in identifying and hiring consultants with substantial experience
and established client relationships. LAI believes it has been able to attract
and retain highly qualified, productive executive search consultants as a result
of its premium reputation and its performance-based consultant compensation,
which LAI believes is among the highest in the industry as a percentage of fee
revenue generated. Although consultants are paid base salaries, a significant
portion of most consultants' compensation consists of incentive compensation
that is dependent primarily upon the amount of fee revenue they generate. The
majority of LAI's executive search consultants are not subject to any
employment, noncompetition or similar agreement. Any reduction in LAI's
compensation levels or any decline in the market price of LAI's Common Stock
could impair LAI's ability to retain existing or attract additional qualified
consultants. Any such occurrence could have a material adverse effect on LAI's
business, financial condition and results of operations. See "-- Portability of
Client Relationships" and "Business -- Business Strategy."

PORTABILITY OF CLIENT RELATIONSHIPS

LAI's success depends upon the ability of its executive search consultants
to develop and maintain strong, long-term relationships with its clients.
Usually, only one or two consultants have primary responsibility for a client
relationship. When a consultant leaves one search firm and joins another,
clients that have established relationships with the departing consultant may
move their business to the consultant's new employer. The loss of one or more
clients is more likely to occur if the departing consultant enjoys widespread
name recognition or has developed a reputation as a specialist in executing
searches in a particular industry. Although client portability historically has
not caused significant problems for LAI, the failure to retain its most
productive consultants or maintain the quality of service to which its clients
are accustomed, and the ability of a departing consultant to move business to
his or her new employer, could have a material adverse effect on LAI's business,
financial condition and results of operations. See "-- Dependence on Attracting
and Retaining Qualified Executive Search Consultants," "Business -- Services"
and "Business -- Marketing and Clients."

RISKS OF GROWTH THROUGH ACQUISITIONS

A key component of LAI's growth strategy is to acquire executive search
firms that expand the breadth of its practice groups and strategically extend
the Company's geographic presence. Since January 1, 1998, LAI has acquired two
executive search firms, thereby adding an aggregate of 37 consultants and a net
total of six offices. As a result of the disparate corporate cultures of
executive search firms, there can be no assurance that LAI will be able to (i)
successfully integrate the acquired firms into its existing operations while
maintaining the high quality of LAI's services and its unique corporate culture,
(ii) retain and motivate key consultants previously associated with acquired
firms or (iii) realize the expected levels of revenue and productivity of such
acquisitions. Growth through acquisitions also could adversely affect LAI's
business and financial

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<PAGE> 9

condition by diverting management's attention from the Company's executive
search business; exacerbating LAI's blocking conflicts; decreasing LAI's
profitability as a result of incurring liabilities that were not known at the
time of acquisition or creating tax and accounting problems. There also can be
no assurance that LAI will be successful in identifying suitable acquisition
candidates or completing any acquisitions of such firms.

MANAGEMENT OF GROWTH

The Company currently is experiencing rapid growth that could strain the
Company's managerial, financial, administrative and operational resources. To
effectively manage its growth, the Company may be required to improve its
internal operational processes and controls, expand its technological and
financial systems, assimilate divergent corporate cultures of acquired executive
search firms, eliminate or consolidate redundant capabilities, and maintain the
consistency and high quality of its services. Moreover, the Company may open
offices in new locations, which would entail certain startup costs. If the
Company is unable to manage its growth effectively, the Company's business,
financial condition and results of operations could be materially adversely
affected. See "Business -- Growth Strategy."

COMPETITION

The executive search industry is extremely competitive and highly
fragmented. Some of LAI's competitors possess greater resources and greater name
recognition than LAI. There are limited barriers to entry into the executive
search industry and new executive search firms continue to enter the market.
Many executive search firms have a smaller client base than LAI and therefore
may be subject to fewer blocking restraints than LAI. See "-- Blocking
Arrangements." In addition, a client will sometimes request a discounted search
fee when the client offers the prospect of multiple search engagements or in
exchange for designating a search firm as the client's "preferred provider" of
search services. Such pricing pressure may constitute an additional competitive
factor. The Company competes for search assignments with the human resources and
recruiting personnel employed by some of its clients and prospective clients.
There can be no assurance that LAI will be able to continue to compete
effectively with existing or potential competitors or that significant clients
or prospective clients of LAI will not decide to perform search services using
in-house personnel. See "Business -- Competition."

BLOCKING ARRANGEMENTS

Executive search firms frequently agree to refrain, for a specified period
of time, from recruiting employees of a client and possibly affiliates of such
client, when conducting searches on behalf of other clients (a "blocking"
arrangement). Blocking arrangements generally remain in effect for one or two
years. However, the duration and scope of the blocking or "off limits" period,
including whether it covers all operations or only certain divisions of the
client, generally depend on factors such as the length of the client
relationship, the number of searches to be performed by the executive search
firm and the amount of fee revenue generated or expected to be generated by the
executive search firm. Some of LAI's clients are recognized as industry leaders
and/or employ a significant number of qualified executives who are potential
recruitment candidates for other companies in those clients' industries. LAI's
inability to recruit employees of such industry leading clients may make it
difficult for LAI to obtain search assignments from, or to fulfill search
assignments for, other companies while employees of such industry leading
clients are off limits. As LAI's client base grows and as LAI acquires
additional executive search firms, blocking arrangements increasingly may impede
LAI's growth or its ability to attract and serve new clients, which could have a
material adverse effect on LAI's business, financial condition and results of
operations. See "Business -- Marketing and Clients."

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RISKS OF INTERNATIONAL OPERATIONS

LAI recently opened an office in London, England and is pursuing further
international expansion. LAI is subject to certain risks that are inherent in
conducting international business, such as exposure to currency fluctuations,
difficulties in integrating and standardizing operational procedures and
corporate cultures, potentially adverse tax consequences, difficulties in
staffing and managing foreign operations and the burden of complying with a wide
variety of foreign laws and regulations. There can be no assurance that one or
more of such risks will not have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Growth
Strategy."

RELIANCE ON INFORMATION PROCESSING SYSTEMS

LAI's success depends in large part upon its ability to gather, store,
retrieve and process substantial amounts of information. To achieve its
operational goals and to remain competitive, LAI believes that it must continue
to automate its search execution process and further improve its information
processing system, which may require the acquisition of equipment and the
acquisition or development, either internally or through independent
consultants, of new proprietary software. If LAI does not maintain an
information processing system that provides the capabilities necessary for LAI
to compete effectively, LAI's business, financial condition and results of
operations could be materially adversely affected. Additionally, in the event
the Company experiences an interruption or loss of its information processing
capabilities, through casualty, operating malfunction or otherwise, the
Company's business could be materially adversely affected. See "Use of Proceeds"
and "Business -- Research and Technology."

BENEFITS OF THE OFFERING TO EXISTING STOCKHOLDERS

The Selling Stockholders, all of whom are consultants, executive officers
and/or directors of the Company, will receive substantial proceeds and certain
other benefits from the Offering. The Selling Stockholders will receive
approximately $19.4 million of the aggregate proceeds of the Offering, net of
underwriting discounts. In addition, the Offering will increase the number of
shares of Common Stock freely traded in the public market. This increased public
float will provide increased liquidity to the Selling Stockholders and to other
existing stockholders of the Company with respect to the shares of Common Stock
they will continue to own after the Offering. See "-- Shares Eligible for Future
Sale" and "Principal and Selling Stockholders."

EXECUTIVE SEARCH LIABILITY RISK

LAI is exposed to potential claims from clients for such matters as
breaching a blocking arrangement or recommending a candidate who later proves to
be unsuitable for the position filled. In addition, employment candidates could
assert claims against LAI for such matters as failure to maintain the
confidentiality of the candidate's employment search or for alleged
discrimination or other employment law violations made by a client of LAI. The
Company maintains professional liability insurance in such amounts and with such
coverage and deductibles as management believes are adequate; however, there can
be no assurance that the Company's insurance will cover all such claims or that
insurance coverage will continue to be available at economically feasible rates.
See "Business -- Insurance."

EFFECT OF ANTI-TAKEOVER PROVISIONS

LAI's Articles of Incorporation and Bylaws and applicable law contain
provisions that could have the effect of inhibiting a non-negotiated merger or
unsolicited change of control of LAI. In particular, LAI's Articles of
Incorporation provide for a staggered Board of Directors, permit the removal of
directors for cause only, and authorize its Board of Directors to issue shares
of preferred stock and fix the rights and preferences

9
<PAGE> 11

thereof, without a vote of its stockholders. Although no shares of preferred
stock currently are outstanding and the Company has no present plans to issue
any shares of preferred stock, the rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. Certain of these provisions
may delay, deter or prevent a change in control of LAI that stockholders might
consider in their best interests. Moreover, the existence of these provisions
may depress the market price of the Common Stock. See "Description of Capital
Stock."

POSSIBLE VOLATILITY OF STOCK PRICE

Since the Company's initial public offering was completed in July 1997 (the
"Initial Public Offering"), the closing sale price of the Common Stock has
fluctuated between $15.875 per share and $23.25 per share. See "Price Range of
Common Stock." The market price of the Common Stock may be subject to
significant fluctuations in response to various factors, such as quarterly
fluctuations in LAI's operating results, changes in securities analysts'
estimates of LAI's future earnings, LAI's loss of key consultants or clients, or
significant business developments relating to LAI or its competitors. The market
price of the Common Stock also may be affected by the Company's ability to meet
analysts' expectations and any failure to meet such expectations, even if minor,
could have a material adverse effect on the market price of the Common Stock.
The trading volume of the Common Stock has been lower than the trading volume of
publicly traded shares of many other companies, in part because certain LAI
stockholders have agreed not to sell, contract to sell or otherwise dispose of
an aggregate of 2,290,384 shares of Common Stock for certain periods of time,
without the prior written consent of Robert W. Baird & Co. Incorporated. See
"-- Shares Eligible for Future Sale," "Shares Eligible for Future Sale" and
"Underwriting." Because of this reduced trading volume, the market price of
Common Stock may be more susceptible to fluctuation. In addition, the stock
market has experienced a high level of price and volume volatility, and market
prices of equity securities of many companies have experienced wide price
fluctuations not necessarily related to the operating performance of such
companies. These broad market fluctuations may adversely affect the market price
of the Common Stock. In the past, securities class action lawsuits frequently
have been instituted against companies following periods of volatility in the
market price of such companies' securities. If any such litigation is instigated
against the Company, it could result in substantial costs to the Company and a
diversion of management's attention and resources, which could have a material
adverse effect on the Company's business, results of operations or financial
condition.

ABSENCE OF DIVIDENDS

LAI does not anticipate paying cash dividends on its Common Stock at any
time in the foreseeable future. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, there will be 7,722,416 shares of Common
Stock outstanding (8,172,416 if the Underwriters' over-allotment option is
exercised in full), substantially all of which will be freely tradable without
restriction. In addition, an aggregate of 1,238,115 shares of Common Stock are
or will be issuable upon exercise of stock options currently outstanding under
LAI's 1997 Omnibus Stock and Incentive Plan and 1998 Omnibus Stock and Incentive
Plan (the "Employee Stock Plans") and Non-Employee Directors' Stock Plan (the
"Directors' Stock Plan"), which shares, upon issuance, also will be freely
tradable without restriction. Sales of such shares in the public market, or the
perception that such sales may occur, could adversely affect the market price of
the Common Stock or impair LAI's ability to raise additional capital in the
future through the sale of equity securities. Certain existing stockholders of
LAI have agreed not to sell, contract to sell or otherwise dispose of an
aggregate of 295,000 shares of Common Stock until at least July 2, 1999; an
additional 25,707 shares until at least January 2, 2000; an additional 189,677

10
<PAGE> 12

shares until at least February 27, 2000; and an additional 1,780,000 shares
until at least , 2000 (two years after the date of this Prospectus),
without the prior written consent of Robert W. Baird & Co. Incorporated. See
"-- Possible Volatility of Stock Price." In addition, the Selling Stockholders
and LAI's executive officers and directors have agreed not to sell, contract to
sell or otherwise dispose of any shares of Common Stock for a period of 90 days
after the date of this Prospectus without the prior written consent of Robert W.
Baird & Co. Incorporated. Additionally, the Company has agreed for a period of
90 days after the date of this Prospectus, not to sell, contract to sell or
otherwise dispose of any shares of Common Stock without the prior written
consent of Robert W. Baird & Co. Incorporated, other than shares of Common Stock
issued in the Offering, under its 1997 Employee Stock Purchase Plan, or upon
exercise of stock options granted pursuant to the Employee Stock Plans or the
Directors' Stock Plan. See "Management -- Incentive and Benefit Plans," "Shares
Eligible for Future Sale" and "Underwriting."

11
<PAGE> 13

USE OF PROCEEDS

The net proceeds to LAI from the sale of the 2,050,000 shares of Common
Stock offered hereby, after deducting the underwriting discounts and estimated
offering expenses, are estimated to be approximately $41.4 million ($50.5
million if the Underwriters' over-allotment option is exercised in full). The
Company will not receive any proceeds from the sale by the Selling Stockholders
of shares of Common Stock in the Offering.

LAI intends to use the net proceeds of the Offering to further implement
the Company's expansion strategy, which includes both additional acquisitions
and opening new offices in major business and financial centers around the
world. The Company also intends to use a portion of the net proceeds of the
Offering for computer software and hardware purchases, upgrades and enhancements
and for general corporate purposes, including working capital. Pending such
uses, LAI intends to invest the net proceeds from the Offering in short-term,
investment grade securities, certificates of deposit or direct guaranteed
obligations of the United States government.

PRICE RANGE OF COMMON STOCK

The following table sets forth, for the periods indicated, the range of
high and low closing sale prices for the Common Stock, as reported on the Nasdaq
National Market since trading began on July 2, 1997, the date of the Company's
Initial Public Offering, at $12.00 per share, under the symbol LAIX.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR 1998:
Second Quarter (from July 2, 1997).......................... $21.250 $15.875
Third Quarter............................................... 22.875 17.750
Fourth Quarter.............................................. 21.250 16.375

FISCAL YEAR 1999:
First Quarter (through May 6, 1998)......................... $23.250 $19.500
</TABLE>

On May 6, 1998, the last reported sales price of the Common Stock on the
Nasdaq National Market was $21.50 per share. As of May 6, 1998, there were
approximately 145 holders of record of the Common Stock.

DIVIDEND POLICY

LAI does not intend to pay any cash dividends for the foreseeable future
but instead intends to retain earnings, if any, for the future operation and
expansion of LAI's business. Any determination to pay dividends in the future
will be at the discretion of the Company's Board of Directors and will be
dependent upon LAI's results of operations, financial condition, contractual
restrictions, restrictions imposed by applicable law and other factors deemed
relevant by the Board of Directors. Moreover, the Company's credit facilities
prohibit payment of dividends without the consent of the lender.

12
<PAGE> 14

CAPITALIZATION

The following table sets forth the capitalization of LAI as of February 28,
1998, and as adjusted to reflect the application of the estimated net proceeds
from the issuance and sale by the Company of the 2,050,000 shares of Common
Stock offered hereby as described in "Use of Proceeds." The table reflects the
Company's recent acquisitions of WHI and CPI and should be read in conjunction
with the Consolidated Financial Statements and Notes thereto included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
AS OF
FEBRUARY 28, 1998
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long term debt........................ $ 3,070 $ 3,070
======= =======
Long-term debt, less current maturities..................... $ 6,055 $ 6,055
------- -------
Stockholders' equity(1):
Preferred stock, $0.01 par value, 3,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common stock, $0.01 par value, 35,000,00 shares
authorized; 5,576,446 shares issued and outstanding;
7,626,446 shares as adjusted........................... 56 77
Additional paid-in capital................................ 32,873 74,213
Retained earnings......................................... 2,542 2,542
------- -------
Total stockholders' equity........................ 35,471 76,832
------- -------
Total capitalization......................... $41,526 $82,887
======= =======
</TABLE>

- ---------------

(1) Excludes 1,211,615 shares of Common Stock issuable on the exercise of
outstanding stock options.

13
<PAGE> 15

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)

The following table sets forth selected financial and other data of LAI for
fiscal years ended February 1994 through 1998 and as of the last day of each of
those fiscal years. The Statement of Operations Data for fiscal 1995, 1996, 1997
and 1998, and Balance Sheet Data as of the end of fiscal 1997 and 1998, are
derived from the audited Consolidated Financial Statements of the Company. The
Statement of Operations and Other Data for, and Balance Sheet Data as of the end
of, fiscal 1994 are derived from the unaudited Consolidated Financial Statements
of the Company and, in the opinion of management, include all adjustments
(consisting of normal and recurring adjustments) necessary to present fairly the
results of operations and financial position of the Company for such periods and
as of such dates. The financial data shown below should be read in conjunction
with the Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR 29,
--------------------------------------------------------------
PRO
FORMA
1994 1995 1996 1997 1998 1998(1)
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Fee revenue, net............................. $ 21,144 $ 28,262 $ 35,088 $ 46,437 $ 61,803 $91,730
Compensation and benefits.................... 17,725 23,991 30,693 39,928 46,513 69,053
General and administrative expenses.......... 2,080 2,333 4,467 6,685 8,680 13,736
-------- -------- -------- -------- -------- -------
Operating income (loss).................... 1,339 1,938 (72) (176) 6,610 8,941
Net interest income (expense)................ 14 (6) (40) (376) 197 (649)
-------- -------- -------- -------- -------- -------
Income (loss) before provision for income
taxes.................................... 1,353 1,932 (112) (552) 6,807 8,292
Provision for income taxes................... 97 671 90 15 2,927 3,807
-------- -------- -------- -------- -------- -------
Net income (loss)................... $ 1,256 $ 1,261 $ (202) $ (567) $ 3,880 $ 4,485
======== ======== ======== ======== ======== =======
Diluted earnings per share................... $ 0.82
========
Pro forma net income (loss)(2)............... $ 785 $ 1,121 $ (202) $ (567) $ 3,880 $ 4,485
======== ======== ======== ======== ======== =======
Pro forma diluted earnings per share......... $ 0.90
=======
Diluted weighted average shares
outstanding................................ 4,751 4,961
OTHER DATA:
Number of consultants employed as of fiscal
year end................................... 38 46 54 62 111
Average fee revenue per consultant employed
during entire fiscal year.................. $602,000 $689,000 $706,000 $740,000 $989,000
Average cash compensation of positions filled
(3)........................................ $172,000 $180,000 $196,000 $226,000 $226,000
</TABLE>

<TABLE>
<CAPTION>
AS OF FEBRUARY 28 OR 29,
----------------------------------------------
1994 1995 1996 1997 1998
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................... $1,723 $ 1,439 $ (485) $ 617 $ 9,815
Total assets................................................ 9,885 12,193 18,300 25,561 88,916
Total long-term debt........................................ 264 143 63 2,037 9,125
Total stockholders' equity.................................. 2,121 2,325 2,509 2,627 35,471
</TABLE>

- ---------------

14
<PAGE> 16

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

This Prospectus contains certain forward-looking statements that are based
on the beliefs of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. Such statements
include those regarding future financial results, successfully implementing and
continuing growth strategies and business strategies, attracting, motivating and
retaining executive search consultants, maintaining favorable long-term client
relationships, future capital requirements and the effects of completing
acquisitions. Because such statements involve risks and uncertainties, actual
actions and strategies and the timing and expected results thereof may differ
materially from those expressed or implied by such forward-looking statements,
and the Company's future results, performance or achievements could differ
materially from those expressed in, or implied by, any such forward-looking
statements. Factors that could cause or contribute to such material differences
include, but are not limited to, those discussed under "Risk Factors." The
following presentation of management's discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the Company's Consolidated Financial Statements, the Notes thereto and other
financial information included herein.

OVERVIEW

LAI is one of the largest and fastest growing executive search firms in the
world. The Company derives substantially all of its revenue from fees for
professional services, which are billed exclusively on a retained basis. LAI's
fees typically equal one-third of the anticipated first year cash compensation
for the positions being filled. If the actual compensation package for a
successfully placed candidate varies from the amount anticipated at the time of
the engagement, an appropriate adjustment may be made to LAI's search fee. The
Company recognizes fee revenue as clients are billed, generally over a 60 to 90
day period following the acceptance of a search assignment. In addition, clients
usually are required to reimburse LAI for out-of-pocket expenses incurred in the
search process.

LAI's fee revenue has grown from $21.1 million in fiscal 1994 to $61.8
million in fiscal 1998, representing a compound annual growth rate of
approximately 31%. LAI's fee revenue for fiscal 1998, on a pro forma combined
basis assuming the acquisitions of WHI and CPI were completed on March 1, 1997,
was $91.7 million. This growth has been achieved by (i) increasing the number of
consultants at existing offices, (ii) improving fee revenue per consultant and
(iii) opening and acquiring new offices. Since its Initial Public Offering on
July 1, 1997, the Company has completed two acquisitions, which added a net
total of six offices and 37 consultants. See "-- Acquisitions." The Company also
opened new offices in Boston, Massachusetts and Stamford, Connecticut in fiscal
1997, and in Pittsburgh, Pennsylvania in fiscal 1998. Including acquisitions,
the Company added a net total of 65 consultants during the three-year period
ended February 28, 1998, representing a 141% increase to its consulting staff.
Fee revenue per consultant employed for an entire fiscal year was approximately
$706,000, $740,000 and $989,000 for fiscal 1996, 1997 and 1998, respectively.
This improvement was due to greater consultant productivity, an increased mix of
more senior level executive searches and to an overall rise in executive
compensation. The average first year cash compensation of positions for which
LAI conducted searches in fiscal 1996, 1997 and 1998 was approximately $196,000,
$226,000, and $226,000, respectively.

The largest component of the Company's operating expenses consists of
compensation and benefits paid to its executive search consultants, executive
officers and administrative and support personnel. LAI believes it has been able
to attract and retain some of the most productive executive search consultants
in the industry as a result of its premium reputation, its performance-based
consultant compensation system and its status as a public company, which
provides consultants with the opportunity to build wealth through direct equity
ownership and participation in the Company's stock incentive plans. Compensation
and benefits expense represented approximately 75.3% of fee revenue in fiscal
1998. The Company believes the compensation and
15
<PAGE> 17

benefits it pays to its consultants, as a percentage of fee revenue generated,
is among the highest in the industry.

General and administrative expenses consist of occupancy expense associated
with the Company's leased premises, costs associated with the Company's
investments in information technology and marketing and other general office
expenses. LAI benefits from the reduced costs associated with locating a
majority of its administrative support operations in Tampa, Florida. In
addition, the Company believes that all of its systems are year 2000 compliant.

ACQUISITIONS

As part of its growth strategy, the Company expects to continue to pursue
strategic acquisitions as an efficient way to increase its number of
consultants, expand its client base, strengthen and expand its practice group
coverage and broaden its geographic reach in both domestic and international
markets. Since the Initial Public Offering on July 1, 1997, the Company
completed two acquisitions, which were recorded under the purchase method of
accounting. The Company amortizes goodwill over 30 years.

