TDOP INC, S-1, 1998-03-06

TDOP INC
S-1, 1998-03-06
TRANSPORTATION SERVICES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1998.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
TDOP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 4700 52-2080967
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

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

84 INVERNESS CIRCLE EAST
ENGLEWOOD, COLORADO 80112-5314
(303) 706-0800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

EDWARD S. ADAMS
CHIEF EXECUTIVE OFFICER
TDOP, INC.
84 INVERNESS CIRCLE EAST
ENGLEWOOD, COLORADO 80112-5314
(303) 706-0800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:

<TABLE>
<S> <C>
GEORGE P. STAMAS, ESQ. ALAN L. BELLER, ESQ.
WILMER, CUTLER & PICKERING DAVID C. LOPEZ, ESQ.
2445 M STREET, N.W. CLEARY, GOTTLIEB, STEEN & HAMILTON
WASHINGTON, D.C. 20037 ONE LIBERTY PLAZA
(202) 663-6000 NEW YORK, NY 10006
(212) 225-2000
</TABLE>

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

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

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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / /

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
AMOUNT OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE PRICE PER AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share..... -- -- $50,000,000(2) $14,750
</TABLE>

(1) Includes shares subject to an option to purchase that may be exercised
by the underwriters solely to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) of the Securities Act.

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>
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 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.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 6, 1998

PROSPECTUS

TDOP, INC.

COMMON STOCK
---------

All of the shares of common stock, $.001 par value per share (the
"Company Common Stock"), offered hereby are being offered by TDOP, Inc. (the
"Company") and will represent approximately % of the outstanding Company
Common Stock upon completion of this offering. Prior to the offering made
hereby, the Company has been a wholly-owned subsidiary of U.S. Office Products
Company ("U.S. Office Products"). Prior to the completion of this offering, all
of the shares of Company Common Stock owned by U.S. Office Products will
be distributed to the stockholders of U.S. Office Products in a spin-off.

[Prior to this offering, there has not been a public market for the Company
Common Stock]. It is currently estimated that the initial public offering price
will be between $ and $ per share. See "Underwriting" for information
relating to the factors considered in determining the initial public offering
price. Application has been made to have the Company Common Stock included on
the Nasdaq Stock Market's National Market under the symbol " ".

SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMPANY COMMON STOCK
OFFERED HEREBY.
-------------

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

<TABLE>
<S> <C> <C> <C>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
Per Share $ $ $
Total(3) $ $ $
</TABLE>

(1) For information regarding indemnification of the Underwriters, see
"Underwriting".

(2) Before deducting expenses estimated at $ .

(3) The Company has granted the Underwriters a 30-day option to purchase up to
additional shares of Company Common Stock solely to cover
over-allotments, if any. See "Underwriting". If such option is exercised in
full, the total Price to the Public, Underwriting Discounts and Commissions,
and Proceeds to Company will be $ , $ and $ , respectively.

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

The shares of Company Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions [, including the completion of the Travel
Distribution]. It is expected that certificates for the shares of Company Common
Stock offered hereby will be available for delivery on or about , 1998,
at the office of Smith Barney Inc., 333 West 34th Street, New York, New York
10001.

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

SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC

, 1998
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-1 (including exhibits, schedules and
amendments thereto, the "Form S-1") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the offering hereby of the
Company Common Stock. This Prospectus, while forming a part of the Form S-1,
does not contain all of the information set forth in the Form S-1. Reference is
hereby made to the Form S-1 for further information with respect to the Company
and the Company Common Stock offered hereby. Statements contained herein
concerning the provisions of documents filed as exhibits to the Form S-1 are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
SEC.

The Form S-1 is available for inspection and copying at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the Regional Offices of the SEC at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such information can be obtained by mail from the Public Reference
Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates, or on the Internet at http://www.sec.gov.

Following the completion of the offering made hereby, the Company will be
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, will file
reports, proxy statements and other information with the SEC that will be
available for inspection and copying at the SEC's public reference facilities
referred to above. Copies of such material can be obtained by mail at prescribed
rates by writing to the Public Reference Branch of the SEC at the address
referred to above.

The Company intends to furnish its stockholders annual reports containing
financial statements audited by its independent accountants. The Company does
not intend to furnish its stockholders quarterly reports.

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMPANY COMMON
STOCK, INCLUDING PURCHASES OF COMPANY COMMON STOCK TO STABLIZE ITS MARKET PRICE
AND TO COVER ALL OR SOME OF ANY SHORT POSITION IN THE COMMON STOCK MAINTAINED BY
THE UNDERWRITERS AND INCLUDING THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

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

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS ABOUT BUSINESS
STRATEGIES, MARKET POTENTIAL, FUTURE FINANCIAL PERFORMANCE AND OTHER MATTERS. IN
ADDITION, WHEN USED IN THIS PROSPECTUS, THE WORDS "INTENDS TO," "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS INVOLVE MANY RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH STATEMENTS,
INCLUDING, WITHOUT LIMITATION, THOSE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE
HEADING "RISK FACTORS" BEGINNING ON PAGE 4.
<PAGE>
SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
PROSPECTIVE PURCHASERS SHOULD READ THE PROSPECTUS IN ITS ENTIRETY. UNLESS THE
CONTEXT REQUIRES OTHERWISE, REFERENCES TO (I) U.S. OFFICE PRODUCTS AND THE
COMPANY (OR TDOP) INCLUDES THEIR RESPECTIVE SUBSIDIARIES, AND (II) THE COMPANY
(OR TDOP) PRIOR TO THE TRAVEL DISTRIBUTION REFER TO THE CORPORATE TRAVEL
SERVICES DIVISION OF U.S. OFFICE PRODUCTS. UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION.

THE COMPANY

TDOP, Inc. ("TDOP" or the "Company"), one of the five largest providers of
corporate travel management services in the United States based on airline
ticket sales, was formed by U.S. Office Products Company ("U.S. Office
Products") through the acquisition of eleven regional corporate travel agencies.
In calendar year 1997, the Company booked $1.38 billion in airline ticket sales,
or approximately 2.5 million airline tickets. With locations throughout the
United States, in Canada, and in the United Kingdom, the Company provides its
corporate customers with the full range of corporate travel management services
through several channels, including on-site travel agencies, regional travel
agency offices and satellite ticket printers. The Company also provides group
and leisure travel services, largely to its corporate customers.

The travel agency industry in the United States is highly fragmented and
characterized by intense competition. There are more than 30,000 travel agencies
producing an estimated $70 billion in annual airline ticket sales. Airline
ticket sales by travel agencies increased at a rate of approximately 10.5% for
calendar year 1997. The business travel agency industry has undergone
significant changes since 1995, due in part to the reduction in commission
revenues from airline carriers, increasing industry reliance on technology and
the concentration of the industry's customer base. The Company believes that
significant technological and financial resources are required to compete in
today's corporate travel market, and that larger corporate travel agencies may
therefore have a competitive advantage. Accordingly, the Company believes the
business travel agency industry is undergoing a period of consolidation and that
significant growth opportunities exist.

The Company's objective is to be a premier provider of corporate travel
management services to middle market and larger companies in North America and,
increasingly, around the world. The Company intends to pursue this objective by
implementing the following business strategies: (i) focusing on corporate
travel; (ii) maintaining personalized customer service; (iii) operating with a
decentralized management structure; (iv) achieving operating efficiencies; and
(v) utilizing technology to improve service and reduce costs.

In addition, the Company intends to execute a focused growth strategy by
implementing an internal growth strategy and by pursuing an aggressive
acquisition program to further consolidate the corporate travel agency industry.
The key elements of the Company's internal growth strategy are as follows: (i)
generating new customers through an aggressive marketing program; (ii)
continuing to reduce customer costs; (iii) implementing best practices; and (iv)
achieving economies of scale.

U.S. Office Products began building the Company with the acquisition of
Professional Travel Corporation in January 1997 and thereafter acquired 10
additional corporate travel management companies. The Company currently has 128
offices, including offices in 16 of the 25 largest U.S. business travel markets.
The Company is a Delaware corporation with its principal executive offices
located at 84 Inverness Circle East, Englewood, Colorado, 80112-5314. The
Company's telephone number is 303-706-0800.

<PAGE>
THE SPIN-OFF FROM U.S. OFFICE PRODUCTS

Prior to the completion of this offering, all of the shares of Company
Common Stock owned by U.S. Office Products will be distributed to the
stockholders of U.S. Office Products in a spin-off (the "Travel Distribution").
The Travel Distribution is part of a strategic restructuring plan (the
"Strategic Restructuring Plan") in which U.S. Office Products is spinning off
the shares of the four companies (the "Spin-Off Companies") that will conduct
U.S. Office Products' current print management, technology solutions,
educational supplies and corporate travel services businesses. (The spin-offs
are collectively referred to as the "Distributions," and the date of the
Distributions is referred to as the "Distribution Date"). See "The Spin-Off From
U.S. Office Products."

THE OFFERING

<TABLE>
<S> <C>
Company Common Stock offered(1).............. shares
Company Common Stock outstanding after the
offering(1)................................. shares
Use of Proceeds.............................. To repay indebtedness allocated to the
Company pursuant to the Travel Distribution
and for general corporate purposes including
acquisitions.
Proposed Nasdaq National Market Symbol.......
</TABLE>

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

(1) Excludes shares of Company Common Stock that may be issued upon the
exercise of outstanding, vested options to purchase Company Common Stock.

2
<PAGE>
SUMMARY FINANCIAL DATA (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL
YEAR
ENDED
FOUR MONTHS APRIL 26,
ENDED ---------
YEAR ENDED DECEMBER 31, ------------
------------------------------------------ APRIL 30,
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
STATEMENT OF INCOME DATA:
Revenues............................................. $ 28,853 $ 32,838 $ 34,569 $ 45,267 $ 18,009 $ 57,677
Operating expenses................................... 14,244 17,153 19,692 25,836 9,491 31,541
--------- --------- --------- --------- ------------ ---------
Gross profit......................................... 14,609 15,685 14,877 19,431 8,518 26,136
General and administrative expenses.................. 10,588 11,647 11,651 15,221 6,660 19,684
Amortization......................................... 203 197 221 342 128 548
Non-recurring acquisition costs...................... 1,156
--------- --------- --------- --------- ------------ ---------
Operating income..................................... 3,818 3,841 3,005 3,868 1,730 4,748
Interest expense..................................... 125 139 118 515 173 587
Interest income...................................... (173) (231) (253) (352) (109) (445)
Other (income) expense............................... 55 48 42 20 118
--------- --------- --------- --------- ------------ ---------
Income before provision for income taxes............. 3,866 3,878 3,092 3,663 1,646 4,488
Provision for income taxes........................... 188 97 18 565 255 1,145
--------- --------- --------- --------- ------------ ---------
Net income........................................... $ 3,678 $ 3,781 $ 3,074 $ 3,098 $ 1,391 $ 3,343
--------- --------- --------- --------- ------------ ---------
--------- --------- --------- --------- ------------ ---------
Pro forma net income per share.......................
Pro forma weighted average shares outstanding (3)....

SIX MONTHS ENDED
(UNAUDITED)
--------------------------------------------------
PRO PRO FORMA PRO FORMA
FORMA OCTOBER 26, OCTOBER 25, OCTOBER 26, OCTOBER 25,
1997(2) 1996 1997 1996(2) 1997(2)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
STATEMENT OF INCOME DATA:
Revenues............................................. $ 144,394 $ 29,013 $ 46,557 $ 71,209 $ 82,576
Operating expenses................................... 79,015 15,100 26,215 38,595 45,182
----------- ----------- ----------- ----------- -----------
Gross profit......................................... 65,379 13,913 20,342 32,614 37,394
General and administrative expenses.................. 46,278 10,231 14,990 23,383 26,277
Amortization......................................... 2,974 365 649 1,597 1,777
Non-recurring acquisition costs......................
----------- ----------- ----------- ----------- -----------
Operating income..................................... 16,127 3,317 4,703 7,634 9,340
Interest expense..................................... 1,200 190 207 600 600
Interest income...................................... (159) (216)
Other (income) expense............................... 312 30 (38) 30 (85)
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes............. 14,615 3,256 4,750 7,004 8,825
Provision for income taxes........................... 6,723 566 2,185 3,222 4,059
----------- ----------- ----------- ----------- -----------
Net income........................................... $ 7,892 $ 2,690 $ 2,565 $ 3,782 $ 4,766
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Pro forma net income per share....................... $ 0.08 $ 0.04 $ 0.05
----------- ----------- -----------
----------- ----------- -----------
Pro forma weighted average shares outstanding (3).... 95,963 95,963 95,963
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
(UNAUDITED)
------------------------------------------ APRIL 30,
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................................ $ 4,172 $ 5,051 $ 4,366 $ 4,288 $ 4,338
Total assets............................................................... 15,040 15,487 14,602 25,258 25,692
Long-term debt, less current portion....................................... 4,048 3,909 3,455 8,160 6,366
Long-term payable to U.S. Office Products..................................
Stockholder's equity....................................................... 6,723 7,914 7,736 9,187 11,221

<CAPTION>
OCTOBER 25, 1997
(UNAUDITED)
-------------------------------------

APRIL 26, PRO AS

1997 ACTUAL FORMA(4) ADJUSTED(4)(5)

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

<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................................ $ 1,281 $ 8,786 $ 4,279
Total assets............................................................... 29,339 133,445 129,401
Long-term debt, less current portion....................................... 2,012 6,070 14,071
Long-term payable to U.S. Office Products.................................. 787 6,753
Stockholder's equity....................................................... 13,483 98,384 94,514
</TABLE>

- ------------------------
(1) The historical financial information of the businesses that were acquired in
business combinations accounted for under the pooling-of-interests method
(the "Pooled Companies") have been combined on a historical cost basis in
accordance with generally accepted accounting principles ("GAAP") to present
this financial data as if the Pooled Companies had always been members of
the same operating group. The financial information of the businesses
acquired in the business combinations accounted for under the purchase
method (the "Purchased Companies") is included from the dates of their
respective acquisitions. The Purchased Companies and their respective
acquisition dates are as follows: Associated Travel International, June 26,
1997; Evans Travel Group, July 25, 1997; Atlas Travel Services, September
26, 1997; OmniTravel, September 26, 1997; McGregor Travel Management,
October 24, 1997; Travel Consultants, Inc., October 24, 1997; and Wareheim
Travel Services, December 23, 1997. The pro forma financial data reflect
acquisitions completed by the Company through March 5, 1998.

(2) Gives effect to the Travel Distribution and the purchase acquisitions
completed by the Company since May 1, 1996 as if all such transactions had
been made on May 1, 1996. The pro forma statement of income data are not
necessarily indicative of the operating results that would have been
achieved had these events actually then occurred and should not be construed
as representative of future operating results.

(3) For calculation of the pro forma weighted average shares outstanding for the
fiscal year ended April 26, 1997 and for the six months ended October 25,
1997 and October 26, 1996, see Note 2(i) of Notes to Pro Forma Combined
Financial Statements included herein.

(4) Gives effect to the Travel Distribution and the purchase acquisition
completed by the Company subsequent to October 25, 1997 as if such
transactions had been made on October 25, 1997. The pro forma balance sheet
data are not necessarily indicative of the financial position that would
have been achieved had these events actually then occurred and should not be
construed as representative of future financial position.

(5) As adjusted to give effect to the sale of the shares of Company Common Stock
by the Company pursuant to this offering (assuming an initial public
offering price of $ per share) after deducting the Underwriting Discount
and estimated offering expenses payable by the Company and the use of the
estimated net proceeds therefrom.

3
<PAGE>
RISK FACTORS

THE FOLLOWING FACTORS SHOULD BE CONSIDERED IN ADDITION TO OTHER INFORMATION
INCLUDED IN THIS PROSPECTUS.

POTENTIAL VOLATILITY OF STOCK PRICE AND OTHER RISKS ASSOCIATED WITH SHARES
ELIGIBLE FOR FUTURE SALE

As a result of the Travel Distribution, stockholders of U.S. Office Products
are acquiring shares of Company Common Stock that are freely tradeable at
the time of this offering without restrictions or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares held by "affiliates" of the Company within the meaning of the Securities
Act will be subject to the resale limitations of Rule 144 promulgated under the
Securities Act ("Rule 144"). Because the Travel Distribution is being made to
existing stockholders of U.S. Office Products, who have not made an affirmative
decision to invest in Company Common Stock, there can be no assurance that some
or all of these stockholders will not sell the shares of Company Common Stock
into the market shortly after the Travel Distribution. In addition, U.S. Office
Products is included in certain broad-based indices tracked by a number of
investment companies and other institutional investors, and such investors can
be expected to sell the shares of Company Common Stock they receive in the
Travel Distribution shortly thereafter.

A "when-issued" trading market in Company Common Stock may develop
immediately upon the Distribution. Such trading could increase the volatility
of, and adversely affect the market price of, the Company Common Stock.

In addition, upon completion of this offering and the Travel Distribution,
the Company will have outstanding (i) shares of Company Common Stock
issued in this offering, all of which will be freely tradeable unless held by
affiliates of the Company, and (ii) immediately exercisable options to
acquire approximately shares of Company Common Stock. Following this
offering and the Travel Distribution, in view of the large number of shares
freely tradeable and available for immediate sale, the market for Company Common
Stock could be highly volatile and could adversely affect the trading price of
the Company Common Stock. See "Management of TDOP--Director Compensation and
Other Arrangements." The officers and directors of the Company who together hold
shares of Company Common Stock have agreed not to offer, sell or otherwise
dispose of any Company Common Stock without the prior written consent of Smith
Barney Inc. for a period of 180 days after the date of the Underwriting
Agreement.

RISKS RELATED TO REVENUE, CUSTOMER FEES AND AIRLINE COMMISSIONS

The Company derives the major portion of its revenues from commissions paid
by airlines. Since 1995, most airlines have substantially reduced the amount of
commissions paid to travel agents for booking domestic flights. The airlines
have both capped the total commissions paid per ticket and reduced the
commission rates per ticket payable to travel agents. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
TDOP--Introduction." There can be no assurance that the airlines will not
further reduce commissions.

In response to reductions in the commissions paid to travel agents and
consistent with growing industry practice, the Company has entered into
management contracts with many of its corporate customers. Under these
contracts, the Company typically deducts its direct operating expenses, indirect
overhead costs and a management fee from commission revenues collected for
travel arrangements made on behalf of the customer. If the commission revenues
collected exceed the amounts deducted, the Company may share a negotiated amount
of the excess with the customer. If the commission revenues do not cover the
amounts deducted the customer pays the difference to the Company. See
"Business-- Revenue Sources--Management Contracts." In addition, the Company
typically charges a fee for each ticket and other transactions to customers who
do not have a management contract with the Company. There can be no assurance
that the Company will be able to maintain or continue to negotiate management
contracts or continue to receive current levels of revenues from those
contracts, or that the Company will be able to charge transaction fees or
maintain the level of such fees.

4
<PAGE>
The Company also derives part of its revenues from incentive override
commissions paid by the major airlines. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of
TDOP--Introduction." If, during any period, the Company fails to meet incentive
levels, revenues could decrease. There can also be no assurance that the
airlines will not reduce or terminate incentive override commissions or that the
Company will be able to extend its current incentive override commission
arrangements or enter into new arrangements that are as favorable as the
Company's current arrangements.

SUBSTANTIAL COMPETITION AND INDUSTRY CONSOLIDATION; NEW METHODS OF DISTRIBUTION

The corporate travel management industry is extremely competitive and has
relatively low barriers to entry. The Company competes primarily with travel
agencies and other distributors of travel services, some of which are larger and
have greater brand name recognition and financial resources than the Company.
Competition within the corporate travel agency industry is increasing as the
industry undergoes a period of consolidation and certain of the Company's
competitors are expanding their size and financial resources through
consolidation. Certain agencies and distributors may have relationships with
certain travel suppliers which give them access to favorable availability of
products (including airplane seats and hotel rooms) or more competitive pricing
than that offered by the Company. Furthermore, some travel agents have a strong
presence in particular geographic areas which may make it difficult for the
Company to attract customers in those areas. As a result of competitive
pressures, the Company's revenues or margins may decline.

The Company also competes with travel suppliers, including airlines, hotels
and rental car companies. Innovations in technology such as the Internet and
computer on-line services have increased the ability of travel suppliers to
distribute their travel products and services directly to consumers. Although
travel agencies remain the primary channel for travel distribution, businesses
and consumers can now use the Internet to access information about travel
products and services and to purchase such products and services directly from
the suppliers, thereby bypassing travel agents. The Company believes that no
single Internet-based service presently provides access to the full range of
information available to the Company and its agents. There can be no assurances,
however, that an Internet-based travel service will not provide such access in
the future. In addition, although the Company believes the service, knowledge
and skills of its employees and its incorporation of new, alternative
distribution channels position it to compete effectively in the changing
industry, there can be no assurance that the Company will compete successfully
or that the failure to compete successfully will not have a material adverse
effect on the financial conditions and results of operations of the Company.

RISK OF RAPID GROWTH; ABSENCE OF HISTORY AS A STAND-ALONE COMPANY

The Company was formed by the consolidation by U.S. Office Products of
eleven separate corporate travel agency companies and expects to continue to
grow in part through acquisitions. All eleven companies have been acquired since
January 1997. The rapid pace of acquisitions has, and will continue to, put
pressure on the Company's executive management, personnel, computer systems and
other corporate support systems. Any inadequacy of such systems to manage the
increased size and scope of operations resulting from growth could adversely
affect the Company's operations, business and financial results and condition.

Prior to the Travel Distribution, certain general and administrative
functions relating to the Company's business (including some legal and
accounting services) were handled by U.S. Office Products. The Company's future
performance will depend on its ability to function as a stand-alone entity, and
on its ability to finance and manage expanding operations and to adapt its
information systems to changes in its business. As a result, certain of the
Company's expenses are likely to be higher than when it was a part of U.S.
Office Products, and the Company may experience disruptions it would not
encounter as a part of U.S. Office Products. Furthermore, the financial
information included herein may not necessarily reflect what the results of
operations and financial condition would have been had the Company been a
separate,

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stand-alone entity during the periods presented or be indicative of future
results of operations and financial condition of the Company.

DEPENDENCE ON TRAVEL SUPPLIERS

The Company is dependent upon travel suppliers for access to their products
and services (including airplane seats and hotel rooms). Certain travel
suppliers offer the Company pricing that is preferential to published fares,
enabling the Company to offer prices lower than would be generally available to
travelers and other travel agents. Travel suppliers can generally cancel or
modify their agreements with the Company upon relatively short notice. The loss
of contracts, changes in the Company's pricing agreements, commission schedules
or incentive override commission arrangements, or more restricted access to
travel suppliers' products and services could have a material adverse effect on
the Company's business, financial condition and results of operations.

DEPENDENCE UPON TECHNOLOGY

The Company's business is dependent upon a number of different information
and telecommunications technologies to access information and manage a high
volume of inbound and outbound telephone calls. Any failure of this technology
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company's ability to quote
air travel ticket prices, make reservations and sell tickets is dependent upon
its contractual right to use, and the performance of, computer reservation
systems operated by SABRE, Galileo/Apollo and Worldspan. Any technical failures
of these systems or restrictions on the Company's access to these systems could
have a material adverse effect on the Company's business, financial condition
and results of operations.

RISKS ASSOCIATED WITH THE BUSINESS TRAVEL INDUSTRY; GENERAL ECONOMIC CONDITIONS

The Company's results of operations will depend upon factors affecting the
business travel industry generally. The Company's revenues and earnings are
especially sensitive to events that affect domestic and international air
travel, and the level of car rentals and hotel reservations. A number of
factors, including recession or slower economic growth, rising travel costs,
extreme weather conditions, and concerns about passenger safety could result in
a temporary or longer-term overall decline in demand for business travel.
Advances in technology and communications, such as videoconferencing and
Internet-based teleconferencing, may also adversely impact travel patterns and
travel demand. The Company believes that price-based competition will continue
in the airline industry for the foreseeable future. The continuation of such
competition and the occurrence of any of the events described above could have a
material adverse effect on the Company's business, financial condition and
results of operations.

RISKS RELATED TO INTEGRATION OF OPERATIONS AND ACQUISITIONS

One of the Company's strategies is to increase operating margins by
consolidating and integrating certain administrative functions common to all of
its operating subsidiaries. Such integration will require substantial attention
from senior management and may also require substantial capital expenditures.
The integration of operations may disrupt the operations of the Company and the
operating subsidiaries, as management attention is diverted from other tasks,
and as technological, practical or personnel issues arise. There can be no
assurance that the integration and consolidation will be completed, or that, if
completed, the Company will recognize economic benefit.

Currently, the Company and each of its subsidiaries operate on separate
computer and telephone systems, several of which use different technologies. The
Company expects that it will integrate these systems, but it has not yet
established a definitive timetable for integration of all of such systems or its
definitive capital needs for such integration. There can be no assurance that
the contemplated integration of these systems will be successful, will be
completed without disruption to the Company's business or will result in the
intended cost efficiencies. In addition, rapid changes in technologies may
require capital expenditures to improve or upgrade customer service.

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Integration of acquisitions may also involve a number of special risks,
including adverse short-term effects on its reported operating results
(including those caused by severance payments to employees of acquired
companies, restructuring charges associated with the acquisitions and other
expenses associated with a change of control, as well as non-recurring
acquisition costs including accounting and legal fees, investment banking fees,
recognition of transaction-related obligations and various other acquisition-
related costs); diversion of management's attention; difficulties with
retention, hiring and training of key personnel; risks associated with
unanticipated problems or legal liabilities; and amortization of acquired
intangible assets. Furthermore, although the Company conducts due diligence and
generally requires representations, warranties and indemnifications from the
former owners of acquired companies, there can be no assurance that such owners
will have accurately represented the financial and operating conditions of their
companies. If an acquired company's financial or operating results were
misrepresented, the acquisition could have a material adverse effect on the
results of operations and financial condition of the Company.

POTENTIAL LIABILITY FOR TAXES RELATED TO THE DISTRIBUTIONS

In connection with the Distributions, U.S. Office Products will enter into a
tax allocation agreement with TDOP and the other Spin-Off Companies (the "Tax
Allocation Agreement"), which will provide that the Spin-Off Companies will
jointly and severally indemnify U.S. Office Products for any losses associated
with taxes related to the Distributions ("Distribution Taxes") if an action or
omission (an "Adverse Tax Act") of any of the Spin-Off Companies materially
contributes to a final determination that any or all of the Distributions are
taxable. TDOP will also enter into a tax indemnification agreement with the
other Spin-Off Companies (the "Tax Indemnification Agreement") under which the
Spin-Off Company that is responsible for the Adverse Tax Act will indemnify the
other Spin-Off Companies for any liability to indemnify U.S. Office Products
under the Tax Allocation Agreement. As a consequence, TDOP will be liable for
any Distribution Taxes resulting from any Adverse Tax Act by TDOP and liable
(subject to indemnification by the other Spin-Off Companies) for any
Distribution Taxes resulting from an Adverse Tax Act by the other Spin-Off
Companies. If there is a final determination that any or all of the
Distributions are taxable and it is determined that there has not been an
Adverse Tax Act by either U.S. Office Products or any of the Spin-Off Companies,
U.S. Office Products and each of the Spin-Off Companies will be liable for its
pro rata portion of the Distribution Taxes based on the value of each company's
common stock after the Distributions. As a result, TDOP could become liable for
a pro rata portion of any Distribution Taxes with respect to not only the Travel
Distribution but also any of the other Distributions. See "The Spin-off from
U.S. Office Products--Tax Allocation Agreement and Tax Indemnification
Agreement" for a detailed discussion of the Tax Allocation Agreement and Tax
Indemnification Agreement.

DEPENDENCE UPON ACQUISITIONS FOR FUTURE GROWTH

One of the Company's strategies is to increase its revenues and the markets
it serves through the acquisition of additional corporate travel businesses.
There can be no assurance that suitable candidates for acquisitions can be
identified or, if suitable candidates are identified, that acquisitions can be
completed on acceptable terms. See "--Risk Related to Acquisition Financing;
Additional Dilution." In addition, prior to the Travel Distribution, the
Company's acquisitions were completed with substantial business, legal and
accounting assistance from U.S. Office Products and the acquisitions were paid
for with U.S. Office Products Common Stock. Furthermore, the Company's ability
to pay for acquisitions with stock may be materially limited in the two-year
period following the Travel Distribution. See "--Possible Limitations on
Issuances of Common Stock." The pace of the Company's acquisition program may be
adversely affected by the absence of U.S. Office Products support for the
acquisitions and the Company's limited ability to issue Company Common Stock.

The Company's acquisition of corporate travel businesses outside the United
States may subject it to certain risks inherent in conducting business
internationally, including fluctuations in currency exchange

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rates. Changes in exchange rates could have a significant effect on the
Company's business, financial condition and results of operations.

RISKS RELATED TO ACQUISITION FINANCING; ADDITIONAL DILUTION

The Company currently intends to finance its future acquisitions by using
shares of Company Common Stock, cash, borrowed funds or a combination thereof.
If the Company Common Stock does not maintain a sufficient market value, if the
price of Company Common Stock is highly volatile or if potential acquisition
candidates are otherwise unwilling to accept Company Common Stock as part of the
consideration for the sale of their businesses, the Company may be required to
use more of its cash resources or more borrowed funds, in order to initiate and
maintain its acquisition program. If the Company does not have sufficient cash
resources, its growth could be limited unless it is able to obtain additional
capital through debt or equity offerings. Prior to the Travel Distribution, the
Company was not responsible for obtaining external sources of funding. The
Company intends to enter into credit facilities with one or more lenders to
obtain financing to be used in connection with future acquisitions. There can be
no assurance that the Company, as a stand alone company, will be able to obtain
such financing if and when it is needed or that any such financing will be
available on terms it deems acceptable.

Upon completion of the Travel Distribution, the Company will have
authorized but unissued and unreserved shares of Company Common Stock, which
(subject to the rules and regulations of federal and state securities laws,
applicable limits under U.S. federal income tax laws and rules, and rules of the
Nasdaq Stock Market) the Company will be able to issue in order to finance
acquisitions without obtaining stockholder approval for such issuance. Existing
stockholders may suffer dilution if the Company uses Company Common Stock as
consideration for future acquisitions. Moreover, the issuance of additional
shares of Company Common Stock may negatively impact earnings per share and the
market price of the Company Common Stock.

RELIANCE ON KEY PERSONNEL

The Company's operations depend on the continued efforts of Edward S. Adams,
its President and Chief Executive Officer, Robert C. Griffith, its Chief
Financial Officer and Treasurer, its other executive officers and the senior
management of its subsidiaries. Furthermore, the Company's operations will
likely depend on the senior management of the companies that may be acquired in
the future. If any of these people become unable to continue in his or her
present role, or if the Company is unable to attract and retain other skilled
employees, its business could be adversely affected. In addition, Jonathan J.
Ledecky will serve as a director of TDOP and is expected to provide services to
TDOP after the Travel Distribution pursuant to an agreement entered into between
Mr. Ledecky and U.S. Office Products, which provides that the Company and the
other Spin-Off Companies will succeed to certain rights of, and obligations
under, such agreement following the Distribution. See "Management of
TDOP--Director Compensation and Other Arrangements." Mr. Ledecky will also serve
as a director of each of the other Spin-Off Companies, and is the director or an
officer of two other public companies. Mr. Ledecky may be unable to devote
substantial time to the activities of TDOP.

NO PRIOR PUBLIC TRADING MARKET

Prior to the Travel Distribution, there has been no public market for the
Company Common Stock, and there can be no assurance that an active trading
market will develop or, if one does develop, that it will continue. The public
offering price of the Company Common Stock, which will be established by
negotiation between the Company and the representatives of the Underwriters, may
not be indicative of the market price that will prevail after the closing of the
offering made hereby. See "Underwriting."

MATERIAL AMOUNT OF GOODWILL

Approximately $85.6 million, or 66.2%, of the Company's pro forma total
assets as of October 25, 1997 represents intangible assets, the significant
majority of which is goodwill. Goodwill represents the excess of cost over the
fair market value of net assets acquired in business combinations accounted for

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under the purchase method. The Company amortizes goodwill on a straight line
method over a period of 35 years with the amount amortized in a particular
period constituting a non-cash expense that reduces the Company's net income.
Amortization of goodwill resulting from certain past acquisitions, and
additional goodwill recorded in certain future acquisitions may not be
deductible for tax purposes. In addition, the Company will be required to
periodically evaluate the recoverability of goodwill by reviewing the
anticipated undiscounted future cash flows from the operations of the acquired
companies and comparing such cash flows to the carrying value of the associated
goodwill. If goodwill becomes impaired, the Company would be required to write
down the carrying value of the goodwill and incur a related charge to its
income. A reduction in net income resulting from the amortization or write down
of goodwill would currently affect financial results and could have a material
and adverse impact upon the market price of the Company Common Stock.

RISKS RELATED TO INABILITY TO USE POOLING-OF-INTERESTS METHOD TO ACCOUNT FOR
FUTURE ACQUISITIONS

Generally accepted accounting principles require that an entity be
autonomous for a period of two years before it is eligible to complete business
combinations under the pooling-of-interests method. The Company will be unable
to satisfy this criterion for a period of two years following the Travel
Distribution. Therefore, the Company will be precluded from completing business
combinations under the pooling-of-interests method for a period of two years and
any business combinations completed by the Company during such period will be
accounted for under the purchase method resulting in the recording of goodwill.
See "--Material Amount of Intangible Assets."

POSSIBLE LIMITATIONS ON ISSUANCES OF COMMON STOCK

U.S. Office Products has sought to structure the Travel Distribution to
qualify as a tax-free spin-off under Section 355 of the Internal Revenue Code of
1986, as amended (the "Code"). Assuming the Travel Distribution qualifies as a
tax-free spin-off and is not taxable under Section 355(e) of the Code, no gain
or loss will be recognized by either U.S. Office Products or the holders of U.S.
Office Products Common Stock (except with respect to cash received in lieu of
fractional shares) solely as a result of the distribution or receipt of Company
Common Stock in connection with the Travel Distribution. As a result of certain
U.S. federal income tax limitations under Section 355 of the Code, the amount of
Company capital stock that can be issued in connection with the Travel
Distribution without jeopardizing the tax-free treatment of the Travel
Distribution may be limited to 20% of the amount of Company capital stock that
would be issued and outstanding after giving effect to all such issuances, if
such issuances are deemed to occur prior to the Travel Distribution. It is
unclear whether stock in the Company that is acquired pursuant to immediately
exercisable options count toward this 20% limitation.

Section 355(e) of the Code, which was added in 1997, provides generally that
a company that distributes shares in a spin-off that is otherwise tax-free will
incur material U.S. federal income tax if 50% or more, by vote or value, of the
capital stock of the company making the spin-off or of the spun-off entity is
acquired by one or more persons, acting pursuant to a plan or series of related
transactions that includes the spin-off. Stock acquired by persons acting
pursuant to a plan or arrangement, and stock acquired by certain related persons
is aggregated in determining whether this 50% test is met. There is a rebuttable
presumption that any acquisition occurring two years before or after the
spin-off is pursuant to a plan that includes the spin-off. Such presumption may
be rebutted by establishing that the spin-off and such acquisition are not
pursuant to a plan or series of related transactions. As a result of the
provisions of Section 355(e), there can be no assurance that issuances of stock
by the Company, including issuances in connection with an acquisition of another
business by the Company, will not create a tax liability for U.S. Office
Products. The Company has entered into a Tax Allocation Agreement and Tax
Indemnification Agreement pursuant to which the Company will be liable to U.S.
Office Products and the other Spin-Off Companies if its actions result in a tax
liability related to the spin-off. See "The Spin-Off from U.S. Office
Products--Tax Allocation Agreement and Tax Indemnification Agreement."

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These limitations could adversely affect the pace of the Company's
acquisition program and its ability to issue Company Common Stock for other
purposes, including equity offerings.

SEASONALITY AND QUARTERLY FLUCTUATIONS

The domestic and international travel industry is extremely seasonal. The
results of the Company have fluctuated because of seasonal variations in the
travel industry. Net revenues and net income for the Company are generally
higher in the second and third calendar quarters. The Company expects this
seasonality to continue in the future. The Company's quarterly results of
operations may also be subject to fluctuations as a result of the timing and
cost of acquisitions, fare wars by travel suppliers, changes in relationships
with certain travel suppliers, changes in the mix of services offered by the
Company, the timing of the payment of incentive override commissions by travel
suppliers, extreme weather conditions or other factors affecting travel. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of TDOP--Fluctuations in Quarterly Results of Operations."

DEPENDENCE ON ARC AGREEMENTS

The Company depends on the ability to sell airline tickets for a substantial
portion of its revenue. To sell airline tickets, the Company must enter into,
and maintain, an Agent Reporting Agreement with the Airlines Reporting Company
("ARC"). The Agent Reporting Agreement imposes numerous financial, operational,
and administrative obligations on the Company. The agreement allows ARC to
cancel an Agent Reporting Agreement for failure to meet any of these
obligations. If the Company's Agent Reporting Agreement is cancelled by ARC, the
Company would be unable to sell airline tickets and its results of operations
would be materially adversely affected.

DILUTION

Purchasers of Company Common Stock offered hereby will incur an immediate
and substantial dilution in net tangible book value of the Company Common Stock
from the initial public offering price. The options to acquire Company Common
Stock that are issued as replacements for options to acquire U.S. Office
Products Common Stock, and that will be outstanding following the Travel
Distribution, may be exercisable at prices significantly below the initial
public offering price. To the extent outstanding options to purchase the Company
Common Stock are exercised, there will be further dilution. See "Dilution."

NO DIVIDENDS

The Company does not expect to pay cash dividends on Company Common Stock in
the foreseeable future. The decision whether to apply legally available funds to
the payment of dividends on the Company Common Stock will be made by the Board
of Directors of the Company (the "Board of Directors") from time to time in the
exercise of its business judgment, taking into account, among other things, the
Company's results of operations and financial condition, any then existing or
proposed commitments by the Company for the use of available funds, and the
Company's obligations with respect to the holders of any then outstanding
indebtedness or preferred stock. The Company's ability to pay dividends may be
restricted from time to time by financial covenants in its credit agreements.
See "Dividend Policy."

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THE SPIN-OFF FROM U.S. OFFICE PRODUCTS

Prior to this offering, TDOP has been a wholly-owned subsidiary of U.S.
Office Products. At the time of this offering, TDOP will hold all of the
business and assets of, and will be responsible for substantially all of the
liabilities associated with, U.S. Office Products Corporate Travel Services
Division. Prior to the completion of the offering made hereby, all of the
shares of TDOP Common Stock owned by U.S. Office Products will be
distributed to the stockholders of U.S. Office Products in the Travel
Distribution. U.S. Office Products is spinning off TDOP as part of the Strategic
Restructuring Plan in which U.S. Office Products is spinning off the shares of
the Spin-Off Companies that will conduct U.S. Office Products' current print
management, technology solutions, educational supplies and corporate travel
services businesses. At the same time as the Distributions, U.S. Office Products
will repurchase approximately 28% of its issued and outstanding common stock in
a tender offer and sell a 24.9% equity interest in U.S. Office Products (but no
interest in the Spin-Off Companies) to an affiliate (the "Investor") of an
investment fund managed by Clayton, Dubilier & Rice, Inc.

In connection with the Travel Distribution, TDOP is entering into a series
of agreements with U.S. Office Products and the other Spin-Off Companies to
provide mechanisms for an orderly transition and to define certain relationships
among TDOP, U.S. Office Products and the other Spin-Off Companies after the
Travel Distribution. These agreements are: a distribution agreement (the
"Distribution Agreement") among TDOP, U.S. Office Products and the other
Spin-Off Companies; the Tax Allocation Agreement among TDOP, U.S. Office
Products and the other Spin-Off Companies; an employee benefits agreement (the
"Employee Benefits Agreement") among TDOP, U.S. Office Products and the other
Spin-Off Companies; and the Tax Indemnification Agreement among TDOP and the
other Spin-Off Companies. The terms of the Distribution Agreement, Tax
Allocation Agreement, Tax Indemnification Agreement and Employee Benefits
Agreement have not yet been finally determined. These terms will be agreed to
while TDOP is a wholly-owned subsidiary of U.S. Office Products. They will not
be the result of arms'-length negotiations between independent parties. In
addition, the agreement between U.S. Office Products and the Investor relating
to CD&R's investment in U.S. Office Products (the "Investment Agreement")
specifies certain terms of these agreements and provides that they are subject
to the Investor's reasonable approval.

Although the terms of the Distribution Agreement, Tax Allocation Agreement,
Tax Indemnification Agreement, and Employee Benefits Agreement have not been
finally determined, the Company currently expects that the terms will include
those described below. There can be no assurance that the terms of the
Distribution Agreement, Tax Allocation Agreement, Tax Indemnification Agreement
and Employee Benefits Agreement will not be less favorable to the stockholders
of the Company than the terms set out below.

DISTRIBUTION AGREEMENT

TRANSFER OF SUBSIDIARIES AND ASSETS. The Distribution Agreement is expected
to provide for the transfer from U.S. Office Products to TDOP of substantially
all of the equity interests in the U.S. Office Products subsidiaries that are
engaged in the business of TDOP as well as the transfer, in certain instances,
of other assets related to the business of TDOP. It is also expected to provide
that the recovery on any claims under applicable acquisition agreements that
U.S. Office Products may have against the persons who sold businesses to U.S.
Office Products that will become part of TDOP in connection with the Travel
Distribution (the "TDOP Acquisition Indemnity Claims") will be allocated between
U.S. Office Products and TDOP under a formula to be determined. In addition, to
the extent that the TDOP Acquisition Indemnity Claims are secured by the pledge
of stock of U.S. Office Products and the Spin-Off Companies that is owned by
persons who sold businesses to U.S. Office Products that will become part of
TDOP (and no previous claims have been made against such shares), the pledged
shares will be used, subject to final resolution of the claim, to reimburse U.S.
Office Products and TDOP for their respective damages and

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expenses in accordance with the relative allocation of recovery rights, which
will be determined prior to the Travel Distribution.

DEBT. The Distribution Agreement is expected to provide that TDOP will
have, at the time of the Travel Distribution, $15.0 million debt plus the amount
of any additional debt incurred after the date of the Investment Agreement by
U.S. Office Products or TDOP in connection with the acquisition of entities that
will become subsidiaries of TDOP in connection with the Distributions. TDOP
estimates that the additional debt will be approximately $ .

ASSUMPTION OF LIABILITIES. The Distribution Agreement is expected to
allocate and provide for the assumption of financial responsibility for certain
liabilities (other than taxes and employee benefit matters, which will be
governed by separate agreements) among U.S. Office Products, TDOP and the other
Spin-Off Companies. TDOP will be responsible for (i) any liabilities arising out
of or in connection with the businesses conducted by TDOP and/or its
subsidiaries, (ii) its liabilities under the Distribution Agreement and related
agreements, (iii) its liabilities for the debt described above, (iv) certain
securities liabilities, and (v) any liabilities of U.S. Office Products relating
to earn-out or bonus payments owed by U.S. Office Products in respect of TDOP or
its subsidiaries. In addition, the Distribution Agreement is expected to provide
for sharing of certain liabilities among some or all of the parties. Each of
U.S. Office Products, TDOP and the other Spin-Off Companies will bear a portion,
on a basis to be determined, of (i) any liabilities of U.S. Office Products
under the securities laws arising from events prior to the Distributions (other
than claims relating solely to a specific Spin-Off Company or relating
specifically to the continuing businesses of U.S. Office Products), (ii) U.S.
Office Products' general corporate liabilities (other than debt, except for that
specifically allocated to the Spin-Off Companies) incurred prior to the
Distributions (I.E., liabilities not related to the conduct of a particular
distributed or retained subsidiary's business) and (iii) transactions costs
(including legal, accounting, investment banking, and financial advisory) and
other fees incurred by U.S. Office Products in connection with the Strategic
Restructuring Plan. U.S. Office Products estimates that legal, financial
advisory, investment banking, financing, accounting, printing, mailing and other
expenses (including the fees of U.S. Office Products' and Spin-Off Companies'
transfer agents) of the Strategic Restructuring Plan, including the
Distributions, will total approximately $ .

The Distribution Agreement is expected to provide that each party will
indemnify and hold all of the other parties harmless from any and all
liabilities for which the former assumed liability under the Distribution
Agreement. All indemnity payments will be subject to adjustment upward or
downward to take account of tax costs or tax benefits as well as insurance
proceeds. If there are any claims made under U.S. Office Products' existing
insurance policies, the amount of any deductible or retention will be allocated
by U.S. Office Products among the claimants in a fair and reasonable manner.

OTHER PROVISIONS. The Distribution Agreement is expected to have other
customary provisions including provisions relating to mutual release, access to
information, witness services, confidentiality and alternative dispute
resolution.

TAX ALLOCATION AGREEMENT AND TAX INDEMNIFICATION AGREEMENT

The Tax Allocation Agreement will provide that each Spin-Off Company will be
responsible for its respective share of U.S. Office Products' consolidated tax
liability for the years that each such corporation was included in U.S. Office
Products' consolidated U.S. federal income tax return. The Tax Allocation
Agreement also will provide for sharing, where appropriate, of state, local and
foreign taxes attributable to periods prior to the Distributions.