WHI Acquisition. LAI completed the acquisition of WHI on February 27,
1998. WHI was the ninth largest executive search firm in the United States with
fee revenue of $26.5 million for the year ended December 31, 1997. WHI's fee
revenue grew at a 21.5% compound annual growth rate from $10.0 million in 1992
to $26.5 million in 1997. LAI acquired WHI for approximately $19.5 million. The
purchase consideration consisted of (i) approximately $8.8 million in cash, (ii)
$7.6 million in subordinated promissory notes payable over three years, accruing
interest on the unpaid balance at the rate of 5.0% per annum and (iii)
approximately 190,000 shares of Common Stock.

CPI Acquisition. LAI completed the acquisition of CPI on January 2, 1998.
CPI was a prominent executive search firm based in California that specialized
primarily in the financial services industry. CPI's fee revenue was $3.4 million
for the year ended December 31, 1997. The Company acquired CPI for approximately
$3.1 million. The purchase consideration consisted of (i) approximately $1.4
million in cash, (ii) a convertible subordinated promissory note of the Company
in the principal amount of $1.25 million payable over three years, accruing
interest on the unpaid balance at the rate of 6.75% per annum and convertible
into shares of Common Stock at each anniversary date at the prices specified in
the asset purchase agreement and (iii) approximately 26,000 shares of Common
Stock.

PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma combined statement of operations for the year ended
February 28, 1998 reflects the results of operations of LAI assuming the
acquisitions of WHI and CPI were completed on March 1, 1997. The historical
audited financial statements of WHI and CPI for the year ended December 31, 1997
were used in preparing the unaudited pro forma combined statement of operations.
See Unaudited Pro Forma Combined Statement of Operations.

The unaudited pro forma combined financial information assumes that the WHI
and CPI consultants were paid according to LAI's consultant compensation plan,
which decreased compensation and benefits expense and increased operating income
by approximately $3.6 million. The unaudited pro forma combined statement of
operations also reflects an increase in goodwill amortization of approximately
$810,000 and a decrease in net interest income of approximately $960,000 as a
result of the two acquisitions. The unaudited pro forma combined statement of
operations does not reflect (i) expected cost savings which may be achieved
through facilities, technology and general and administrative integration or
(ii) expected costs of planned upgrades to WHI's and CPI's management
information systems. Such items are not reflected because they are not factually
determinable or estimable.

16
<PAGE> 18

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
Statement of Operations Data as a percentage of fee revenue:

<TABLE>
<CAPTION>
PERCENTAGE OF FEE
REVENUE
---------------------
YEAR ENDED
FEBRUARY 28 OR 29,
---------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Fee revenue, net............................................ 100.0% 100.0% 100.0%
Compensation and benefits................................... 87.5 86.0 75.3
General and administrative expenses......................... 12.7 14.4 14.0
----- ----- -----
Operating income (loss)..................................... (0.2) (0.4) 10.7
Net interest income (expense)............................... (0.1) (0.8) 0.3
----- ----- -----
Income (loss) before provision for income taxes............. (0.3) (1.2) 11.0
Provision for income taxes.................................. 0.3 -- 4.7
----- ----- -----
Net income (loss)........................................... (0.6)% (1.2)% 6.3%
===== ===== =====
</TABLE>

FISCAL 1998 COMPARED WITH FISCAL 1997

Fee revenue. Fee revenue increased $15.4 million, or 33.1%, to $61.8
million for fiscal 1998 from $46.4 million for fiscal 1997. The increase in fee
revenue was primarily a result of an increase in the number of consultants and
an increase in the average fee revenue per consultant. At the end of fiscal
1998, the Company employed a total of 111 consultants, which represents a net
increase of 49 consultants since the beginning of fiscal 1998 and reflects the
37 consultants added in connection with the acquisitions of WHI on February 27,
1998 and CPI on January 2, 1998. The average fee revenue per consultant employed
for the entirety of the periods being compared increased 33.6% to $989,000 in
fiscal 1998 from $740,000 in fiscal 1997.

Compensation and benefits. Compensation and benefits increased $6.6
million, or 16.5%, to $46.5 million for fiscal 1998 from $39.9 million for
fiscal 1997. The increase was primarily due to compensation and benefits
associated with the growth in the number of consultants and the increase in fee
revenue per consultant. As a percentage of fee revenue, compensation and
benefits decreased to 75.3% for fiscal 1998 from 86.0% for fiscal 1997 primarily
due to a decrease in cash compensation paid to consultants in connection with
the Company's adoption of a revised compensation plan for consultants effective
March 1, 1997. The decrease in compensation and benefits as a percentage of fee
revenue also was due to spreading compensation and benefits for LAI's
administrative and support staff, which are primarily fixed, over a greater fee
revenue base.

General and administrative expenses. General and administrative expenses
increased $2.0 million, or 29.8%, to $8.7 million for fiscal 1998 from $6.7
million for fiscal 1997. These changes were the result of additional
infrastructure costs related to business expansion, including increased
occupancy and IT expenses. As a percentage of fee revenue, general and
administrative expenses decreased to 14.0% for fiscal 1998 from 14.4% for fiscal
1997.

Operating income (loss). Operating income was $6.6 million for fiscal
1998, as compared to a loss of $176,000 for fiscal 1997. This change was
primarily the result of an increase in fee revenue and decreases in compensation
and benefits and general and administrative expenses as a percentage of fee
revenue.

Net interest income (expense). The Company received net interest income of
$197,000 for fiscal 1998, as compared to net interest expense incurred of
$376,000 for fiscal 1997. This change was a result of the Company repaying all
outstanding indebtedness under its credit facilities with proceeds from the
issuance of

17
<PAGE> 19

Common Stock during the Initial Public Offering, as well as investment earnings
from the remaining net proceeds.

Provision for income taxes. The effective tax rate for fiscal 1998 of
43.0% varied from the statutory rate of 34.0% due to state and local income
taxes and because certain expenses, including a portion of meals, entertainment
and dues expense and premiums on keyperson life insurance policies, are
non-deductible for income tax purposes.

FISCAL 1997 COMPARED WITH FISCAL 1996

Fee revenue. Fee revenue increased $11.3 million, or 32.3%, to $46.4
million for fiscal 1997 from $35.1 million for fiscal 1996. The increase in fee
revenue was primarily a result of an increase in the number of consultants and
an increase in the average fee revenue per consultant. At the end of fiscal
1997, the Company employed a total of 62 consultants, which represents a net
increase of 8 consultants since the beginning of fiscal 1997. The average fee
revenue per consultant employed for the entirety of the periods being compared
increased 4.8% to $740,000 in fiscal 1997 from $706,000 in fiscal 1996. The
average first year cash compensation of positions for which LAI conducted
searches increased by 15.3% to $226,000 in fiscal 1997 from $196,000 in fiscal
1996. During fiscal 1997, LAI opened two new offices, which generated
approximately $1.7 million of fee revenue.

Compensation and benefits. Compensation and benefits increased $9.2
million, or 30.1%, to $39.9 million for fiscal 1997 from $30.7 million for
fiscal 1996. The increase was primarily due to compensation and benefits
associated with the growth in the number of consultants and the increase in fee
revenue per consultant. As a percentage of fee revenue, compensation and
benefits decreased to 86.0% for fiscal 1997 from 87.5% for fiscal 1996 primarily
due to spreading compensation and benefits for LAI's administrative and support
staff, which are primarily fixed, over a greater fee revenue base.

General and administrative expenses. General and administrative expenses
increased $2.2 million, or 49.7%, to $6.7 million for fiscal 1997 from $4.5
million for fiscal 1996. As a percentage of fee revenue, general and
administrative expenses increased to 14.4% for fiscal 1997 from 12.7% for fiscal
1996. These increases were primarily due to increases in occupancy costs
associated with lease renewals at three of LAI's offices and the opening of two
new offices in Stamford, Connecticut and Boston, Massachusetts, as well as an
increase in marketing expenses to implement a program to enhance LAI's name
recognition.

Operating income (loss). Operating loss increased $104,000 to $176,000 for
fiscal 1997 from $72,000 for fiscal 1996, and as a percentage of fee revenue to
0.4% for fiscal 1997 from 0.2% for fiscal 1996. These increases were primarily
due to the increase in general and administrative expenses, partially offset by
lower compensation and benefits as a percentage of fee revenue.

Net interest income (expense). Net interest expense increased $336,000 to
$376,000 for fiscal 1997 from $40,000 for fiscal 1996. The increase constitutes
interest expense on indebtedness incurred to fund leasehold improvements at two
of LAI's offices, as well as interest on compensation deferred pursuant to the
Company's deferred compensation plan. See "Management -- Incentive and Benefit
Plans."

Provision for income taxes. The effective tax rate for fiscal 1997 of
(2.8)% varied from the statutory rate of 35.0% due to state and local income
taxes and because certain expenses, including a portion of meals, entertainment
and dues expense and premiums on keyperson life insurance policies, are
non-deductible for income tax purposes.

18
<PAGE> 20

UNAUDITED QUARTERLY RESULTS

The following table sets forth certain unaudited quarterly operating
information of the Company for fiscal 1997 and fiscal 1998. This information has
been prepared on the same basis as the audited Consolidated Financial Statements
contained elsewhere in this Prospectus and, in the opinion of management,
includes all adjustments, consisting solely of normal and recurring adjustments,
necessary for the fair presentation of the information for the periods
presented. The financial data shown below should be read in conjunction with the
Consolidated Financial Statements and Notes thereto. Results for any previous
fiscal quarter are not necessarily indicative of results for the full year or
for any future quarter.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------------------
MAY 31, AUGUST 31, NOVEMBER 30, FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30, FEBRUARY 28,
1996 1996 1996 1997 1997 1997 1997 1998
-------- ---------- ------------ ------------ -------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fee revenue, net..... $11,107 $11,506 $11,706 $12,118 $13,725 $16,773 $15,349 $15,956
Operating income
(loss)............. 131 216 (200) (323) 1,377 1,745 1,701 1,787
Net income (loss).... (5) 8 (244) (326) 702 1,016 1,056 1,106
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company relies primarily upon cash flows from operations and available
borrowings under its credit facilities to finance its operations. During fiscal
1996, 1997 and 1998, cash flows from operations were $1.6 million, $(653,000)
and $2.9 million, respectively. To provide additional liquidity, during fiscal
1998 the Company obtained a commitment letter for credit facilities providing
for maximum borrowings of $15.0 million. In May 1998, this commitment was
increased to $25.0 million. Borrowings under this facility will bear interest at
variable rates. See Note 4 to Consolidated Financial Statements.

Capital expenditures totaled approximately $2.5 million, $1.8 million and
$2.2 million for fiscal 1996, 1997 and 1998, respectively. These expenditures
consisted primarily of purchases of office equipment, upgrades to information
systems and leasehold improvements. Investments in whole life insurance policies
intended to fund the Company's deferred compensation plan were $779,000, $1.0
million and $2.1 million in fiscal 1996, 1997 and 1998, respectively.

Cash provided by financing activities was approximately $23.6 million
during fiscal 1998, including $24.7 million from the sale of Common Stock in the
Company's Initial Public Offering. During fiscal 1998 the Company issued $8.8
million of subordinated debt in connection with the WHI and CPI acquisitions.
Cash provided by financing activities was approximately $2.7 million during
fiscal 1997, which included $1.7 million of net borrowings under a term loan and
$926,000 in proceeds from sales of Common Stock (net of Common Stock
repurchases) to newly hired and promoted consultants as part of LAI's strategy
to increase the breadth of stock ownership among its consultants. During fiscal
1996, cash provided by financing activities was approximately $416,000,
consisting primarily of proceeds from sales of Common Stock (net of Common Stock
repurchases) to newly hired and promoted consultants.

The Company believes that funds from operations, its expanded credit
facilities and the net proceeds of the Offering will be sufficient to meet its
anticipated working capital, capital expenditure, debt repayment and general
corporate requirements on both a short-term basis (i.e., during the twelve
months following the Offering) and a long-term basis (i.e., after such twelve
month period).

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<PAGE> 21

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 requires that an enterprise (a)
classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS 130 is effective for
financial statements for periods beginning after December 15, 1997. Management
believes the effect of adopting SFAS 130 would not have a material impact on the
accompanying consolidated financial statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS 131"). SFAS 131 requires that a
public business enterprise report financial and descriptive information about
its reportable operating segments. SFAS 131 is effective for fiscal years
beginning after December 15, 1997. Management has not yet determined the effect
of adopting SFAS 131.

If February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pension and Other Post Retirement Benefits" ("SFAS 132"). SFAS 132 revises
employers' disclosures about pension and other post retirement benefit plans.
SFAS 132 is effective for fiscal years beginning after December 15, 1997;
earlier application is encouraged. Management has implemented SFAS 132 for the
year ended February 28, 1998.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use ("SOP 98-1"). SOP 98-1 provides guidance
for capitalizing and expensing the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. Management believes the effect
of adopting SOP 98-1 would not have a material impact on the accompanying
consolidated financial statements.

20
<PAGE> 22

BUSINESS

GENERAL

LAI has developed a knowledge-based search practice organized around eight
industry groups and one functional group. The industry groups execute searches
for clients in the following business sectors: automotive; communications,
entertainment and technology; consumer products and services; energy and natural
resources; financial services; health care and pharmaceuticals; industrial; and
insurance and risk management. The functional group executes searches for
specific functional positions, including legal, human resources and board of
directors. These practice groups enable LAI's consultants to better understand
each client's business strategy and industry and position LAI as a consulting
partner to its clients. LAI's clients are among the most prominent companies in
their industries and include General Motors, Lucent Technologies, PepsiCo,
Enron, Lehman Brothers, Bristol-Myers Squibb, AlliedSignal and Prudential. LAI's
fee revenue has grown from $21.1 million in fiscal 1994 to $61.8 million in
fiscal 1998, representing a compound annual growth rate of approximately 31%.
This growth rate compares favorably with the approximately 22% average compound
annual growth rate experienced by LAI's nine largest competitors during the same
period. On a pro forma combined basis assuming the acquisitions of WHI and CPI
were completed on March 1, 1997, LAI's fee revenue for fiscal 1998 was $91.7
million.

EXECUTIVE SEARCH INDUSTRY OVERVIEW

Executive search represents a $6.5 billion global market and is generally
separated into two broad fee-based categories: retained search firms and
contingency search firms. Retained search firms fulfill their clients' senior
leadership needs by identifying, evaluating, assessing and recommending
qualified candidates for senior level positions, typically with cash
compensation of $100,000 and above. Contingency search firms, on the other hand,
focus primarily on mid-level positions with cash compensation of less than
$150,000. Both types of firms normally are paid a fee for their services equal
to approximately one-third of the guaranteed first year cash compensation for
the position being filled.

Retained search firms currently serve the majority of the Fortune 500 as
well as numerous other organizations, including government agencies,
professional organizations and fast-growing entrepreneurial companies. Retained
firms are compensated for an assignment whether or not they are successful in
placing a recommended candidate. Contingency search firms also serve large
corporations; however, their primary focus is on small and medium sized
companies. Unlike retained search firms, contingency search firms are not
compensated for an assignment unless they successfully complete a search and
place a recommended candidate.

According to Kennedy Information, a leading industry publication, revenue
in the executive search industry historically has been divided almost evenly
between retained and contingency search firms; however, retained search firms
are estimated to employ only one-third of the consultants in the industry. Thus,
the average fee revenue per consultant for retained firms is substantially
higher than for contingency firms. Moreover, the predictable revenue stream
associated with a retained search enables a retained firm, such as LAI, to
devote more personnel and greater resources to an assignment than a contingency
search firm whose

21
<PAGE> 23

revenue is not assured. LAI believes this difference in payment structure
enables retained search firms to provide clients with more value-added
consulting services than contingency search firms.

The executive search industry has experienced consistent growth over the
past 20 years. Global executive search industry revenue has grown at a 17%
compound annual growth rate from approximately $3.5 billion in 1993 to
approximately $6.5 billion in 1997. Kennedy Information expects industry growth
to continue at a 15% annual rate, with revenue projected to reach $10.0 billion
by the year 2000.

GLOBAL EXECUTIVE SEARCH INDUSTRY REVENUE GRAPH

The global executive search industry is highly fragmented, consisting of
more than 4,000 firms. In 1997, more than 80% of retained firms and
approximately 90% of contingency firms generated fewer than $2 million in
revenues. The top ten search firms, all of which operate on a retained basis,
accounted for approximately 11% of global industry revenue in 1997. However,
Kennedy Information predicts that these top ten firms will increase their market
share at an accelerating rate as they continue to offer clients increased
geographic reach, broader industry coverage, greater industry expertise and more
sophisticated technology and research support.

LAI believes that a number of trends have caused and will continue to cause
the executive search industry to experience significant growth. These trends
include:

Greater Demand for Managers with Broad Leadership Skills. Many companies
are facing a rapidly changing business environment due to an increase in
domestic and international competition, an increase in deregulation and more
widespread use of technology. The need to respond to this dynamic environment
and remain competitive has caused many companies to set higher standards for
their senior level executives. As these standards become more stringent, more
companies are looking outside their organizations to fill positions
traditionally reserved for internal candidates. The process of identifying and
evaluating executives is becoming

22
<PAGE> 24

increasingly difficult and, as a result, a growing number of companies are
relying on executive search firms to solve their senior management and
leadership needs. According to a study published in 1997 by Coopers & Lybrand HR
Advisory Group, nearly two-thirds of the companies surveyed reported using
executive search professionals to recruit and hire senior level executives.

Rapid Growth in Outsourcing. Many companies are outsourcing non-core
activities to reduce costs and increase efficiencies. These organizations often
engage independent, third party specialists to provide many non-revenue
generating functions that were previously performed in-house. Among the
functions most commonly outsourced are human resource and personnel functions,
including executive recruitment and hiring.

Growth of Multinational Business. The expansion of companies abroad and
the integration of global markets has created a growing demand for international
search capabilities. Consultants located in the country in which a position is
to be filled are often better able to identify candidates and execute searches
due to their familiarity with the local business community and culture and
available pool of executive candidates. Likewise, consultants located in the
country from which the search is originated often will better understand the
client's business strategy and recruitment needs. Executive search firms have
responded by forming affiliations with executive search firms in foreign
countries and by directly acquiring or opening foreign offices. LAI believes
that the ability to complete executive searches on a worldwide basis is an
important factor in attracting and retaining multinational clients.

Increase in Executive Turnover. In the past, it was common for executives
to spend an entire career with one or two organizations. However, in today's
rapidly changing business environment, executives often advance their careers by
working for a number of different organizations in various geographic locations.
Executive turnover has been particularly high in such growth industries as
health care and technology. This increase in executive turnover has intensified
the competition for highly qualified executives and forced many companies to
recruit executives on a more frequent basis.

Increase in Executive Compensation Levels. Compensation levels for
executives have increased considerably over the past several decades. According
to a study published in 1997 by William M. Mercer, Incorporated, the average
annual cash compensation for chief financial, chief executive and chief
operating officers grew at compound annual growth rates of 5.7%, 4.2% and 3.1%,
respectively, between 1992 and 1996. This increase in executive compensation,
among other factors, has caused many companies to be more rigorous in their
hiring practices, often retaining an executive search firm to assist in the
identification and evaluation of qualified candidates. In addition, because fees
for executive search firms are based on the compensation levels for positions
they are engaged to fill, higher executive compensation has translated into
higher executive search fees.

BUSINESS STRATEGY

LAI's objective is to be a global leader in providing comprehensive
consulting services aimed specifically at solving its clients' senior leadership
needs. The key elements of LAI's business strategy include:

Attract, Motivate and Retain High Quality Search Consultants. LAI has been
successful in attracting, motivating and retaining highly productive executive
search consultants as a result of its premium reputation, performance-based
consultant compensation and stock incentive plans. The Company's compensation
system is primarily based on consultant performance, which is measured by the
amount of fee revenue each consultant generates. Management believes that its
performance-based compensation system is among the most competitive in the
industry. LAI's ability to attract talented consultants is demonstrated by the
large number of consultants who previously held senior level positions with
leading companies in LAI's targeted industry sectors. In addition, LAI believes
its status as a public company provides it with a strong competitive advantage
in attracting and retaining highly qualified consultants through ownership of
Common Stock and

23
<PAGE> 25

participation in the Company's stock incentive plans. The Company believes that
equity ownership by its consultants fosters a team-oriented working environment
and aligns the interests of its consultants with its investors. The Company has
experienced an average annual turnover rate among its consultants of less than
8% over the last five fiscal years.

Build on Knowledge-Based Practice Groups. LAI believes a thorough
understanding of both its clients and the industries in which they operate are
among the most significant factors in obtaining and completing search
assignments. Accordingly, LAI has developed a knowledge-based search practice
organized around eight industry groups and one functional group. The industry
groups execute searches for clients in the following business sectors:
automotive; communications, entertainment and technology; consumer products and
services; energy and natural resources; financial services; health care and
pharmaceuticals; industrial; and insurance and risk management. The functional
group executes searches for specific functional positions, including legal,
human resources and board of directors. Each practice group is coordinated under
the direction of a Practice Leader who establishes the marketing and search
strategies for that practice group. LAI intends to continue to build its
existing and expand into new practice groups by (i) hiring consultants with
substantial experience and significant client relationships in the Company's
targeted industry sectors and (ii) completing strategic acquisitions. The
acquisitions of WHI and CPI strengthened LAI's existing practice groups,
particularly in the areas of financial services, health care and technology, and
added new practice groups in the areas of automotive, insurance, and media and
entertainment.

Build Long-Term, Consultative Relationships. LAI strives to develop
long-term relationships by becoming a consulting partner with its clients. To
position itself as a consulting partner, the Company works closely with clients
to gain an in-depth understanding of their unique organizational structure,
history, operations, culture, strategic objectives and leadership needs. In
addition, the Company's focus on knowledge-based practice groups enables its
consultants to provide more specialized and efficient service to LAI's clients.
Each of LAI's 30 largest clients, based on fiscal 1998 fee revenue, had been a
client for an average of approximately seven years as of February 28, 1998. More
than 65% of the Company's fiscal 1998 fee revenue was attributable to companies
for which LAI conducted one or more searches during the prior two fiscal years.

Capitalize on Research and Technology. LAI believes that its industry
specialization and technological capabilities enable it to consistently provide
superior research and, ultimately, deliver higher quality search results to its
clients. LAI's 116 associates, researchers and IT professionals provide timely
industry, company and compensation information to consultants using numerous
information sources. LAI also maintains a proprietary database containing
professional information on more than 100,000 executive candidates. Consultants
can query this database on a variety of attributes, including demographic
information, work experience, compensation and personal interview results. LAI's
wide area computer network provides remote document sharing and data search
capabilities, groupware features and real-time updates on ongoing search
engagements.