The Tax Allocation Agreement will further provide that the Spin-Off
Companies will jointly and severally indemnify U.S. Office Products for any
Distribution Taxes assessed against U.S. Office Products if an Adverse Tax Act
of any of the Spin-Off Companies materially contributes to a final determination
that any or all of the Distributions are taxable. TDOP will also enter into the
Tax Indemnification Agreement

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with the other Spin-Off Companies under which the Spin-Off Company that is
responsible for the Adverse Tax Act will indemnify the other Spin-Off Companies
for any liability to U.S. Office Products under the Tax Allocation Agreement. As
a consequence, TDOP will be liable for any Distribution Taxes resulting from any
Adverse Tax Act by TDOP and liable (subject to indemnification by the other
Spin-Off Companies) for any Distribution Taxes resulting from an Adverse Tax Act
by the other Spin-Off Companies. If there is a final determination that any or
all of the Distributions are taxable and it is determined that there has not
been an Adverse Tax Act by either U.S. Office Products or any of the Spin-Off
Companies, each of U.S. Office Products and the Spin-Off Companies will be
liable for its pro rata portion of such Distribution Taxes based on the value of
each company's common stock after the Distributions. As a result, TDOP could
become liable for a pro rata portion of any Distribution Taxes with respect to
not only the Travel Distribution but also any of the other Distributions.

U.S. Office Products and the Company will receive an opinion of Wilmer,
Cutler & Pickering, counsel to U.S. Office Products and the Company, that for
U.S. federal income tax purposes the Travel Distribution should qualify as a
tax-free spin-off under Section 355 of the Code, and should not be taxable under
Section 355(e) of the Code. The opinion of counsel will be based on certain
assumptions and the accuracy of factual representations made by U.S. Office
Products and the Company. Neither U.S. Office Products nor the Company is aware
of any present facts or circumstances which should cause such representations
and assumptions to be untrue. However, the opinion of counsel is not binding on
either the IRS or the courts. A ruling has not been, and will not be, sought
from the IRS with respect to the U.S. federal income tax consequences of the
Travel Distribution and it is possible that the IRS may take the position that
the School Specialty Distribution does not qualify as a tax-free spin-off or is
taxable under Section 355(e).

EMPLOYEE BENEFITS AGREEMENT

In connection with the Distributions, U.S. Office Products expects to enter
into the Employee Benefits Agreement with TDOP and the other Spin-Off Companies
to provide for an orderly transition of benefits coverage between U.S. Office
Products and the Spin-Off Companies. Pursuant to this agreement, the respective
Spin-Off Companies will retain or assume liability for employment-related claims
and severance for persons currently or previously employed by the respective
Spin-Off Companies and their subsidiaries, while U.S. Office Products and its
post-Distribution subsidiaries will retain or assume responsibility for their
current and previous employees. The proposed Employee Benefits Agreement
reflects U.S. Office Products' expectation that each of the Spin-Off Companies
will establish 401(k) plans for their respective employees effective as of, or
shortly after, the Distribution Date and that U.S. Office Products will transfer
401(k) accounts to those plans as soon as practicable. The proposed agreement
also provides for spinning off portions of the U.S. Office Products' cafeteria
plan that relate to employees of the Spin-Off Companies (and their subsidiaries)
and having those spun-off plans assume responsibilities for claims submitted on
or after the Distribution.

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USE OF PROCEEDS

The proceeds to the Company from this offering as contemplated hereby (net
of underwriting discounts and commissions and the estimated expenses of the
offering) at an assumed offering price of $ per share are estimated to be
approximately $ ($ if the Underwriters' over-allotment option is
exercised in full). A portion of the net proceeds to the Company from this
offering will be used to repay indebtedness allocated to the Company by U.S.
Office Products in connection with the Travel Distribution. The remainder of the
net proceeds to the Company from this offering, $ , will be retained by the
Company for general corporate purposes, including future acquisitions if
suitable acquisitions can be identified on acceptable terms. Pending such uses,
the Company intends to invest the net proceeds in investment grade,
interest-bearing securities, including, without limitation, obligations of the
U.S. government or U.S. government agencies and other highly rated liquid debt
instruments.

DIVIDEND POLICY

The Company does not anticipate declaring and paying cash dividends on the
Company Common Stock in the foreseeable future. The decision whether to apply
any legally available funds to the payment of dividends on the Company Common
Stock will be made by the Board of Directors from time to time in the exercise
of its business judgment, taking into account the Company's financial condition,
results of operations, existing and proposed commitments for use of the
Company's funds and other relevant factors. The Company's ability to pay
dividends may be restricted from time to time by financial covenants in its
credit agreements.

14
<PAGE>
DILUTION

The pro forma net tangible book value of the Company at October 25, 1997 was
$ , or $ per share of Company Common Stock. Pro forma net tangible
book value per share is determined by dividing the pro forma net tangible book
value (total pro forma tangible assets less total liabilities) of the Company
(after giving effect to the Travel Distribution, the allocation of debt by U.S.
Office Products and the purchase acquisition completed subsequent to October 25,
1997) by the number of shares of Company Common Stock outstanding. Without
taking into account any changes in the pro forma net tangible book value of the
Company, other than to give effect to the sale of the shares of Company Common
Stock offered hereby (assuming an initial public offering price of $ per
share) and the receipt of the net proceeds therefrom, the adjusted pro forma net
tangible book value of the Company at October 25, 1997 would have been
$ , or $ per share of Company Common Stock. This represents an
immediate dilution in pro forma net tangible book value of $ per share to new
investors purchasing shares in this offering. The following table illustrates
this per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $
Pro forma net tangible book value per share at October 25, 1997........... $
Increase per share attributable to new investors (1)......................
---------
Pro forma net tangible book value per share after the offering..............
---------
Dilution per share to new investors (2)(3).................................. $
---------
---------
</TABLE>

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

(1) After deduction of underwriting discounts and commissions and estimated
offering expenses to be paid by the Company.

(2) Determined by subtracting the adjusted pro forma net tangible book value per
share after the offering from the amount of cash paid by a new investor for
one share of Company Common Stock.

(3) The foregoing information does not give effect to the issuance of an
aggregate of shares of Company Common Stock reserved for issuance
as follows: (i) shares reserved for issuance upon the exercise of
the Underwriters' over-allotment option; and (ii) shares reserved
for issuance pursuant to options to purchase Company Common Stock. See
"Management-- Executive Compensation" and "Underwriting."

15
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at October
25, 1997, (i) on an actual basis; (ii) on a pro forma basis to reflect the
Travel Distribution, the allocation of $15.0 million of debt by U.S. Office
Products and the purchase acquisition completed subsequent to October 25, 1997;
and (iii) as adjusted to give effect to the sale of the shares of Company
Common Stock being offered hereby, at an assumed initial public offering price
of $ per share. This table should be read in conjunction with the
"Management's Discussion and Analysis of Financial Position and Results of
Operations of TDOP," the historical consolidated financial statements and the
pro forma combined financial statements of the Company, and the related notes to
each thereof, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
OCTOBER 25, 1997
------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
Cash........................................................................ $ 4,492 $ --
---------- ----------- -----------
---------- ----------- -----------
Short-term debt............................................................. $ 3,005 $ 929
---------- ----------- -----------
---------- ----------- -----------
Long-term debt.............................................................. $ 6,070 $ 14,071
Long-term payable to U.S. Office Products................................... 6,753
Stockholder's equity:
Preferred Stock, $.001 par value per share, shares authorized and no
shares issued and outstanding...........................................
Common Stock, $.001 par value per share; shares authorized; shares
issued and outstanding, actual; shares issued and outstanding, pro
forma; and shares issued and outstanding, pro forma as adjusted.....
Additional paid-in capital................................................
Divisional equity......................................................... 88,388 84,518
Cumulative translation adjustment......................................... (2) (2)
Retained earnings......................................................... 9,998 9,998
---------- ----------- -----------
Total stockholder's equity............................................ 98,384 94,514
---------- ----------- -----------
Total capitalization.................................................. $ 111,207 $ 108,585
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

16
<PAGE>
SELECTED FINANCIAL DATA

The historical Statement of Income Data for the year ended December 31, 1994
and 1995, the four months ended April 30, 1996 and the fiscal year ended April
26, 1997 and the Balance Sheet Data at April 30, 1996 and 1997 have been derived
from the Company's consolidated financial statements that have been audited and
are included elsewhere in this Prospectus. The historical Statement of Income
Data for the years ended December 31, 1992 and 1993 and the Balance Sheet Data
at December 31, 1992, 1993, 1994 and 1995 have been derived from unaudited
consolidated financial statements which are not included elsewhere in this
Prospectus or incorporated herein by reference. The Selected Financial Data for
the six months ended October 26, 1996 and October 25, 1997 (except pro forma
amounts) have been derived from unaudited consolidated financial statements that
appear elsewhere in this Prospectus. These unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements and, in the opinion of management, contain all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of
the financial position and results of operations for the periods presented.

The pro forma financial data gives effect, as applicable, to the Travel
Distribution and the acquisitions completed by the Company after May 1, 1996 as
if all such transactions had been consummated on May 1, 1996. In addition, the
pro forma information is based on available information and certain assumptions
and adjustments.

The Selected Financial Data provided herein should be read in conjunction
with the historical financial statements, including the notes thereto, the pro
forma financial information, including the notes thereto, and the "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
TDOP" that appear elsewhere in this Prospectus.

17
<PAGE>
SELECTED FINANCIAL DATA (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED APRIL
ENDED
(UNAUDITED)
FOUR MONTHS 26, -----------
ENDED -----------------------
YEAR ENDED DECEMBER 31, APRIL 30, PRO
------------------------------------------ ------------- FORMA OCTOBER 26,
1992 1993 1994 1995 1996 1997 1997(2) 1996
--------- --------- --------- --------- ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
STATEMENT OF INCOME DATA:
Revenues.................. $ 28,853 $ 32,838 $ 34,569 $ 45,267 $ 18,009 $ 57,677 $ 144,394 $ 29,013
Operating Expenses........ 14,244 17,153 19,692 25,836 9,491 31,541 79,015 15,100
--------- --------- --------- --------- ------------- --------- ------------ -----------
Gross profit.............. 14,609 15,685 14,877 19,431 8,518 26,136 65,379 13,913
General and administrative
expenses................ 10,588 11,647 11,651 15,221 6,660 19,684 46,278 10,231
Amortization.............. 230 197 221 342 128 548 2,974 365
Non-recurring acquisition
costs................... 1,156
--------- --------- --------- --------- ------------- --------- ------------ -----------
Operating income.......... 3,818 3,841 3,005 3,868 1,730 4,748 16,127 3,317
Interest expense.......... 125 139 118 515 173 587 1,200 190
Interest income........... (173) (231) (253) (352) (109) (445) (159)
Other (income) expense.... 55 48 42 20 118 312 30
--------- --------- --------- --------- ------------- --------- ------------ -----------
Income before provision
for income taxes........ 3,866 3,878 3,092 3,663 1,646 4,488 14,615 3,256
Provision for income
taxes................... 188 97 18 565 255 1,145 6,723 566
--------- --------- --------- --------- ------------- --------- ------------ -----------
Net income................ $ 3,678 $ 3,781 $ 3,074 $ 3,098 $ 1,391 $ 3,343 $ 7,892 $ 2,690
--------- --------- --------- --------- ------------- --------- ------------ -----------
--------- --------- --------- --------- ------------- --------- ------------ -----------
Pro forma net income per
share................... $ 0.08
------------
------------
Pro forma weighted average
shares outstanding
(3)..................... 95,963

PRO PRO
FORMA FORMA
OCTOBER 25, OCTOBER 26, OCTOBER 25,
1997 1996(2) 1997(2)
----------- ----------- -----------
<S> <C> <C> <C>

STATEMENT OF INCOME DATA:
Revenues.................. $ 46,557 $ 71,209 $ 82,576
Operating Expenses........ 26,215 38,595 45,182
----------- ----------- -----------
Gross profit.............. 20,342 32,614 37,394
General and administrative
expenses................ 14,990 23,383 26,277
Amortization.............. 649 1,597 1,777
Non-recurring acquisition
costs...................
----------- ----------- -----------
Operating income.......... 4,703 7,634 9,340
Interest expense.......... 207 600 600
Interest income........... (216)
Other (income) expense.... (38) 30 (85)
----------- ----------- -----------
Income before provision
for income taxes........ 4,750 7,004 8,825
Provision for income
taxes................... 2,185 3,222 4,059
----------- ----------- -----------
Net income................ $ 2,565 $ 3,782 $ 4,766
----------- ----------- -----------
----------- ----------- -----------
Pro forma net income per
share................... $ 0.04 $ 0.05
----------- -----------
----------- -----------
Pro forma weighted average
shares outstanding
(3)..................... 95,963 95,963
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
(UNAUDITED)
------------------------------------------ APRIL 30, APRIL 26,
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $ 4,172 $ 5,051 $ 4,366 $ 4,288 $ 4,338 $ 1,281
Total assets.......................................... 15,040 15,487 14,602 25,258 25,692 29,339
Long-term debt, less current portion.................. 4,048 3,909 3,455 8,160 6,366 2,012
Long-term payable to U.S. Office Products............. 787
Stockholder's equity.................................. 6,723 7,914 7,736 9,187 11,221 13,483

<CAPTION>
OCTOBER 25, 1997
(UNAUDITED)
---------------------------------------------
PRO AS
ACTUAL FORMA(4) ADJUSTED(4)(5)
---------- ---------- ---------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $ 8,786 $ 4,279
Total assets.......................................... 133,445 129,401
Long-term debt, less current portion.................. 6,070 14,071
Long-term payable to U.S. Office Products............. 6,753
Stockholder's equity.................................. 98,384 94,514
</TABLE>

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

(1) The historical financial information of the Pooled Companies have been
combined on a historical cost basis in accordance with GAAP to present this
financial data as if the Pooled Companies had always been members of the
same operating group. The financial information of the Purchased Companies
is included from the dates of their respective acquisitions. The Purchased
Companies and their respective acquisition dates are as follows: Associated
Travel International, June 26, 1997; Evans Travel Group, July 25, 1997;
Atlas Travel Services, September 26, 1997; Omni Travel, September 26, 1997;
McGregor Travel Management, October 24, 1997; Travel Consultants, Inc.,
October 24, 1997; and Wareheim Travel Services, December 23, 1997. The pro
forma financial data reflect acquisitions completed by the Company through
March 5, 1998.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF TDOP

INTRODUCTION

The Company, which combines eleven regional corporate travel agencies
acquired by U.S. Office Products, provides corporate travel management services
and, to a more limited extent, other travel services, throughout the United
States, in Canada and in the United Kingdom.

The Company's consolidated financial statements give retroactive effect to
the four business combinations accounted for under the pooling-of-interests
method during the period from January 1997 through April 1997 (the "Pooled
Companies") and include the results of companies acquired in business
combinations accounted for under the purchase method from their respective dates
of acquisition. Prior to their respective dates of acquisition by U.S. Office
Products, the Pooled Companies reported results on years ending on December 31.
Upon acquisition by U.S. Office Products and effective for the fiscal year ended
April 26, 1997 ("fiscal 1997"), the Pooled Companies changed their year-ends
from December 31 to conform to U.S. Office Products' fiscal year, which ends on
the last Saturday in April.

The Company generates revenues principally from (i) base and incentive
override commissions on air travel tickets, (ii) fees for services rendered to
customers and (iii) commissions on hotel reservations and car rentals. Air
travel ticketing generates the largest portion of the Company's revenues. In the
fiscal year ended April 30, 1997 and the calendar years ended December 31, 1995
and 1994, air travel commissions, including both base commissions and incentive
override commissions, accounted for approximately 73.1%, 78.9% and 79.1%,
respectively, of the Company's revenues.

The methods by which the airlines compensate travel agents have changed
considerably in recent years and continue to be in flux. Historically, the
airlines paid a percentage commission on ticket price for each domestic and
international air travel ticket issued by a travel agent. Subsequent to 1995,
most major United States airlines imposed commission caps of $25 on domestic
one-way air travel and $50 on domestic round-trip tickets. Commissions on
international tickets are not subject to a cap. In October 1997, the airlines
reduced base commissions on tickets to approximately 8% of the ticket price.

In response to the reductions in the commissions paid to travel agents,
travel agents are in the process of changing their financial arrangements with
their corporate customers either by implementing management contracts, in the
case of middle market and larger customers, or by charging transaction fees.
Under management contracts, the Company typically deducts its direct operating
expenses, indirect overhead costs and a management fee from commission revenues
collected for travel arrangements made on behalf of the customer. If the
commission revenues exceed the amounts deducted, the Company may share a
negotiated amount of the excess with the customer. If the commission revenues do
not cover the amounts deducted, the customer pays the difference to the Company.
Fee income recognized under management contracts has historically been derived
from commissions paid by the airlines. As a result, the Company does not prepare
separate reports distinguishing payments under management contracts from air
travel commission income.

After the airlines instituted the commission cap in 1995 and reduced base
commissions in October 1997, travel agencies, including the Company, began
charging transaction fees for some services to non-contract customers. The
Company typically charges between $10 and $15 per ticket for tickets issued to
customers that do not have a management contract with the Company.

The remainder of the Company's revenues derive largely from commissions on
hotel reservations and car rentals. In accordance with industry practice, the
Company receives a commission equal to approximately 10% of the hotel rate for
each hotel reservation and 5% of the base rental car rate for each rental car
reservation that it makes. Some of the Company's customers negotiate special
hotel rates that do not produce commissions. In the fiscal year ended April 26,
1997 and the calendar years ended December 31,

19
<PAGE>
1995 and 1994, hotel and rental car commissions accounted for approximately
11.9%, 9.4% and 7.4% respectively, of the Company's revenues.

The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes thereto and pro forma
financial statements and related notes thereto appearing elsewhere in this
Prospectus.

RESULTS OF OPERATIONS

The following table sets forth various items as a percentage of revenues for
the years ended December 31, 1994 and 1995, the fiscal year ended April 26, 1997
and for the six months ended October 26, 1996 and October 25, 1997, as well as
for the fiscal year ended April 26, 1997 and for the six months ended October
26, 1996 and October 25, 1997 on a pro forma basis reflecting the Travel
Distribution and the results of companies acquired in business combinations
accounted for under the purchase method as if such transactions had occurred on
May 1, 1996.
<TABLE>
<CAPTION>
FOR THE FISCAL
YEAR ENDED FOR THE SIX MONTHS ENDED
FOR THE YEAR ENDED ------------------------ -------------------------------------------
-------------------------------- PRO FORMA PRO FORMA
DECEMBER 31, DECEMBER 31, APRIL 26, APRIL 26, OCTOBER 26, OCTOBER 25, OCTOBER 26,
1994 1995 1997 1997 1996 1997 1996
--------------- --------------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating Expenses..... 57.0 57.1 54.7 54.7 52.0 56.3 54.2
----- ----- ----- ----- ----- ----- -----
Gross profit......... 43.0 42.9 45.3 45.3 48.0 43.7 45.8
General and
administrative
expenses............. 34.3 34.4 35.1 34.1 36.6 33.6 35.1
Non-recurring
acquisition costs.... -- -- 2.0 -- -- -- --
----- ----- ----- ----- ----- ----- -----
Operating income..... 8.7 8.5 8.2 11.2 11.4 10.1 10.7
Interest expense,
net.................. (0.4) 0.4 0.3 0.8 0.1 0.0 0.9
Other (income)
expense.............. 0.1 0.1 0.1 0.2 0.1 (0.1) 0.0
----- ----- ----- ----- ----- ----- -----
Income before provision
for income taxes..... 9.0 8.0 7.8 10.2 11.2 10.2 9.8
Provision for income
taxes................ 0.1 1.2 2.0 4.7 1.9 4.7 4.5
----- ----- ----- ----- ----- ----- -----
Net income............. 8.9% 6.8% 5.8% 5.5% 9.3% 5.5% 5.3%
----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- -----

PRO FORMA
OCTOBER 25,
1997
-------------
<S> <C>
Revenues............... 100.0%
Operating Expenses..... 54.7
-----
Gross profit......... 45.3
General and
administrative
expenses............. 34.0
Non-recurring
acquisition costs.... --
-----
Operating income..... 11.3
Interest expense,
net.................. 0.7
Other (income)
expense.............. (0.1)
-----
Income before provision
for income taxes..... 10.7
Provision for income
taxes................ 4.9
-----
Net income............. 5.8%
-----
-----
</TABLE>

PRO FORMA COMBINED RESULTS OF OPERATIONS

SIX MONTHS ENDED OCTOBER 25, 1997 COMPARED TO SIX MONTHS ENDED OCTOBER 26,
1996

Pro forma revenues increased 16.0%, from $71.2 million for the six months
ended October 26, 1996, to $82.6 million for the six months ended October 25,
1997. This increase was primarily due to sales to new and existing customer
accounts and improved incentive override programs with airlines.

Gross profit increased 14.7%, from $32.6 million, or 45.8% of revenues, for
the six months ended October 26, 1996 to $37.4 million, or 45.3% of revenues,
for the six months ended October 25, 1997. The decrease in gross profit as a
percentage of revenues was due primarily to the six companies acquired in
business combinations accounted for under the purchase method during the six
months ended October 25, 1997 ("the Fiscal 1998 Purchased Companies") becoming a
higher proportion of the Company's overall revenues. The Fiscal 1998 Purchased
Companies have lower gross margins as a percentage of revenue due

20
<PAGE>
to a lower proportion of revenues being derived from international air sales and
to higher operating cost structures as a result of their geographic locations.
Unlike commissions earned on domestic air sales, commissions earned on
international air sales are not subject to limitations by the airlines, and
therefore result in higher margins.

General and administrative expenses increased 12.3%, from $25.0 million, or
35.1% of revenues, for the six months ended October 26, 1996 to $28.1 million,
or 34.0% of revenues, for the six months ended October 25, 1997. The decrease in
general and administrative expenses as a percentage of revenues was primarily
due to the spreading of fixed general and administrative expenses over a larger
revenue base.

Provision for income taxes has been estimated using an effective income tax
rate of 46.0%. The high effective income tax rate, compared to the federal
statutory rate of 35.0%, was primarily due to nondeductible goodwill
amortization resulting from acquisition of the Fiscal 1998 Purchased Companies.

CONSOLIDATED RESULTS OF OPERATIONS

SIX MONTHS ENDED OCTOBER 25, 1997 COMPARED TO SIX MONTHS ENDED OCTOBER 26,
1996

Consolidated revenues increased 60.5%, from $29.0 million for the six months
ended October 26, 1996, to $46.6 million for the six months ended October 25,
1997. This increase was primarily due to the inclusion of the revenues from the
Fiscal 1998 Purchased Companies, from their respective dates of acquisition and
to sales to new and existing customer accounts, increased commissions earned on
rising travel prices and improved incentive override programs with airlines.

Gross profit increased 46.2%, from $13.9 million, or 48.0% of revenues, for
the six months ended October 26, 1996 to $20.3 million, or 43.7% of revenues,
for the six months ended October 25, 1997. The decrease in gross profit as a
percentage of revenues was due primarily to the inclusion of the Fiscal 1998
Purchased Companies. The Fiscal 1998 Purchased Companies have lower gross
margins as a percentage of revenue due to a lower proportion of revenues being
derived from international air sales and to higher operating cost structures as
a result of their geographic locations.