Reduce Search Cycle Times. LAI believes that the ability to reduce the
time required to perform a search ("cycle time") will be a key differentiating
factor among executive search firms in the future. In an effort to reduce its
average cycle time, LAI is investing in technology upgrades, refining its
research process, strengthening its knowledge-based practice groups and closely
evaluating each step of the placement process. Reduced cycle times would enable
LAI's consultants to complete more assignments in a given period of time,
resulting in increased client satisfaction, higher fee revenue per consultant
and enhanced profitability.

24
<PAGE> 26

GROWTH STRATEGY

LAI has competed successfully in the executive search industry and has
capitalized on the growing demand for executive search services. LAI's fee
revenue has increased from $21.1 million in fiscal 1994 to $61.8 million in
fiscal 1998, representing a compound annual growth rate of 31%. On a pro forma
basis assuming the acquisitions of WHI and CPI were completed on March 1, 1997,
LAI's fee revenue was $91.7 million in fiscal 1998. LAI's growth has been
achieved by increasing the number of consultants at existing offices, improving
fee revenue per consultant, opening new offices and successfully executing and
integrating strategic acquisitions. LAI intends to continue to extend the reach,
breadth and penetration of its services both domestically and internationally
through internal and external growth. The key elements of LAI's growth strategy
include:

Leverage Existing and Develop New Client Relationships. LAI intends to
increase fee revenue by obtaining additional search engagements from existing
clients and by developing relationships with new clients. LAI focuses on
accounts from which it obtains, or believes it can obtain, a significant number
of search assignments ("focused accounts"). LAI invests significant resources in
its focused accounts to better understand their business strategies and culture
and eventually position the Company as a consulting partner to its clients.
Accordingly, LAI emphasizes long-term relationships with its clients, rather
than one-time projects or assignments. Consultants also spend substantial time
marketing LAI's services to carefully selected prospective clients within their
practice groups. Search assignments often are awarded after a small number of
search firms are invited to make presentations to a prospective client's senior
management or Board of Directors. In fiscal 1998, LAI obtained search
engagements from a majority of the presentations in which it participated. The
Company attributes its success to its knowledge-based practice groups and
consultative approach as well as the premium reputation LAI has developed.

Expand Existing and Selectively Open New Offices. LAI has added and
intends to continue adding experienced, highly qualified executive search
consultants to its practice. The Managing Partner of each office is responsible
for recruiting new consultants to LAI, and a significant factor in determining
the Managing Partner's compensation is the success of these efforts. During
fiscal 1998, LAI added a net total of 12 consultants to new and existing
offices, excluding consultants added in connection with the acquisitions of WHI
and CPI. LAI also continually evaluates the desirability of opening new offices.
Since early 1997, the Company has opened offices in Boston, Massachusetts;
Stamford, Connecticut; Pittsburgh, Pennsylvania; Austin, Texas and London,
England.

Consolidate Fragmented Industry; Leverage Public Company Status. LAI
believes that acquisitions provide an efficient, cost-effective method to
increase the Company's number of consultants, expand its client base, strengthen
and expand its practice group coverage and broaden its geographic reach. Given
the highly fragmented nature of the executive search industry, the Company
believes numerous acquisition opportunities exist. In addition, LAI believes its
status as the only U.S. based publicly traded company focused exclusively on
executive search makes it an attractive consolidation partner and provides it
with an acquisition currency and the financial flexibility to effectively pursue
this aspect of its growth strategy. LAI completed two acquisitions in fiscal
1998 and is actively pursuing additional acquisitions in strategic locations
throughout the world.

Penetrate International Markets. Revenue in the global executive search
industry has grown at a 17% compound annual growth rate from approximately $3.5
billion in 1993 to approximately $6.5 billion in 1997 and includes more than
4,000 search firms. The industry is expected to continue to grow at a 15% annual
rate with global revenue projected to reach $10.0 billion by the year 2000. LAI
believes that global search fulfillment capabilities are critical to attracting
and retaining multinational clients. Historically, LAI has offered its clients
global search fulfillment capabilities through its membership in Amrop
International, an international alliance of independent search firms. However,
to better leverage its knowledge-based expertise

25
<PAGE> 27

and technological capabilities, capitalize on its existing relationships with
multinational clients and ensure the quality and consistency of its services,
LAI recently initiated an international strategy of directly owning offices in
major business and financial centers around the world. In May 1998, LAI opened
an office in London, England and is currently targeting other major markets in
which to establish offices. In international markets where LAI does not own an
office, it will continue to provide clients with search fulfillment capabilities
by using existing and developing new referral relationships with executive
search firms located in those markets. Through these referral relationships, LAI
executes domestic search assignments on behalf of non-U.S. executive search
firms and refers to such firms international search assignments for LAI's
domestic clients.

Since continuing as a member of Amrop International was incompatible with
the Company's international expansion strategy, LAI recently announced its
withdrawal from Amrop International. Searches derived from membership in Amrop
International accounted for approximately 3% of LAI's fiscal 1998 fee revenue.
However, LAI has built strong referral relationships with many Amrop members
throughout the world and expects to maintain these relationships to continue
providing clients with global search fulfillment capabilities in markets where
LAI does not directly own an office. LAI believes that its global search
capabilities will be enhanced by its strategy of direct ownership of
international offices.

SERVICES

LAI provides executive search services exclusively on a retained search
basis for Fortune 500 and large private companies. The Company typically is
retained to identify candidates to fill its clients' senior leadership
positions, which range from brand managers and controllers to chief operating
and chief executive officers. The average first year cash compensation of
positions for which LAI conducted searches in fiscal 1998 was approximately
$226,000.

LAI serves its clients in a consultative capacity by (i) assessing the
client's existing management capabilities, corporate culture and business
strategies, (ii) evaluating the client's industry position and major
competition, (iii) determining the relevant business experience, skills and
personal characteristics that a qualified candidate should possess, (iv)
identifying, contacting and interviewing potential candidates, (v) developing
detailed candidate reports and making recommendations to the client regarding
the most qualified candidates, (vi) advising the client with respect to
appropriate compensation and benefits and (vii) monitoring the quality of its
search procedures with client surveys and other client feedback mechanisms.

In providing high quality executive search services, the Company uses a
team-oriented approach rather than relying on the reputation of a few key
consultants. Each of LAI's consultants is expected to develop and maintain an
expertise in one or two industries and build long-term relationships with a
limited number of clients. To maintain a high level of quality on a consistent
basis, consultants employ LAI's standard executive search process for each new
search assignment, regardless of how similar the parameters of the new search
may be to other search assignments previously conducted by LAI. At the start of
each search assignment, LAI and its client jointly develop detailed candidate
and job specifications and establish a search strategy that targets specific
industries and companies that are expected to produce the most appropriate
candidates. LAI's consultants and research staff then contact potential
candidates, distribute job specifications and client promotional materials,
conduct extensive telephone and personal interviews, and check references of
those candidates who appear most qualified for the position. Because most
candidates are successfully employed and not seeking to change jobs, initial
contact must be conducted discreetly.

After meeting with job candidates, LAI submits to the client confidential
candidate reports regarding those candidates who LAI believes are the most
qualified. Each report contains a detailed business history of the candidate,
results of LAI's preliminary reference checks and LAI's assessment of the
candidate's relevant

26
<PAGE> 28

business experience, qualifications, personal characteristics and suitability.
LAI then assists in the introduction of selected candidates to the client and
administers the interview process. When the client is ready to extend an
employment offer, LAI facilitates the negotiation of employment terms and the
transition by the candidate to the employ of the client.

LAI has also recently developed a new service offering, known as "selection
services," to complement its core executive search practice. Selection services
typically involves searches for mid-to senior-level positions with cash
compensation in the $75,000 to $125,000 range, frequently for a client seeking
to fill multiple positions under a single search engagement. LAI's approach to
selection services is similar to its other executive searches, in that search
consultants evaluate the needs of each client and develop appropriate job
specifications and profiles. However, selection services frequently differs from
other executive searches in the way the successful job candidate is located. In
traditional executive search, LAI identifies and seeks out specific candidates
who ordinarily are not actively looking to change jobs. In a selection services
engagement, by contrast, LAI invites inquiries from interested candidates in
response to a job posting advertised either in print, such as in The Wall Street
Journal, or on the Internet, and then evaluates, analyzes and ranks the
candidates based on inquiries and responses received. The Company supplements
this data with highly focused research, using LAI's proprietary database and
other information sources. To expand and manage selection services more
efficiently, the Company recently licensed an Internet-based software program.
This software will enable LAI to use the Internet to advertise job
opportunities, solicit responses and gather relevant employment histories from
interested candidates; search, sort and evaluate the resulting database; and
pre-select interested candidates based on pre-determined criteria. Job
candidates will also be able to complete job applications on-line, submit
writing samples and complete skill assessment worksheets.

Similar to traditional executive searches, LAI's fee for selection services
is usually based on a percentage of the first year cash compensation for each
position filled, though selection services engagements may include other minimum
or contingent fee provisions. Although the average first year cash compensation
for the position being filled is typically less for a selection services
engagement than for LAI's core executive search practice, the Company can
achieve lower costs and higher profit margins on selection services because
these engagements involve multiple assignments of the same type and are less
labor intensive. The volume and efficiencies associated with selection services
provide LAI with an opportunity to enhance both total fee revenue and average
fee revenue per consultant. In addition, offering selection services provides
LAI's consultants with the ability to cross-sell a new service offering to both
new and existing clients.

MARKETING AND CLIENTS

The Company's marketing strategy includes three primary components:
capitalize on its knowledge-based practice groups and long-term client
relationships; penetrate the domestic market through its regional office
structure and the international market through direct ownership of offices in
major business and financial centers around the world; and implement a global
branding program. LAI believes that its industry specialization and
technological capabilities enable it to consistently provide superior research
and, ultimately, deliver higher quality search results to its clients.

Knowledge-Based Practice Groups. LAI has developed a knowledge-based
search practice organized around eight industry groups and one functional group.
The industry groups execute searches for clients in the following business
sectors: automotive; communications, entertainment and technology; consumer
products and services; energy and natural resources; financial services; health
care and pharmaceuticals; industrial; and insurance and risk management. The
functional group executes searches for specific functional positions, including
legal, human resources and board of directors. Each practice group is
coordinated by a group Practice Leader who is responsible for developing new
business and maintaining a high standard of service in that practice group. To
achieve these objectives, each group's Practice Leader (i) establishes the
marketing and search strategies for the particular practice group, (ii)
identifies focused accounts and targets clients
27
<PAGE> 29

within that practice group's business sector and (iii) facilitates and assists
the marketing activities of other consultants in the practice group. Each
Practice Leader has substantial industry expertise, frequently having held one
or more executive positions in the group's business sector prior to becoming a
search consultant. Additionally, LAI's Practice Leaders have an average of
approximately 13 years of experience in the executive search industry.

The following table sets forth certain information regarding LAI's practice
groups. The companies listed in this table are clients with which the Company
anticipates having a continuing significant relationship in the future and
includes both (i) companies that are either the largest or among the largest
clients in the indicated practice group based on the Company's pro forma fiscal
1998 fee revenue received from such clients and (ii) companies that have been
clients for several years or more.

- --------------------------------------------
<TABLE>
<CAPTION>

% OF PRO
FORMA
PRACTICE GROUP FISCAL SELECTED
1998 FEE CLIENTS
REVENUE(1)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Financial Services 24.5% Banc One, Banco Santander, Lehman Brothers,
Societe Generale
- ---------------------------------------------------------------------------------
Communications, 20.4 America Online, GTE, IBM, Lucent
Entertainment and Technologies
Technology

- ---------------------------------------------------------------------------------
Health Care and 14.3 Bristol-Myers Squibb, Columbia/HCA,
Pharmaceuticals Schering-Plough, PhyMatrix
- ---------------------------------------------------------------------------------
Consumer Products 10.8 Grand Metropolitan, Home Depot, Kohler,
and Services PepsiCo
- ---------------------------------------------------------------------------------
Industrial 9.0 AlliedSignal, Cooper Industries, General Electric,
Georgia Pacific
- ---------------------------------------------------------------------------------
Insurance and Risk 6.7 Equitable, Prudential, Zurich Kemper
Management
- ---------------------------------------------------------------------------------
Energy and Natural 6.5 Amerada Hess, Enron, Pennzoil
Resources
- ---------------------------------------------------------------------------------
Automotive 3.7 B.F. Goodrich, General Motors
- ---------------------------------------------------------------------------------
Functional (Board of 4.1 Eastman Chemical, Gillette, Lockheed
Directors, Human Martin, Waste Management
Resources, Legal)
- ---------------------------------------------------------------------------------
</TABLE>

- ---------------

(1) Includes LAI, WHI and CPI fee revenue for their fiscal years ended February
28, 1998, December 31, 1997 and December 31, 1997, respectively.

LAI's practice groups enable its consultants to better understand each
client's business strategy and industry and position LAI as a consulting partner
to its clients. LAI emphasizes long-term relationships with clients, rather than
one-time projects or assignments. Each of LAI's 30 largest clients, based on
LAI's fiscal 1998 fee revenue, had been a client for an average of approximately
seven years as of February 28, 1998. In addition, more than 65% of the Company's
fiscal 1998 fee revenue was attributable to companies for which LAI conducted
one or more searches during the prior two fiscal years.

Domestic and International Offices. To complement its knowledge-based
practice groups, the Company has established 17 domestic offices and one
international office in cities that are key business centers for one or more of
the Company's practice groups. Each major office is run by a Managing Partner
who has complete fiscal responsibility for that office. The Managing Partner's
principal responsibilities include overseeing day-to-day operational and
administrative matters at the local office level, providing assistance to
consultants in that office, assuring quality control in business development and
search execution, hiring and supervising office personnel and serving on an
internal operations committee. While compensation for other consultants is based
primarily on individual performance, compensation for Managing Partners is based
largely on the profitability

28
<PAGE> 30

of their respective local office, as well as on their ability to successfully
recruit highly qualified consultants to LAI. Since consultants have greater
opportunities to develop relationships with clients and prospective clients in
close geographic proximity, they normally focus on, but do not limit their
efforts to, clients in the region served by their particular office. Over time,
consultants seek to establish deep roots in the community and develop strong
links with local business, government and cultural leaders. LAI's domestic
offices are located in Atlanta, Austin (Texas), Barrington (Illinois), Boston,
Chicago, Cleveland, Dallas, Encino (California), Houston, Lake Geneva
(Wisconsin), Los Angeles, New York, Phoenix, Pittsburgh, San Francisco, Stamford
and Tampa. In addition, LAI has an office located in London, England.

Branding Initiatives. The Company historically has relied primarily on
client referrals and the efforts of its consultants, particularly its Practice
Leaders, to market the Company's services. More recently, LAI also has
implemented a global branding program to supplement the marketing efforts of the
Company's consultants. The global branding program is designed to significantly
increase LAI's visibility. The program involves (i) strengthening LAI's
reputation in cities where LAI offices are located through local event
sponsorship, board participation and local public relations, (ii) enhancing
LAI's reputation in the industries served by the Company's knowledge-based
practice groups through trade journal advertising, targeted mailings, and
participation in industry associations and conferences and (iii) building both a
national and global reputation through news releases, participation in industry
forums and issuance of specialized reports.

Blocking Arrangements. Either by agreement with clients or for marketing
or client relations purposes, executive search firms frequently refrain from
recruiting employees of a client, and possibly other entities affiliated with
that client, for a specified period of time (a "blocking" arrangement). LAI
actively manages its blocking arrangements and seeks to mitigate any adverse
effects of blocking by strengthening its long-term relationships with focused
accounts, shortening the length of the off-limits period and by resisting
requests for blocking arrangements with clients who do not engage LAI for
multiple assignments. Additionally, in recent years market conditions and
industry practices have resulted in blocking arrangements that are becoming
narrower in scope and shorter in duration. See "Risk Factors -- Blocking
Arrangements."

RESEARCH AND TECHNOLOGY

LAI believes that its industry specialization and technological
capabilities enable it to consistently provide superior research and,
ultimately, deliver higher quality search results to its clients. Search
consultants must understand a client's industry, competitors and business
strategies and be able to readily identify the universe of most qualified
executive candidates. LAI's 116 associates, researchers and IT professionals
support the Company's consultants by, among other things, gathering and
analyzing information obtained from numerous electronic databases, trade
journals and directories, the Internet and other sources. LAI also maintains a
proprietary database containing professional information on more than 100,000
executive candidates. Consultants can query this database on a variety of
attributes, including demographic information, work experience, compensation and
personal interview results. LAI's wide area computer network provides remote
document sharing and data search capabilities, groupware features and real-time
updates on ongoing search engagements. LAI is committed to continually upgrading
its proprietary database and other information sources to enable LAI's
consultants to retrieve relevant information quickly and efficiently.

The Company's support functions, including its research department, are
coordinated from its Tampa, Florida office. In the search process, the principal
function of LAI's research department is to support the Company's consultants by
gathering and analyzing information on the industries and companies expected to
produce the most qualified candidates. LAI's research professionals also support
the Company's business development activities by providing target lists, data on
past LAI searches and information on companies and executives in target
industries. LAI's researchers typically have had professional research or
library training and experience prior to joining LAI, and many have
undergraduate and graduate degrees in such fields as library science. LAI's
research staff is organized by practice group, with most researchers
specializing in one
29
<PAGE> 31

or two specific industries. Unlike many of its competitors, LAI researchers do
not work exclusively for particular executive search consultants. LAI believes
its focused approach facilitates the development of specialized expertise,
promotes a consistent culture and cooperation across the firm and standardizes
communication and training.

PROFESSIONAL STAFF AND EMPLOYEES

At April 30, 1998, LAI had 386 full time employees, of which 114 were
executive search consultants, 116 were associates, researchers or IT
professionals and 156 were administrative and support staff. LAI has never been
a party to any collective bargaining agreement and considers relations with its
employees to be good.

LAI's search professionals are categorized either as consultants,
consisting of partners and principals, or as associates. Associates are junior
search professionals who generally do not directly execute search assignments,
but assist partners and principals by performing research and other functions.
After several years of experience and satisfactory performance, an associate
will be considered for promotion to the position of principal. If a principal
continues to develop and generate revenue, the principal will be offered the
opportunity to advance to the position of partner. Promotions depend on a
variety of factors, including productivity and business development. As a matter
of corporate philosophy, LAI strives to hire as associates only those
individuals it believes have the potential to become productive consultants.

LAI's consultants (excluding those who joined LAI in connection with the
recent acquisitions of WHI and CPI) have been employed by the Company for an
average of approximately four years. LAI has experienced an average annual
turnover rate among its consultants of less than 8% over the last five fiscal
years. At April 30, 1998, there were 94 partners, 20 principals and 41
associates. Most of LAI's consultants held senior level positions with leading
companies in LAI's targeted industry sectors and had experience in the executive
search business prior to joining LAI. LAI's consultants have, on average,
approximately 11 years of experience in the executive search industry.

LAI has been able to attract and retain some of the most productive
executive search consultants in the industry as a result of its premium
reputation, performance-based consultant compensation system and stock incentive
plans. The Company believes the salaries, commissions, bonuses and profit
sharing it pays to its consultants are among the industry's highest as a
percentage of fee revenue generated. Although consultants are paid base
salaries, a significant portion of most consultants' compensation consists of
incentive compensation that is dependent primarily upon the amount of fee
revenue they generate. See "Risk Factors -- Dependence on Attracting and
Retaining Qualified Executive Search Consultants" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Overview."

COMPETITION

The executive search industry is highly competitive. It is estimated that
there are more than 4,000 executive search firms worldwide. There are relatively
few barriers to entry and new competitors frequently enter the market. While LAI
faces competition to some degree from all firms in the industry, the Company
believes its most direct competition comes from other retained search firms. In
particular, LAI competes with the largest firms in the industry: Heidrick &
Struggles, Inc., Korn/Ferry International, SpencerStuart & Associates, Russell
Reynolds Associates, Inc. and Egon Zehnder International. To a lesser extent,
LAI also faces competition from smaller boutique or specialty firms that may
compete in certain regional or functional markets and from in-house human
resource departments of clients and prospective clients. Some of LAI's
competitors possess greater resources and name recognition than LAI. Each firm
with which LAI competes is also a competitor in seeking to attract the most
productive search consultants. In the Company's experience, the executive search
business is more quality-sensitive than price-sensitive. As a result, LAI
competes on the

30
<PAGE> 32

level of service it offers, reflected by its knowledge-based practice groups and
individual client focus, and, ultimately, the quality of its search results.

FACILITIES

The Company leases all of its office locations. The aggregate square
footage of office space under such leases is approximately 155,186. The leases
for these offices call for future minimum lease payments of approximately $23.2
million and have terms which will expire between one and nine years (exclusive
of renewal options exercisable by LAI). LAI believes that its facilities are
adequate for its current needs and that it will not have difficulty leasing
additional office space to satisfy anticipated future needs.

INSURANCE

LAI maintains insurance in such amounts and with such coverages and
deductibles as management believes are adequate. The principal risks that LAI
insures against are professional liability, workers' compensation, personal
injury, bodily injury, property damage and fidelity losses. There can be no
assurance that the Company's insurance will adequately protect it from potential
losses and liabilities. See "Risk Factors -- Executive Search Liability Risk."

LEGAL PROCEEDINGS

From time to time the Company has been involved in litigation incidental to
its business. LAI currently is not a party to any litigation the adverse
resolution of which, in management's opinion, would be likely to have a material
adverse effect on the Company's business, financial condition or results of
operations.

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<PAGE> 33

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding LAI's
executive officers and directors.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Robert L. Pearson(3).................................. 59 President, Chief Executive
Officer, Director
Jack P. Wissman....................................... 46 Executive Vice President and Chief
Financial Officer
Joe D. Goodwin(1)..................................... 52 Executive Vice President, Director
Roderick C. Gow(2).................................... 50 Executive Vice President, Director
John S. Rothschild(2)................................. 45 Executive Vice President, Director
David L. Witte(1)..................................... 56 Executive Vice President, Director
Philip R. Albright.................................... 28 Vice President -- Finance
John F. Johnson(3).................................... 56 Chairman of the Board of Directors
Ray J. Groves(3)...................................... 62 Director
Richard W. Pogue(2)................................... 70 Director
John C. Pope(1)....................................... 49 Director
</TABLE>

- ---------------

(1) Term expires in 1998.
(2) Term expires in 1999.
(3) Term expires in 2000.

LAI's directors are divided into three classes elected for three-year
terms, which are staggered so that the term of one class of directors expires
each year.

Robert L. Pearson joined the Company in 1984 and has served as President
and Chief Executive Officer and a Director since 1995. Mr. Pearson served as
Executive Director with Russell Reynolds Associates, Inc. from 1982 until 1984.
He owned and was President of Pearson, Inc., an equipment manufacturing company,
from 1971 until 1982; was Vice President, Corporate Finance, of R. J. Financial
Corporation, a financial services holding company, from 1968 until 1970; and was
an engagement manager and management consultant with McKinsey & Company, Inc.
from 1964 until 1968. Mr. Pearson holds an M.S. in Industrial Management from
Massachusetts Institute of Technology and a B.S.E.E. from Michigan State
University. Mr. Pearson's employment agreement requires the Company to use its
good faith efforts, during the term of such agreement, to nominate Mr. Pearson
to the Board of Directors.