General and administrative expenses increased 47.6%, from $10.6 million, or
36.6% of revenues, for the six months ended October 26, 1996 to $15.6 million,
or 33.6% of revenues, for the six months ended October 25, 1997. The decrease in
general and administrative expenses as a percentage of revenues was due
primarily to a reduction in executive compensation expense at the Pooled
Companies. Prior to being acquired by the Company, many of the Pooled Companies
were privately held corporations that paid compensation and bonuses
substantially in the amount of their net income.

Provision for income taxes increased from $566,000 for the six months ended
October 26, 1996 to $2.2 million for the six months ended October 25, 1997,
reflecting effective income tax rates of 17.4% and 46.0%, respectively. The low
effective income tax rate for the six months ended October 26, 1996, compared to
the federal statutory rate of 35.0%, was primarily due to the fact that several
of the companies included in the results of such period, which were acquired in
business combinations accounted for under the pooling-of-interests method, were
subject to federal income taxes on a corporate level as they had elected to be
treated as subchapter S corporations prior to being acquired by the Company
("Subchapter S Companies"). The high effective income tax rate for the six
months ended October 25, 1997 was due primarily to certain of the Pooled
Companies no longer being treated as subchapter S corporations and, therefore,
being subject to federal income taxes and due to an increase in nondeductible
goodwill amortization resulting from the acquisitions of the Fiscal 1998
Purchased Companies.

YEAR ENDED APRIL 26, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Consolidated revenues increased 27.4%, from $45.3 million in 1995, to $57.7
million in fiscal 1997. This increase was due primarily to the inclusion of
revenues from a company acquired by one of the Pooled

21
<PAGE>
Companies during 1995 in a business combination accounted for under the purchase
method (the "1995 Purchased Company") for all of fiscal 1997 and only a portion
of 1995.

Gross profit increased 34.5%, from $19.4 million, or 42.9% of revenues, in
1995 to $26.1 million, or 45.3% of revenues, in fiscal 1997. The increase in
gross profit as a percentage of revenues was due primarily to a shift in the mix
of revenues to higher margin services such as international air sales and
leisure travel.

General and administrative expenses increased 30.0%, from $15.6 million, or
34.4% of revenues, in 1995 to $20.2 million, or 35.1% of revenues, in fiscal
1997. The increase in general and administrative expenses as a percentage of
revenues was primarily due to the inclusion, for all of fiscal 1997 and a
portion of 1995, of the 1995 Purchased Company, which had higher general and
administrative expenses as a percentage of revenues.

The Company incurred non-recurring acquisition costs of $1.2 million in
fiscal 1997, in connection with the acquisition of the Pooled Companies. These
non-recurring acquisitions costs included accounting, legal and investment
banking fees, real estate and environmental assessments and appraisals, various
regulatory fees and recognition of transaction related obligations. Generally
accepted accounting principles ("GAAP") require the Company to expense all
acquisition costs (both those paid by the Company and those paid by the sellers
of the acquired companies) related to business combinations accounted for under
pooling-of-interests method of accounting. The Company does not anticipate
incurring any such costs for the next two years since, as a result of the Travel
Distribution, the Company is precluded from completing acquisitions under the
pooling-of-interests method for two years from the Distribution Date.

Provision for income taxes increased from $565,000 in 1995 to $1.1 million
in fiscal 1997, reflecting effective income tax rates of 15.4% and 25.5%,
respectively. The low effective income tax rates in 1995 and fiscal 1997,
compared to the federal statutory rate of 35.0%, was primarily due to the fact
that several of the companies included in the results of such periods, which
were acquired in business combinations accounted for under the
pooling-of-interests method, were Subchapter S Companies. The difference in the
effective tax rate between the two periods was attributable principally to
differences in the relative operating performance in such periods of such
Subchapter S Companies and companies subject to federal income taxes on a
corporate level.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Consolidated revenues increased 30.9%, from $34.6 million in 1994, to $45.3
million in 1995. This increase was primarily due to the inclusion of the
revenues from the 1995 Purchased Company from its date of acquisition. This
increase was partially offset by a reduction in revenues due to a change in the
commission structure paid by the airlines. In April 1995 most airlines reduced
the commissions paid to travel agents by imposing a cap on commissions earned
from the booking of domestic flights. Per-ticket commissions are generally
capped at $25 for one-way domestic tickets and $50 for round-trip domestic
tickets.

Gross profit increased 30.6%, from $14.9 million, or 43.0% of revenues, in
1994 to $19.4 million, or 42.9% of revenues, in 1995. The decrease in gross
profit margin as a percentage of revenues was due to the change in air sale
commissions described above, partially offset by the inclusion of the 1995
Purchased Company, which had a higher gross profit percentage than the Company.

General and administrative expenses increased 31.1%, from $11.9 million, or
34.3% of revenues, in 1994 to $15.6 million, or 34.4% of revenues, in 1995. The
increase in general and administrative expenses as a percentage of revenues was
due to the inclusion of the 1995 Purchased Company, which had higher general and
administrative expenses as a percentage of revenues than the Company and as a
result of the change in airline ticket sale commissions described above.

22
<PAGE>
Provision for income taxes increased from $18,000 in 1994 to $565,000 in
1995, reflecting effective income tax rates of 0.6% and 15.4%, respectively. The
low effective income tax rates in 1994 and 1995, compared to the federal
statutory rate of 35.0%, was primarily due to the fact that several of the
companies included in the results for such periods, which were acquired in
business combinations accounted for under the pooling-of-interests method, were
Subchapter S Companies. The difference in the effective tax rate between the two
periods was attributable principally to differences in the relative operating
performance in such periods of such Subchapter S Companies and companies subject
to federal income taxes on a corporate level.

LIQUIDITY AND CAPITAL RESOURCES

At October 25, 1997, the Company had cash of $4.5 million and working
capital of $8.8 million. The Company's capitalization, defined as the sum of
long-term debt, long-term payable to U.S. Office Products and stockholder's
equity, at October 25, 1997 was approximately $111.2 million. On a pro forma
basis at October 25, 1997, the Company had working capital of $4.3 million and
capitalization of $108.6 million. The decreases in pro forma working capital and
capitalization are a result of pro forma adjustments reflecting the Company's
(i) using its cash to pay a long-term payable to U.S. Office Products and (ii)
assuming certain liabilities in connection with the Distribution Agreement. See
"The Spin-Off from U.S. Office Products--Distribution Agreement."

During the six months ended October 25, 1997, net cash used in operating
activities was $1.5 million. Cash flow from operating activities was primarily
impacted by a significant increase in deposits made on the behalf of customers
for advance travel reservations, which increase was attributable to a Purchased
Company acquired in 1997. Net cash provided by investing activities was
$265,000, including $990,000 for additions to property and equipment, such as
computer equipment and office furniture, and $618,000 to pay non-recurring
acquisition costs, partially offset by $1.7 million of cash acquired with the
Fiscal 1998 Purchased Companies. Net cash used in financing activities was $1.2
million, consisting primarily of the repayment of indebtedness.

During the six months ended October 26, 1996, net cash provided by operating
activities was $2.8 million. Net cash used in investing activities was $590,000
related to additions to property and equipment, such as computer equipment and
office furniture. Net cash used in financing activities was $1.7 million,
including $970,000 for the repayment of indebtedness and $1.0 million for the
payment of dividends.

During fiscal 1997, net cash provided by operating activities was $6.5
million. Net cash used in investing activities was $3.1 million, including $1.8
million for an acquisition, $769,000 for additions to property and equipment,
such as computer equipment and office furniture, and $539,000 to pay non-
recurring acquisition costs. Net cash used in financing activities was $2.1
million, including $4.6 million for the repayment of indebtedness and $3.0
million for the payment of dividends, partially offset by advances to the
Company of $5.0 million from U.S. Office Products.

During 1995, net cash provided by operating activities was $4.2 million. Net
cash provided by investing activities was $561,000, including $2.3 million of
cash received in conjunction with a purchase acquisition partially offset by
$1.9 million paid for additions to property and equipment, such as computer
equipment and office furniture. Net cash used by financing activities was $3.1
million, including $2.0 million for the repayment of indebtedness and $2.4
million for the payment of dividends, partially offset by proceeds from the sale
of $800,000 of common stock of one of the pooled companies.

During 1994, net cash provided by operating activities was $3.0 million. Net
cash used in investing activities was $676,000, including $804,000 for additions
to property and equipment, such as computer equipment and office furniture. Net
cash used in financing activities was $4.0 million, including $707,000 to repay
indebtedness and $3.3 million for the payment of dividends.

23
<PAGE>
The Company expects that the Distribution Agreement with U.S. Office
Products will call for an allocation of $15.0 million of debt by U.S. Office
Products resulting in incremental debt of $5.4 million at October 25, 1997,
which will be reflected in the financial statements as a reduction in
stockholder's equity. The Company intends to use a portion of the net proceeds
of this offering to repay such debt. The remainder of the net proceeds from this
offering will be retained by the Company and used for general corporate
purposes, including acquisitions. See "Use of Proceeds."

The Company also intends to enter into a credit facility concurrently with
the Distribution which will contain certain customary financial and other
restrictive covenants. The Company expects that funds from operations and the
availability of the credit facility will be sufficient to meet its working
capital and capital expenditure commitments for the foreseeable future. The
Company also expects that a portion of the credit facility will be available to
fund the cash portion of future acquisitions, subject to the maintenance of bank
covenants.

Capital expenditures for fiscal year 1998 are expected to be approximately
$3.5 million.

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

The domestic and international travel industry is extremely seasonal. The
results of the Company have fluctuated because of seasonal variations in the
travel industry, especially the leisure travel segment. Net revenues and net
income for the Company are generally higher in the second and third calendar
quarters. The Company expects this seasonality to continue in the future. The
Company's quarterly results of operations may also be subject to fluctuations as
a result of fare wars by travel suppliers, changes in relationships with certain
travel suppliers, changes in the mix of services offered by the Company, extreme
weather conditions or other factors affecting travel. Unexpected variations in
quarterly results could also adversely affect the price of the Company Common
Stock, which in turn could limit the ability of the Company to make
acquisitions.

As the Company continues to complete acquisitions, it may become subject to
additional seasonal influences. Quarterly results also may be materially
affected by the timing of acquisitions, the timing and magnitude of costs
related to such acquisitions, variations in the prices paid by the Company for
the products it sells, the mix of products sold and general economic conditions.
Moreover, the operating margins of companies acquired may differ substantially
from those of the Company, which could contribute to the further fluctuation in
its quarterly operating results. Therefore, results for any quarter are not
necessarily indicative of the results that the Company may achieve for any
subsequent fiscal quarter or for a full fiscal year.

The following table sets forth certain unaudited consolidated quarterly
financial data for the year ended December 31, 1995, the fiscal year ended April
26, 1997 and the six months ended October 25, 1997 (in thousands). The
information has been derived from unaudited consolidated financial statements
that in

24
<PAGE>
the opinion of management reflect all adjustments, consisting only of normal
recurring accruals, necessary for a presentation of such quarterly information.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues.................................................... $ 8,486 $ 13,241 $ 12,005 $ 11,535 $ 45,267
Gross profit................................................ 3,142 6,305 5,093 4,891 19,431
Operating income............................................ 188 2,091 1,000 589 3,868
Net income.................................................. 217 1,558 792 531 3,098
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED APRIL 26, 1997
-----------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................................... $ 15,243 $ 13,770 $ 12,514 $ 16,150 $ 57,677
Gross profit............................................... 7,637 6,276 4,957 7,266 26,136
Operating income (loss).................................... 2,186 1,131 (407) 1,838 4,748
Net income (loss).......................................... 1,753 937 (367) 1,020 3,343
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED
OCTOBER 25, 1997
--------------------
FIRST SECOND
--------- ---------
<S> <C> <C> <C> <C> <C>
Revenues...................................................
Gross Profit...............................................
Operating income (loss)....................................
Net income (loss)..........................................
</TABLE>

INFLATION

The Company does not believe that inflation has had a material impact on its
results of operations.

NEW ACCOUNTING PRONOUNCEMENTS

EARNINGS PER SHARE. In February 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No.
128 "Earnings Per Share." SFAS No. 128 establishes standards for computing and
presenting earnings per share ("EPS") and applies to entities with publicly held
common stock or potential common stock. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997; earlier
application is not permitted. SFAS No. 128 requires restatement of all
prior-period EPS data presented. The Company intends to adopt SFAS No. 128 in
fiscal 1998. The implementation of SFAS No. 128 is not expected to have a
material effect on the Company's earnings per share as determined under current
accounting rules.

REPORTING COMPREHENSIVE INCOME. In June 1997, FASB issued SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. SFAS No. 130 is effective for fiscal years beginning
after December 15, 1997. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The Company intends to
adopt SFAS No. 130 in fiscal 1999.

25
<PAGE>
INDUSTRY OVERVIEW

The travel agency industry in the United States is highly fragmented and
characterized by intense competition. There are more than 30,000 travel agencies
producing an estimated $70 billion in annual airline ticket sales. Approximately
seven of those agencies, including the Company, have more than $1.0 billion each
in annual airline sales. The Company believes that approximately 75% of the
United States market for air travel is booked through travel agencies. Business
travel accounts for approximately 60% of all travel expenditures, with leisure
travel accounting for the balance. Airline ticket sales by travel agencies
increased at a rate of approximately 10.5% for calendar year 1997, and have
increased approximately 66% since 1988, according to recent industry reports.

Travel agencies serve both their customers and travel suppliers. The
agencies have traditionally served their customers by booking travel
reservations with travel suppliers and providing information regarding the array
of travel services available. The agencies review, analyze and simplify the
range of information concerning competing suppliers, schedules and prices to
provide customers with relevant and useful choices. In addition, agencies
servicing corporate customers offer customized reports and other management
tools that facilitate the development and monitoring of corporate travel
policies. Agencies also serve travel suppliers by acting as their primary
distribution channel for information and booking services. Travel agencies
derive their revenue from commissions generated by airline, rental car and hotel
bookings and from service fees paid by customers.

The business travel agency industry has undergone significant changes since
1995, due in part to the reduction in commission revenues from airline carriers,
increasing industry reliance on technology and the concentration of the
industry's customer base. The Company believes that significant technological
and financial resources are required to compete in today's corporate travel
market, and that larger corporate travel agencies may therefore have a
competitive advantage. Accordingly, the Company believes the business travel
agency industry is undergoing a period of consolidation and that significant
growth opportunities exist. The Company believes that large agencies providing
integrated systems from purchasing to payment will eventually dominate the
industry.

The industry's role and capacity as a distribution channel, and its
relationship with both customers and suppliers, is also undergoing significant
changes as a result of the Internet, computer on-line services and other
technological innovations. The Company believes these innovations offer
opportunities for travel agencies to increase the efficiency of their
distribution capacities and enhance services provided to travelers and corporate
travel managers.

BUSINESS

GENERAL

The Company, one of the five largest providers of corporate travel
management services in the United States based on airline ticket sales, was
formed by U.S. Office Products through the acquisition of eleven regional
corporate travel agencies. In calendar year 1997, the Company booked $1.38
billion in airline ticket sales, or approximately 2.5 million airline tickets.
With locations throughout the United States, in Canada, and in the United
Kingdom, the Company provides its corporate customers with the full range of
corporate travel management services, including reservations by telephone,
facsimile, e-mail, Internet and direct access; ticketing; accounting;
information and management reporting; assistance in planning and organizing
incentive trips, corporate meetings and events; and travel management consulting
services. The Company provides corporate travel management services to its
customers through several channels, including on-site travel agencies, regional
travel agency offices and satellite ticket printers. The Company receives
commissions and fees from airlines, hotels, car rental companies and other
travel suppliers, and service and management fees from its customers. As a small
portion of the Company's overall business, the Company provides travel services
to leisure customers and groups.

26
<PAGE>
The Company employs approximately 2,400 people at 128 offices and 214
on-site locations in the United States, Canada and the United Kingdom. U.S.
Office Products began building the Company with the acquisition of Professional
Travel Corporation in January 1997 and thereafter acquired ten additional
corporate travel management companies. The following table sets forth each of
the acquired agencies.

<TABLE>
<CAPTION>
NAME HEADQUARTERS DATE FOUNDED
- ------------------------------------------------ ------------------------------------------------ -------------

<S> <C> <C>
Professional Travel Corporation Englewood, Colorado 1983

Mutual Travel Seattle, Washington 1985

Travel Arrangement, Inc. and
St. Pierre Enterprises (Super Travel) Houston, Texas 1975/1985

Simmons Associates, Inc. Alexandria, Virginia 1976

Associated Travel International Santa Ana, California 1961

Evans Travel Group New Orleans, Louisiana 1986

Atlas Travel Services Vancouver, British Columbia 1961

Omni Travel Cambridge, Massachusetts 1979

Travel Consultants, Inc. Grand Rapids, Michigan 1972

McGregor Travel Management Stamford, Connecticut 1953

Wareheim Travel Services Baltimore, Maryland
(Travel Guide) 1951
</TABLE>

BUSINESS STRATEGY

The Company's objective is to be a premier provider of corporate travel
management services to middle market and larger companies around the world. To
accomplish this objective, the Company has a focused business strategy based
upon the following key principles:

- FOCUSING ON CORPORATE TRAVEL. The Company's customers are primarily middle
market and larger corporations, which typically require the expertise and
efficiencies offered by multi-regional professional service providers. The
Company provides these customers with end-to-end systems integration of
their corporate travel: from consulting on the development of corporate
travel policies, negotiating with frequently-used travel suppliers and
making reservations to providing corporate management with detailed
accounting, travel expense and travel activity reports.

- MAINTAINING PERSONALIZED CUSTOMER SERVICE. The Company's strategy is to
combine the resources and efficiencies of a large, national "mega-agency"
with the responsive, personalized service of local and regional travel
agencies. Although the mega-agencies have the resources to manage and
service large national accounts efficiently, they have not maintained a
reputation for delivery of personal service. The Company believes that its
regional business focus, which allows it to emphasize customer service and
to offer its customers dedicated, local service, is a key feature
differentiating it from its other large competitors.

- OPERATING WITH DECENTRALIZED MANAGEMENT STRUCTURE. The Company believes
that its local management teams have a thorough understanding of their
respective geographic markets and businesses and have developed strong
relationships with their customers and suppliers. The Company intends to
capitalize on its local market expertise and client relationships by
utilizing a decentralized management structure. Even as the Company
centralizes administrative and technology systems, local management will
continue to handle daily interactions with customers and operate their
businesses with an appreciation of their particular local and regional
markets. The Company's executive management team will work closely with
local and regional offices to coordinate, integrate and expand their
service offerings. The Company also intends to use appropriate incentive

27
<PAGE>
compensation, including stock ownership, to ensure that local management
interests and Company objectives remain aligned.

- ACHIEVING OPERATING EFFICIENCIES. The Company's strategy is to reduce
costs as a percentage of sales by taking advantage of purchasing,
administrative and other operating efficiencies which it believes can be
achieved with the Company's existing and potentially increasing size and
scale. The Company believes that it will be able to achieve operating
efficiencies by eliminating redundant facilities, reducing overhead and
combining certain general and administrative functions, such as ARC
processing, 24-hour toll-free number service, research and development,
purchasing, data processing and the process of securing accounting,
insurance, financial management, human resources and legal support.

- UTILIZING TECHNOLOGY TO IMPROVE SERVICE AND REDUCE COST. The Company
intends to continue pursuing systems and technological advancement to
provide the most complete, accurate and current information about travel
services and reservations to the Company's customers. Certain of the
Company's subsidiaries have developed operating and technology systems
designed to improve and enhance their operations, including a
fully-automated quality assurance and cost savings program. See
"--Services--Use of Technology." The Company intends to utilize the
Internet, computer on-line booking services and other technological
innovations to enhance its ability to interface with its customers
efficiently and conveniently and to reduce the cost of transactions to its
customers.

GROWTH STRATEGIES

The Company plans to achieve its objective of being a premier provider of
corporate travel management services to middle market and larger companies
around the world by implementing an internal growth strategy and pursuing an
aggressive acquisition program.

- IMPLEMENTING INTERNAL GROWTH STRATEGY. The key elements of the Company's
internal growth strategy are as follows:

Generate new customers through an aggressive marketing program. The
Company intends to expand its customer base by capitalizing on the breadth
of its services, its size, its geographic scope and its financial resources.
The Company believes that it will be able to leverage its nationwide
presence to attract corporate customers that have locations in more than one
geographic region.

Continue to reduce customer costs. The Company intends to continue
developing its planning, consulting and other management services to help
clients achieve their travel objectives at the lowest feasible cost. In
addition, the Company's shift toward a revenue structure based primarily on
management fees enables the Company to share with customers the cost savings
it achieves through operating efficiencies. See "--Revenue
Sources--Management Contracts."

Implement best practices. The Company believes that the ability of its
different operating units to access and share the collective experience and
expertise of its management gives it competitive advantages in the industry.
The Company seeks to identify certain best practices in each of its
operating units that can be implemented in other operating units, and
therefore generate incremental revenue, reduce costs, and enhance
profitability. For example, the Company expects to identify the best
applications among the software and information technology of each of its
subsidiaries.

Achieve economies of scale. The Company believes that it can achieve
economies of scale through the integration of its back-office operations,
technology development and information and management systems at its current
operations. For instance, the Company has begun implementing a single,
Company-wide information technology platform to service its accounting and
reporting requirements. The Company expects to benefit from greater
purchasing power in such key expense areas as telecommunications,
advertising, insurance, courier expenses and employee benefits. The Company
believes that it can reduce total operating expenses by eliminating or
consolidating certain

28
<PAGE>
duplicative administrative functions, such as ARC processing, 24-hour
toll-free number services and research and development.

- PURSUING AN AGGRESSIVE ACQUISITION PROGRAM TO FURTHER CONSOLIDATE THE
INDUSTRY. The Company believes that the travel service industry is highly
fragmented with significant opportunities to consolidate through selective
acquisitions of leading regional and local companies. The Company will
seek to acquire companies that (i) have demonstrated growth and
profitability, (ii) have desirable geographic locations, (iii) are run by
successful, experienced entrepreneurs whom the Company will generally
endeavor to retain, (iv) predominantly serve the corporate market and (v)
have an emphasis on customer service. The Company believes that its
acquisition strategy will enable it to achieve operating efficiencies
through consolidation of purchasing and various administrative functions,
while freeing regional and local management to focus on service and
customer satisfaction. The Company believes that opportunities exist for
global expansion. The Company, which already has operations in Canada and
the United Kingdom, also intends to continue seeking opportunities for
international expansion through strategic international acquisitions and
through internal expansion into global markets.

The Company routinely reviews, and conducts investigations of, potential
acquisitions of domestic and foreign travel agencies. When the Company
believes a favorable opportunity exists, the Company seeks to enter into
discussions with the owners of such businesses regarding the possibility of
an acquisition by the Company. At any given time, the Company may be in
discussions with one or more travel agency owners. On February , 1998,
the Company entered into a letter of intent to purchase a regional
corporate travel agency for approximately $1.6 million in cash, subject to
completion of due diligence and negotiation of definitive terms. The
Company expects to complete this acquisition in the second half of calendar
year 1998.

SERVICES

TRAVEL MANAGEMENT SERVICES

The Company provides the full range of corporate travel management services,
including: reservations by telephone, facsimile, Internet and direct access;
ticketing; accounting; information and management reporting; assistance in
planning and organizing incentive trips, corporate meetings and events; and
travel management consulting services. In providing these services, the Company
seeks to assist corporations in managing and controlling their travel costs.

The Company books travel reservations for its customers with a variety of
travel suppliers, including airlines, hotels and rental car companies. In
calendar year 1997 the Company booked $1.38 billion in airline ticket sales, or
approximately 2.5 million airline tickets. In order to improve customer value,
the Company uses several computer reservation systems to book airline tickets,
hotel reservations and rental car reservations. The Company uses three major
systems, SABRE, Galileo/Apollo and Worldspan. After reserving travel
arrangements for its customers, the Company issues tickets, both paper and
electronic, and provides its customers with detailed itineraries, which include
confirmation numbers for hotel and car rental reservations. The Company also
provides a 24-hour toll-free number which its customers can access for emergency
assistance.

For its business customers, the Company provides various travel management
services. These include tracking and reporting travel expenses, providing
reports to management summarizing travel patterns and policy, and identifying
deviations from the customer's travel policies. See "--Use of Technology." The
Company can also assist its business customers in the creation of their travel
policies and can manage customer costs by negotiating discounts and other
benefits with travel suppliers, such as airlines, hotels and car rental
companies.

In addition to corporate travel management, the Company provides leisure
travel services to individuals and groups, as a small portion of the Company's
overall business. The Company derives part of its

29
<PAGE>
leisure travel business through its existing corporate customer base. Certain of
the Company's regional offices also actively advertise in the leisure travel
market.

USE OF TECHNOLOGY

The Company embraces technology as a key to future success in the travel
industry. The Company's information technology can provide corporate travel
managers with extensive feedback about individual, departmental and company
travel activity and patterns. The Company can use this information to consult
with its customers regarding the structure, operation and efficiency of a
variety of corporate travel policies. In addition, the Company can provide
corporate travel managers with comprehensive information about cost saving
opportunities for the travel undertaken by their companies' employees.

The Company has developed a fully-automated quality assurance program,
AQUA-Registered Trademark-, which features both a quality auditing system and a
computerized cost avoidance system. AQUA's Trip Auditor system checks each
travel record for accuracy and completeness and repetitively searches airline
seat maps for each traveler's preferred seat assignments and frequent flier
upgrade opportunities. AQUA's FareBuster-TM- system is a computerized cost
avoidance program which checks each record for a lower airline fare or hotel
rate and continuously checks wait list flights and flight inventories for
discount fares that become available prior to travel. AQUA also advises travel
managers of travelers who are not taking advantage of the lowest fare. Although
certain of the Company's regional agencies cannot yet access the AQUA system,
the Company intends to install the system throughout its offices.

In addition, the Company has recently developed an Internet system that
allows travel managers and other executives to view their company's travel
activities 24 hours a day using a password protected system. The user can view
both pre-trip and post-trip information sorted at every level of corporate
organization, from individual traveler to department, division or company.

DISTRIBUTION OF SERVICES

The Company provides corporate travel management services to its customers
through several channels, including on-site travel agencies, regional travel
agency offices and on-site satellite ticket printers ("STP").

The Company currently has 214 on-site travel operations on customer
premises, where it provides customized trip planning, reservation and ticketing
services to the employees of corporate customers. On-site operations are
typically desirable for customers with airline expenditures in excess of $1.0
million per year. Through an on-site office, the Company is able to work
one-on-one with the customer's travel manager to meet the customer's travel
needs, including the need for customized corporate travel information and
negotiations with travel suppliers frequently used by the customer.

The Company has 128 regional travel agency offices. These offices are
typically used by corporate customers with less than $1.0 million in travel
expenditures per year. The regional travel agency offices provide local
companies with comprehensive travel management services, including trip
planning, reservation and ticketing services, accounting, corporate travel
reporting, negotiations with frequently used travel suppliers and consulting.
The regional nature of these offices allows them to leverage their local market
expertise and to provide quick, responsive and personalized service. In
addition, regional travel agency offices provide backup to nearby on-site
locations.

The Company also operates over 300 STPs at customer locations across the
country. The Company uses these printers to distribute tickets instantly to
customers' field locations that have enough volume to justify the STP. Locations
with lower volume can receive tickets via overnight delivery services. The
Company believes that the advent of electronic ticketing will eventually
eliminate the need for STPs and overnight delivery.

The Company has entered into arrangements with third parties pursuant to
which it fulfills travel reservations placed on the Internet. In addition, the
Company has several sites on the World Wide Web

30
<PAGE>
where individual customers can, among other things, check flight times, make
reservations, access and sort password-protected corporate travel data, find
restaurants and automatic teller machines, and access the latest currency
conversions.

The Company also offers desktop reservation services to its customers. This
distribution method offers customers the option of performing reservation
services directly, while the travel agent provides a supporting role. The travel
agent's role includes performing quality control on the reservation, assisting
the traveler with the use of the reservation system and issuing and delivering
tickets reserved by the customer. Additionally, the travel agent reports to
management on matters such as pre- and post-travel activity, cost saving
opportunities and the development and assessment of the company's travel policy
and negotiated rate opportunities.

REVENUE SOURCES

The Company generates revenues principally from (i) base and incentive
override commissions on air travel tickets, (ii) fees for services rendered to
customers and (iii) commissions on hotel reservations and car rentals. In
accordance with industry practice, the Company receives a commission on each
domestic and international air travel ticket that it issues of approximately 8%,
with a commission cap of $25 on domestic one-way air travel tickets and $50 on
domestic round-trip tickets. Commissions on international tickets are not
subject to a commission cap. The Company has also entered into agreements with
major airlines for the payment of "incentive override commissions" in addition
to the base commissions the Company receives. Under such agreements, the
airlines generally award additional commissions on domestic and international
air travel if the volume of the Company's ticket sales surpasses specified
thresholds, which typically are based on the airlines' share of the relevant
markets. Furthermore, the Company receives a commission equal to approximately
10% of the hotel rate for hotel reservations that it makes and a commission
equal to 5% of the base rental car rate for rental car reservations that it
makes.

In response to reductions in the commissions paid to travel agents and
consistent with growing industry practice, the Company has entered into
management contracts with many of its corporate customers. Under these
contracts, the Company typically deducts its direct operating expenses, indirect
overhead costs and a management fee from commission revenues collected from
travel arrangements made on behalf of the customer. If the commission revenues
collected exceed the amounts deducted, the Company may share a negotiated amount
of the excess with the customer. If the commission revenues do not cover the
amounts deducted, the customer pays the difference to the Company. Fee income
recognized under management contracts has historically been paid from
commissions paid by travel suppliers. As a result, the Company does not prepare
separate reports distinguishing payments under management contracts from
commission income.

After the airlines instituted the commission cap in 1995, and reduced base
commissions to approximately 8% in October 1997, travel agencies, including the
Company, began charging transaction fees for some services to non-contract
customers. The Company typically charges between $10 and $15 per ticket for
tickets issued to customers who do not have a management contract with the
Company.

Despite the management fees increasingly being charged to customers since
airlines reduced commissions, it is the Company's belief that corporate
customers will continue to use travel agents for their service and knowledge
capabilities. The expense and opportunity costs to a corporate customer of
processing reservations and comprehending the magnitude of information available
regarding travel services would probably exceed the fees charged by a travel
agency. In addition, the management fee structure enables the customer to
benefit from operating efficiencies and other cost reductions that the Company
is able to achieve. Moreover, an internal travel management capability would
fall outside the core business expertise of most companies. Customers have the
option of contracting directly with airlines and other travel suppliers, but at
the risk of increased costs, inadequate information and a substantial time
investment.

The Company also provides group and leisure travel services, largely to its
corporate customers. The Company's leisure travel services include booking
airline tickets, hotel reservations, car rentals, tours,

31
<PAGE>
cruises and specialty travel packages. As is the case with non-contract
corporate customers, the Company usually charges between $10 and $15 per airline
ticket for tickets issued to leisure customers.

COMPETITION

The Company competes with a variety of other providers of travel and
travel-related products and services. Its principal competitors are (i) other
travel agencies and other distributors of travel services, (ii) travel suppliers
offering their products and services directly to consumers and (iii) various
on-line services available on the Internet.

The Company faces competition from local, regional and large travel
agencies. Local and regional agencies often have a strong presence in particular
geographic areas and benefit from a detailed knowledge of their particular
markets. Large travel agencies and other travel distributors may have
substantial resources and the leverage to achieve certain purchasing and
operating efficiencies. In addition, travel suppliers, including airlines,
hotels and rental car companies, are increasingly offering their products and
services directly to consumers through the Internet and computer on-line
services. Because of low barriers to entry in the travel service industry, the
Company constantly faces competition from possible new entrants. See "Risk
Factors--Substantial Competition and Industry Consolidation; New Methods of
Distribution."

The Company believes that it competes for customers based upon service,
price and specialized knowledge. The Company believes that it is well-positioned
to compete on these bases due to its combination of size and regional focus. The
Company uses its size to achieve operating efficiencies by implementing
customized and industry-standard technologies and by consolidating
administrative functions. The Company's size also provides opportunities to
negotiate favorable arrangements with travel suppliers, such as airlines, hotels
and rental car companies. The Company's regional focus, conversely, fosters
personalized customer service and specialized local market knowledge, which
helps improve customer service and expand the Company's customer base.

MARKETING AND SALES

The Company's marketing continually targets both new and existing customers.
The Company's sales staff identifies potential customers, and develops
opportunities to provide additional travel services to existing customers. Over
the past few years, travel policy and travel purchasing decisions in larger
companies have been centralized in purchasing departments, with travel managers,
or within the offices of chief financial officers. The selection of a travel
agency has also become more formal, with larger accounts soliciting bids through
"requests for proposals." The Company has adapted to these changes by relying on
a sales force specially trained in the business of corporate travel, supported
by experienced marketing staff. The Company has approximately 100 employees in
its sales and marketing departments.

The Company also plans to utilize co-branding to enhance its national
identity. The Company expects that each of its subsidiaries will use the
Company's name and its own name together in its advertising and marketing
efforts.

MANAGEMENT INFORMATION SYSTEMS

The Company uses networked management information systems for financial
management, reporting, and communication. These systems provide management with
current financial information from all the Company's offices, and allow
management to share that information easily and quickly with others. The systems
also allow management to communicate efficiently with employees and each other
throughout the business day. The Company employs technicians to administer,
install, and maintain its computer hardware and software, as well as computer
programmers to create software solutions for the Company and its customers. The
Company has begun implementing a single, Company-wide information technology
platform to service its accounting and reporting requirements, and expects the
new system to be in place Company-wide by the first quarter of calendar 1999.

32
<PAGE>
YEAR 2000 ISSUES

The Company is addressing the Year 2000 issues relating to its financial
accounting system by upgrading its financial accounting software to a program
that is Year 2000 compliant. This upgrade is being done in conjunction with the
Company's shift towards an integrated system for all of its operating
subsidiaries and, therefore, the Company expects that the upgrade to Year 2000
compliant software will not result in any material capital expenditure above and
beyond that which would have been incurred to integrate the Company's systems.
The Company expects the new system to be in place Company-wide by the first
quarter of calendar 1999. Other significant software used in the Company's
operations, such as its computerized reservation system, is provided by
third-party vendors, who have represented that their software will be Year 2000
compliant.

EMPLOYEES

As of December 31, 1997, the Company had approximately 2,400 full time
employees, none of which are subject to collective bargaining agreements. The
Company believes that it enjoys good relations with its employees.

PROPERTIES

As of December 31, 1997, the Company operated at 128 travel agency
facilities, three of which are owned and 125 of which are leased. The following
are material properties:

<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED/
LOCATION FOOTAGE LEASED EXPIRATION
- ------------------------------------------------------------------ ------------- --------- ----------------------
<S> <C> <C> <C>

Santa Ana, California............................................. 22,852 Leased October 31, 1998

Alexandria, Virginia.............................................. 6,000 Leased December 13, 1998

New Orleans, Louisiana............................................ 2,521 Leased June 30, 1998

Stamford, Connecticut............................................. 10,000 Owned N/A

Seattle, Washington............................................... 1,200 Leased January 31, 1999

Seattle, Washington............................................... 560 Leased October 31, 1998

Cambridge, Massachusetts.......................................... 15,500 Leased December 31, 2001

Englewood, Colorado............................................... 49,900 Owned N/A

Grand Rapids, Michigan............................................ 29,142 Owned N/A
</TABLE>

The office building owned by TDOP and located at 84 Inverness Circle East,
Englewood, Colorado is subject to first and second deeds of trust. The first
deed of trust secures payment of a Promissory Note dated May 16, 1995 and
payable to Colorado National Bank, in the principal amount of $1,650,000. The
second deed of trust secures payment of a Promissory Note dated June 20, 1995
and payable to Colorado National Bank, in the principal amount of $225,000.

The office building owned by TDOP and located at 112 Prospect Street,
Stamford, Connecticut is subject to a mortgage securing payment of a Promissory
Note payable to First County Bank, in the principal amount of $585,000.

The Company believes that its properties are adequate to support its
operations for the foreseeable future.

LEGAL PROCEEDINGS

The Company is involved in various legal actions arising in the ordinary
course of business. The Company believes that none of these actions will have a
material adverse effect on its business, financial condition and results of
operations.

33
<PAGE>
MANAGEMENT OF TDOP

DIRECTORS AND EXECUTIVE OFFICERS

Following the Travel Distribution, it is anticipated that the directors and
executive officers of the Company will be as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- --------------------------------------------
<S> <C> <C>
Edward S. Adams........................... 47 Chairman of the Board, Chief Executive
Officer, President and Director
Robert C. Griffith........................ 48 Chief Financial Officer and Treasurer
Eugene A. Over, Jr........................ 39 General Counsel and Secretary
Jonathan J. Ledecky....................... 40 Director*
Vassilios Sirpolaidis..................... 50 Director*
Ned A. Minor.............................. 52 Director*
</TABLE>

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

* Messrs. Ledecky, Sirpolaidis and Minor are expected to join the Board of
Directors promptly following the Distribution.

EDWARD S. ADAMS has served as Chairman of the Board, Chief Executive
Officer, President and Director of the Company since February 1998. He has also
served as President of Professional Travel Corporation ("PTC"), a subsidiary of
the Company, since 1983 and as President of the U.S. Office Products Corporate
Travel Services Division from January 1997 through the Distribution Date.

ROBERT C. GRIFFITH has served as Chief Financial Officer and Treasurer of
the Company since February 1998. He has served as Chief Financial Officer of PTC
since January 1997 and as Chief Financial Officer of the U.S. Office Products
Corporate Travel Services Division from January 1997 through the Distribution
Date. Mr. Griffith served as Vice President of Finance and Administration of PTC
from June 1993 through January 1997. Prior to joining PTC, Mr. Griffith served
as Senior Manager and Area Director of IDS Tax and Business Services, a
subsidiary of American Express, from September 1991 to June 1993. Before joining
IDS, Mr. Griffith was employed by Deloitte & Touche. Mr. Griffith is licensed as
a certified public accountant in the state of Colorado.

EUGENE A. OVER, JR. has served as General Counsel and Secretary of the
Company since February 1998. He has also served as Legal Affairs and
Administrative Officer of PTC since December 1997. Mr. Over was an attorney at
Clanahan Tanner Downing & Knowlton, P.C. from December 1994 through November
1997. From January 1994 through November 1994, he served as General Counsel of
GSA Corporation, a private investment company. Prior to January 1994, Mr. Over
was an attorney at Montgomery, Little & McGrew, P.C.

JONATHAN J. LEDECKY will serve as a Director of the Company and each of the
other Spin-Off Companies as of the Distribution Date. He founded Consolidation
Capital Corporation in February 1997 and serves as its Chairman and Chief
Executive Officer. Mr. Ledecky founded U.S. Office Products in October 1994 and
will serve as its Chairman of the Board until the Distribution Date and served
as its Chief Executive Officer until November 5, 1997. Mr. Ledecky has also
served as the Non-Executive Chairman of the Board of USA Floral Products, Inc.
since April 1997 and as the Non-Executive Chairman of the Board of UniCapital
Corporation since October 1997. Mr. Ledecky served from 1989 to 1991 as the
President of The Legacy Fund, Inc., and from 1991 to September 1994 as President
and Chief Executive Officer of Legacy Dealer Capital Fund, Inc., a wholly-owned
subsidiary of Steelcase Inc., the nation's largest manufacturer of office
furniture products. Prior to his tenure at The Legacy Fund, Inc., Mr. Ledecky
was a partner at Adler and Company and a Senior Vice President at Allied Capital
Corporation, an investment management company.

34
<PAGE>
VASSILIOS SIRPOLAIDIS will serve as a Director of the Company as of the
Distribution Date. He has been President of Mile High Office Supply Company,
Inc. ("Mile High") since 1978. U.S. Office Products acquired Mile High in July
1996. Mr. Sirpolaidis has also served as a District President of U.S. Office
Products since August 1996.

NED A. MINOR will serve as a Director of the Company as of the Distribution
Date. Mr. Minor has served as Director, President and Vice-President of Minor &
Brown, P.C., a private law firm, since 1977. Mr. Brown is a practicing attorney
in the state of Colorado, specializing in the areas of general corporate law and
mergers and acquisitions.

The Board of Directors intends to create an Audit Committee effective as of
the Distribution Date. The Audit Committee will be charged with reviewing the
Company's annual audit and meeting with the Company's independent accountants to
review the Company's internal control and financial management practice.

The Board of Directors intends to create a Compensation Committee effective
as of the Distribution Date. The Compensation Committee will be charged with
determining the compensation of executive officers of the Company and
administering any stock option plan the Company may adopt.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the compensation
paid by all persons for services rendered to the Company and its subsidiaries
during the year ended April 26, 1997 to the Chief Executive Officer and to the
other most highly compensated officer of the Company (the "Named Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2)
- -------------------------------------------------------------------------- ---------- --------- ----------------
<S> <C> <C> <C>

Edward S. Adams........................................................... $ 300,750 -- $ 8,554
Chairman of the Board, Chief Executive Officer, President and Director

Robert C. Griffith........................................................ $ 120,000 $ 3,000 $ 5,256
Chief Financial Officer and
Treasurer
</TABLE>

(1) The salaries for the Named Officers include nine months of salary prior to
PTC being acquired by U.S. Office Products. Mr. Adams' salary was reduced
from $325,000 to $250,000 and Mr. Griffith's salary was increased from
$104,000 to $150,000 upon the acquisition of PTC by U.S. Office Products.
Upon the completion of the Travel Distribution, the annual salaries of the
named executives will be: Mr. Adams--$300,000 and Mr. Griffith--$200,000.

(2) Represents automobile expenses paid by the Company.

No options to acquire securities of the Company or U.S. Office Products were
granted to or held by the Named Officers in the year ended April 26, 1997. After
the fiscal year ended April 26, 1997, Mr. Adams and Mr. Griffith were granted
options, which expire on April 28, 2007, to acquire 22,500 shares and 15,000
shares, respectively, of U.S. Office Products Common Stock at an exercise price
of $15.17. As described above, all options were granted by U.S. Office Products
as options to acquire U.S. Office Products Common Stock and are expected to be
replaced with options to acquire Company Common Stock in connection with the
Travel Distribution.

35
<PAGE>
DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS

Non-management directors are expected to be compensated with $10,000 of
airline tickets and other travel accommodations for their services as directors.
In addition, such directors will be paid $2,500 in cash for each committee of
the Board of Directors on which they serve. Non-management directors will also
be reimbursed for all out-of-pocket expenses related to their service as
directors.

Jonathan J. Ledecky entered into the Ledecky Services Agreement with U.S.
Office Products on January 13, 1998, to become effective on the Distribution
Date and contingent on the consummation of the Distributions. The Ledecky
Services Agreement will expire on September 30, 1998 if none of the
Distributions has occurred by that date. If the Ledecky Services Agreement
becomes effective, it will replace his November 4, 1997 employment agreement
with U.S. Office Products.

The Ledecky Services Agreement governs Mr. Ledecky's continuing obligations
to U.S. Office Products and also provides certain benefits and obligations with
respect to the Company and the other Spin-Off Companies. Under the Ledecky
Services Agreement, Mr. Ledecky will remain an employee of U.S. Office Products,
at an annual salary of $48,000, through June 30, 2001, with the contract
terminable only if he violates the non-competition provision of the agreement.

The Ledecky Services Agreement provides for non-competition and
non-solicitation restrictions, until the fourth anniversary of the Distribution
Date. These provisions generally restrict Mr. Ledecky from, among other things,
investing in or working for or on behalf of any business selling any products or
services in direct competition with U.S. Office Products and the Spin-Off
Companies (collectively, the "U.S. Office Products Companies"), within 100 miles
of any location where any of the U.S. Office Products Companies conducts
business. (For this purpose, "products or services" are those in effect as of
January 13, 1998.) The Ledecky Services Agreement prohibits Mr. Ledecky from
calling upon managerial employees of the U.S. Office Products Companies to hire
them away and calling upon customers of the U.S. Office Products Companies to
solicit or sell products or services in direct competition with the U.S. Office
Products Companies. Mr. Ledecky is also barred from hiring away for
Consolidation Capital Corporation any person then or in the preceding one year
employed by the U.S. Office Products Companies. The Ledecky Services Agreement
includes Mr. Ledecky's agreement that four years is a reasonable period of time
for this provision and that U.S. Office Products will assign to the Company and
the other Spin-Off Companies the ability to enforce the non-competition
provisions described above as to their own businesses.

Under the Ledecky Services Agreement, the Board of Directors of U.S. Office
Products has agreed that Mr. Ledecky will receive a stock option for Company
Common Stock from the Company as of the Distribution Date. The Board of
Directors of U.S. Office Products intends the option to be compensation for Mr.
Ledecky's services to the Company as a director, and certain services as an
employee. The option will cover up to 7.5% of the outstanding Company Common
Stock determined as of the Distribution Date, with no anti-dilution provisions
in the event of issuance of additional shares of Company Common Stock (other
than with respect to stock splits or reverse stock splits). The option will have
a per share exercise price equal to the price of the first trade (the "Initial
Trading Price") on the day the Company Common Stock is first publicly traded
(the "First Trade Date").