Jack P. Wissman joined the Company in 1981 and became Executive Vice
President and Chief Financial Officer in 1997. He previously served as Vice
President and Chief Administrative Officer of the Company. Mr. Wissman also
served as a Director from 1987 until July 1997. Prior to joining LAI, Mr.
Wissman was a certified public accountant with Arthur Andersen LLP from 1974
until 1981. He holds a B.S.B.A. in Accounting from Bowling Green State
University.

Joe D. Goodwin joined the Company in 1991, and has been Managing Partner of
LAI's Atlanta and Tampa offices since 1992, a Director since July 1997 and an
Executive Vice President since April 1998. Mr. Goodwin held various positions,
including Partner and Managing Director, with SpencerStuart & Associates from
1982 until 1991. Mr. Goodwin also held various executive positions with McKinnis
& Goodwin, an executive search firm, from 1979 until 1982; with Burger King
Corporation from 1978 until 1979;

32
<PAGE> 34

and with Xerox Corporation from 1969 until 1978. Mr. Goodwin holds a B.S. in
Commerce and Business Administration from the University of Alabama.

Roderick C. Gow joined the Company and has served as Managing Partner of
LAI's New York office since 1995, a Director since July 1997 and an Executive
Vice President since April 1998. Mr. Gow also has operational responsibility for
LAI's Boston and Stamford offices. Mr. Gow held various positions, including
Managing Director, with Russell Reynolds Associates, Inc., an executive search
firm, from 1983 until 1991 and then again from 1994 until 1995. Mr. Gow was
Chief Executive Officer of GKR Group, an executive search firm based in the
United Kingdom, from 1991 until 1994; was Vice President with Barclays Bank Plc
from 1978 until 1983; and prior to that time served with the British Army. Mr.
Gow holds an M.A. and a B.A. from Trinity College, Cambridge University.

John S. Rothschild joined the Company and has served as Managing Partner of
LAI's Chicago office since 1996, a Director since July 1997 and an Executive
Vice President since April 1998. Mr. Rothschild held various positions,
including Partner and Director, with Heidrick & Struggles, Inc., an executive
search firm, from 1989 until 1996. Mr. Rothschild held positions, including
National Director, Human Resources and Director, Human Resources Consulting
Practice, with Grant Thornton from 1981 until 1989. He served in various
executive positions with American Hospital Supply Corporation from 1978 until
1981; and with GATX Corporation from 1975 until 1978. Mr. Rothschild holds an
M.S. in Industrial Relations from Loyola University and a B.A. in Political
Science from Lake Forest College.

David L. Witte joined the Company in February 1998 in connection with the
acquisition by the Company of WHI, and has been a Director since joining the
Company and an Executive Vice President since March 1998. Mr. Witte served as
President and Chief Executive Officer and Chairman of the Board of Directors of
WHI from 1990 until LAI's acquisition of WHI in February 1998. WHI is now a
wholly-owned subsidiary of the Company. Pursuant to the Agreement and Plan of
Merger entered into in connection with the WHI acquisition, Mr. Witte was
elected to the Board of Directors of the Company upon closing of the
acquisition, and the Company is obligated to use its best efforts to cause Mr.
Witte to be elected to the Board of Directors of the Company at the next annual
meeting of stockholders for a three year term. Mr. Witte holds a B.S. from
Michigan State University.

Philip R. Albright joined the Company in 1997 serving as Controller and was
appointed Vice President -- Finance in 1998. Mr. Albright, a certified public
accountant, was employed by Arthur Andersen LLP from 1992 until 1997. He holds a
B.S.Acc. and a M.Acc. from the University of Florida.

John F. Johnson joined the Company in 1976 and has served as Chairman of
the Board of Directors since 1995. Mr. Johnson previously served as Executive
Vice President and President and Chief Executive Officer of LAI, as well as
Chairman of Amrop International. Mr. Johnson held various positions, including
Manager of Organization and Manpower, with General Electric Company from 1967
until 1976; and Industrial Relations Analyst with Ford Motor Company from 1964
until 1967. Mr. Johnson holds an M.B.A. from Columbia University and a B.A. in
Economics from Tufts University.

Ray J. Groves has been a Director since July 1997. Mr. Groves served as
Chairman and Chief Executive Officer of Ernst & Young, an international
accounting and financial consulting firm, for 17 years prior to his retirement
in 1994. Mr. Groves also serves as Chairman of Legg Mason Merchant Banking,
Inc., and as a Director of Consolidated Natural Gas Company, Electronic Data
Systems Corporation, Marsh & McLennan Companies, Inc. and RJR Nabisco, Inc. Mr.
Groves holds a B.S. from The Ohio State University.

Richard W. Pogue served as an advisor to LAI's Board of Directors from 1995
until he became a Director in July 1997. Mr. Pogue has served as Senior Advisor
to Dix & Eaton, a public relations firm, since 1994. Mr. Pogue held various
positions with the law firm of Jones, Day, Reavis & Pogue, from 1957 until
retiring from his position as Senior Partner in 1994. Mr. Pogue also serves as a
Director of Derlan Industries Ltd.,

33
<PAGE> 35

Continental Airlines, Inc., OHM Corporation, M.A. Hanna Company, Redland PLC,
Rotek Incorporated, KeyCorp and TRW Inc. Mr. Pogue holds a bachelor's degree
from Cornell University and a law degree from the University of Michigan.

John C. Pope served as an advisor to LAI's Board of Directors from 1995
until he became a Director in July 1997. Mr. Pope held various positions,
including President and Chief Operating Officer, of UAL Corporation, owner of
United Airlines, from 1988 until his retirement in 1994. Prior to that time Mr.
Pope spent 11 years with AMR Corporation in various financial capacities,
including Chief Financial Officer. Mr. Pope also serves as Chairman of the Board
of Directors of MotivePower Industries, Incorporated and as a Director of
Federal Mogul Corporation, Medaphis Corporation, Wallace Computer Services,
Inc., Waste Management, Inc. and Dollar Thrifty Automotive Group, Inc. He holds
a bachelor's degree from Yale University and an M.B.A. from Harvard Business
School.

COMMITTEES OF THE BOARD OF DIRECTORS

LAI's Board of Directors has the following standing committees:

Compensation and Management Development Committee. The Compensation and
Management Development Committee (the "Compensation Committee") is responsible
for establishing and recommending to the Board of Directors the Company's
compensation philosophy, including general compensation, severance and change in
control arrangements for consultants, Managing Partners, Practice Leaders and
executive officers. The Compensation Committee also establishes and recommends
to the Board of Directors the Company's stock option philosophy, including
granting of awards under all equity based incentive plans and recommendations
for adoption of new plans. The Compensation Committee sets executive officer
compensation, including annual reviews, and negotiates and approves all
executive officer employment agreements. The Compensation Committee reviews all
existing compensation plans and programs and all amendments thereto, and
recommends the adoption of any new plans. In addition, the Compensation
Committee reviews and coordinates with the Full Board of Directors the Company's
senior leadership structure and helps to identify personnel for the next
generation of the Company's leadership. The Compensation Committee's three
members are Messrs. Groves, Pogue and Pope (Chairman), all of whom are
"Non-Employee Directors," as defined under the Securities Exchange Act of 1934.

Audit Committee. The Audit Committee is responsible for reviewing with
management the financial controls, accounting and audit and reporting activities
of the Company. The Audit Committee annually recommends to the Board of
Directors the Company's independent auditors, meets with the independent
auditors before and after the annual audit to review the results of the audit
and the performance of management in implementing the auditors' recommendations,
reviews significant changes in accounting practices and the Company's
implementation of new accounting rules and evaluates annual audit fees. In
addition, the Audit Committee reviews each Annual Report on Form 10-K, including
a review of the Company's financial statements and the related management's
discussion and analysis of financial condition and results of operations. The
Audit Committee's three members are Messrs. Groves (Chairman), Pogue and Pope,
all of whom are Non-Employee Directors.

Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee is responsible for recommending to the Board of
Directors management's nominees for election to the Board of Directors. This
Committee establishes criteria for qualification and selection of directors,
establishes Board Committees by function, size and responsibilities and
recommends the same to the Board of Directors for adoption and membership
determination, and coordinates responses to stockholder proposals in conjunction
with management and counsel. The Nominating and Corporate Governance Committee's
four members are Messrs. Johnson, Pearson, Pogue and Pope.

34
<PAGE> 36

Executive Committee. The Executive Committee has been granted authority,
subject to the limitations specified in the Florida Business Corporation Act, to
act in the place and stead of the full Board of Directors, including when it is
inconvenient or impossible to convene a meeting of the full Board or when
specific tasks have been assigned to the Executive Committee. The Executive
Committee took no actions and held no meetings during fiscal 1998. The Executive
Committee's four members are Messrs. Johnson, Pearson, Pogue and Pope.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to the Initial Public Offering, the Board of Directors did not have a
Compensation Committee and the functions of the Compensation Committee
previously had been performed by the Board of Directors. See "-- Committees of
the Board of Directors -- Compensation and Management Development Committee."

DIRECTOR COMPENSATION

Non-Employee Directors receive $1,000 for each meeting of the Board of
Directors attended and $1,000 for each meeting of a committee of the Board of
Directors attended. Non-Employee Directors who serve as Chairman of a committee
of the Board of Directors receive an additional $500 for each meeting chaired.
In addition, Non-Employee Directors receive an annual retainer fee of $12,000,
paid quarterly. Non-Employee Directors may make an annual election to defer
receipt of all or a portion of the retainer and meeting fees and to have such
deferral credited in the form of either cash or stock appreciation rights in
accordance with LAI's Directors' Deferral Plan (the "Directors' Deferral Plan").
Directors who opt for the stock appreciation right alternative receive a 25%
premium in stock appreciation rights. Fees deferred under the cash deferral
alternative earn interest as determined under the Directors' Deferral Plan.
Directors also are reimbursed for reasonable travel expenses to and from
meetings of the Board of Directors and committees. Directors who are employees
of the Company do not receive compensation for serving as Directors.

The Company grants to each Non-Employee Director, upon initial appointment
to the Board of Directors, a stock option to purchase 5,000 shares of Common
Stock pursuant to LAI's Non-Employee Directors' Stock Plan (the "Directors'
Stock Plan"). In addition, as of the date of each annual meeting of the
Company's stockholders, the Company grants to each Non-Employee Director who is
then reelected or who is continuing as a member of the Board of Directors a
stock option to purchase 5,000 shares of Common Stock. The exercise price of
each such stock option is equal to the closing price of Common Stock on the date
the stock option is granted. Stock options issued under the Directors' Stock
Plan generally vest fully on the first anniversary of the date of grant and
expire after five years. Stock options to purchase an aggregate of up to 15,000
shares of Common Stock are outstanding under the Directors' Stock Plan, and an
aggregate of 80,000 shares of Common Stock (including the shares covered by such
outstanding stock options) are reserved for issuance under the Directors' Stock
Plan.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation for fiscal 1997 and fiscal 1998 of the Company's executive officers
during such periods (the "Named Executive Officers," as defined under applicable
Securities and Exchange Commission rules).

35
<PAGE> 37

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
AWARDS
--------------------------
SHARES OF
ANNUAL COMPENSATION COMMON
------------------------------------- RESTRICTED STOCK
FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS($) OPTIONS (#) COMPENSATION(3)
- --------------------------- ------ -------- -------- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Pearson................ 1998 $525,000 $420,240 $8,526 $364,189(4) 97,000 $12,800
President and Chief 1997 250,000 902,238 8,465 -- -- 22,500
Executive Officer
Jack P. Wissman.................. 1998 250,000 115,585 7,073 -- 74,000(5) 12,800
Executive Vice President 1997 130,000 279,102 4,419 -- -- 22,500
and Chief Financial Officer
</TABLE>

- ---------------

(1) Consists of performance-based bonuses based upon individual achievement and
LAI financial performance for the indicated fiscal years.
(2) Consists of above-market interest on deferred compensation, fees for
professional tax services, payments for unused sick time and life insurance
premiums.
(3) Consists of contributions made by LAI to its Profit Sharing Plan. See
"-- Incentive and Benefit Plans."
(4) On April 15, 1998, the Company granted Mr. Pearson 16,939 shares of
restricted Common Stock in lieu of a portion of the compensation he earned
in fiscal 1998. Such shares vest 25% over the four years after the grant
date and may be subject to forfeiture upon termination of his employment
under certain circumstances.
(5) In April 1998, Mr. Wissman elected to return to the Company a stock option
to purchase 69,000 shares of Common Stock granted to him in July 1997.

OPTION GRANTS TABLE

The following table shows information concerning outstanding stock options
granted during fiscal 1998 for the Named Executive Officers.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Pearson................. 15,000 1.25% $ 12.00 7/1/07 $113,201 $ 286,874
82,000 6.85 19.125 7/29/07 986,264 2,499,387
Jack P. Wissman................... 5,000 0.42 12.00 7/1/07 37,734 95,625
69,000(1) 5.77 19.125 7/29/07 829,905 2,103,142
</TABLE>

- ---------------

(1) In April 1998, Mr. Wissman elected to return to LAI this stock option, which
was granted to him in July 1997.

OPTION EXERCISES AND YEAR-END VALUE TABLE

No stock options were exercised by any of the Company's directors or
executive officers during fiscal 1998. The following table shows information
concerning values as of the end of fiscal 1998 of stock options to purchase
shares of Common Stock held by each Named Executive Officer.

<TABLE>
<CAPTION>
NUMBER OF OPTIONS VALUE OF OPTIONS
NAME EXERCISABLE/UNEXERCISABLE (#) EXERCISABLE/UNEXERCISABLE ($)
- ---- ----------------------------- -----------------------------
<S> <C> <C>
Robert L. Pearson...................... -0-/97,000 -0-/$149,361
Jack P. Wissman........................ -0-/74,000(1) -0-/$68,037(1)
</TABLE>

- ---------------

(1) In April 1998, Mr. Wissman elected to return to the Company a stock option
to purchase 69,000 shares of Common Stock granted to him in July 1997.

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<PAGE> 38

INCENTIVE AND BENEFIT PLANS

1997 and 1998 Omnibus Stock and Incentive Plans. LAI has two stock option
and incentive plans, the 1997 Omnibus Stock and Incentive Plan (the "1997
Employee Stock Plan") and the 1998 Omnibus Stock and Incentive Plan (the "1998
Employee Stock Plan" and, collectively, the "Employee Stock Plans"). Under the
Employee Stock Plans, incentive stock options, nonqualified stock options, stock
appreciation rights, performance units, performance shares, restricted stock,
restricted stock units and stock not subject to restrictions may be granted from
time to time upon hiring of new personnel, as incentive compensation or to
reward employees for outstanding performance; however, such incentives are not
routinely granted as part of annual consultant compensation, which continues to
be predominantly cash-based. The Compensation Committee administers the Employee
Stock Plans and determines all awards granted thereunder. The exercise price of
a stock option granted may be less than the market price of Common Stock on the
date of grant. Generally, incentive stock options, nonqualified stock options,
restricted stock and restricted stock units vest each year beginning on the
first anniversary of the date of grant at 20-25% per year and expire after 10
years. The Compensation Committee may condition awards upon satisfaction of
performance targets. Up to 950,000 shares of Common Stock may be issued under
the 1997 Employee Stock Plan, including, as of April 30, 1998, up to 808,500
shares upon exercise of stock options already granted and outstanding under the
1997 Employee Stock Plan. Up to 1,000,000 shares of Common Stock may be issued
under the 1998 Employee Stock Plan, including, as of April 30, 1998, 95,970
shares of Common Stock already issued and outstanding and up to 414,615
additional shares upon exercise of stock options already granted and outstanding
under the 1998 Employee Stock Plan.

Profit Sharing Plan. LAI maintains a profit sharing plan (the "Profit
Sharing Plan"), a defined contribution plan established pursuant to and under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Each year, the Board of Directors determines the amount that LAI will contribute
to the Profit Sharing Plan for that plan year. Such contributions are allocated
to participants' accounts in proportion to their total compensation, subject to
limitations imposed by the Code. During the second quarter of fiscal 1999, the
Profit Sharing Plan will be amended to include a cash or deferred arrangement
feature that qualifies for deferred tax treatment under Section 401(k) of the
Code, pursuant to which participants may make elective contributions of up to
15% of their compensation, as defined in the Profit Sharing Plan. Each year, the
Board of Directors will determine the amount that LAI will contribute to the
Profit Sharing Plan as a matching contribution on participants' elective
contributions. Participants' elective contributions will be 100% vested at all
times, while LAI's contributions will vest 25% per year after completion of one
year of service. Participants may elect among several investment vehicles
selected by the plan administrator as to how their accounts under the Profit
Sharing Plan will be invested.

Deferred Compensation Plan. LAI maintains a deferred compensation plan
(the "Deferred Compensation Plan") for its executive employees. The Board of
Directors or a Committee appointed by the Board determines the persons eligible
to participate in the Deferred Compensation Plan, although historically all
consultants have been eligible to participate. Each year, eligible participants
may elect to defer under the Deferred Compensation Plan a specified amount or
percentage of their compensation for payment at a specified future date or upon
termination of employment with or retirement from LAI, as directed by each
participant. The Company pays interest on amounts deferred under the Deferred
Compensation Plan at a rate, currently 8.5% per annum, established each year by
the Board of Directors in its discretion. Participants are fully vested in their
accounts. LAI does not match employee contributions to the Deferred Compensation
Plan. See Note 6 to the Consolidated Financial Statements.

1997 Employee Stock Purchase Plan. The Company maintains the 1997 Employee
Stock Purchase Plan (the "ESPP"). Under the ESPP, which is intended to qualify
under the provisions of Section 423 of the Code, eligible employees are given
the right to purchase shares of Common Stock generally two times a year.

37
<PAGE> 39

The per share purchase price under the ESPP is 85% of the market price of the
Common Stock immediately prior to the first day of each exercise period or,
during the first exercise period, 85% of the lesser of the market price
immediately prior to the first day of such exercise period or the market price
at the close of such period. During each exercise period, an eligible employee
will be entitled to purchase up to that number of shares of Common Stock the
aggregate purchase price of which under the ESPP does not exceed 3% of the
employee's annual compensation. An aggregate of 200,000 shares of Common Stock
have been reserved for issuance under the ESPP, of which 24,585 shares have been
issued. Shares issued under the ESPP may be newly issued shares or shares
purchased by the Company in the open market.

EXECUTIVE EMPLOYMENT ARRANGEMENTS

The Company has entered into an employment agreement with Mr. Pearson with
an initial term expiring February 29, 2000; however, the agreement provides that
on February 28, 1998 and on the last day of February each year thereafter, the
term of Mr. Pearson's employment shall be extended for an additional one year
period, such that the remaining term of the agreement is restored annually to
three years, unless either the Company or Mr. Pearson gives notice not less than
90 days prior to any extension date of an intention not to extend. Under his
employment agreement, Mr. Pearson is entitled to receive an annual base salary
of not less than $525,000, and is eligible to earn annual incentive bonuses
based upon such plans and criteria as may be established from time to time by
the Compensation Committee. Under the plan currently in effect, Mr. Pearson is
eligible to earn a target bonus equal to 80% of his base salary and a maximum
bonus equal to 160% of his base salary. For fiscal 1998, the employment
agreement provided for a minimum incentive bonus of $420,000 payable pro rata in
monthly installments during the fiscal year. If any cash compensation otherwise
payable to Mr. Pearson thereunder would exceed the deductibility limitations of
Section 162(m) of the Internal Revenue Code, the agreement provides that such
excess compensation shall be paid in phantom stock units, in lieu of cash.

Mr. Pearson may terminate his employment agreement upon 90 days prior
written notice. Mr. Pearson is entitled to receive certain severance benefits if
his employment is terminated by the Company "without good cause" or by Mr.
Pearson following a "change of control" (each as defined in the employment
agreement). In the event of termination "without good cause," Mr. Pearson will
receive his base salary for the remainder of the unexpired term of the
employment agreement (not to exceed 36 months) or 24 months, whichever is
greater, and an amount equal to not less than the target bonus for the year of
termination multiplied by the number of years and fractions thereof in the
unexpired term of the agreement or, if greater, two. Mr. Pearson may terminate
the agreement during the 60 day period commencing six months after a "change of
control," whereupon he would be entitled to receive a lump sum payment equal to
three times his annual base salary plus an amount not less than three times the
target bonus for the year of termination. The agreement requires the Company to
use its good faith efforts, during the term, to nominate Mr. Pearson to the
Company's Board of Directors. Mr. Pearson has agreed to not compete with the
Company during the term of his employment and, if his employment is terminated
by the Company without good cause or following a change of control, for so long
as he continues to receive payments under the agreement.

In addition, upon any termination of Mr. Pearson's employment "without good
cause" or following a "change of control," all vesting or performance
requirements with respect to any stock options or other similar equity-based
compensation awards shall be deemed to have been satisfied. With respect to any
payments under his employment agreement upon death, disability, or termination
"without good cause" or following a "change of control", Mr. Pearson would
receive additional cash payments in an amount necessary to pay any federal
excise taxes. Mr. Pearson's employment agreement is also subject to voluntary
termination by Mr. Pearson or termination by the Company "for cause."

In connection with the negotiation of his employment agreement, the
Compensation Committee awarded Mr. Pearson stock options to purchase 82,000
shares of Common Stock at an exercise price of $19.125 per
38
<PAGE> 40

share. Such stock options will fully vest and become exercisable upon the first
to occur of the sixth anniversary of the date of grant or, if the sale price of
the Common Stock closes at $25.00 or higher for a period of 60 or more
consecutive trading days, on the 60th such day. In July 1997, Mr. Pearson also
received stock options to purchase 15,000 shares of Common Stock at an exercise
price of $12.00 per share, which options vest over four years at the rate of 25%
per year.

39
<PAGE> 41

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 5, 1998, and as adjusted to
reflect the sale of shares offered hereby, by: (i) each of the Company's
directors and Named Executive Officers, (ii) all executive officers and
directors of the Company as a group, (iii) each person known by the Company to
own beneficially more than 5% of the outstanding Common Stock and (iv) each of
the Selling Stockholders. Except as otherwise indicated, each of the individuals
listed below is a director or consultant of the Company, has sole voting and
investment power over the shares listed as beneficially owned and has an address
in care of LAI's headquarters in New York, NY.