It is expected that Mr. Ledecky's option will become exercisable as to
two-thirds of the shares it covers as of the 12-month anniversary of the First
Trade Date. The remainder of the option will become exercisable as follows: (i)
as of the 18-month anniversary of the First Trade Date if the average closing
trading price over the 15 business days preceding that anniversary date exceeds
the Initial Trading Price (with the prices adjusted for stock splits or reverse
stock splits or other corporate events that cause the Company to adjust
substantially all outstanding options) by at least 25% or (ii) as of the sixth
anniversary of the First Trade Date if the clause (i) condition is not met and
Mr. Ledecky is still employed by the Company at that anniversary. Option
exercisability will accelerate if Mr. Ledecky dies before the option expires or,
if and to the extent that, the Company accelerates the exercise schedule of
options for substantially all management option holders. All unexercised
portions of the option will expire ten years

36
<PAGE>
after its date of grant or, if applicable, as of the date Mr. Ledecky violates
his non-competition agreement with the Company.

The Company expects to adopt an employee stock options plan at approximately
the time of the Travel Distribution. The terms of the plan and the initial
amount of options have not yet been approved, but the Company currently expects
that options for up to 7.5% of the issued and outstanding capital stock of the
Company will be issued to senior management concurrent with the Travel
Distribution.

EMPLOYMENT CONTRACTS AND RELATED MATTERS

In January 1997, PTC entered into an employment agreement with Edward S.
Adams, its President and Chief Executive Officer. The employment agreement
provides for an initial two-year term and successive one-year extensions at the
option of PTC. Pursuant to this agreement, Mr. Adams is entitled to receive
minimum annual compensation of $250,000 (which will be increased to $300,000
upon completion of the Travel Distribution), incentive bonuses as determined by
the Board of Directors of PTC (and approved by the U.S. Office Products Board of
Directors) and all perquisites and benefits customarily provided by PTC to its
employees. The agreement also provides for the issuance of options to purchase
60,000 shares of U.S. Office Products Common Stock (up to a maximum of 600,000
shares) for every $10 million increase in commission revenue earned by U.S.
Office Products after the date of the agreement. In the event that Mr. Adams'
employment is terminated for any reason other than cause, Mr. Adams' employment
agreement provides that Mr. Adams is entitled to receive his base salary and
benefits for the longer of (i) six months from the date of termination, or (ii)
the remaining time under the initial term of the employment agreement. The
employment agreement also prohibits Mr. Adams from engaging in certain
activities deemed competitive with PTC or its affiliates during the duration of
his employment with PTC and for the longer of (i) a period of two years
thereafter, or (ii) as long as Mr. Adams continues to receive severance payments
from PTC.

In January 1997, PTC entered into an employment agreement with Robert C.
Griffith, its Chief Financial Officer and Treasurer. The employment agreement
provides for an initial two-year term and successive one-year extensions at the
option of PTC. Pursuant to this agreement, Mr. Griffith is entitled to receive
minimum annual compensation of $150,000 (which will be increased to $200,000
upon completion of the Travel Distribution), incentive bonuses as determined by
the President of PTC (and approved by the U.S. Office Products Board of
Directors) and all perquisites and benefits customarily provided by PTC to its
employees. In the event that Mr. Griffith's employment is terminated for any
reason other than cause, Mr. Griffith's employment agreement provides that Mr.
Griffith is entitled to receive his base salary and benefits for the longer of
(i) four months from the date of termination, or (ii) the remaining time under
the initial term of the employment agreement. The employment agreement also
prohibits Mr. Griffith from engaging in certain activities deemed competitive
with PTC or its affiliates during the duration of his employment with PTC and
for the longer of (i) a period of two years thereafter, or (ii) as long as Mr.
Griffith continues to receive severance payments from PTC.

Effective as of the Distribution Date, PTC will assign Messrs. Adams' and
Griffith's employment agreements to TDOP and, thereafter, all decisions formerly
made by PTC's Board of Directors (and approved by the U.S. Office Products Board
of Directors) will be made by the Company's Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors expects to create a Compensation Committee effective
as of the Distribution Date. The Compensation Committee will be charged with
determining the compensation of all executive officers. Until a Compensation
Committee of the Board of Directors is created, decisions regarding the
compensation of executive officers will be made by the Board of Directors. No
member of the Board of Directors has ever been an officer of the Company or any
of its subsidiaries, except that Mr. Adams is the

37
<PAGE>
Chief Executive Officer of the Company. In addition, Mr. Ledecky was the Chief
Executive Officer of U.S. Office Products until November 5, 1997 and will be the
Chairman of U.S. Office Products until the Distribution Date and Mr. Sirpolaidis
has been President of Mile High, which was acquired by U.S. Office Products in
July 1996, since 1978 and a District President of U.S. Office Products since
August 1996.

RELATED PARTY TRANSACTIONS

On January 24, 1997, U.S. Office Products acquired PTC, which will be a
wholly-owned subsidiary of TDOP following the Distribution, from Edward S.
Adams, the Company's Chairman of the Board, Chief Executive Officer and
President, for 725,923 shares of U.S. Office Products Common Stock valued at
$22.725 per share. In connection with the acquisition, PTC also entered into an
employment agreement with Mr. Adams at an annual base salary of $250,000 per
year and employment agreement with Robert C. Griffith, the Company's Chief
Financial Officer and Treasurer, at an annual base salary of $150,000 per year.
See "Management of TDOP--Employment Contracts and Related Matters."

On January 24, 1997, in a related transaction, U.S. Office Products acquired
a commercial office building at 84 Inverness Circle East, Englewood, Colorado
from Marcono LLC ("Marcono"), a Colorado limited liability company, for an
aggregate purchase price of approximately $3.4 million, consisting of 68,154
shares of U.S. Office Products Common Stock valued at $22.725 per share and U.S.
Office Products' assumption of certain notes from Marcono in the aggregate
amount of $1,846,721.27. Marcono is owned as follows: 2% by Edward S. Adams, 2%
by Mr. Adams' wife and 48% by each of two trusts established for the benefit of
Mr. Adams' two children. Vassilios Sirpolaidis, who is expected to be a director
of the Company, is the trustee of the two trusts. Prior to the purchase of the
office building by U.S. Office Products, PTC leased the office building from
Marcono for approximately $22,000 per month. The office building purchased by
U.S. Office Products is used as the headquarters of PTC.

For a discussion of matters related to the spin-off of the Company from U.S.
Office Products, see "The Spin-Offs From U.S. Office Products."

For a discussion of transactions between the Company and Mr. Ledecky, see
"Management--Director Compensation and Other Arrangements."

38
<PAGE>
PRINCIPAL STOCKHOLDERS OF TDOP

The following table sets forth the number and percentage of outstanding
shares of the Company Common Stock that are expected to be beneficially owned by
(i) all persons known by the Company to own beneficially more than 5% of the
U.S. Office Products Common Stock, (ii) each director and each Named Officer who
is a stockholder, and (iii) all directors and executive officers as a group, in
each case after giving effect to the Travel Distribution. The table reflects
shares of U.S. Office Products Common Stock owned as of February 12, 1998.
Assuming one share of Company Common Stock is distributed for each share of U.S.
Office Products Common Stock, the number and percent of shares of Company Common
Stock beneficially owned by the following at the time of the Travel Distribution
should be equal to the number of shares of U.S. Office Products Common Stock
owned by them at the time of the Travel Distribution (which will exclude any
shares purchased from these persons in the Tender Offer), except that the number
of shares beneficially owned with respect to options that are exercisable within
60 days of the time of the Travel Distribution may be different depending on the
ratio at which options for U.S. Office Products Common Stock are replaced with
options for Company Common Stock. Except as otherwise indicated, the business
address of each of the following is 84 Inverness Circle East, Englewood,
Colorado, 80155.

<TABLE>
<CAPTION>
PERCENT
--------------------
PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OFFERING OFFERING
- ------------------------------------------------------------------------------ ------------ --------- ---------
<S> <C> <C> <C>

Edward S. Adams(1)............................................................ 699,702 *

Robert C. Griffith(2)......................................................... 3,750 *

Jonathan J. Ledecky(3)........................................................ 2,428,125 1.7%

Vassilios Sirpolaidis(4)...................................................... 1,206,375 *
Ned A. Minor.................................................................. 0 *

All current executive officers and directors as a group (5 persons)........... 4,337,952 3.1%

5% STOCKHOLDERS

FMR Corp.(5).................................................................. 15,754,406 11.2%
82 Devonshire Street
Boston, MA 02109

Massachusetts Financial Services Company(5)................................... 8,262,886 5.9%
500 Boylston Street
Boston, MA 02116
</TABLE>

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

* Less than 1%.

(1) Includes 5,625 shares which may be acquired upon exercise of options
exercisable within 60 days following the Travel Distribution.

(2) Includes 3,750 shares which may be acquired upon exercise of options
exercisable within 60 days following the Travel Distribution.

(3) Excludes options for U.S. Office Product Common Stock that will not be
converted into options for Company Common Stock at the time of the Travel
Distribution.

(4) Includes 9,375 shares which may be acquired upon exercise of options
exercisable within 60 days following the Travel Distribution and 48,000
shares held by Mr. Sirpolaidis' wife.

(5) Based upon a Schedule 13G filed with the SEC.

39
<PAGE>
DESCRIPTION OF TDOP CAPITAL STOCK

GENERAL

Set forth below is a summary of TDOP's authorized capital stock. At the time
of the Travel Distribution, the Company's authorized capital stock is expected
to consist of shares of Company Common Stock, par value $.001 per share,
and shares of preferred stock, par value $.001 per share (the "Preferred
Stock"). At the time of the Travel Distribution, the Company is expected to have
outstanding approximately shares of Company Common Stock and no shares of
Preferred Stock.

COMPANY COMMON STOCK

The holders of Company Common Stock are entitled to one vote for each share
on all matters voted upon by stockholders, including the election of directors.

Subject to the rights of any then outstanding shares of Preferred Stock, the
holders of the Company Common Stock are entitled to such dividends as may be
declared in the discretion of the Board of Directors out of funds legally
available therefor. See "Dividend Policy." The holders of Company Common Stock
are entitled to share ratably in the net assets of the Company upon liquidation
after payment or provision for all liabilities and any preferential liquidation
rights of any Preferred Stock then outstanding. The holders of Company Common
Stock have no preemptive rights to purchase shares of stock of the Company.
Shares of Company Common Stock are not subject to any redemption provisions and
are not convertible into any other securities of the Company. All of the shares
of Company Common Stock to be distributed pursuant to the Travel Distribution
will be fully paid and nonassessable.

PREFERRED STOCK

The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's certificate of incorporation (the "Certificate of
Incorporation") and limitations prescribed by law, the Board of Directors is
expressly authorized to adopt resolutions to issue the shares, to fix the number
of shares and to change the number of shares constituting any series, and to
provide for or change the voting powers, designations, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions thereof, including dividend rights (including whether dividends are
cumulative), dividend rates, terms of redemption (including sinking fund
provisions), redemption prices, conversion rights and liquidation preferences of
the shares constituting any class or series of the Preferred Stock, in each case
without any further action or vote by the stockholders. The Company has no
current plans to issue any shares of Preferred Stock of any class or series.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Company Common Stock. For example, Preferred Stock issued by the
Company may rank prior to the Company Common Stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of Company Common Stock. Accordingly, the issuance of
shares of Preferred Stock may discourage bids for the Company Common Stock or
may otherwise adversely affect the market price of the Company Common Stock.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Section 203 provides, with certain
exceptions, that a Delaware corporation may not

40
<PAGE>
engage in any of a broad range of business combinations with a person or an
affiliate, or associate of such person, who is an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquired 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
such person an interested stockholder (excluding shares owned by persons who are
both officers and directors of the corporation, and shares held by certain
employee stock ownership plans); or (iii) on or after the date the person
becomes an interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is: (i) the owner of 15%
or more of the outstanding voting stock of the corporation; or (ii) an affiliate
or associate of the corporation if such affiliate or associate was the owner of
15% or more of the outstanding voting stock of the corporation at any time
within the three-year period immediately prior to the date on which it is sought
to be determined whether such person is an interested stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws, by action of
its stockholders, to exempt itself from coverage, provided that such bylaws or
certificate of incorporation amendment shall not become effective until 12
months after the date it is adopted. The Company has not adopted such an
amendment to its Certificate of Incorporation or bylaws (the "Bylaws").

LIMITATION ON DIRECTORS' LIABILITIES

Pursuant to the Certificate of Incorporation and under Delaware law,
directors of the Company are not liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law or any
transaction in which a director has derived an improper personal benefit.

TRANSFER AGENT AND REGISTRAR

The Company has not yet appointed a Transfer Agent and Registrar for the
Company Common Stock but expects to do so prior to the Travel Distribution.

41
<PAGE>
UNDERWRITING

Upon the terms and subject to the conditions set forth in the Underwriting
Agreement, [including the completion of the Travel Distribution], the Company
has agreed to sell to each of the Underwriters named below (the "Underwriters"),
for whom Smith Barney Inc. and NationsBanc Montgomery Securities LLC are acting
as representatives (the "Representatives"), and each of such Underwriters has
severally agreed to purchase from the Company the respective number of shares of
Company Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Smith Barney Inc. .........................................................
NationsBanc Montgomery Securities LLC......................................

-----------------
Total....................................................................
-----------------
-----------------
</TABLE>

In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the shares of
Company Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any such shares of Company 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 has been advised by the
Representatives that the several Underwriters propose initially to offer such
Shares 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 of Company Common Stock. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share of
Company Common Stock to other dealers. After the initial offering, the public
offering price and such concessions may be changed.

The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to
additional shares of Company Common Stock, at the public offering price less the
Underwriting Discount set forth on the cover page of this Prospectus. The
Underwriters may exercise such option only to cover over-allotments in the sale
of the shares of Company Common Stock that the Underwriters have agreed to
purchase. To the extent that the Underwriters exercise such option, each
Underwriter will have a firm commitment, subject to certain conditions, to
purchase a number of option shares proportionate to such Underwriter's initial
commitment.

The Representatives have informed the Company that they do not intend to
confirm sales to any account over which they exercise discretionary authority.

In connection with this offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Company Common
Stock. Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which such persons may bid
for or purchase Company Common Stock for the purpose of stabilizing its market
price. The Underwriters also may create a short position for the account of the
Underwriters by selling more Company Common Stock in connection with this
offering than they are committed to purchase from the Company, and in such case
may purchase Company Common Stock in the open market following completion of the
offering to cover all or a portion of such short position. The Underwriters may
also cover all or a portion of such short position, up to shares of
Company Common Stock, by exercising the Underwriters' over-allotment option
referred to above. In addition, Smith Barney Inc., on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the offering) for the account of the other Underwriters, the selling
concession with respect

42
<PAGE>
to Company Common Stock that is distributed in the offering but subsequently
purchased for the account of the Underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the Company Common Stock at a level above that which might otherwise
prevail in the open market. None of the transactions described in this paragraph
is required, and, if they are undertaken, they may be discontinued at any time.

The Company's officers and directors, including Jonathan J. Ledecky, will
agree that they will not, without the prior written consent of Smith Barney
Inc., offer, sell, pledge or otherwise dispose of, or file (or participate in
the filing of) a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, with respect to, any shares of capital stock of the
Company or any securities convertible into or exercisable or exchangeable for
such capital stock, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of the Underwriting
Agreement, other than shares of Company Common Stock disposed as BONA FIDE gifts
approved by Smith Barney Inc. The Company has agreed that it will not, for a
period of 180 days following the date of the Underwriting Agreement, without the
prior written consent of Smith Barney Inc., offer, sell or contract to sell, or
otherwise dispose of (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other shares of Company Common
Stock or any securities convertible into, or exchangeable for, shares of Company
Common Stock, except that the Company may issue and sell Company Common Stock
pursuant to any employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect on the date of the Underwriting
Agreement and the Company may issue Company Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding on the date of
the Underwriting Agreement.

The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments the Underwriters may be required
to make in respect thereof. In the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

Prior to this offering, there has been no public market for the Company
Common Stock. The price to the public for the shares of Company Common Stock
will be determined through negotiations between the Company and the
Representatives and will be based on, among other things, the Company's
financial and operating history and condition, the prospects of the Company and
its industry in general, the management of the Company and the market prices of
securities of companies engaged in businesses similar to those of the Company.
There can, however, be no assurance that the prices at which the shares of
Company Common Stock will sell in the public market after this offering will not
be lower than the price at which the shares of Company Common Stock are sold by
the Underwriters.

EXPERTS

The financial statements included in this Prospectus (except as they relate
to the unaudited interim periods) have been audited by various independent
accountants. The companies and periods covered by these audits are indicated in
the individual accountants' reports. Such financial statements have been so
included in reliance on the reports of the various independent accountants given
on the authority of such firms as experts in auditing and accounting.

LEGAL MATTERS

The validity of shares of Company Common Stock and certain tax matters
relating to the Distributions will be passed upon on behalf of the Company and
U.S. Office Products by Wilmer, Cutler & Pickering, Washington, D.C. The
validity of the shares of Company Common Stock will be passed upon for the
Underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.

43
<PAGE>
TDOP, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
TDOP, INC.
Introduction to Pro Forma Financial Information.......................................................... F-3
Pro Forma Combined Balance Sheet as of October 25, 1997 (unaudited)...................................... F-5
Pro Forma Combined Statement of Income for the six months ended October 25, 1997 (unaudited)............. F-6
Pro Forma Combined Statement of Income for the six months ended October 26, 1996 (unaudited)............. F-7
Pro Forma Combined Statement of Income for the fiscal year ended April 26, 1997 (unaudited).............. F-8
Notes to Pro Forma Combined Financial Statements......................................................... F-9
Report of Price Waterhouse LLP, Independent Accountants.................................................. F-10
Report of Deloitte & Touche LLP, Independent Auditors.................................................... F-11
Consolidated Balance Sheet as of April 30, 1996, April 26, 1997 and October 25, 1997 (unaudited)......... F-12
Consolidated Statement of Income for the years ended December 31, 1994 and 1995, the four months ended
April 30, 1996, the fiscal year ended April 26, 1997 and the six months ended October 26, 1996
(unaudited) and October 25, 1997 (unaudited)........................................................... F-13
Consolidated Statement of Stockholder's Equity for the years ended December 31, 1994 and 1995, the four
months ended April 30, 1996, the fiscal year ended April 26, 1997 and the six months ended October 25,
1997 (unaudited)....................................................................................... F-14
Consolidated Statement of Cash Flows for the years ended December 31, 1994 and 1995, the four months
ended April 30, 1996, the fiscal year ended April 26, 1997 and the six months ended October 26, 1996
(unaudited) and October 25, 1997 (unaudited)........................................................... F-15
Notes to Consolidated Financial Statements............................................................... F-17

ASSOCIATED TRAVEL SERVICES, INC.
Report of Deloitte and Touche LLP, Independent Auditors.................................................. F-30
Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997 (unaudited)........................... F-31
Statements of Income for the years ended December 31, 1994, 1995 and 1996 and the three months ended
March 31, 1996 (unaudited) and 1997 (unaudited)........................................................ F-33
Statements of Shareholder's Equity for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1997 (unaudited)................................................................ F-34
Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996 and the three months ended
March 31, 1996 (unaudited) and 1997 (unaudited)........................................................ F-35
Notes to Financial Statements............................................................................ F-37

EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.
Report of Price Waterhouse LLP, Independent Accountants.................................................. F-45
Combined Balance Sheet as of July 25, 1997............................................................... F-46
Combined Statement of Income and Retained Earnings for the year ended July 25, 1997...................... F-47
Combined Statement of Cash Flows for the year ended July 25, 1997........................................ F-48
Notes to Combined Financial Statements................................................................... F-49
</TABLE>

F-1
<PAGE>
TDOP, INC.

INDEX TO FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
PAGE
---------
MCGREGOR TRAVEL MANAGEMENT, INC.
<S> <C>
Report of Walter J. McKeever & Company, Independent Accountants.......................................... F-53
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997 (unaudited)....................... F-54
Statement of Income and Retained Earnings for the years ended December 31, 1995 and 1996 and the nine
months ended September 30, 1996 (unaudited) and 1997 (unaudited)....................................... F-56
Statements of Cash Flows for the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1996 (unaudited) and 1997 (unaudited).................................................... F-57
Notes to Financial Statements............................................................................ F-59

OMNI TRAVEL SERVICE, INC.
Report of Nardella & Taylor, Independent Accountants..................................................... F-66
Balance Sheets as of December 31, 1996 and June 30, 1997 (unaudited)..................................... F-67
Statements of Income and Retained Earnings for the year ended June 30, 1996, the six months ended
December 31, 1996 and the six months ended June 30, 1996 (unaudited) and 1997 (unaudited).............. F-68
Statements of Cash Flows for the year ended June 30, 1996, the six months ended December 31, 1996 and the
six months ended June 30, 1996 (unaudited) and 1997 (unaudited)........................................ F-69
Notes to Financial Statements............................................................................ F-70

TRAVEL CONSULTANTS, INC. AND ENVISIONS VACATIONS, INC.
Report of Price Waterhouse LLP, Independent Accountants.................................................. F-76
Combined Balance Sheet as of October 24, 1997............................................................ F-77
Combined Statement of Income and Retained Earnings for the year ended October 24, 1997................... F-78
Combined Statement of Cash Flows for the year ended October 24, 1997..................................... F-79
Notes to Combined Financial Statements................................................................... F-80
</TABLE>

F-2
<PAGE>
TDOP, INC.

PRO FORMA COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

The unaudited pro forma financial statements give effect to the spin-off of
TDOP, Inc. (the "Company"), formerly the Corporate Travel Services division of
U.S. Office Products Company ("U.S. Office Products"), through the distribution
of shares of the Company to U.S. Office Products shareholders (the
"Distribution") and acquisitions completed through March 5, 1998.

The pro forma combined balance sheet gives effect to the Distribution and
the acquisition of an individually insignificant company after October 25, 1997
(the "Post October 25, 1997 Purchase Acquisition"), as if all such transactions
had occurred as of the Company's most recent balance sheet date, October 25,
1997.

The pro forma combined statement of income for the fiscal year ended April
26, 1997 gives effect to (i) the Distribution; (ii) the acquisition of one
individually insignificant company acquired in a business combination accounted
for under the purchase method completed during the fiscal year ended April 26,
1997 (the "Fiscal 1997 Purchase Acquisition"); and (iii) the acquisitions of
Associated Travel Services, Inc. ("Associated Travel"), Evans Travel Group, Inc.
and Evans Consulting Services, Inc. ("Evans Travel"), McGregor Travel
Management, Inc. ("McGregor Travel"), Omni Travel Service, Inc. ("Omni Travel"),
Travel Consultants, Inc. and Envisions Vacations, Inc. ("Travel Consultants")
and two other individually insignificant companies in business combinations
accounted for under the purchase method and completed during the fiscal year
ending April 25, 1998 (the "Fiscal 1998 Purchase Acquisitions"), as if all such
transactions had occurred on May 1, 1996. The pro forma combined statement of
income for the year ended April 26, 1997 includes (i) the audited financial
information of the Company for the year ended April 26, 1997; (ii) the unaudited
financial information of the Fiscal 1997 Purchase Acquisitions for the period
May 1, 1996 through their respective dates of acquisition; and (iii) the
unaudited financial information of the Fiscal 1998 Purchase Acquisitions for the
period from May 1, 1996 through April 26, 1997.