<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED OWNED
PRIOR TO THE AFTER THE
OFFERING(1) SHARES OFFERING(1)
------------------- OFFERED -----------------
NAME NUMBER PERCENT FOR SALE NUMBER PERCENT
- ---- --------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Robert L. Pearson(2).................................. 245,377 4.32% 66,667 178,710 2.31%
Jack P. Wissman(3).................................... 122,224 2.15 36,166 86,058 1.11
David L. Witte........................................ 13,428 * -- 13,428 *
Philip R. Albright(4)................................. 2,692 * -- 2,692 *
John F. Johnson(5).................................... 225,528 3.97 66,667 158,861 2.06
Joe D. Goodwin(6)..................................... 125,726 2.22 40,000 85,726 1.11
Roderick C. Gow(7).................................... 125,152 2.21 33,333 91,819 1.19
Ray J. Groves(8)...................................... 5,000 * -- 5,000 *
Richard W. Pogue(9)................................... 13,000 * -- 13,000 *
John C. Pope(10)...................................... 13,000 * -- 13,000 *
John S. Rothschild(11)................................ 109,423 1.93 30,000 79,423 1.03
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (11
PERSONS)............................................ 1,000,550 17.54 272,833 727,717 9.39
David W. Palmlund III(12)............................. 200,091 3.53 60,000 140,091 1.81
Anthony B. Cashen..................................... 120,000 2.12 40,000 80,000 1.04
Lawrence F. Nein(13).................................. 105,944 1.87 33,333 72,611 *
Thomas M. Watkins III(14)............................. 103,488 1.82 33,333 70,155 *
Charles E. Taylor(15)................................. 100,849 1.78 33,333 67,516 *
Theodore H. Borman(16)................................ 98,074 1.73 30,000 68,074 *
Arthur I. Newman(17).................................. 96,000 1.69 95,000 1,000 *
Michael Brenner(18)................................... 81,250 1.43 26,667 54,583 *
Mark P. Elliott(19)................................... 79,970 1.41 23,333 56,637 *
David W. Gallagher(20)................................ 76,600 1.35 25,000 51,600 *
Arthur J. Davidson(21)................................ 68,043 1.20 20,000 48,043 *
Rafael A. Sierra(22).................................. 65,906 1.16 21,667 44,239 *
Martin D. Nass(23).................................... 58,607 1.03 15,000 43,607 *
David J. Shimp(24).................................... 57,377 1.01 18,333 39,044 *
Arnold Kuypers(25).................................... 52,771 * 10,000 42,771 *
Robert H. Crumbaker................................... 51,389 * 16,667 34,722 *
James G. Aslaksen(26)................................. 51,156 * 15,000 36,156 *
Austin Broadhurst, Jr. ............................... 50,000 * 16,667 33,333 *
Paul McG. Miller...................................... 50,000 * 16,667 33,333 *
Tara L. Pettersson(27)................................ 38,750 * 11,667 27,083 *
Donald R. Utroska(28)................................. 38,051 * 11,667 26,384 *
Diane M. Barowsky(29)................................. 36,250 * 11,667 24,583 *
Noah W. Waldman(30)................................... 36,250 * 11,667 24,583 *
Barbara Z. Settles.................................... 35,687 * 11,667 24,020 *
Eileen M. Merrigan(31)................................ 31,260 * 8,333 22,927 *
Walter U. Baker(32)................................... 29,368 * 8,333 21,035 *
Barry R. Cesafsky(33)................................. 28,543 * 7,500 21,043 *
Susan J. Landon(34)................................... 27,500 * 8,333 19,167 *
Thomas H. Wilson(35).................................. 26,250 * 7,000 19,250 *
Walter E. Williams(36)................................ 25,214 * 7,000 18,214 *
Kenneth I. Felderman.................................. 25,000 * 14,000 11,000 *
Robert R. Stone....................................... 25,000 * 8,333 16,667 *
Dresdner RCM Global Investors LLC(37)................. 372,800 6.57 -- 372,800 4.83
</TABLE>

40
<PAGE> 42

- ---------------

(*) Less than 1%.
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person has or shares sole voting power and/or investment power.
(2) Includes 6,777 shares of Common Stock held in the Profit Sharing Plan;
6,408 shares held as trustee for the benefit of certain family members,
which Mr. Pearson is deemed to beneficially own; 3,750 shares underlying
currently exercisable stock options deemed beneficially owned; and 16,939
restricted shares subject to a risk of forfeiture.
(3) Includes 5,383 shares of Common Stock held in the Profit Sharing Plan and
1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(4) Includes 192 shares of Common Stock held in the Profit Sharing Plan and
2,500 shares underlying currently exercisable stock options deemed
beneficially owned.
(5) Includes 16,509 shares of Common Stock held in the Profit Sharing Plan,
3,750 shares underlying currently exercisable stock options deemed
beneficially owned and 3,766 restricted shares subject to a risk of
forfeiture. Does not include 5,000 shares held by Mr. Johnson's wife, 200
shares held by two daughters of Mr. Johnson and 100 shares held by Mr.
Johnson's brother, as to which Mr. Johnson disclaims beneficial ownership.
(6) Includes 1,133 shares of Common Stock held in the Profit Sharing Plan,
2,500 shares underlying currently exercisable stock options deemed
beneficially owned and 2,093 restricted shares subject to a risk of
forfeiture.
(7) Includes 307 shares of Common Stock held in the Profit Sharing Plan, 2,500
shares underlying currently exercisable stock options deemed beneficially
owned and 20,930 restricted shares subject to a risk of forfeiture.
(8) Includes 5,000 shares underlying currently exercisable stock options deemed
beneficially owned.
(9) Includes 8,000 shares of Common Stock held by a revocable trust which Mr.
Pogue, as trustee, is deemed to beneficially own and 5,000 shares
underlying currently exercisable stock options deemed beneficially owned.
(10) Includes 5,000 shares underlying currently exercisable stock options deemed
beneficially owned.
(11) Includes 2,000 shares of Common Stock held by two of Mr. Rothschild's
children which Mr. Rothschild is deemed to beneficially own and 5,581
restricted shares subject to a risk of forfeiture. Does not include 3,000
shares held by Mr. Rothschild's spouse, as to which Mr. Rothschild
disclaims beneficial ownership.
(12) Includes 7,614 shares of Common Stock held in the Profit Sharing Plan,
1,250 shares underlying currently exercisable stock options deemed
beneficially owned and 8,317 restricted shares subject to a risk of
forfeiture.
(13) Includes 4,511 shares of Common Stock held in the Profit Sharing Plan.
(14) Includes 3,488 restricted shares subject to a risk of forfeiture.
(15) Includes 849 shares of Common Stock held in the Profit Sharing Plan.
(16) Includes 2,802 shares of Common Stock held in the Profit Sharing Plan,
1,250 shares underlying currently exercisable stock options deemed
beneficially owned and 4,022 restricted shares subject to a risk of
forfeiture.
(17) Prior to his retirement from LAI, Mr. Newman was employed as a consultant.
(18) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(19) Includes 1,337 shares of Common Stock held in the Profit Sharing Plan,
3,750 shares underlying currently exercisable stock options deemed
beneficially owned and 4,883 restricted shares subject to a risk of
forfeiture.
(20) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(21) Includes 747 shares of Common Stock held in the Profit Sharing Plan, 1,250
shares underlying currently exercisable stock options deemed beneficially
owned and 1,046 restricted shares subject to a risk of forfeiture.
(22) Includes 906 restricted shares subject to a risk of forfeiture.
(23) Includes 962 shares of Common Stock held in the Profit Sharing Plan, 2,500
shares underlying currently exercisable stock options deemed beneficially
owned and 3,912 restricted shares subject to a risk of forfeiture.
(24) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(25) Includes 1,421 shares of Common Stock held in the Profit Sharing Plan and
1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(26) Includes 3,750 shares underlying currently exercisable stock options deemed
beneficially owned and 2,406 restricted shares subject to a risk of
forfeiture.
(27) Includes 3,750 shares underlying currently exercisable stock options deemed
beneficially owned.
(28) Includes 2,500 shares underlying currently exercisable stock options deemed
beneficially owned.
(29) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(30) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(31) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned and 5,010 restricted shares subject to a risk of
forfeiture.
(32) Includes 618 shares of Common Stock held in the Profit Sharing Plan and
3,750 shares underlying currently exercisable stock options deemed
beneficially owned.
(33) Includes 441 shares of Common Stock held in the Profit Sharing Plan and
3,102 restricted shares subject to a risk of forfeiture.
(34) Includes 2,500 shares underlying currently exercisable stock options deemed
beneficially owned.
(35) Includes 1,250 shares underlying currently exercisable stock options deemed
beneficially owned.
(36) Includes 214 shares of Common Stock held in the Profit Sharing Plan.
(37) This information is derived from a Schedule 13G dated January 30, 1998
filed with the Securities and Exchange Commission (the "Commission") by
Dresdner RCM Global Investors LLC, RCM Limited L.P. and RCM General
Corporation (collectively, "RCM"). Each of such parties possesses sole
dispositive power with respect to all 372,800 shares and sole voting power
with respect to 267,700 shares. Dresdner Bank AG also filed a Schedule 13G
dated January 30, 1998 with the Commission with respect to such shares and
may be deemed, together with RCM, to beneficially own such shares; however,
Dresdner Bank AG does not possess any voting or dispositive power over such
shares. RCM's address is Four Embarcadero Center, San Francisco, California
94111.

41
<PAGE> 43

CERTAIN TRANSACTIONS

Prior to its Initial Public Offering, it was the Company's practice to sell
shares of Common Stock to newly hired or promoted partners. In connection with
such sales, the Company had arranged for a bank credit facility that provided
installment loans to partners, with the proceeds of such loans being used to pay
the consideration for shares purchased directly from the Company. Each loan
under such facility was secured by a pledge of the shares purchased and was
guaranteed by the Company. Roderick C. Gow and Joe D. Goodwin had outstanding
loans guaranteed by the Company under such facility in fiscal 1998. The original
principal amounts of such loans, and the maximum amounts outstanding and
guaranteed by the Company under such loans during fiscal 1998, were $146,000 and
$125,000, respectively, for Mr. Gow, and $148,000 and $70,000, respectively, for
Mr. Goodwin. The Company obtained a release of its guarantee under such facility
after completion of its Initial Public Offering.

Pursuant to the Agreement and Plan of Merger entered into in connection
with the WHI acquisition, David L. Witte received as of February 27, 1998, in
exchange for his interest in WHI, 13,428 shares of Common Stock, $588,288.46 in
cash and a promissory note in the amount of $534,575.75. Such promissory note
bears interest at 5% per annum and provides for three installment payments of
$178,191.92 each, due February 27, 1999, 2000 and 2001.

In August 1997, the Company made a non-interest bearing loan of $105,000 to
John S. Rothschild, the proceeds of which were used to pay certain initiation
fees for a country club joined by Mr. Rothschild in connection with his
employment responsibilities. So long as Mr. Rothschild does not voluntarily
terminate his employment with the Company, 20% of the principal amount of the
loan will be forgiven on July 1 of each year, commencing July 1, 1998. The
Company also has agreed to pay Mr. Rothschild the amount of any tax on income
that may be imputed to him as a result of such forgiveness.

See "Description of Capital Stock -- Indemnification and Limitation of
Liability for Directors and Officers" for information regarding indemnification
agreements which LAI has entered into with certain of its directors and
officers.

DESCRIPTION OF CAPITAL STOCK

GENERAL

LAI has authority under its Articles of Incorporation to issue up to
35,000,000 shares of Common Stock and up to 3,000,000 shares of Preferred Stock
(the "Preferred Stock").

COMMON STOCK

Subject to any preferential rights of any Preferred Stock created by the
Board of Directors, each outstanding share of Common Stock is entitled to such
dividends, if any, as may be declared from time to time by the Board. See
"Dividend Policy." Each outstanding share is entitled to one vote on all matters
submitted to a vote of stockholders. Holders of Common Stock do not have any
preemptive right to subscribe to any securities of LAI of any kind or class. In
the event of liquidation, dissolution or winding up of LAI, holders of Common
Stock are entitled to receive on a pro rata basis any assets remaining after
provision for payment of creditors and after payment of any liquidation
preferences to holders of Preferred Stock.

PREFERRED STOCK

Preferred Stock is available for issuance from time to time in one or more
series at the discretion of the Board of Directors without stockholder approval.
The Board of Directors has the authority to prescribe, for each series of
Preferred Stock it establishes, the number of shares, the voting rights (if any)
to which such

42
<PAGE> 44

shares are entitled, and the designations, powers, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions of such shares. Depending upon the rights of such Preferred Stock,
the issuance of Preferred Stock could have an adverse effect on holders of
Common Stock by delaying or preventing a change in control of LAI, making
removal of the present management of LAI more difficult or resulting in
restrictions upon the payment of dividends and other distributions to the
holders of Common Stock.

FLORIDA BUSINESS CORPORATION ACT

The Company is subject to several anti-takeover provisions that apply to a
public corporation organized under Florida law unless the corporation has
elected to opt out of such provisions in its Articles of Incorporation or
(depending on the provision in question) its Bylaws. LAI has not elected to opt
out of these provisions. The Florida Business Corporation Act (the "Florida
Act") contains a provision that prohibits the voting of shares in a publicly
held Florida corporation which are acquired in a "control share acquisition"
unless the holders of a majority of the corporation's voting shares (exclusive
of shares held by officers of the corporation, inside directors or the acquiring
party) approve the granting of voting rights as to the shares acquired in the
control share acquisition. A "control share acquisition" means an acquisition
that immediately thereafter entitles the acquiring party to vote in the election
of directors within any of the following ranges of voting power: (i) one-fifth
or more but less than one third of such voting power, (ii) one third or more but
less than a majority of such voting power and (iii) more than a majority of such
voting power.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested stockholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested stockholder,
(ii) the interested stockholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the interested
stockholder is the beneficial owner of at least 90% of the corporation's
outstanding voting shares, exclusive of those shares acquired by the interested
stockholder directly from the corporation in a transaction approved by a
majority of the disinterested directors. An interested stockholder is defined as
a person who together with affiliates and associates beneficially owns more than
10% of the corporation's outstanding voting shares.

PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS AFFECTING CHANGES IN CONTROL

Certain provisions of the Company's Articles of Incorporation and Bylaws
may delay or make more difficult unsolicited acquisitions or changes of control
of LAI. Such provisions may enable LAI to develop its business in a manner that
will foster its long-term growth without disruption caused by the threat of a
takeover not deemed by its Board of Directors to be in the best interests of LAI
and its stockholders. Such provisions could have the effect of discouraging
third parties from making proposals involving an unsolicited acquisition or
change of control of LAI, although such proposals, if made, might be considered
desirable by a majority of LAI's stockholders. Such provisions may also have the
effect of making it more difficult for third parties to cause the replacement of
the current Board of Directors of LAI. These provisions include (i) the
availability of capital stock for issuance from time to time at the discretion
of the Board of Directors, (ii) a classified Board of Directors, (iii)
prohibition against stockholders acting by written consent in lieu of a meeting,
(iv) limitations on calling meetings of stockholders, (v) requirements for
advance notice for raising business or making nominations at stockholders'
meetings and (vi) the ability of the Board of Directors to increase the size of
the Board of Directors and to appoint directors to newly created directorships.
These provisions are present in the Articles of Incorporation or Bylaws of LAI.

43
<PAGE> 45

INDEMNIFICATION AND LIMITATION OF LIABILITY FOR DIRECTORS AND OFFICERS

The LAI Bylaws provide that LAI shall have the power, but generally not the
obligation, to indemnify directors and officers to the fullest extent permitted
by the laws of the State of Florida. LAI has entered into indemnification
agreements with all of its executive officers and directors creating certain
indemnification obligations on LAI's part in favor of the directors and
executive officers. These indemnification agreements clarify and expand the
circumstances under which a director or executive officer will be indemnified.

The indemnification rights conferred by the Bylaws and indemnification
agreements are not exclusive of any other right, under the Florida Act or
otherwise, to which a person seeking indemnification may otherwise be entitled.
LAI also provides liability insurance for the directors and officers for certain
losses arising from claims or charges made against them while acting in their
capacities as directors or officers.

The effect of such indemnification arrangements may be to exempt or limit
the liability of such executive officers and directors to LAI or its
stockholders for monetary damages for breach of fiduciary duty to LAI, except to
the extent such exemption or limitation is not permitted under the Florida Act
as the same exists or may hereafter be amended.

TRANSFER AGENT

The transfer agent and registrar of the Company's Common Stock is
ChaseMellon Shareholder Services, L.L.C.

44
<PAGE> 46

SHARES ELIGIBLE FOR FUTURE SALE

A substantial number of shares of Common Stock already outstanding, or
issuable on exercise of stock options under the Employee Stock Plans and the
Directors' Stock Plan, are or will be eligible for future sale in the public
market at prescribed times pursuant to Rule 144 or Rule 701 under the Securities
Act.

Upon completion of the Offering, LAI will have 7,722,416 shares of Common
Stock outstanding (8,172,416 if the Underwriters' over-allotment option is
exercised in full) and will have granted stock options to purchase another
1,238,115 shares of Common Stock. Of these shares, the 2,300,000 shares of
Common Stock sold in the Initial Public Offering and the 3,000,000 shares sold
in the Offering (3,450,000 shares if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable by persons other than "affiliates"
of LAI, without restriction under the Securities Act. The remaining 2,422,416
shares of Common Stock are "restricted" securities within the meaning of Rule
144 under the Securities Act and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including the exemptions contained in Rule 144. Certain existing stockholders of
LAI, however, have agreed not to sell, contract to sell or otherwise dispose of
an aggregate of 295,000 shares of Common Stock until at least July 2, 1999; an
additional 25,707 shares until at least January 2, 2000; an additional 189,677
shares until at least February 27, 2000; and an additional 1,780,000 shares
until at least , 2000 (two years after the date of this Prospectus),
without the prior written consent of Robert W. Baird & Co. Incorporated.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares of
Common Stock for at least one year (including the prior holding period of any
prior owner other than an affiliate of LAI) is entitled to sell within any
three-month period that number of shares which does not exceed the greater of 1%
of the outstanding shares of Common Stock or the average weekly trading volume
during the four calendar weeks preceding each such sale. Sales under Rule 144
also are subject to certain manner of sale provisions, notice requirements and
the availability of current public information about LAI. A person (or persons
whose shares are aggregated) who is not or has not been deemed an affiliate of
LAI for at least three months and who has beneficially owned shares for at least
two years (including the holding period of any prior owner other than an
affiliate) would be entitled to sell such shares under Rule 144 without regard
to the limitations discussed above. Rule 144 defines "affiliate" of a company as
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such company.
Affiliates of a company generally include its directors, executive officers and
principal stockholders.

Sales of such shares in the public market, or the perception that such
sales may occur, could adversely affect the market price of the Common Stock or
impair LAI's ability to raise additional capital in the future through the sale
of equity securities.

45
<PAGE> 47

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company and the Selling Stockholders have agreed to sell to each
of the underwriters named below (the "Underwriters"), and each of the
Underwriters has severally agreed to purchase from the Company the respective
number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS COMMON SHARES
- ------------ -------------
<S> <C>
Robert W. Baird & Co. Incorporated..........................
The Robinson-Humphrey Company, LLC..........................
J.C. Bradford & Co..........................................

---------
Total............................................. 3,000,000
=========
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all 3,000,000 shares of
Common Stock offered hereby if any such shares of Common Stock are purchased. In
the event of a default by any Underwriter, the Underwriting Agreement provides
that, in certain circumstances, purchase commitments of the non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.

The Company and the Selling Stockholders have been advised by the
Underwriters that the several Underwriters propose to offer such Common Stock to
the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow and such dealers may
re-allow a concession not in excess of $ per share to other dealers.
After the shares of Common Stock are released for sale to the public, the
offering price and other selling terms may be changed by the Underwriters.

The Company has granted the Underwriters an option, expiring 30 days from
the date of this Prospectus, to purchase up to 450,000 additional shares of
Common Stock at the public offering price less underwriting discounts set forth
on the cover page of this Prospectus. The Underwriters may exercise such option
solely to cover over-allotments, if any, made in connection with the sale of the
Common Stock that the Underwriters have agreed to purchase. To the extent the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase a number of shares
proportionate to such Underwriter's initial commitment.

The Selling Stockholders and LAI's executive officers and directors have
agreed not to sell, contract to sell or otherwise dispose of any shares of
Common Stock for a period of 90 days after the date of this Prospectus without
the prior written consent of Robert W. Baird & Co. Incorporated. In addition,
certain existing stockholders of LAI have agreed not to sell, contract to sell
or otherwise dispose of an aggregate of 295,000 shares of Common Stock until at
least July 2, 1999; an additional 25,707 shares until at least

46
<PAGE> 48

January 2, 2000; an additional 189,677 shares until at least February 27, 2000;
and an additional 1,780,000 shares until at least , 2000 (two years
after the date of this Prospectus), without the prior written consent of Robert
W. Baird & Co. Incorporated. See "Shares Eligible for Future Sale." The Company
has agreed, for a period of 90 days after the date of this Prospectus, not to
sell, contract to sell or otherwise dispose of any shares of Common Stock
without the prior written consent of Robert W. Baird & Co. Incorporated, other
than shares of Common Stock issued in the Offering, under the ESPP or upon
exercise of stock options granted pursuant to the Employee Stock Plans or the
Directors' Stock Plan. See "Management -- Incentive and Benefit Plans."

The Underwriting Agreement provides that LAI and the Selling Stockholders
will indemnify the Underwriters and the Underwriters will indemnify LAI and the
Selling Stockholders against certain liabilities under the Securities Act or
contribute to payments that may be required to be made in respect thereof.

In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot the Offering,
creating a syndicate short position. In addition, the Underwriters may bid for,
and purchase, shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Any of these activities
may stabilize or maintain the market price of the Common Stock above independent
market levels.

The Underwriters are not required to engage in these activities, and may
end any of these activities at any time. The Underwriters and dealers may also
engage in passive market making transactions in the Common Stock in accordance
with Rule 103 of Regulation M promulgated by the Commission. In general, a
passive market maker may not bid for, or purchase, the Common Stock at a price
that exceeds the higher independent bid. In addition, the net daily purchases
made by any passive market maker generally may not exceed 30% of its average
daily trading volume in the Common Stock during a specified two-month prior
period, or 200 shares, whichever is greater. A passive market maker must
identify passive market making bids as such on the Nasdaq electronic
inter-dealer reporting system. Passive market making may stabilize or maintain
the market price of the Common Stock above independent market levels.
Underwriters and dealers are not required to engage in passive market making and
may end passive market making activities at anytime.

From time to time in the ordinary course of its business, Robert W. Baird &
Co. Incorporated has provided and may continue to provide financial advisory
services to the Company in connection with certain acquisitions and proposed
acquisitions and other matters.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for LAI by Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
Professional Association, Tampa, Florida. Certain legal matters in connection
with the Offering will be passed upon for the Underwriters by Neal, Gerber &
Eisenberg, Chicago, Illinois.

EXPERTS

The Consolidated Financial Statements and Notes thereto included in this
Prospectus and the Registration Statement have been audited by Arthur Andersen
LLP, independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.

47
<PAGE> 49

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
periodic reports and other information with the Commission. Reports, proxy and
information statements and other information filed by the Company may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 5th Street, N.W., Washington, D.C. 20549, as well
as the following Regional Offices of the Commission: Seven World Trade Center,
13th Floor, New York, New York 10048 and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained by mail from the Public Reference Section, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 20549, upon payment
of prescribed rates. In addition, electronically filed documents, including
reports, proxy and information statements and other information regarding the
Company, can be obtained from the Commission's Web site at: http://www.sec.gov.
The Company's Common Stock is quoted on the Nasdaq National Market, and reports,
proxy statements and other information concerning the Company can also be
inspected at the offices of the National Association of Securities Dealers, Inc.
at 1735 K Street, Washington, D.C. 20006.

The Company has filed a Registration Statement on Form S-1 (together with
all amendments and exhibits thereto, referred to herein as the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and such Common Stock offered hereby, reference is made
to the Registration Statement. Statements contained in this Prospectus with
respect to the contents of any contract or other document filed as an exhibit to
the Registration Statement are not necessarily complete, and in each such
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
all respects by such reference to such exhibit. Copies of all or any part of the
Registration Statement, including the documents incorporated by reference
therein or exhibits thereto, may be obtained upon payment of the prescribed
rates at the offices of the Commission set forth above.

48
<PAGE> 50

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
LAMALIE ASSOCIATES, INC. FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets............................... F-3
Consolidated Statements of Operations..................... F-4
Consolidated Statements of Stockholders' Equity........... F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
WARD HOWELL INTERNATIONAL, INC. FINANCIAL STATEMENTS
Independent Auditors' Report................................ F-18
Balance Sheets............................................ F-19
Statements of Operations.................................. F-20
Statements of Shareholders' Equity........................ F-21
Statements of Cash Flows.................................. F-22
Notes to Financial Statements............................. F-23
CHARTWELL PARTNERS INTERNATIONAL, INC. FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants.......... F-27
Statement of Operations................................... F-28
Statement of Cash Flows................................... F-29
Notes to Financial Statements............................. F-30
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Introduction to Unaudited Pro Forma Combined Statement of
Operations............................................. F-32
Unaudited Pro Forma Combined Statement of Operations...... F-33
Notes to Unaudited Pro Forma Combined Statement of
Operations............................................. F-34
</TABLE>

F-1
<PAGE> 51

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Lamalie Associates, Inc.:

We have audited the accompanying consolidated balance sheets of Lamalie
Associates, Inc. (a Florida corporation) and subsidiaries as of February 28,
1997 and 1998, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended February 28, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lamalie Associates, Inc. and
subsidiaries as of February 28, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
February 28, 1998, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Tampa, Florida,
April 8, 1998

F-2
<PAGE> 52

LAMALIE ASSOCIATES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28,
1997 1998
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................. $ 1,662 $23,780
Accounts receivable, less allowance of $850 and $2,120,
respectively........................................... 14,238 22,219
Prepaid expenses.......................................... 1,033 1,420
Refundable income taxes................................... 58 1,822
------- -------
Total current assets.............................. 16,991 49,241
------- -------
Property and equipment, net................................. 4,184 5,612
Deferred tax assets......................................... 1,958 4,185
Goodwill, net............................................... -- 24,790
Cash value of life insurance................................ 2,255 4,363
Other assets................................................ 173 725
------- -------
Total assets...................................... $25,561 $88,916
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities.................. $ 2,089 $ 7,191
Payable to former WHI stockholders........................ -- 8,592
Accrued compensation...................................... 13,255 20,573
Current maturities of long-term debt...................... 387 3,070
Current deferred tax liabilities.......................... 643 --
------- -------
Total current liabilities......................... 16,374 39,426
------- -------
Accrued rent................................................ 1,038 1,013
Deferred compensation....................................... 3,872 6,951
Long-term debt, less current maturities..................... 1,650 6,055
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value; 3,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common stock; $0.01 par value; 35,000,000 shares
authorized; 3,075,000 and 5,576,446 shares issued and
outstanding, respectively.............................. 31 56
Additional paid-in capital................................ 4,087 32,873
Subscriptions receivable.................................. (153) --
Retained earnings (accumulated deficit)................... (1,338) 2,542
------- -------
Total stockholders' equity........................ 2,627 35,471
------- -------
Total liabilities and stockholders' equity........ $25,561 $88,916
======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-3
<PAGE> 53

LAMALIE ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1997 1998
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Fee revenue, net..................................... $35,088 $46,437 $61,803
Operating expenses:
Compensation and benefits.......................... 30,693 39,928 46,513
General and administrative......................... 4,467 6,685 8,680
------- ------- -------
Total operating expenses................... 35,160 46,613 55,193
------- ------- -------
Operating income (loss).............................. (72) (176) 6,610
------- ------- -------
Interest income...................................... 117 125 887
Interest expense..................................... (157) (501) (690)
------- ------- -------
Net interest income (expense).............. (40) (376) 197
------- ------- -------
Income (loss) before provision for income taxes...... (112) (552) 6,807
Provision for income taxes........................... 90 15 2,927
------- ------- -------
Net income (loss).................................... $ (202) $ (567) $ 3,880
======= ======= =======
Basic net income (loss) per common share............. $ (0.07) $ (0.18) $ 0.85
======= ======= =======
Weighted average common shares....................... 2,921 3,199 4,573
======= ======= =======
Diluted net income (loss) per common and common
equivalent share................................... $ (0.07) $ (0.18) $ 0.82
======= ======= =======
Weighted average common and common equivalent
shares............................................. 2,921 3,199 4,751
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-4
<PAGE> 54

LAMALIE ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK ADDITIONAL EARNINGS/ TOTAL
--------------- PAID-IN SUBSCRIPTIONS (ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT) EQUITY
------ ------ ---------- ------------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF FEBRUARY 28,
1995........................... 2,278 $23 $ 2,943 $ (72) $ (569) $ 2,325
Redemption of common stock....... (100) (1) (136) -- -- (137)
Issuance of common stock......... 612 6 845 (851) -- --
Reduction of subscriptions
receivable from stockholders... -- -- -- 524 -- 524
Net loss......................... -- -- -- -- (202) (202)
----- --- ------- ------ ------- -------
BALANCE AS OF FEBRUARY 29,
1996........................... 2,790 28 3,652 (399) (771) 2,510
Redemption of common stock....... (345) (3) (509) -- -- (512)
Issuance of common stock......... 630 6 944 (950) -- --
Reduction of subscriptions
receivable from stockholders... -- -- -- 1,196 -- 1,196
Net loss......................... -- -- -- -- (567) (567)
----- --- ------- ------ ------- -------
BALANCE AS OF FEBRUARY 28,
1997........................... 3,075 31 4,087 (153) (1,338) 2,627
Redemption of common stock....... (50) (1) (76) -- -- (77)
Initial public offering of common
stock.......................... 2,300 23 24,628 -- -- 24,651
Other issuance of common stock... 251 3 4,183 -- -- 4,186
Reduction of subscriptions
receivable from stockholders... -- -- -- 153 -- 153
Amortization of discounted
options........................ -- -- 51 -- -- 51
Net income....................... -- -- -- -- 3,880 3,880
----- --- ------- ------ ------- -------
BALANCE AS OF FEBRUARY 28,
1998........................... 5,576 $56 $32,873 $ -- $ 2,542 $35,471
===== === ======= ====== ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-5
<PAGE> 55

LAMALIE ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1997 1998
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ (202) $ (567) $ 3,880
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................. 449 768 885
Amortization of goodwill.................................. -- -- 17
Amortization of discounted options........................ -- -- 51
Deferred income taxes..................................... (738) (276) (897)
Changes in assets and liabilities
Accounts receivable, net................................ (3,796) (4,679) (1,367)
Prepaid expenses........................................ (218) (331) (319)
Refundable income taxes................................. 465 (1,146) (1,707)
Other assets............................................ (35) (36) (532)
Accounts payable and accrued liabilities................ 1,843 (155) 361
Accrued compensation.................................... 2,362 3,376 (493)
Accrued rent............................................ 122 531 (25)
Deferred compensation................................... 1,314 1,862 3,079
------- ------- -------
Net cash provided by (used in) operating
activities....................................... 1,566 (653) 2,933
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in life insurance................................ (779) (1,048) (2,109)
Purchases of property and equipment......................... (2,483) (1,825) (2,187)
Acquisition of WHI.......................................... -- -- 1,318
Acquisition of CPI.......................................... -- -- (1,387)
------- ------- -------
Net cash used in investing activities.............. (3,262) (2,873) (4,365)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings.................................................. -- 3,995 --
Repayments of debt.......................................... -- (2,262) (1,783)
Redemption of certificate of deposit........................ 109 -- --
Proceeds from issuance of common stock...................... 524 1,197 25,410
Payments to redeem common stock............................. (217) (271) (77)
------- ------- -------
Net cash provided by financing activities............... 416 2,659 23,550
------- ------- -------
Net (decrease) increase in cash and cash
equivalents............................................. (1,280) (867) 22,118
Cash and Cash Equivalents, at beginning of period........... 3,809 2,529 1,662
------- ------- -------
Cash and Cash Equivalents, at end of period................. $ 2,529 $ 1,662 $23,780
======= ======= =======
Supplemental disclosures of cash flow information --
Cash paid for interest...................................... $ 8 $ 204 $ 145
Cash paid for income taxes.................................. 362 1,437 4,691
Supplemental disclosures of non-cash activities --
Debt issued in connection with acquisitions................. -- -- 8,802
Equity issued in connection with acquisitions............... -- -- 3,580
Payable in connection with acquisitions..................... -- -- 8,592
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-6
<PAGE> 56

LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1998

(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Lamalie Associates, Inc. and its wholly-owned subsidiaries ("LAI" or the
"Company") provide consulting services aimed specifically at solving its
clients' leadership needs by identifying, evaluating and recommending qualified
candidates for senior level positions. LAI provides executive search services
exclusively on a retained basis from 16 regional offices located throughout the
United States.

INITIAL PUBLIC OFFERING & REINCORPORATION

The Company completed its initial public offering (the "IPO") of 2,300,000
shares of common stock on July 1, 1997. The proceeds of $24.7 million, net of
underwriters' discounts and other offering costs, were used to repay outstanding
indebtedness under the Company's credit facilities, to finance business
acquisitions and to provide additional working capital. On June 3, 1997, in
connection with the IPO, the Company reincorporated from Delaware to Florida.

STOCK SPLIT

On June 3, 1997, in connection with the IPO, the Company effected a 1,000
for one stock split of each outstanding share of common stock. All share related
data in these consolidated financial statements have been adjusted retroactively
to give effect to this event as if it had occurred at the beginning of the
earliest period presented.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly-liquid investment instruments with
original maturities of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Office furniture and equipment are stated at cost less accumulated
depreciation. Effective March 1, 1996, the Company adopted the straight-line
method of depreciation for all newly acquired assets. All assets acquired prior
to March 1, 1996, are depreciated using an accelerated method. The effect of the
change in depreciation methods on newly acquired assets is not material to the
Company's financial statements. Depreciation is provided over the assets'
estimated useful lives of 7 years for office furniture and equipment and 5 years
for software. Leasehold improvements are stated at cost less accumulated
amortization using the straight-line method over the related remaining lease
terms which range from 2 to 9 years. Repair and maintenance costs which do not
extend the useful lives of the assets are expensed as incurred.

F-7
<PAGE> 57
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

GOODWILL

Goodwill relates to acquisitions made during the year ended February 28,
1998 (see Note 2), and is being amortized on a straight-line basis over thirty
years. Accumulated amortization as of February 28, 1998, was approximately
$17,000.

REVENUE RECOGNITION

The Company derives substantially all of its revenues from fees for
professional services, which are recognized as fee revenue as clients are
billed, generally over a 60- to 90-day period commencing with the initial
acceptance of a search. Fee revenue is presented net of adjustments to original
billings.

INCOME TAXES

The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. Deferred tax assets and liabilities are
measured by applying enacted statutory tax rates applicable to the future years
in which the related deferred tax assets or liabilities are expected to be
settled or realized. Provision for income taxes consists of the taxes payable
for the current period and the change during the period in deferred tax assets
and liabilities.

NET INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per common share was determined by dividing the net
income (loss) by the weighted average number of shares of common stock
outstanding during the year. Diluted net income (loss) per common and common
equivalent share was determined by dividing the net income (loss) by the
weighted average number of shares of common stock outstanding and dilutive
common equivalent shares from stock options using the treasury stock method and
from the convertible debt assuming conversion upon issuance. (See Note 4)

Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, shares of common stock issued by the Company during the 12 months
preceding the IPO have been included in the calculation of weighted average
shares of common stock outstanding as if the shares were outstanding for all
periods presented.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially expose the Company to concentration
of credit risk consist primarily of accounts receivable. Credit risk arising
from receivables is minimal due to the large number of clients comprising the
Company's customer base. The customers are concentrated primarily in the
Company's U.S. market areas. Credit losses in the past have not been material.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments as of February
28, 1997 and 1998, approximate fair value.

F-8
<PAGE> 58
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NEWLY ISSUED ACCOUNTING STANDARDS

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pension and Other Post Retirement Benefits" ("SFAS 132"). SFAS 132 revises
employers' disclosures about pension and other post retirement benefit plans.
SFAS 132 is effective for fiscal years beginning after December 15, 1997;
earlier application is encouraged. Management has implemented SFAS 132 for the
year ended February 28, 1998.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance
for capitalizing and expensing the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. Management believes the effect
of adopting SOP 98-1 would not have a material impact on the accompanying
consolidated financial statements.

RECLASSIFICATIONS

Certain prior year balances have been reclassified in order to conform to
the current year financial statement presentation.

(2) ACQUISITIONS

On February 27, 1998, the Company completed the acquisition by merger of
Ward Howell International, Inc. ("WHI"). WHI and its subsidiary were merged into
a wholly-owned subsidiary of the Company and WHI was the surviving corporation
in the merger. The purchase price was approximately $19.5 million including $7.6
million in notes payable and approximately 190,000 shares or $3.1 million of
common stock. The remaining $8.8 million of the purchase consideration was
payable to the former WHI stockholders as of February 28, 1998, and is accrued
for in the accompanying consolidated balance sheets. Also, additional
acquisition costs of approximately $3.1 million have been accrued for in the
accompanying consolidated balance sheets. The acquisition was accounted for as a
purchase with goodwill being recognized for the excess of the purchase amount
over the fair market value of the assets acquired.

On January 2, 1998, the Company acquired Chartwell Partners International,
Inc. ("CPI"). The acquisition cost was approximately $3.1 million and consisted
of approximately $1.4 million cash, a $1.25 million convertible subordinated
note payable, and approximately 26,000 shares or $424,000 of common stock.

F-9
<PAGE> 59
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The acquisition was accounted for as a purchase with goodwill being recognized
for the excess of the purchase amount over the fair market value of the assets
acquired.

Had the acquisitions of WHI and CPI been completed on March 1, 1996 and
1997, respectively, the combined pro forma unaudited results of operations would
have been as follows for the year ended February 28:

<TABLE>
<CAPTION>
1997 1998
------- -------
(IN THOUSANDS,
EXCEPT PER
SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Fee revenue, net............................................ $74,193 $91,730
Net income.................................................. 2,943 4,485
Basic net income per common share........................... 0.86 0.94
Diluted net income per common and common equivalent share... 0.86 0.90
</TABLE>

The unaudited pro forma combined results of operations for the years ended
February 28, 1997 and 1998 were prepared using the financial statements of WHI
and CPI for the years ended December 31, 1996 and 1997, respectively.

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of February 28:

<TABLE>
<CAPTION>
1997 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Office furniture and equipment.............................. $2,884 $3,934
Leasehold improvements...................................... 2,305 2,614
Software.................................................... 721 1,672
------ ------
5,910 8,220
Less: accumulated depreciation and amortization............. (1,726) (2,608)
------ ------
$4,184 $5,612
====== ======
</TABLE>

F-10
<PAGE> 60
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) LONG-TERM DEBT

Long-term debt consists of the following as of February 28:

<TABLE>
<CAPTION>
1997 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Notes payable to former WHI stockholders dated February 27,
1998, payable in three equal annual installments plus
accrued interest bearing interest at 5.0%................. $ -- $7,552
Convertible subordinated promissory note to a former CPI
stockholder, dated January 2, 1998, payable in three equal
annual installments plus accrued interest, bearing
interest at 6.75%, and convertible into shares of common
stock at each anniversary date at prices specified in the
asset purchase agreement.................................. -- 1,250
Term loan dated March 1996, payable in monthly principal
installments of $23,810 plus accrued interest secured by
accounts receivable, repaid in full during fiscal 1998.... 1,733 --
Notes payable due to former LAI stockholders, non-interest
bearing (interest imputed at 6.5%), payable in three equal
annual installments maturing through April 2000........... 304 254
Notes payable to former WHI stockholders bearing interest
from 5.8% to 9.5% maturing through February 2003.......... -- 69
------ ------
2,037 9,125
Less: current maturities of long-term debt.................. (387) (3,070)
------ ------
$1,650 $6,055
====== ======
</TABLE>

Maturities of long-term debt are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
- ----------- ------
<S> <C>
February 28, 1999........................................... $3,070
February 29, 2000........................................... 3,070
February 28, 2001........................................... 2,971
February 28, 2002........................................... 7
February 28, 2003........................................... 7
------
$9,125
======
</TABLE>

The Company maintains a line of credit which provides for maximum
borrowings of $6.5 million bearing interest at the bank's prime rate (8.5% at
February 28, 1998). Interest is payable monthly and the principal balance is due
upon demand. The line of credit is collateralized by accounts receivable with
borrowings limited to 75% of qualifying receivables. Additionally, the Company
is required to comply with certain working capital and liquidity covenants. The
Company was in compliance with the terms and covenants of its debt agreements as
of February 28, 1997 and 1998. No amounts were outstanding under the line of
credit as of February 28, 1997 or 1998. During fiscal 1998, the Company obtained
a commitment letter for credit facilities providing for maximum borrowings of
$15.0 million. Subsequent to year end, this commitment was increased to $25.0
million.

F-11
<PAGE> 61
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) INCOME TAXES

Significant components of the provision for income taxes are summarized as
follows:

<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1997 1998
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.................................... $ 662 $ 235 $2,931
State...................................... 166 56 893
----- ----- ------
828 291 3,824
----- ----- ------
Deferred:
Federal.................................... (591) (220) (683)
State...................................... (147) (56) (214)
----- ----- ------
(738) (276) (897)
----- ----- ------
$ 90 $ 15 $2,927
===== ===== ======
</TABLE>

The provision for income taxes differs from the amount computed by applying
the U.S. federal corporate tax rate to income before provision for income taxes
as follows:

<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate....... 35.0% 35.0% 34.0%
Meals, entertainment and dues.............. (101.0) (31.2) 2.1
Keyperson life insurance premiums.......... (6.6) (3.8) .5
State taxes, net of federal benefit........ (7.3) (2.8) 6.4
------ ----- -----
Effective income tax rate............... (79.9)% (2.8)% 43.0%
====== ===== =====
</TABLE>

F-12
<PAGE> 62
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax reporting purposes.
As of February 28, 1998, the Company has changed its method of reporting for
income taxes from the cash basis to the accrual basis. Significant components of
the Company's deferred tax assets and liabilities as of February 28, 1997 and
1998, are as follows:

<TABLE>
<CAPTION>
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accounts payable and accrued liabilities.................. $ 766 $ 124
Accrued compensation...................................... 4,539 --
Accrued rent.............................................. 415 408
Allowance for uncollectible accounts...................... -- 595
Deferred compensation..................................... 1,549 2,798
Net operating loss carryforward........................... -- 2,207
Other..................................................... 70 35
------- -------
Total deferred tax assets......................... 7,339 6,167
------- -------
Deferred tax liabilities:
Accrued compensation...................................... -- (117)
Accounts receivable, net.................................. (5,757) --
Liability for change in tax method........................ -- (1,241)
Prepaid expenses.......................................... (261) --
Property and equipment, net............................... (6) (623)
Other..................................................... -- (1)
------- -------
Total deferred tax liabilities.................... (6,024) (1,982)
------- -------
Net deferred tax asset............................ $ 1,315 $ 4,185
======= =======
</TABLE>

The Company has net operating loss carryforwards of approximately $5.5
million, expiring in 2018. Approximately $4.2 million of this amount relates to
the acquisition of WHI (see Note 2). The remaining $1.3 million relates to the
change from calendar to fiscal year end for tax reporting purposes.

(6) EMPLOYEE BENEFIT PLANS

PROFIT SHARING PLAN

The Company maintains a defined contribution retirement plan covering
substantially all employees. As of February 28, 1997 and 1998, the Company has
accrued for contributions totaling approximately $2,183,000 and $1,585,000,
respectively, which are included in accrued compensation in the accompanying
consolidated balance sheets.

DEFERRED COMPENSATION PLAN

The Company has deferred compensation agreements with 59 of its employees.
Under the terms of the agreements, employees elect to defer a portion of their
compensation to be received, together with accrued interest, upon termination of
the agreements, as defined. The present value of the obligation is recorded as
deferred compensation in the accompanying consolidated balance sheets. Interest
is earned on deferred amounts at a rate determined annually by the Company (8.5%
at February 28, 1998).

The Company is the beneficiary of whole life insurance policies with an
aggregate cash surrender value of approximately $2,255,000 and $4,363,000, and
an aggregate face amount of $14,725,000 and $13,450,000, as of February 28, 1997
and 1998, respectively. Proceeds from the policies are intended to fund the
deferred compensation agreements.

F-13
<PAGE> 63
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EMPLOYEE STOCK PURCHASE PLAN

The Company maintains an employee stock purchase plan (the "ESPP") covering
all eligible employees meeting length of service requirements as specified in
the ESPP. An aggregate of 200,000 shares of common stock is reserved for
issuance under the ESPP. Eligible employees are given the right to purchase
shares of common stock two times a year at a price equal to 85% of the then
current market price of the common stock.

STOCK OPTION PLANS

The Company has two employee stock option plans, the 1997 Omnibus Stock and
Incentive Plan (the "1997 Plan") and the 1998 Omnibus Stock and Incentive Plan
(the "1998 Plan"). Under the 1997 Plan and the 1998 Plan, incentive stock
options, nonqualified stock options, stock appreciation rights, performance
units, performance shares, restricted stock, restricted stock units and stock
not subject to restrictions may be granted to employees of the Company at prices
determined at the time of grant. Generally, incentive stock options,
nonqualified stock options, restricted stock and restricted stock units will
vest each year beginning on the first anniversary of the date of grant at 20-25%
per year and will expire after 10 years. An aggregate of 950,000 and 1,000,000
shares of common stock are reserved for issuance under the 1997 Plan and the
1998 Plan, respectively. Certain options under the 1997 Plan which have been
granted to executive officers of the Company vest immediately upon the Company's
stock price exceeding specified closing prices for a specified length of time as
determined by the Board of Directors. If the specified criteria are not met, the
options become 100% exercisable six years from the date of grant.