The pro forma combined statement of income for the six months ended October
25, 1997 gives effect to the Distribution and the Fiscal 1998 Purchase
Acquisitions, as if all such transactions had occurred on April 27, 1997. The
pro forma combined statement of income for the six months ended October 25, 1997
includes the unaudited financial information of the Company for the six months
ended October 25, 1997 and the unaudited financial information of the Fiscal
1998 Purchase Acquisitions for the period from April 27, 1997 through the
earlier of their respective dates of acquisition or October 25, 1997.

The pro forma combined statement of income for the six months ended October
26, 1996 gives effect to (i) the Distribution; (ii) the fiscal 1997 Purchase
Acquisition; and (iii) the Fiscal 1998 Purchase Acquisitions, as if all such
transactions had occurred on May 1, 1996. The pro forma combined statement of
income for the six months ended October 26, 1996 includes (i) the unaudited
financial information of the Company for the six months ended October 26, 1996;
(ii) the unaudited financial information of the fiscal 1997 Purchase Acquisition
for the six months ended October 26, 1996; and (iii) the unaudited financial
information of the Fiscal 1998 Purchase Acquisitions for the six months ended
October 26, 1996.

The historical financial statements of the Company give retroactive effect
to the results of the four companies acquired by the Company during the year
ended April 26, 1997 in business combinations accounted for under the
pooling-of-interests method of accounting.

The historical financial statements of the Company also reflect an allocated
portion of general and administrative costs incurred by U.S. Office Products.
The allocated costs include expenses such as: certain corporate executives'
salaries, accounting and legal fees, departmental costs for accounting, finance,
legal, purchasing, marketing and human resources, as well as other general
overhead costs. These corporate

F-3
<PAGE>
TDOP, INC.

PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

overheads have been allocated to the Company using one of several factors,
dependent on the nature of the costs being allocated, including, revenues,
number and size of acquisitions and number of employees.

The pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial data presented herein does not purport to
represent what the Company's financial position or results of operations would
have been had the transactions which are the subject of pro forma adjustments
occurred on those dates, as assumed, and are not necessarily representative of
the Company's financial position or results of operations in any future period.
The pro forma combined financial statements should be read in conjunction with
the other financial statements and notes thereto included elsewhere in this
Prospectus.

F-4
<PAGE>
TDOP, INC.

PRO FORMA COMBINED BALANCE SHEET

OCTOBER 25, 1997

(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
POST OCTOBER
25,
1997 PURCHASE PRO FORMA PRO FORMA
TDOP, INC. ACQUISITION ADJUSTMENTS COMBINED
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 4,492 $ 695 $ (5,187)(b) $
Accounts receivable, net............................. 21,422 319 21,741
Receivable from U.S. Office Products................. 1,779 (1,779)(b)
Prepaid and other current assets..................... 1,524 23 1,547
----------- ------- ----------- -----------
Total current assets............................. 29,217 1,037 (6,966) 23,288

Property and equipment, net............................ 18,545 214 18,759
Intangible assets, net................................. 83,966 604 1,058(a) 85,628
Other assets........................................... 1,717 9 1,726
----------- ------- ----------- -----------
Total assets..................................... $ 133,445 $ 1,864 $ (5,908) $ 129,401
----------- ------- ----------- -----------
----------- ------- ----------- -----------

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Short term debt...................................... $ 3,005 $ $ (2,076)(b) $ 929
Accounts payable..................................... 5,658 640 6,298
Accrued compensation................................. 4,408 14 4,422
Other accrued liabilities............................ 7,360 7,360
----------- ------- ----------- -----------
Total current liabilities........................ 20,431 654 (2,076) 19,009

Long-term debt......................................... 6,070 787 7,214(b) 14,071
Long-term payable to U.S. Office Products.............. 6,753 (6,753)(b)
Deferred income taxes.................................. 155 155
Other long-term liabilities............................ 1,652 1,652
----------- ------- ----------- -----------
Total liabilities................................ 35,061 1,441 (1,615) 34,887

Stockholder's equity:
Divisional equity.................................... 88,388 1,481(a) 84,518
(5,351)(b)
Cumulative translation adjustment.................... (2) (2)
Retained earnings.................................... 9,998 423 (423)(a) 9,998
----------- ------- ----------- -----------
Total stockholder's equity....................... 98,384 423 (4,293) 94,514
----------- ------- ----------- -----------
Total liabilities and stockholder's equity....... $ 133,445 $ 1,864 $ (5,908) $ 129,401
----------- ------- ----------- -----------
----------- ------- ----------- -----------
</TABLE>

See accompanying notes to pro forma combined financial statements.

F-5
<PAGE>
TDOP, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED OCTOBER 25, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
INDIVIDUALLY
INSIGNIFICANT
FISCAL 1998
TDOP, ASSOCIATED EVANS MCGREGOR OMNI TRAVEL PURCHASE
INC. TRAVEL TRAVEL TRAVEL TRAVEL CONSULTANTS ACQUISITIONS
--------- ----------- --------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $ 46,557 $ 7,146 $ 1,524 $ 13,134 $ 2,983 $ 7,052 $ 4,180
Operating expenses................ 26,215 4,034 669 7,887 1,259 3,955 1,163
--------- ----------- --------- ----------- --------- ------ ------
Gross profit.................... 20,342 3,112 855 5,247 1,724 3,097 3,017

General and administrative
expenses........................ 14,990 1,989 401 3,148 1,132 2,138 2,744
Amortization Expense.............. 649 197 15 87 47
--------- ----------- --------- ----------- --------- ------ ------
Operating income................ 4,703 926 439 2,012 592 912 273
Other (income) expense:
Interest expense................ 207 32 4 63 1 41 14
Interest income................. (216) (35) (61) (28) (6)
Other........................... (38) (47)
--------- ----------- --------- ----------- --------- ------ ------
Income before provision for income
taxes........................... 4,750 976 435 2,010 619 871 265
Provision for income taxes........ 2,185 252 7 44
--------- ----------- --------- ----------- --------- ------ ------
Net income........................ $ 2,565 $ 724 $ 435 $ 2,003 $ 619 $ 871 $ 221
--------- ----------- --------- ----------- --------- ------ ------
--------- ----------- --------- ----------- --------- ------ ------
Pro forma weighted average shares
outstanding.....................
Pro forma net income per share....

PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
------------- -----------
<S> <C> <C>
Revenues.......................... $ $ 82,576
Operating expenses................ 45,182
------------- -----------
Gross profit.................... 37,394
General and administrative
expenses........................ (265)(c) 26,277
Amortization Expense.............. 782(e) 1,777
------------- -----------
Operating income................ (517) 9,340
Other (income) expense:
Interest expense................ 238(g) 600
Interest income................. 346(g)
Other........................... (85)
------------- -----------
Income before provision for income
taxes........................... (1,101) 8,825
Provision for income taxes........ 1,571(h) 4,059
------------- -----------
Net income........................ $ (2,672) $ 4,766
------------- -----------
------------- -----------
Pro forma weighted average shares
outstanding..................... 95,963(i)
Pro forma net income per share.... $ 0.05
-----------
-----------
</TABLE>

See accompanying notes to pro forma combined financial statements.

F-6
<PAGE>
TDOP, INC.

PRO FORMA COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED OCTOBER 26, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
INDIVIDUALLY INDIVIDUALLY
INSIGNIFICANT INSIGNIFICANT
FISCAL 1998 FISCAL 1997
TDOP, ASSOCIATED EVANS MCGREGOR OMNI TRAVEL PURCHASE PURCHASE
INC. TRAVEL TRAVEL TRAVEL TRAVEL CONSULTANTS ACQUISITION ACQUISITIONS
--------- ----------- --------- ----------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $ 29,013 $ 14,473 $ 2,270 $ 11,324 $ 3,171 $ 5,851 $ 2,988 $ 2,119
Operating expenses... 15,100 8,472 1,174 6,400 1,175 3,658 1,086 1,530
--------- ----------- --------- ----------- --------- ------ ------ ------
Gross profit....... 13,913 6,001 1,096 4,924 1,996 2,193 1,902 589

General and
administrative
expenses........... 10,231 4,859 964 4,325 1,386 1,793 1,755 1,142
Amortization
Expense............ 365 140 9 59 18 4
--------- ----------- --------- ----------- --------- ------ ------ ------
Operating income
(loss)........... 3,317 1,002 123 540 610 382 143 (553)

Other (income)
expense:
Interest expense... 190 60 7 53 2 44 16
Interest income.... (159) (49) 0 (25) (33) (4)
Other.............. 30
--------- ----------- --------- ----------- --------- ------ ------ ------
Income (loss) before
provision for
income taxes....... 3,256 991 116 512 641 338 131 (553)
Provision for income
taxes.............. 566 624 22 19
--------- ----------- --------- ----------- --------- ------ ------ ------
Net income (loss).... $ 2,690 $ 367 $ 94 $ 512 $ 641 $ 338 $ 112 $ (553)
--------- ----------- --------- ----------- --------- ------ ------ ------
--------- ----------- --------- ----------- --------- ------ ------ ------
Pro forma weighted
average shares
outstanding........
Pro forma net income
per share..........

PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
------------- -----------
<S> <C> <C>
Revenues............. $ $ 71,209
Operating expenses... 38,595
------------- -----------
Gross profit....... 32,614
General and
administrative
expenses........... (3,560)(c) 23,383
488(d)
Amortization
Expense............ 1,002(e) 1,597
------------- -----------
Operating income
(loss)........... 2,070 7,634
Other (income)
expense:
Interest expense... 228(g) 600
Interest income.... 270(g)
Other.............. 30
------------- -----------
Income (loss) before
provision for
income taxes....... 1,572 7,004
Provision for income
taxes.............. 1,991(h) 3,222
------------- -----------
Net income (loss).... $ (419) $ 3,782
------------- -----------
------------- -----------
Pro forma weighted
average shares
outstanding........ 95,963(i)
Pro forma net income
per share.......... $ 0.04
-----------
-----------
</TABLE>

See accompanying notes to pro forma combined financial statements.

F-7
<PAGE>
TDOP, INC.

PRO FORMA COMBINED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED APRIL 26, 1997

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
INDIVIDUALLY INDIVIDUALLY
INSIGNIFICANT INSIGNIFICANT
FISCAL 1998 FISCAL 1997
TDOP, ASSOCIATED EVANS MCGREGOR OMNI TRAVEL PURCHASE PURCHASE
INC. TRAVEL TRAVEL TRAVEL TRAVEL CONSULTANTS ACQUISITIONS ACQUISITION
--------- ----------- --------- ----------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $ 57,677 $ 31,289 $ 5,662 $ 22,445 $ 6,351 $ 11,850 $ 6,490 $ 2,630
Operating expenses... 31,541 18,098 2,948 12,443 2,346 7,347 2,287 2,005
--------- ----------- --------- ----------- --------- ----------- ------ ------
Gross profit....... 26,136 13,191 2,714 10,002 4,005 4,503 4,203 625

General and
administrative
expenses........... 19,684 10,999 2,007 8,103 2,792 3,650 3,840 1,454
Amortization
Expense............ 548 213 18 120 63 8
Non-recurring
acquisition
costs.............. 1,156
--------- ----------- --------- ----------- --------- ----------- ------ ------
Operating income
(loss)........... 4,748 1,979 689 1,779 1,213 790 355 (829)

Other (income)
expense:
Interest expense... 587 95 14 127 4 105 27
Interest income.... (445) (62) (1) (45) (66) (9)
Other.............. 118 194
--------- ----------- --------- ----------- --------- ----------- ------ ------
Income (loss) before
provision for
income taxes....... 4,488 1,752 676 1,697 1,275 685 337 (829)
Provision for income
taxes.............. 1,145 1,048 (50) 79
--------- ----------- --------- ----------- --------- ----------- ------ ------
Net income (loss).... $ 3,343 $ 704 $ 676 $ 1,697 $ 1,325 $ 685 $ 258 $ (829)
--------- ----------- --------- ----------- --------- ----------- ------ ------
--------- ----------- --------- ----------- --------- ----------- ------ ------
Pro forma weighted
average shares
outstanding........
Pro forma net income
per share..........

PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
------------- -----------
<S> <C> <C>
Revenues............. $ 144,394
Operating expenses... 79,015
------------- -----------
Gross profit....... 65,379
General and
administrative
expenses........... (7,119)(c) 46,278
868(d)
Amortization
Expense............ 2,004(e) 2,974
Non-recurring
acquisition
costs.............. (1,156)(f)
------------- -----------
Operating income
(loss)........... 5,403 16,127
Other (income)
expense:
Interest expense... 241(g) 1,200
Interest income.... 628(g)
Other.............. 312
------------- -----------
Income (loss) before
provision for
income taxes....... 4,534 14,615
Provision for income
taxes.............. 4,501(h) 6,723
------------- -----------
Net income (loss).... $ 33 $ 7,892
------------- -----------
------------- -----------
Pro forma weighted
average shares
outstanding........ 95,963(i)
Pro forma net income
per share.......... $ 0.08
-----------
-----------
</TABLE>

See accompanying notes to pro forma combined financial statements.

F-8
<PAGE>
TDOP, INC.

NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

(DOLLARS AND SHARE AMOUNTS IN THOUSANDS)

1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS

(a) Adjustment to reflect purchase price adjustments associated with the
Post October 25, 1997 Purchase Acquisition. The portion of the consideration
assigned to goodwill ($1,058) in the transaction accounted for under the
purchase method represents the excess of the cost over the fair market value of
the net assets acquired. The Company amortizes goodwill over a period of 35
years. The recoverability of the unamortized goodwill will be assessed on an
ongoing basis by comparing anticipated undiscounted future cash flows from
operations to net book value.

(b) Represents payment of debt with available cash, the forgiveness of the
receivable from U.S. Office Products by the Company and the allocation of a
total of $15,000 of debt to the Company at the date of the Distribution. The
forgiveness of the receivable and the incremental debt allocated to the Company
has been reflected as a reduction of capital of $5,351.

2. UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME ADJUSTMENTS

(c) Adjustment to reflect reductions in executive compensation as a result
of the elimination of certain executive positions and the renegotiations of
executive compensation agreements resulting from certain acquisitions.

(d) Adjustment to reflect additional corporate overhead during the period
prior to the formation of the Corporate Travel Services division by U.S. Office
Products as if the division had been formed at May 1, 1996.

(e) Adjustment to reflect the increase in amortization expense relating to
goodwill recorded in purchase accounting related to the Fiscal 1998 Purchase
Acquisitions for the periods prior to the respective dates of acquisition. The
Company has recorded goodwill amortization in the historical financial
statements from the respective dates of acquisition forward. The goodwill is
being amortized over an estimated life of 35 years.

(f) Adjustment to reflect the reduction in non-recurring acquisition costs
related to pooling-of-interests business combinations of $1,156 for the fiscal
year ended April 26, 1997.

(g) Adjustment to reflect the increase in interest expense and reduction in
interest income resulting from the net allocation of $5,351 of debt by U.S.
Office Products.

(h) Adjustment to calculate the provision for income taxes on the combined
pro forma results at an effective income tax rate of approximately 46%. The
difference between the effective tax rate of 46% and the statutory tax rate of
35% relates primarily to state income taxes and non-deductible goodwill.

(i) The pro forma weighted average shares outstanding used to calculate pro
forma earnings per share is based upon 95,963 shares of common stock outstanding
for the periods. This is based upon the most current number of shares of common
stock of U.S. Office Products outstanding of 133,000 less 37,037 shares expected
to be repurchased by U.S. Office Products in the Tender Offer, and assumes a
distribution ratio of one share of Company Common Stock for each share of U.S.
Office Products Common Stock. The actual distribution ratio will be determined
prior to effectiveness of the Registration Statement of which this Prospectus is
a part, and is expected to be less than one share of Company Common Stock for
every one share of U.S. Office Products Common Stock.

F-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholder of

TDOP, Inc.

In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheet and the related consolidated statements
of income, of stockholder's equity and of cash flows present fairly, in all
material respects, the financial position of TDOP, Inc. (the "Company") and its
subsidiaries at April 30, 1996 and April 26, 1997, and the results of their
operations and their cash flows for the fiscal years ended December 31, 1994 and
1995, the four months ended April 30, 1996 and the fiscal year ended April 26,
1997, in conformity with generally accepted accounting principles. 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 did not audit the financial statements of MTA, Inc., a
wholly-owned subsidiary, which statements reflect total revenues of $11,418,751
for the period from January 25, 1995 (date of incorporation) to December 31,
1995. Those statements were audited by other auditors whose report thereon has
been furnished to us, and our opinion expressed herein, insofar as it relates to
the amounts included for MTA, Inc., is based solely on the report of the other
auditors. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Denver, Colorado
February 6, 1998

F-10
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
MTA, Inc.

We have audited the consolidated balance sheet of MTA, Inc. (the Company) as
of December 31, 1995 and the related consolidated statements of income and
retained earnings and of cash flows for the period from January 25, 1995 (date
of incorporation) to December 31, 1995 (not presented separately herein). 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MTA, Inc. as
of December 31, 1995, and the results of its operations and its cash flows for
the period from January 25, 1995 (date of incorporation) to December 31, 1995,
in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Seattle, Washington

September 23, 1996

F-11
<PAGE>
TDOP, INC.

CONSOLIDATED BALANCE SHEET

(IN THOUSANDS)

<TABLE>
<CAPTION>
APRIL 30, APRIL 26, OCTOBER 25,
1996 1997 1997
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 5,646 $ 6,952 $ 4,492
Accounts receivable, less allowance for doubtful accounts of $96, $271 and
$340, respectively......................................................... 5,449 5,965 21,422
Receivable from U.S. Office Products......................................... 1,779
Prepaid expenses and other current assets.................................... 655 775 1,524
--------- --------- -----------
Total current assets..................................................... 11,750 13,692 29,217

Property and equipment, net.................................................... 7,947 7,954 18,545
Intangible assets, net......................................................... 5,456 7,112 83,966
Other assets................................................................... 539 581 1,717
--------- --------- -----------
Total assets............................................................. $ 25,692 $ 29,339 $ 133,445
--------- --------- -----------
--------- --------- -----------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Short-term debt.............................................................. $ 2,059 $ 456 $ 3,005
Short-term payable to U.S. Office Products................................... 4,221
Accounts payable............................................................. 2,385 3,226 5,658
Accrued compensation......................................................... 1,508 1,085 4,408
Other accrued liabilities.................................................... 1,460 3,423 7,360
--------- --------- -----------
Total current liabilities................................................ 7,412 12,411 20,431

Long-term debt................................................................. 6,366 2,012 6,070
Long-term payable to U.S. Office Products...................................... 787 6,753
Deferred income taxes.......................................................... 190 196 155
Other long-term liabilities.................................................... 503 450 1,652
--------- --------- -----------
Total liabilities........................................................ 14,471 15,856 35,061
--------- --------- -----------

Commitments and contingencies

Stockholder's equity:
Divisional equity............................................................ 4,093 6,050 88,388
Cumulative translation adjustment............................................ (2)
Retained earnings............................................................ 7,128 7,433 9,998
--------- --------- -----------
Total stockholder's equity............................................... 11,221 13,483 98,384
--------- --------- -----------
Total liabilities and stockholder's equity............................... $ 25,692 $ 29,339 $ 133,445
--------- --------- -----------
--------- --------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-12
<PAGE>
TDOP, INC.