The Company also maintains a non-employee directors' stock plan (the
"Directors' Stock Plan"). An aggregate of 80,000 shares of common stock are
reserved for issuance under the Directors' Stock Plan. Among other provisions,
outside directors will annually receive options to purchase 5,000 shares of
common stock at an exercise price equal to the market price of the common stock
on the date of grant. The options will vest fully on the first anniversary of
the date of grant and expire after five years.

The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25 ("APB 25"), under which approximately
$51,000 of compensation expense has been recognized for options with an exercise
price less than the market price on the date of grant. In October 1995, the FASB
issued SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
which was effective for fiscal years beginning after December 15, 1995. SFAS 123
allows companies to continue following the accounting guidance of APB 25, but
requires pro forma disclosure of net income and earnings per share for the
effects on compensation expense had the accounting guidance of SFAS 123 been
adopted.

The Company adopted SFAS 123 for disclosure purposes during the year ended
February 28, 1998. For SFAS 123 purposes, the fair value of each option grant
has been estimated as of the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions; risk-free
interest rates ranging from 5.56 to 6.43 percent, depending on the date of
grant, expected life of 7 years, dividend rate of zero percent, and expected
volatility of 45 percent. Using these assumptions, the fair value of the stock
options granted in the year ended February 28, 1998, is approximately
$10,934,000, which would be amortized as compensation expense over the vesting
period of the options. Had compensation cost been determined consistent with
SFAS 123, utilizing the assumptions detailed above, the Company's net income and
net

F-14
<PAGE> 64
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

income per share, as reported would have been the following pro forma amounts
(in thousands except per share data):

<TABLE>
<CAPTION>
1998
------
<S> <C>
Net Income
As reported............................................... $3,880
Pro forma................................................. 3,399
Basic net income per common share
As reported............................................... $ 0.85
Pro forma................................................. 0.74
Diluted net income per common and common equivalent share
As reported............................................... $ 0.82
Pro forma................................................. 0.72
</TABLE>

A summary of the status of the Company's stock option plans as of February
28, 1998, and for the year then ended is presented in the table and narrative
below:

<TABLE>
<CAPTION>
1998
--------------------------
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding -- beginning of year........................... -- $ --
Granted.................................................... 1,211,615 15.97
--------- ------
Outstanding -- end of year................................. 1,211,615 $15.97
========= ======
</TABLE>

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-----------------------------------------------------
NUMBER WEIGHTED- WEIGHTED-
OUTSTANDING AVERAGE AVERAGE
AS OF REMAINING EXERCISE
RANGE OF EXERCISE PRICES FEBRUARY 28, 1998 CONTRACTUAL LIFE PRICE
- ------------------------ ----------------- ---------------- --------------
<S> <C> <C> <C>
$7.50............................... 67,500 9.3 years $ 7.50
12.00 -- 17.88...................... 538,500 9.4 years 13.12
19.13 -- 19.56...................... 605,615 10.0 years 19.45
</TABLE>

As of February 28, 1998, options to purchase an aggregate of 1,211,615
shares were outstanding with a weighted average fair value of $9.02. No options
were exercisable as of February 28, 1998. No options were granted during the
years ended February 29, 1996 or February 28, 1997.

F-15
<PAGE> 65
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(7) NET INCOME (LOSS) PER SHARE

The Company adopted SFAS 128, "Earnings per Share" during the year ended
February 28, 1998. Accordingly, basic and diluted earnings per share ("EPS") are
shown on the face of the accompanying consolidated statements of operations. The
following is a reconciliation of the numerator and denominator of basic EPS to
diluted EPS.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
---------------------------------------------------------------------------
FEBRUARY 29, 1996 FEBRUARY 28, 1997
------------------------------------ ------------------------------------
INCOME PER- INCOME PER-
(LOSS) SHARES SHARE (LOSS) SHARES SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------ ----------- ------------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Income available to common
stockholders............... $(202) 2,921 $(0.07) $(567) 3,199 $(0.18)
Effect of Dilutive
Securities Options......... -- -- -- --
Convertible promissory
note....................... -- -- -- --
----- ----- ----- -----
DILUTED EPS
Income available to common
stockholders + assumed
conversions................ $(202) 2,921 $(0.07) $(567) 3,199 $(0.18)
===== ===== ====== ===== ===== ======

<CAPTION>
FOR THE YEARS ENDED
------------------------------------
FEBRUARY 28, 1998
------------------------------------
INCOME PER-
(LOSS) SHARES SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
BASIC EPS
Income available to common
stockholders............... $3,880 4,573 $0.85
Effect of Dilutive
Securities Options......... -- 121
Convertible promissory
note....................... 14 57
------ -----
DILUTED EPS
Income available to common
stockholders + assumed
conversions................ $3,894 4,751 $0.82
====== ===== =====
</TABLE>

Options to purchase 605,615 shares of common stock at prices ranging from
$19.13 to $19.56 per share were outstanding as of February 28, 1998, but were
not included in the computation of diluted EPS because the options' exercise
prices were greater than the average market price of common shares.

(8) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain office equipment and real property under
noncancellable operating leases.

Future minimum lease payments under these leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
- ----------- --------------
(IN THOUSANDS)
<S> <C>
February 28, 1999......................................... $ 4,606
February 29, 2000......................................... 4,078
February 28, 2001......................................... 3,394
February 28, 2002......................................... 2,802
February 28, 2003......................................... 2,511
Thereafter................................................ 5,788
-------
$23,179
=======
</TABLE>

Rent expense totaled approximately $1,769,000, $2,947,000 and $3,396,000
during the years ended February 29, 1996, February 28, 1997, and February 28,
1998, respectively. Certain real property leases provide for periods of free
rent or escalating lease payments throughout the lease term. In accordance with
generally accepted accounting principles, rent expense is recognized ratably
over the term of the agreement.

F-16
<PAGE> 66
LAMALIE ASSOCIATES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LETTERS OF CREDIT

As of February 28, 1998, the Company has standby letters of credit totaling
approximately $417,000. The letters of credit, which are required by certain
lessors as security deposits, expire between October and December 1998.

LITIGATION

The Company is involved in various legal actions arising in the normal
course of business. While it is not possible to determine with certainty the
outcome of these matters, in the opinion of management, the eventual resolution
of these claims and actions outstanding will not have a material adverse effect
on the Company's financial position or results of operations.

F-17
<PAGE> 67

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Ward Howell International, Inc.:

We have audited the accompanying balance sheets of Ward Howell
International, Inc. (the "Company") as of December 31, 1997 and 1996, and the
related statements of operations, shareholders' equity and cash flows for each
of the years in the three year period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ward Howell International,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the years in the three year period ended December 31,
1997 in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

February 20, 1998

F-18
<PAGE> 68

WARD HOWELL INTERNATIONAL, INC.

BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 1,997,652 $ 1,437,234
Accounts receivable including client disbursements, net of
allowance for doubtful accounts of approximately
$1,287,000 in 1997 and $726,000 in 1996................ 7,183,214 7,226,873
Employee advances......................................... 712,236 346,149
Due from joint venture (note 2)........................... 1,122 --
Deferred income taxes (note 6)............................ 544,744 285,647
Prepaid expenses and other current assets................. 45,021 107,174
----------- -----------
Total current assets.............................. 10,483,989 9,403,077
----------- -----------
Fixed assets, at cost:
Furniture, fixtures and equipment......................... 1,713,057 1,598,374
Computers and related costs............................... 2,055,770 1,821,307
Leasehold improvements.................................... 476,456 262,769
Assets acquired under capital leases...................... 103,746 103,746
----------- -----------
4,349,029 3,786,196
Less accumulated depreciation and amortization............ (3,460,549) (3,179,067)
----------- -----------
Net fixed assets.................................. 888,480 607,129
Investment in joint ventures (note 1)....................... 96,301 67,028
Other....................................................... 292,536 344,698
----------- -----------
Total assets...................................... $11,761,306 $10,421,932
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable to related parties (note
2)..................................................... $ 29,448 $ 33,021
Current portion of installment notes payable (note 2)..... 39,000 50,069
Due to joint venture (note 2)............................. -- 25,022
Accounts payable and accrued liabilities.................. 699,125 549,373
Accrued profit-sharing contribution and bonuses (note
4)..................................................... 4,102,834 3,578,531
Accrued commissions....................................... 4,962,329 4,176,107
Income taxes payable...................................... 150,560 40,846
----------- -----------
Total current liabilities......................... 9,983,296 8,452,969
Notes payable to related parties, net of current portion
(note 2).................................................. 53,923 42,967
Installment notes payable, net of current portion (note
2)........................................................ 32,931 78,565
Deferred rent (note 3)...................................... 263,224 305,418
Noncurrent deferred income taxes (note 6)................... 64,252 52,104
----------- -----------
Total liabilities................................. 10,397,626 8,932,023
Shareholders' equity:
Common stock, $1 par value; 5,000 shares authorized; 2,146
shares and 2,136 shares issued and outstanding in 1997
and 1996, respectively (note 7)........................ 2,146 2,136
Additional paid-in capital................................ 1,180,598 1,170,248
Retained earnings......................................... 252,867 487,599
----------- -----------
1,435,611 1,659,983
Less:
Shareholders' notes receivable (note 5)................ (71,931) (170,074)
----------- -----------
Total shareholders' equity........................ 1,363,680 1,489,909
Commitments and contingencies (notes 3 and 8)...............
----------- -----------
Total liabilities and shareholders' equity........ $11,761,306 $10,421,932
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-19
<PAGE> 69

WARD HOWELL INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Fee revenues....................................... $26,498,292 $25,137,840 $17,063,083
----------- ----------- -----------
Operating expenses:
Compensation and benefits........................ 23,216,196 22,370,604 15,318,795
General and administrative expenses (notes 3 and
4)............................................ 3,701,819 2,078,613 2,271,293
----------- ----------- -----------
Total operating expenses................. 26,918,015 24,449,217 17,590,088
----------- ----------- -----------
Earnings (loss) from operations.......... (419,723) 688,623 (527,005)
Equity in net income of joint ventures............. 43,673 14,335 8,193
Other income (expense):
Interest income (note 5)......................... 52,695 33,936 31,021
Interest expense (note 2)........................ (11,780) (16,512) (5,868)
----------- ----------- -----------
40,915 17,424 25,153
----------- ----------- -----------
Earnings (loss) before income taxes...... (335,135) 720,382 (493,659)
Income tax (expense) benefit (note 6).............. 100,403 (382,445) (111,980)
----------- ----------- -----------
Net earnings (loss)...................... $ (234,732) $ 337,937 $ (381,679)
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-20
<PAGE> 70

WARD HOWELL INTERNATIONAL, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
ADDITIONAL SHAREHOLDERS' TOTAL
COMMON PAID-IN RETAINED TREASURY NOTES SHAREHOLDERS'
STOCK CAPITAL EARNINGS STOCK RECEIVABLE EQUITY
------ ---------- --------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994...... $1,664 $ 681,728 $ 531,341 -- $(250,795) $ 963,938
Repurchase of 320 shares of
treasury stock.................. -- -- -- (331,520) 219,483 (112,037)
Issuance of 320 shares of treasury
stock........................... -- -- -- 331,520 (200,000) 131,520
Payment from shareholders......... -- -- -- -- 42,408 42,408
Net loss.......................... -- -- (381,679) -- -- (381,679)
------ ---------- --------- -------- --------- ----------
Balance at December 31, 1995...... 1,664 681,728 149,662 -- (188,904) 644,150
Payment from shareholders......... -- -- -- -- 60,270 60,270
Issuance of 472 shares of common
stock........................... 472 488,520 -- -- (41,440) 447,552
Net earnings...................... -- -- 337,937 -- -- 337,937
------ ---------- --------- -------- --------- ----------
Balance at December 31, 1996...... 2,136 1,170,248 487,599 -- (170,074) 1,489,909
Issuance of 10 shares of common
stock........................... 10 10,350 -- -- -- 10,360
Repurchase of common stock........ -- -- -- (142,968) -- (142,968)
Issuance of treasury stock........ -- -- -- 142,968 -- 142,968
Payment from shareholders......... -- -- -- -- 98,143 98,143
Net loss.......................... -- -- (234,732) -- -- (234,732)
------ ---------- --------- -------- --------- ----------
Balance at December 31, 1997...... $2,146 $1,180,598 $ 252,867 -- $ (71,931) $1,363,680
====== ========== ========= ======== ========= ==========
</TABLE>

See accompanying notes to financial statements.

F-21
<PAGE> 71

WARD HOWELL INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)..................................... $ (234,732) $ 337,937 $ (381,679)
---------- ---------- -----------
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Equity in net income of joint venture................ (43,673) (14,335) (8,193)
Depreciation and amortization........................ 281,482 213,787 233,514
Provision for doubtful accounts...................... 1,173,878 965,625 361,564
Deferred rent........................................ (42,194) (78,971) 30,210
Deferred income taxes................................ (246,949) 292,791 (203,430)
Changes in operating assets and liabilities:
Accounts receivable................................ (1,130,219) (3,555,707) (1,145,366)
Employee advances.................................. (251,092) 163,143 (49,121)
Due from joint venture............................. (1,122) 29,600 (29,600)
Prepaid expenses and other current assets.......... 62,153 (61,339) 80,189
Prepaid income taxes............................... -- 37,820 (67,252)
Other.............................................. 52,162 (42,967) (25,445)
Accounts payable and accrued liabilities........... 149,752 1,295,333 57,643
Accrued commissions................................ 786,222 579,323 769,694
Accrued profit sharing contribution and bonuses.... 524,303 1,170,350 159,535
Income taxes payable............................... 109,714 40,846 --
Due to joint ventures.............................. (25,022) (84,777) (161,881)
Other long-term liabilities........................ -- (3,227) (67,162)
---------- ---------- -----------
Total adjustments............................... 1,399,395 947,295 (65,101)
---------- ---------- -----------
Net cash provided by (used in) operating
activities.................................... 1,164,663 1,285,232 (446,780)
---------- ---------- -----------
Cash flows from investing activities:
Distributions from ventures............................. 14,400 -- --
Purchases of fixed assets............................... (562,833) (179,102) (175,082)
---------- ---------- -----------
Net cash used in investing activities........... (548,433) (179,102) (175,082)
---------- ---------- -----------
Cash flows from financing activities:
Sales of treasury stock................................. $ 27,973 $ -- $ 131,520
Purchases of stock for treasury......................... (102,564) -- (112,037)
Payments on notes payable, net.......................... (89,724) (145,606) (51,215)
Shareholders' payment on notes receivable............... 98,143 60,270 42,408
Payments on capital lease obligations................... -- (10,107) (10,737)
Sale of common stock.................................... 10,360 277,060 --
---------- ---------- -----------
Net cash provided by (used in) financing
activities.................................... (55,812) 181,617 (61)
---------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents................................... 560,418 1,287,747 (621,923)
Cash and cash equivalents, beginning of year.............. 1,437,234 149,487 771,410
---------- ---------- -----------
Cash and cash equivalents, end of year.................... $1,997,652 $1,437,234 $ 149,487
========== ========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest............................................. $ 5,850 $ 18,170 $ 9,424
========== ========== ===========
Taxes................................................ $ 84,532 $ 71,062 $ 177,600
========== ========== ===========
Noncash financing activities:
Shareholder notes receivable, net....................... -- 41,440 19,483
Note payable for repurchase of common stock............. 40,404 -- --
Receivable from sale of common stock.................... $ 114,995 $ 170,492 $ --
========== ========== ===========
</TABLE>

See accompanying notes to financial statements.

F-22
<PAGE> 72

WARD HOWELL INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
(1) ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Organization and Basis of Presentation

Ward Howell International, Inc. (the "Company") was incorporated in 1951 in
the State of Connecticut. The Company is part of the Ward Howell International
Group, which unites 20 autonomous firms worldwide into one organization for the
purpose of sharing resources, information and conducting international executive
searches. These searches relate to all management disciplines in business,
industry, government, education, health care and foundations. The Company has
offices in New York, Barrington, Chicago, Dallas, Encino, Houston, Stamford,
Atlanta, Phoenix and Wisconsin.

The Company accounts for its investments in joint ventures using the equity
method of accounting. At December 31, 1996 and 1995, the Company had a 30%
interest in Ward Howell Russia, Inc., which in turn held a 29% interest in Ward
Howell International, Holdings, Inc. In 1997 Ward Howell Russia, Inc. was
dissolved and the Company's interest in Ward Howell Russia, Inc. became a direct
8.7% interest in Ward Howell International Holdings, Inc. as of December 31,
1997.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company generates substantially all of its revenues from fees for
professional services, which are recognized as fee revenue as clients are
billed, generally over a 60- to 90- day period commencing with the initial
acceptance of a search. Fee revenue is presented net of adjustments to original
billings.

Depreciation and Amortization

Depreciation is provided using the straight-line method over the estimated
useful lives of the assets, which generally approximate five years.

Leasehold improvements are amortized over the terms of the related leases
or the estimated useful lives of the improvements, whichever is less.

Income Taxes

Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

Cash Equivalents

The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.

F-23
<PAGE> 73
WARD HOWELL INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS CONTINUED

Use of Estimates

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make a number of estimates
and assumptions that affect the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the 1996 and 1995 financial statements have been
reclassified to conform with the 1997 financial statement presentation.

(2) RELATED PARTY TRANSACTIONS

Notes payable to related parties represent amounts due to former
shareholders for repurchases of common stock. The notes are payable in annual
installments with maturities through 2003, and bear interest at rates ranging
from 5.8% to 9.50% at December 31, 1997. Interest expense on notes payable
aggregated approximately $7,000 in 1997, $8,000 in 1996, and $6,000 in 1995
including approximately $5,000 that was accrued at both December 31, 1997 and
1996. In addition, the Company has outstanding installment notes payable that
have been guaranteed by certain shareholders. These notes are payable in monthly
installments through 1999 and bear interest at the prime rate plus one and
one-half percent. At December 31, 1997, the prime rate was 8.50%.

Aggregate future maturities of notes payable as of December 31, 1997 are
approximately as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 AMOUNT
- ----------------------- --------
<S> <C>
1998................................................. $ 68,000
1999................................................. 55,000
2000................................................. 12,000
2001................................................. 7,000
2002................................................. 7,000
2003................................................. 6,000
--------
$155,000
========
</TABLE>

Included in due to joint ventures are commissions owed to the joint
ventures and fees collected on behalf of the joint ventures.

(3) RENT EXPENSE AND COMMITMENTS

The Company leases its office facilities under agreements that provide for
scheduled rent increases and rent abatements. Rent expense is recognized on a
straight-line basis, rather than in accordance with lease payment schedules, for
purposes of recognizing a consistent annual rent expense. Scheduled base rent
increases and the effects of rent abatements are spread evenly over the terms of
the respective leases in order to effect a straight-line rent expense amount
over the term of the related leases.

F-24
<PAGE> 74
WARD HOWELL INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS CONTINUED

Noncancelable leases for office space expire on various dates through 2003.
The following is a schedule as of December 31, 1997 of approximate future
minimum lease payments:

<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ----------
<S> <C>
1998........................................................ $ 930,000
1999........................................................ 890,000
2000........................................................ 762,000
2001........................................................ 602,000
2002........................................................ 602,000
2003........................................................ 139,000
----------
$3,925,000
==========
</TABLE>

The leases provide for additional payments for real estate taxes and other
costs.

In 1997, 1996 and 1995, rent expense aggregated approximately $1,059,000,
$1,028,000 and $1,057,000, respectively.

(4) PROFIT SHARING 401(K) PLAN

The Company has a profit-sharing 401(k) plan that covers substantially all
employees. Contributions to the plan by the Company are limited to 15% of
participants' aggregate annual compensation with limitations on contributions
for each participant of 25% of compensation not to exceed $30,000. Excess
amounts (amounts in excess of $30,000) may be paid in the form of bonuses.
Profit-sharing expense pertaining to the 401(k) plan for 1997, 1996 and 1995,
net of forfeitures, was approximately $953,500, $1,156,600 and $1,057,000,
respectively.

(5) SHAREHOLDERS' NOTES RECEIVABLE

Shareholders' notes receivable represent amounts due for the purchase by
shareholders of common stock. The notes are due in annual installments with
maturities through 1999, and bear interest at 10% per annum.

(6) INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 1997, 1996
and 1995 is composed of the following components:

<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
Current:
Federal............................................ $ 86,196 $133,154 $ --
State.............................................. 60,349 61,460 66,900
Deferred............................................. (246,948) 187,831 (178,880)
--------- -------- ---------
$(100,403) $382,445 $(111,980)
========= ======== =========
</TABLE>

F-25
<PAGE> 75
WARD HOWELL INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS CONTINUED

Deferred income taxes included in the respective balance sheets reflect the
net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts reported for
income tax purposes. A schedule of the temporary differences and the related tax
effect follows:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Allowance for doubtful accounts............................. $544,744 $297,660
Depreciation and amortization............................... (64,252) (52,104)
Accrued lease termination costs............................. -- 1,323
Tax credit/other carryforward............................... -- (13,336)
-------- --------
$480,492 $233,543
======== ========
</TABLE>

The Company's deferred tax assets and liabilities as of December 31, 1997
and 1996 consist of the following:

<TABLE>
<CAPTION>
1997 1996
--------------------- ---------------------
CURRENT NONCURRENT CURRENT NONCURRENT
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets..................................... $544,744 $ -- $298,983 $ --
Liabilities................................ -- (64,252) (13,336) (52,104)
-------- -------- -------- --------
Net deferred tax assets (liabilities)...... $544,744 $(64,252) $285,647 $(52,104)
======== ======== ======== ========
</TABLE>

In 1997, 1996 and 1995, the difference between the effective tax rate and
the Federal statutory rate is due primarily to Federal graduated rates, state
and local taxes and certain meals and entertainment expenses that are not
deductible for tax purposes.

(7) COMMON STOCK

Common stock is issued at a price of $1,036 per share or book value per
share, as defined, whichever is greater. The book value per share at December
31, 1997 and 1996 was $669 and $777, respectively. For purposes of calculating
book value per share, shareholders' notes receivable are not deducted from
shareholders' equity. Upon a shareholder's termination of employment or the
occurrence of certain other events, the Company has the first right and option
to purchase the common stock held by the shareholder at a price of $1,036 per
share or book value per share, as defined, whichever is greater.

(8) SHORT-TERM BORROWINGS

The Company has available a line of credit with a bank in the amount of
$800,000. Borrowings under this line of credit were secured by the Company's
accounts receivable and carried interest at the rate of prime plus 1%. There
were no such borrowings at December 31, 1997 and 1996.

F-26
<PAGE> 76

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholder of
Chartwell Partners International, Inc.:

We have audited the accompanying statement of operations of Chartwell
Partners International, Inc. (a California corporation) for the year ended
December 31, 1997, and the related statement of cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Chartwell
Partners International, Inc. for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Tampa, Florida,
April 8, 1998

F-27
<PAGE> 77

CHARTWELL PARTNERS INTERNATIONAL, INC.

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
<S> <C>
Fee Revenue, net............................................ $3,428,995
Operating Expenses:
Compensation and benefits................................. 2,926,011
General and administrative................................ 544,554
----------
Total operating expenses.......................... 3,470,565
----------
Operating Loss.............................................. (41,570)
Interest Income, net........................................ 25,700
----------
Loss Before Provision for Income Taxes...................... (15,870)
Provision for Income Taxes.................................. 4,000
----------
Net Loss.................................................... $ (19,870)
==========
Basic and Diluted Loss Per Share............................ $ (1.99)
==========
Weighted Average Shares Outstanding......................... 10,000
==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-28
<PAGE> 78

CHARTWELL PARTNERS INTERNATIONAL, INC.

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (19,870)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization.......................... 59,142
Changes in assets and liabilities:
Accounts receivable.................................. 1,022
Accounts payable and accrued liabilities............. 77,043
Accrued compensation................................. 191,639
----------
Net cash provided by operating activities......... 308,976
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (56,817)
----------
Net cash used in investing activities............. (56,817)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt.............................. (51,667)
Dividends paid............................................ (10,000)
----------
Net cash used in financing activities............. (61,667)
----------
Net Increase in Cash and Cash Equivalents................... 190,492
Cash and Cash Equivalents, beginning of year................ 14,664
----------
Cash and Cash Equivalents, end of year...................... $ 205,156
==========
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest............................................... $ 4,457
Income taxes........................................... $ 4,000
</TABLE>

The accompanying notes are an integral part of this statement.

F-29
<PAGE> 79

CHARTWELL PARTNERS INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION

Chartwell Partners International, Inc. (the Company) is an executive search
firm specializing in the recruitment of executives on behalf of its clients. The
Company contracts with its clients, primarily on a retainer basis, to provide
consulting advice on the identification, evaluation, attraction, and
recommendation of qualified candidates for specific positions.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investment instruments with
original maturities of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Office furniture and equipment is depreciated using the straight-line
method of depreciation over its estimated useful lives of five years. Computer
equipment is depreciated using the straight-line method of depreciation over its
estimated useful lives of two and one-half years. Repair and maintenance costs
which do not extend the useful lives of the related assets are expensed as
incurred.

REVENUE RECOGNITION

The Company derives substantially all of its revenues from professional
services, which are recognized as fee revenue as clients are billed, generally
over a 60- to 90-day period commencing with the initial acceptance of a search.
Fee revenue is presented net of adjustments to original billings.

INCOME TAXES

The Company reports its earnings under the provisions of Subchapter S of
the Internal Revenue Code. Accordingly, net income is reported through the
stockholder's individual income tax return, and the resulting federal tax
liability is the responsibility of the individual stockholder.

The provision for income taxes relates to state income taxes owed by the
Company for the year ended December 31, 1997.

NET LOSS PER SHARE

Net loss per share is determined by dividing the net loss by the weighted
average number of shares of common stock outstanding during the period. There
were no common equivalent shares outstanding during the year ended December 31,
1997.

F-30
<PAGE> 80
CHARTWELL PARTNERS INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CONCENTRATION OF CREDIT RISK

For the year ended December 31, 1997, the Company derived approximately 10
percent of its revenues from a single customer.

NEWLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share"
(SFAS 128). SFAS 128 establishes new standards for computing and presenting
earnings per share (EPS). Specifically, SFAS 128 replaces the presentation of
primary EPS with a presentation of basic EPS, requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. SFAS 128 is effective for financial statements issued
for periods ending after December 15, 1997; earlier application is not
permitted. Management has implemented SFAS 128 for the year ended December 31,
1997. Because the Company does not have a complex capital structure, the
implementation of SFAS No. 128 had no impact on the financial statements.

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pensions and Other Postretirement Benefits" (SFAS 132). SFAS 132 revises
employers' disclosures about pension and other postretirement benefit plans.
SFAS 132 is effective for fiscal years beginning after December 15, 1997;
earlier application is encouraged. Management has implemented SFAS 132 for the
year ended December 31, 1997.

2. EMPLOYEE BENEFIT PLANS:

DEFINED CONTRIBUTION 401(K) PROFIT SHARING PLAN

The Company maintains a defined contribution 401(k) profit sharing plan.
For the year ended December 31, 1997, the Company did not make a contribution to
this plan.

MONEY PURCHASE PENSION PLAN

The Company maintains a money purchase pension plan. For the year ended
December 31, 1997, the Company made a contribution totaling approximately
$68,000, which is reflected in compensation and benefits expense in the
accompanying statement of operations.

3. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases certain office space under a non-cancelable operating
lease. Aggregate future minimum lease payments under this lease are
approximately $99,000 and relate to the year ending December 31, 1998.

Rent expense totaled approximately $92,000 for the year ended December 31,
1997.

4. SUBSEQUENT EVENT:

On January 2, 1998, the Company entered into an asset sale agreement with
Lamalie Associates, Inc. (LAI) to sell certain assets of the Company. The sales
price was approximately $3,100,000 and was paid with approximately $1,400,000 of
cash, a $1,250,000 convertible subordinated note and LAI's common stock.

F-31
<PAGE> 81

LAMALIE ASSOCIATES, INC.

INTRODUCTION TO UNAUDITED
PRO FORMA COMBINED STATEMENT OF OPERATIONS

The following unaudited pro forma combined statement of operations for the
year ended February 28, 1998, has been prepared to reflect the results of
operations of Lamalie Associates, Inc. ("LAI" or "the Company") as if the
acquisitions of Ward Howell International, Inc. ("WHI") in February 1998 and
Chartwell Partners International, Inc. ("CPI") in January 1998 were completed on
March 1, 1997.

WHI ACQUISITION

The acquisition of WHI was treated under the purchase method of accounting
for financial reporting purposes. The Company acquired WHI for approximately
$19.5 million. The purchase consideration consisted of (i) approximately $8.8
million cash, (ii) $7.6 million in notes payable over three years, accruing
interest on the unpaid balance at the rate of 5.0 percent per annum, and (iii)
approximately 190,000 shares or $3.1 million of common stock. Approximately $8.8
million of the purchase consideration was derived from the proceeds of the
Company's IPO which had been invested in short-term investment securities since
July 1997. Also, additional acquisition costs of approximately $3.1 million have
been accrued for in the consolidated balance sheets.

CPI ACQUISITION

The acquisition of CPI was treated under the purchase method of accounting
for financial reporting purposes. The Company acquired CPI for approximately
$3.1 million. The purchase consideration consisted of (1) approximately $1.4
million cash, (2) a convertible subordinated promissory note of the Company in
the principal amount of $1.25 million, payable over three years, accruing
interest on the unpaid balance at the rate of 6.75% per annum and convertible
into shares of the Company's common stock at each anniversary date at the prices
specified in the asset purchase agreement, and (3) approximately 26,000 shares
of the Company's common stock. Approximately $1.4 million of the purchase
consideration was derived from the proceeds of the Company's IPO which had been
invested in short-term investment securities since July 1997.

The Company believes that the assumptions used in preparing the unaudited
pro forma combined statement of operations contained herein provide a reasonable
basis on which to present the unaudited pro forma combined financial data. The
unaudited pro forma combined statement of operations is provided for
informational purposes only and should not be construed to be indicative of the
results of operations or financial position of the Company had the transactions
occurred on the date indicated and are not intended to project the Company's
results of operations for any future period or as of any future date. The
unaudited pro forma combined statement of operations should be read in
conjunction with the separate historical financial statements of the Company,
WHI and CPI and in conjunction with the related assumptions and notes to this
unaudited pro forma combined statement of operations. The historical financial
statements of WHI and CPI for the year ended December 31, 1997, were used in
preparing the unaudited pro forma combined statement of operations for the year
ended February 28, 1998.

The unaudited pro forma combined statement of operations does not reflect
the effect of expected decreases in expenses as a result of cost savings which
may be achieved through facilities, technology and administrative integration.
Likewise, this statement does not reflect expected increases in levels of
expenses as a result of planned upgrades to WHI's and CPI's management
information systems. Such items are not reflected because they are not factually
determinable or estimable.

F-32
<PAGE> 82

LAMALIE ASSOCIATES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1998

<TABLE>
<CAPTION>
BUSINESSES
ACQUIRED
---------------- ACQUISITION PRO FORMA
LAI CPI WHI ADJUSTMENTS COMBINED
------- ------ ------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Fee revenue, net........................ $61,803 $3,429 $26,498 $ -- $91,730
Operating expenses:
Compensation and benefits............. 46,513 2,926 23,216 (3,602)(a) 69,053
General and administrative expenses... 8,663 545 3,702 -- 12,910
Goodwill amortization................. 17 -- -- 809(b) 826
------- ------ ------- ------- -------
Total operating expenses...... 55,193 3,471 26,918 (2,793) 82,789
------- ------ ------- ------- -------
Operating income (loss)................. 6,610 (42) (420) 2,793 8,941
Interest income (expense), net.......... 197 26 85 (957)(c) (649)
------- ------ ------- ------- -------
Income (loss) before provision for
income taxes.......................... 6,807 (16) (335) 1,836 8,292
Provision for income taxes.............. 2,927 4 (100) 976(d) 3,807
------- ------ ------- ------- -------
Net income (loss)............. $ 3,880 $ (20) $ (235) $ 860 $ 4,485
======= ====== ======= ======= =======
Basic earnings per share................ $ 0.85 $ 0.94
======= =======
Weighted average common shares
outstanding........................... 4,573 4,783
======= =======
Diluted earnings per share.............. $ 0.82 $ 0.90
======= =======
Weighted average common and common
equivalent shares outstanding......... 4,751 4,961
======= =======
</TABLE>

See Notes to Unaudited Pro Forma Combined Statement of Operations.

F-33
<PAGE> 83

LAMALIE ASSOCIATES, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

(a) To reflect the elimination of that portion of consultant compensation that
exceeds the amount which would have been paid had the WHI and CPI
consultants been paid under the Company's compensation plan for consultants.

(b) To reflect the increase in amortization expense related to the goodwill
recorded under the purchase method of accounting. The Company amortizes
goodwill over 30 years.

(c) To reflect the elimination of interest income foregone in connection with
the cash used in the acquisitions and the increase in interest expense for
the notes payable issued in connection with the acquisitions bearing
interest at rates ranging from 5.00% to 6.75%.

(d) To reflect the increase in income tax expense based on the pro forma
adjustments to income before provision for income taxes based on the
Company's effective tax rate after consideration of certain portions of
goodwill which are not deductible for income tax purposes.

F-34
<PAGE> 84
Center of page lists "LAI Ward Howell is a Knowledge-Based Firm" followed
by the company's mission statement "committed to providing comprehensive
consulting services aimed specifically at fulfilling our clients' leadership
needs. Our firm has been built on the collective experiences of our consultants
and their ability to understand the dynamic changes taking place in industry
today. We save major corporations and emerging companies on a global basis". The
background is the hemisphere of a globe on a light blue background, which
carries over from the inside front cover.
<PAGE> 85

======================================================

No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company, the Selling Stockholders or any
Underwriter. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any security other than the shares of Common
Stock offered hereby, nor does it constitute an offer to sell or solicitation of
an offer to buy any of the securities offered hereby to any person in any
jurisdiction in which it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 12
Price Range of Common Stock........... 12
Dividend Policy....................... 12
Capitalization........................ 13
Selected Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 21
Management............................ 32
Principal and Selling Stockholders.... 40
Certain Transactions.................. 42
Description of Capital Stock.......... 42
Shares Eligible for Future Sale....... 45
Underwriting.......................... 46
Legal Matters......................... 47
Experts............................... 47
Additional Information................ 48
Index to Financial Statements......... F-1
</TABLE>

======================================================
======================================================
3,000,000 SHARES

(LAI WARD HOWELL LOGO)
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
ROBERT W. BAIRD & CO.
INCORPORATED

THE ROBINSON-HUMPHREY
COMPANY

J.C. BRADFORD & CO.
, 1998

======================================================
<PAGE> 86

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee.................... $ 21,309
NASD filing fee....................... 7,723
Nasdaq listing fees................... 17,500
Printing and engraving expenses....... 150,000*
Accounting fees and expenses.......... 50,000*
Legal fees and expenses............... 100,000*
Transfer Agent's fees and expenses.... 5,000*
Miscellaneous......................... 50,000*
--------
Total....................... $401,532*
========
</TABLE>

- ---------------

* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Florida Business Corporation Act, as amended (the "Florida Act"),
provides that, in general, a business corporation may indemnify any person who
is or was a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director
or officer of the corporation, against liability incurred in connection with
such proceeding, including any appeal thereof, provided certain standards are
met, including that such officer or director acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and provided further that, with respect to any criminal action
or proceeding, the officer or director had no reasonable cause to believe his or
her conduct was unlawful. In the case of proceedings by or in the right of the
corporation, the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he or she is or was a director or officer of the corporation
against expenses and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of such proceeding, including any
appeal thereof, provided that such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim as to which such person is adjudged liable unless a court of competent
jurisdiction determines upon application that such person is fairly and
reasonably entitled to indemnity. To the extent that any officers or directors
are successful on the merits or otherwise in the defense of any of the
proceedings described above, the Florida Act provides that the corporation is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the Florida Act further
provides that, in general, indemnification or advancement of expenses shall not
be made to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, a circumstance under
which the director has voted for or assented to a distribution made in violation
of the Florida Act or the corporation's articles of incorporation; or (iv)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a stockholder.

II-1
<PAGE> 87

Under the terms of the Company's Articles of Incorporation and Bylaws, the
Company may indemnify any director, officer or employee or any former director,
officer or employee to the fullest extent permitted by law.

The Company has entered into agreements with certain of the directors and
officers of the Company pursuant to which the Company agrees to indemnify each
such person against claims, liabilities, damages, expenses, losses, costs,
penalties or amounts paid in settlement incurred by such person and arising out
of his capacity or service as a director, officer, employee, stockholder,
partner, consultant, independent contractor and/or agent of the Company. In
addition, each such person generally shall be entitled to an advance of expenses
to meet the obligations indemnified against. For the benefit and on behalf of
each of its directors, the Company maintains insurance that provides coverage
with respect to liabilities that may arise under the statutory provisions
referred to above and other liabilities as well, including certain liabilities
that could arise under the Securities Act of 1933 and against which such persons
might not be indemnified by the Company.

The underwriters also will agree to indemnify the directors and officers of
the Company against certain liabilities as set forth in the Underwriting
Agreement (see Exhibit 1).

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the Company has issued 1,012,000 shares of
Common Stock to 32 of its current and former professional employees in 44
transactions for an aggregate of $1,475,009 and 215,384 shares to consultants in
connections with the acquisitions of WHI and CPI. The Company believes that all
such transactions were exempt from registration pursuant to Section 4(2) and/or
Rule 701 under the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

II-2
<PAGE> 88

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.9* -- 1998 Omnibus Stock and Incentive Plan
10.10(1) -- Employment Agreement for Mr. Rothschild+
10.11(2) -- Form of Indemnification Agreement entered into with certain
Directors and Officers
10.12(1) -- Directors' Deferral Plan
10.13(3) -- Employment Agreement with Robert L. Pearson dated October 8,
1997
10.14(4) -- Form of Employment Agreement for former Ward Howell
International, Inc. Shareholders
21.1 -- Subsidiaries of the Registrant
23.1* -- Consent of Counsel to the Company (included in Exhibit 5)
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of KPMG Peat Marwick LLP
27 -- Financial Data Schedule
</TABLE>

- ---------------

(1) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (File No. 333-26027),
originally filed April 29, 1997, as amended and as effective July 1, 1997.
(2) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended May 31,
1997, filed August 8, 1997.
(3) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended November
30, 1997, filed January 13, 1998.
(4) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's current Report on Form 8-K filed March 13, 1998.
+ Confidential treatment has been granted with respect to portions of this
Exhibit.

* To be filed by amendment

(b) Financial Statement Schedules

Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14), or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt deliver to each purchaser.

II-3
<PAGE> 89

The undersigned registrant hereby undertakes that:

i. For purposes of determining any liability under the Securities act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

ii. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 90

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida,
on the 7th day of May, 1998.

LAMALIE ASSOCIATES, INC.

By: /s/ ROBERT L. PEARSON
------------------------------------
Robert L. Pearson
President and Chief Executive
Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers and
directors of Lamalie Associates, Inc. (the "Company"), a Delaware corporation,
for himself and not for one another, does hereby constitute and appoint Robert
L. Pearson, Jack P. Wissman and Philip R. Albright, and each of them, a true and
lawful attorney in his name, place and stead, in any and all capacities, to sign
his name to any and all amendments, including post-effective amendments, to this
registration statement, and to sign a Registration Statement pursuant to Section
462(b) of the Securities Act of 1933, and to cause the same (together with all
Exhibits thereto) to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do and
perform any act and thing necessary and proper to be done in the premises, as
fully to all intents and purposes as the undersigned could do if personally
present, and each of the undersigned for himself hereby ratifies and confirms
all that said attorneys or any one of them shall lawfully do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ ROBERT L. PEARSON President, Chief Executive May 7, 1998
- ----------------------------------------------------- Officer and Director
Robert L. Pearson (Principal Executive Officer)

/s/ JACK P. WISSMAN Executive Vice President, May 7, 1998
- ----------------------------------------------------- Chief Financial Officer
Jack P. Wissman (Principal Financial Officer)

/s/ PHILIP R. ALBRIGHT Vice President, May 7, 1998
- ----------------------------------------------------- Finance and Controller
Philip R. Albright (Principal Accounting Officer)

/s/ JOE D. GOODWIN Director May 7, 1998
- -----------------------------------------------------
Joe D. Goodwin

/s/ RODERICK C. GOW Director May 7, 1998
- -----------------------------------------------------
Roderick C. Gow
</TABLE>

II-5
<PAGE> 91

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ RAY J. GROVES Director May 7, 1998
- -----------------------------------------------------
Ray J. Groves

/s/ JOHN F. JOHNSON Director May 7, 1998
- -----------------------------------------------------
John F. Johnson

/s/ RICHARD W. POGUE Director May 7, 1998
- -----------------------------------------------------
Richard W. Pogue

/s/ JOHN C. POPE Director May 7, 1998
- -----------------------------------------------------
John C. Pope

/s/ JOHN S. ROTHSCHILD Director May 7, 1998
- -----------------------------------------------------
John S. Rothschild

/s/ DAVID L. WITTE Director May 7, 1998
- -----------------------------------------------------
David L. Witte
</TABLE>

II-6
<PAGE> 92

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Lamalie Associates, Inc.:

We have audited in accordance with generally accepted auditing standards,
the financial statements of Lamalie Associates, Inc. included in this
registration statement and have issued our report thereon dated April 8, 1998.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index in item
16(b) is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

Tampa, Florida,
April 8, 1998

II-7
<PAGE> 93

SCHEDULE II

LAMALIE ASSOCIATES, INC.

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO AMOUNT ADDED BALANCE AT
BEGINNING OF COST AND THROUGH END OF
DESCRIPTION PERIOD EXPENSES ACQUISITIONS PERIOD
- ----------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Year ended February 29, 1996
Deducted from asset account:
Allowance for doubtful
accountants...................... $275 $350 $ -- $ 625
Year ended February 29, 1997
Deducted from asset account:
Allowance for doubtful
accountants...................... 625 225 -- 850
Year ended February 29, 1998
Deducted from asset account:
Allowance for doubtful
accountants...................... 850 450 820 2,120
</TABLE>

II-8
<PAGE> 94

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1 (1) -- Form of Underwriting Agreement
2.1 (4) -- Agreement and Plan of Merger dated February 27, 1998, by and
among Lamalie Associates, Inc., LAI Mergersub, Inc. and Ward
Howell International, Inc.
2.2 (4) -- Asset Purchase Agreement dated December 29, 1997, by and
among Lamalie Associates, Inc., Chartwell Partners
International, Inc. and David M. DeWilde
3.1 (1) -- Articles of Incorporation of the Registrant as now in effect
3.2 (1) -- Bylaws of the Registrant as now in effect
4 (1) -- Form of Common Stock Certificate
5* -- Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis as to the legality of the Common Stock being
registered
10.1 (3) -- 1997 Omnibus Stock and Incentive Plan
10.2 (1) -- Non-Employee Directors' Stock Option Plan
10.3 (1) -- Profit Sharing Plan
10.4 (1) -- 1997 Employee Stock Purchase Plan
10.5 (1) -- Form of Agreement for Deferred Compensation Plan
10.6 (1) -- Managing Partners' Compensation Plan+
10.7 (1) -- Partners' Compensation Plan+
10.8 (1) -- Employment Agreement for Mr. Gow+
10.9* -- 1998 Omnibus Stock and Incentive Plan
10.10(1) -- Employment Agreement for Mr. Rothschild+
10.11(2) -- Form of Indemnification Agreement entered into with certain
Directors and Officers
10.12(1) -- Directors' Deferral Plan
10.13(3) -- Employment Agreement with Robert L. Pearson dated October 8,
1997
10.14(4) -- Form of Employment Agreement for former Ward Howell
International, Inc. Shareholders
21.1 -- Subsidiaries of the Registrant
23.1* -- Consent of Counsel to the Company (included in Exhibit 5)
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of KPMG Peat Marwick LLP
27* -- Financial Data Schedule (for SEC use only)
</TABLE>

- ---------------

* To be filed by amendment

<PAGE> 1
EXHIBIT 21.1 Subsidiaries of the registrant

Ward Howell International, Inc. (Connecticut), which is conducting business
under the name LAI Ward Howell.

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made a part of
this registration statement.

ARTHUR ANDERSEN LLP

Tampa, Florida,
May 6, 1998

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We consent to the use of our report dated February 20, 1998, with respect to
the balance sheets of Ward Howell International, Inc. as of December 31, 1997
and 1996 and the related statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1997 included herein.

KPMG PEAT MARWICK LLP

New York, New York
May 6, 1998

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 23,780
<SECURITIES> 0
<RECEIVABLES> 24,339
<ALLOWANCES> 2,120
<INVENTORY> 0
<CURRENT-ASSETS> 49,241
<PP&E> 8,220
<DEPRECIATION> 2,608
<TOTAL-ASSETS> 88,916
<CURRENT-LIABILITIES> 39,426
<BONDS> 0
0
0
<COMMON> 56
<OTHER-SE> 34,415
<TOTAL-LIABILITY-AND-EQUITY> 88,916
<SALES> 0
<TOTAL-REVENUES> 61,803
<CGS> 0
<TOTAL-COSTS> 55,193
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (197)
<INCOME-PRETAX> 6,807
<INCOME-TAX> 2,927
<INCOME-CONTINUING> 3,880
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,880
<EPS-PRIMARY> .85
<EPS-DILUTED> .82

</TABLE>