CONSOLIDATED STATEMENT OF INCOME

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE SIX
FOR THE YEAR ENDED FOR THE FOUR FISCAL MONTHS ENDED
-------------------------- MONTHS ENDED YEAR ENDED ------------------------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26, OCTOBER 26, OCTOBER 25,
1994 1995 1996 1997 1996 1997
------------ ------------ ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues.............................. $ 34,569 $ 45,267 $ 18,009 $ 57,677 $ 29,013 $ 46,557
Operating expenses.................... 19,692 25,836 9,491 31,541 15,100 26,215
------------ ------------ ------------ ------------- ----------- -----------
Gross profit.................... 14,877 19,431 8,518 26,136 13,913 20,342

General and administrative expenses... 11,872 15,563 6,788 20,232 10,596 15,639
Non-recurring acquisition costs....... 1,156
------------ ------------ ------------ ------------- ----------- -----------
Operating income................ 3,005 3,868 1,730 4,748 3,317 4,703

Other (income) expense:
Interest expense.................. 118 515 173 587 190 207
Interest income................... (253) (352) (109) (445) (159) (216)
Other............................. 48 42 20 118 30 (38)
------------ ------------ ------------ ------------- ----------- -----------
Income before provision for income
taxes............................... 3,092 3,663 1,646 4,488 3,256 4,750
Provision for income taxes............ 18 565 255 1,145 566 2,185
------------ ------------ ------------ ------------- ----------- -----------
Net income............................ $ 3,074 $ 3,098 $ 1,391 $ 3,343 $ 2,690 $ 2,565
------------ ------------ ------------ ------------- ----------- -----------
------------ ------------ ------------ ------------- ----------- -----------

Unaudited pro forma net income (see
Note 9)............................. $ 1,992 $ 2,314 $ 1,043 $ 2,235 $ 804 $ 2,565
------------ ------------ ------------ ------------- ----------- -----------
------------ ------------ ------------ ------------- ----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-13
<PAGE>
TDOP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

(IN THOUSANDS)

<TABLE>
<CAPTION>
CUMULATIVE TOTAL
DIVISIONAL TRANSLATION RETAINED STOCKHOLDER'S
EQUITY ADJUSTMENT EARNINGS EQUITY
----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993................................... $ 1,668 $ $ 6,246 $ 7,914
Cash dividends of Pooled Companies........................... (3,252) (3,252)
Net income................................................... 3,074 3,074
----------- ----------- --------- -------------

Balance at December 31, 1994................................... 1,668 6,068 7,736
Transactions of Pooled Companies:
Issuance of Pooled Company common stock for cash........... 800 800
Cash dividends............................................. (2,447) (2,447)
Net income................................................... 3,098 3,098
----------- ----------- --------- -------------

Balance at December 31, 1995................................... 2,468 6,719 9,187
Transactions of Pooled Companies:
Issuance of Pooled Company common stock for cash........... 1,625 1,625
Cash dividends............................................. (982) (982)
Net income................................................... 1,391 1,391
----------- ----------- --------- -------------

Balance at April 30, 1996...................................... 4,093 7,128 11,221
Transactions of Pooled Companies:
Issuance of Pooled Company common stock for cash........... 142 142
Capital contribution....................................... 43 43
Cash dividends............................................. (3,038) (3,038)
Issuance of U.S. Office Products common stock for repayment
of debt.................................................... 1,772 1,772
Net income................................................... 3,343 3,343
----------- ----------- --------- -------------

Balance at April 26, 1997...................................... 6,050 7,433 13,483
Unaudited data:
Issuance of U. S. Office Products common stock in conjunction
with acquisitions.......................................... 82,338 82,338
Cumulative translation adjustment............................ (2) (2)
Net income................................................... 2,565 2,565
----------- ----------- --------- -------------
Balance at October 25, 1997 (unaudited)........................ $ 88,388 $ (2) $ 9,998 $ 98,384
----------- ----------- --------- -------------
----------- ----------- --------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-14
<PAGE>
TDOP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
FOR THE FOUR FISCAL MONTHS
FOR THE YEAR ENDED MONTHS ENDED YEAR ENDED ENDED
---------------------------- ------------- ------------- -----------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26, OCTOBER 26,
1994 1995 1996 1997 1996
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income....................................... $ 3,074 $ 3,098 $ 1,391 $ 3,343 $ 2,690
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization expense.......... 679 986 452 1,660 910
Non-recurring acquisition costs................ 1,156
Other.......................................... (82) 137 (27) 6 50
Changes in current assets and liabilities (net
of assets acquired and liabilities assumed in
business combinations accounted for under the
purchase method):
Accounts receivable.......................... (772) 679 (361) (106) 234
Prepaid expenses and other current assets.... 12 46 (43) 6 347
Accounts payable............................. 464 124 453 755 (690)
Accrued liabilities.......................... (380) (909) (985) (323) (722)
------------- ------------- ------------- ------------- -----------
Net cash provided by (used in) operating
activities............................... 2,995 4,161 880 6,497 2,819
------------- ------------- ------------- ------------- -----------
Cash flows from investing activities:
Additions to property and equipment, net of
disposals...................................... (804) (1,858) (486) (769) (590)
Cash paid in acquisitions, net of cash received.. 2,293 (1,758)
Payments of non-recurring acquisition costs...... (539)
Other............................................ 128 126 (129)
------------- ------------- ------------- ------------- -----------
Net cash (used in) provided by investing
activities............................... (676) 561 (615) (3,066) (590)
------------- ------------- ------------- ------------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt......... 72 3,800 362 258
Payments of long-term debt....................... (518) (1,968) (5,594) (3,039) (730)
Proceeds from (payments of) short-term
debt, net...................................... (189) 424 801 (1,603) (240)
Payments of dividends of Pooled Companies........ (3,252) (2,447) (982) (3,038) (1,036)
Proceeds from issuance of common stock........... 800 1,625 142
Capital contributed by stockholders of Pooled
Company........................................ 43
Net advances from U.S. Office Products Company... 5,008
------------- ------------- ------------- ------------- -----------
Net cash used in financing activities...... (3,959) (3,119) (350) (2,125) (1,748)
------------- ------------- ------------- ------------- -----------
Net increase (decrease) in cash and cash
equivalents...................................... (1,640) 1,603 (85) 1,306 481
Cash and cash equivalents at beginning of period... 5,768 4,128 5,731 5,646 5,646
------------- ------------- ------------- ------------- -----------
Cash and cash equivalents at end of period......... $ 4,128 $ 5,731 $ 5,646 $ 6,952 $ 6,127
------------- ------------- ------------- ------------- -----------
------------- ------------- ------------- ------------- -----------
Supplemental disclosures of cash flow information:
Interest paid.................................... $ 161 $ 562 $ 189 $ 579 $ 253
Income taxes paid................................ $ 9 $ 361 $ 364 $ 453 $ 136

OCTOBER 25,
1997
-----------
<S> <C>

Cash flows from operating activities:
Net income....................................... $ 2,565
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization expense.......... 1,610
Non-recurring acquisition costs................
Other.......................................... (145)
Changes in current assets and liabilities (net
of assets acquired and liabilities assumed in
business combinations accounted for under the
purchase method):
Accounts receivable.......................... (4,241)
Prepaid expenses and other current assets.... 464
Accounts payable............................. 22
Accrued liabilities.......................... (1,752)
-----------
Net cash provided by (used in) operating
activities............................... (1,477)
-----------
Cash flows from investing activities:
Additions to property and equipment, net of
disposals...................................... (990)
Cash paid in acquisitions, net of cash received.. 1,699
Payments of non-recurring acquisition costs...... (618)
Other............................................ 174
-----------
Net cash (used in) provided by investing
activities............................... 265
-----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt......... 55
Payments of long-term debt....................... (1,225)
Proceeds from (payments of) short-term
debt, net...................................... (44)
Payments of dividends of Pooled Companies........
Proceeds from issuance of common stock...........
Capital contributed by stockholders of Pooled
Company........................................
Net advances from U.S. Office Products Company... (34)
-----------
Net cash used in financing activities...... (1,248)
-----------
Net increase (decrease) in cash and cash
equivalents...................................... (2,460)
Cash and cash equivalents at beginning of period... 6,952
-----------
Cash and cash equivalents at end of period......... $ 4,492
-----------
-----------
Supplemental disclosures of cash flow information:
Interest paid.................................... $ 113
Income taxes paid................................ $ 17
</TABLE>

The Company issued common stock, notes payable and cash in connection with
certain business combinations accounted for under the purchase method in the
year ended December 31, 1995, the fiscal

F-15
<PAGE>
TDOP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

(IN THOUSANDS)

year ended April 26, 1997 and the six months ended October 25, 1997. The fair
values of the assets and liabilities of the acquired companies at the dates of
the acquisitions are presented as follows:

<TABLE>
<CAPTION>
FOR THE FOR THE SIX
FOR THE YEAR ENDED FOR THE FOUR FISCAL MONTHS ENDED
---------------------------- MONTHS ENDED YEAR ENDED ------------------------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26, OCTOBER 26, OCTOBER 25,
1994 1995 1996 1997 1996 1997
------------- ------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Accounts receivable........................... $ $ 2,406 $ $ 410 $ $ 11,016
Prepaid expenses and other current assets..... 248 99 1,266
Property and equipment........................ 928 348 10,525
Intangible assets............................. 5,109 2,127 77,501
Other assets.................................. 176 70 1,538
Short-term debt............................... (859) (2,593)
Accounts payable.............................. (817) (86) (3,405)
Accrued liabilities........................... (1,610) (1,167) (8,414)
Long-term debt................................ (43) (5,099)
Other long-term liabilities................... (520) (1,696)
------------- ------------- ------------- ------------- ----------- -----------
Net assets acquired....................... $ $ 5,061 $ $ 1,758 $ $ 80,639
------------- ------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ------------- ----------- -----------
The acquisitions were funded as follows:
U.S. Office Products common stock............. $ $ $ $ $ $ 82,338
Notes payable................................. 7,354
Cash paid, net of cash received............... (2,293) 1,758 (1,699)
------------- ------------- ------------- ------------- ----------- -----------
Total..................................... $ $ 5,061 $ $ 1,758 $ $ 80,639
------------- ------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ------------- ----------- -----------
</TABLE>

Noncash transactions:

- - During the fiscal year ended April 26, 1997, the Company used U.S. Office
Products common stock to repay $1,772 of indebtedness.

F-16
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS)

NOTE 1--BACKGROUND

TDOP, Inc. (the "Company") is a Delaware Corporation which is a wholly-owned
subsidiary of U.S. Office Products Company ("U.S. Office Products"). On January
13, 1998, U.S. Office Products announced its intention to spin-off its Corporate
Travel Services division as an independent publicly owned company. This
transaction is expected to be effected through the distribution of shares of the
Company to U.S. Office Products shareholders effective on or about April 25,
1998 (the "Distribution"). Prior to the Distribution, U.S. Office Products plans
to contribute its equity interests in certain wholly-owned subsidiaries
associated with U.S. Office Products' Corporate Travel Services division to the
Company. U.S. Office Products and the Company will enter into a number of
agreements to facilitate the Distribution and the transition of the Company to
an independent business enterprise.

The Corporate Travel Services division was created by U.S. Office Products
in January 1997 and completed four business combinations accounted for under the
pooling-of-interests method during the period from January 1997 to April 1997
(the "Pooled Companies"). As a result of these business combinations being
accounted for under the pooling-of-interests method, the results of the Company
prior to the completion of such business combinations represent the combined
results of the Pooled Companies operating as separate autonomous entities.

The Company's operations are primarily concentrated in one market segment -
airline travel - and the customers are geographically diverse with no single
customer base concentrated in a single industry. Management considers a downturn
in this market segment to be unlikely. The Company's operations are seasonal,
with the November and December periods having the lowest airline bookings.

NOTE 2--BASIS OF PRESENTATION

The consolidated financial statements reflect the assets, liabilities,
divisional equity, revenues and expenses that were directly related to the
Company as it was operated within U.S. Office Products. In cases involving
assets and liabilities not specifically identifiable to any particular business
of U.S. Office Products, only those assets and liabilities expected to be
transferred to the Company prior to the Distribution were included in the
Company's separate consolidated balance sheet. With the exception of interest
expense, the Company's statement of income includes all of the related costs of
doing business including an allocation of certain general corporate expenses of
U.S. Office Products which were not directly related to these businesses
including certain corporate executives' salaries, accounting and legal fees,
departmental costs for accounting, finance, legal, purchasing, marketing, human
resources as well as other general overhead costs. These allocations were based
on a variety of factors, dependent upon the nature of the costs being allocated,
including revenues, number and size of acquisitions and number of employees.
Management believes these allocations were made on a reasonable basis.

U.S. Office Products uses a centralized approach to cash management and the
financing of its operations. As a result, minimal amounts of cash and cash
equivalents and an agreed upon amount of debt will be allocated to the Company
at the time of the Distribution. The consolidated statement of income does not
include an allocation of interest expense on all debt allocated to the Company.
See Note 8 for further discussion of interest expense.

F-17
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 the
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.

CHANGE IN FISCAL YEAR

Prior to their respective dates of acquisition by U.S. Office Products, the
Pooled Companies reported results on years ending on December 31. Upon
acquisition by U.S. Office Products and effective for the fiscal year ended
April 26, 1997 ("fiscal 1997"), the Pooled Companies changed their year-ends
from December 31 to conform to U.S. Office Products' fiscal year, which ends on
the last Saturday in April. A four month fiscal transition period from January
1, 1996 through April 30, 1996 has been presented for the Company to conform its
fiscal year-end.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
accounts are eliminated in consolidation.

CASH AND CASH EQUIVALENTS

The Company considers temporary cash investments with original maturities of
three months or less from the date of purchase to be cash equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
Receivables arising from sales to customers are not collateralized and, as a
result, management continually monitors the financial condition of its customers
to reduce the risk of loss.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Additions and improvements are
capitalized. Maintenance and repairs are expensed as incurred. Depreciation of
property and equipment is calculated using the straight-line method over the
estimated useful lives of the respective assets. The estimated useful lives
range from 25 to 40 years for buildings and its components and 3 to 15 years for
furniture, fixtures and equipment. Property and equipment leased under capital
leases is being amortized over the lesser of its useful life or its lease terms.

INTANGIBLE ASSETS

Intangible assets consist primarily of goodwill, which represents the excess
of cost over the fair value of assets acquired in business combinations
accounted for under the purchase method. Substantially all

F-18
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
goodwill is amortized on a straight line basis over an estimated useful life of
35 years. Management periodically evaluates the recoverability of goodwill,
which would be adjusted for a permanent decline in value, if any, by comparing
anticipated undiscounted future cash flows from operations to net book value.

TRANSLATION OF FOREIGN CURRENCIES

Balance sheet accounts of foreign subsidiaries are translated using the
year-end exchange rate, and statement of income accounts are translated using
the average exchange rate for the year. Translation adjustments are recorded as
a separate component of stockholders' equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments including cash
and cash equivalents, accounts receivable, accounts payable and accrued
liabilities approximate fair value.

INCOME TAXES

As a division of U.S. Office Products, the Company does not file separate
federal income tax returns but rather is included in the federal income tax
returns filed by U.S. Office Products and its subsidiaries from the respective
dates that the entities within the Company were acquired by U.S. Office
Products. For purposes of the consolidated financial statements, the Company's
allocated share of U.S. Office Products' income tax provision was based on the
"separate return" method. Certain companies acquired in pooling-of-interests
transactions elected to be taxed as Subchapter S corporations, and accordingly,
no federal income taxes were recorded by those companies for periods prior to
their acquisition by U.S. Office Products.

REVENUE RECOGNITION

The Company records revenues from air reservations and hotel and car
reservations when earned, which is at the time a reservation is booked and
ticketed. The Company provides a reserve for cancellations and reservation
changes, and provisions for such amounts are reflected in net revenues. The
reserves that have been netted against net revenues are not material in the
periods reflected. The Company estimates and records accruals for cancellations
and changes to reservation revenues booked. However, such estimates could vary
significantly based upon changes in economic and political conditions that
impact corporate travel patterns. Cruise revenues are recorded when the customer
is no longer entitled to a full refund of the cost of the cruise. Revenues
consist of commissions on travel services and year-end volume bonuses from
travel service providers.

OPERATING EXPENSES

Operating expenses include travel agent commissions, salaries,
communications and other costs associated with the selling and processing of
travel reservations.

NON-RECURRING ACQUISITION COSTS

Non-recurring acquisition costs represent acquisition costs incurred by the
Company in business combinations accounted for under the pooling-of-interests
method. These costs include accounting, legal,

F-19
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and investment banking fees, real estate and environmental assessments and
appraisals, various regulatory fees and recognition of transaction related
obligations. Generally accepted accounting principles require the Company to
expense all acquisition costs (both those paid by the Company and those paid by
the sellers of the acquired companies) related to business combinations
accounted for under the pooling-of-interests method.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." This Statement establishes standards for computing and presenting
earnings per share ("EPS"). SFAS No. 128 simplifies the standards for computing
EPS and makes the presentation comparable to international EPS standards by
replacing the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement. Basic EPS excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. The Company intends to adopt SFAS No.
128 in the fiscal year ending April 25, 1998. The implementation of SFAS No. 128
is not expected to have a material effect on the Company's earnings per share as
determined under current accounting rules. Historical earnings per share has not
been presented as such amounts are not deemed meaningful due to the significant
change in the Company's capital structure that will occur on the consummation of
the Distribution.

In June 1997, the FASB issued SFAS No. 130. "Reporting Comprehensive
income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general-purpose financial statements. SFAS No. 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The Company intends to adopt SFAS No. 130 in
fiscal 1999.

UNAUDITED INTERIM FINANCIAL DATA

In the opinion of management, the Company has made all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation
of the financial condition of the Company as of October 25, 1997 and the results
of operations and of cash flows for the six months ended October 26, 1996 and
October 25, 1997, as presented in the accompanying unaudited consolidated
financial data.

NOTE 4--BUSINESS COMBINATIONS

POOLING-OF-INTERESTS METHOD

In fiscal 1997, the Company issued U.S. Office Products common stock to
acquire the Pooled Companies. The Company's consolidated financial statements
give retroactive effect to the acquisitions of the Pooled Companies for all
periods presented. Prior to being acquired by U.S. Office Products, the

F-20
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 4--BUSINESS COMBINATIONS (CONTINUED)
Pooled Companies all reported on years ending on December 31. Upon completion of
the acquisitions of the Pooled Companies, their year-ends were changed to U.S.
Office Products' year-end of the last Saturday in April.

The following presents the separate results, in each of the periods
presented, of the Company (excluding the results of Pooled Companies prior to
the dates on which they were acquired), and the Pooled Companies up to the dates
on which they were acquired:

<TABLE>
<CAPTION>
POOLED
TDOP, INC. COMPANIES COMBINED
----------- ----------- -----------
<S> <C> <C> <C>
For the year ended December 31, 1994
Revenues................................................................... $ $ 34,569 $ 34,569
Net income................................................................. $ $ 3,074 $ 3,074
For the year ended December 31, 1995
Revenues................................................................... $ $ 45,267 $ 45,267
Net income................................................................. $ $ 3,098 $ 3,098
For the four months ended April 30, 1996
Revenues................................................................... $ $ 18,009 $ 18,009
Net income................................................................. $ $ 1,391 $ 1,391
For the fiscal year ended April 26, 1997
Revenues................................................................... $ 6,135 $ 51,542 $ 57,677
Net income................................................................. $ 231 $ 3,112 $ 3,343
For the six months ended October 26, 1996 (unaudited):
Revenues................................................................... $ $ 29,013 $ 29,013
Net income................................................................. $ $ 2,690 $ 2,690
For the six months ended October 25, 1997 (unaudited):
Revenues................................................................... $ 46,557 $ 46,557
Net income................................................................. $ 2,565 $ 2,565
</TABLE>

PURCHASE METHOD

During 1995, the Company made one acquisition accounted for under the
purchase method for an aggregate purchase price of $5,061, consisting of $7,354
of notes payable and net of $2,293 of cash acquired. The total assets related to
the acquisition were $8,867, including goodwill of $5,109. The results of the
acquisition have been included in the Company's results from the date of
acquisition.

In fiscal 1997, the Company made one acquisition accounted for under the
purchase method for an aggregate cash purchase price of $1,758. The total assets
related to the acquisition were $3,054, including goodwill of $2,127. The
results of the acquisition have been included in the Company's results from the
date of acquisition.

The following presents the unaudited pro forma results of operations of the
Company for the year ended December 31, 1995 and the fiscal year ended April 26,
1997 and includes the Company's consolidated financial statements, which give
retroactive effect to the acquisitions of the Pooled Companies for all periods
presented, and the results of the companies acquired in purchase acquisitions as
if all such purchase acquisitions had been made at the beginning of 1995. The
results presented below include

F-21
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 4--BUSINESS COMBINATIONS (CONTINUED)
certain pro forma adjustments to reflect the amortization of intangible assets,
adjustments in executive compensation and the inclusion of a federal income tax
provision on all earnings:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR
ENDED
-----------------------
<S> <C> <C>
DECEMBER 31, APRIL 26,
1995 1997
------------ ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C>
Revenues............................................................. $ 50,015 $ 60,307
Net income........................................................... 4,263 4,099
</TABLE>

The unaudited pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning of 1995 or the results
which may occur in the future.

NOTE 5--PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26,
1996 1997
----------- -----------
<S> <C> <C>
Land..................................................................... $ 325 $ 325
Buildings................................................................ 3,605 3,088
Furniture and fixtures................................................... 7,013 7,934
Leasehold improvements................................................... 667 1,273
----------- -----------
11,610 12,620
Less: Accumulated depreciation........................................... (3,663) (4,666)
----------- -----------
Net property and equipment............................................... $ 7,947 $ 7,954
----------- -----------
----------- -----------
</TABLE>

Depreciation expense for the years ended December 31, 1994 and 1995, the
four months ended April 30, 1996 and the fiscal year ended April 26, 1997 was
$458, $644, $324, and $1,112, respectively.

NOTE 6--INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26, OCTOBER 25,
1996 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Goodwill.................................................... $ 4,966 $ 7,016 $ 81,993
Other....................................................... 1,137 1,122 3,651
----------- ----------- -----------
6,103 8,138 85,644
Less: Accumulated amortization.............................. (647) (1,026) (1,678)
----------- ----------- -----------
Net intangible assets....................................... $ 5,456 $ 7,112 $ 83,966
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

F-22
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 6--INTANGIBLE ASSETS (CONTINUED)
Amortization expense for the years ended December 31, 1994 and 1995, the
four months ended April 30, 1996, the fiscal year ended April 26, 1997 and the
six months ended October 25, 1997 was $221, $342, $128, $548, and $649
respectively.

NOTE 7--OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26,
1996 1997
----------- -----------
<S> <C> <C>
Customer deposits........................................................ $ 142 $ 1,198
Accrued income taxes..................................................... 314 917
Accrued acquisition costs................................................ 618
Other.................................................................... 1,004 690
----------- -----------
Total other accrued liabilities...................................... $ 1,460 $ 3,423
----------- -----------
----------- -----------
</TABLE>

NOTE 8--CREDIT FACILITIES

SHORT-TERM DEBT

Short-term debt consists of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26,
1996 1997
----------- -----------
<S> <C> <C>
Other.................................................................... $ 705 $
Current maturities of long-term debt..................................... 1,354 456
----------- -----------
Total short-term debt................................................ $ 2,059 $ 456
----------- -----------
----------- -----------
</TABLE>

LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26,
1996 1997
----------- -----------
<S> <C> <C>
Notes payable, secured by certain assets of the Company, interest rates
ranging from 9.04% to 9.4%, maturities from October 1997 through
2015................................................................... $ 7,720 $ 2,393
Capital lease obligations................................................ 75
----------- -----------
7,720 2,468
Less: Current maturities of long-term debt............................... (1,354) (456)
----------- -----------
Total long-term debt................................................. $ 6,366 $ 2,012
----------- -----------
----------- -----------
</TABLE>

F-23
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 8--CREDIT FACILITIES (CONTINUED)
MATURITIES OF LONG-TERM DEBT

Maturities on long-term debt, including capital lease obligations, are as
follows:

<TABLE>
<S> <C>
1998................................................................ $ 456
1999................................................................ 451
2000................................................................ 55
2001................................................................ 54
2002................................................................ 59
Thereafter.......................................................... 1,393
---------
Total maturities of long-term debt $ 2,468
---------
---------
</TABLE>

PAYABLE TO U.S. OFFICE PRODUCTS

The long-term payable to U.S. Office Products primarily represents payments
made by U.S. Office Products on behalf of the Company and a reasonable
allocation by U.S. Office Products of certain general corporate expenses. No
interest has been allocated to the Company on the outstanding payable. An
analysis of the activity in this account is as follows:

<TABLE>
<S> <C>
Balance at April 30, 1996............................................ $
Payments of long-term debt of Pooled Companies upon acquisition...... 394
Payments of acquisition costs........................................ 263
Allocated corporate expenses......................................... 107
Normal operating costs paid by U.S. Office Products.................. 23
---------
Balance at April 26, 1997............................................ $ 787
---------
---------
</TABLE>

The average outstanding long-term payable to U.S. Office Products during the
fiscal year ended April 26, 1997 was $43.

U.S. Office Products has charged the Company interest on the short-term
payable to U.S. Office Products at the prime rate in effect at the time. The
short-term payable to U.S. Office Products was incurred by the Company primarily
as a result of U.S. Office Products repaying short-term debt outstanding at the
businesses acquired by U.S. Office Products at or soon after the respective
dates of acquisition and through the centralized cash management system, which
involves daily advances or sweeps of cash to keep the cash balance at or near
zero on a daily basis. U.S. Office Products has not charged the Company interest
on the long-term payable to U.S. Office Products. The Company's financial
statements include allocations of interest expense from U.S. Office Products
totaling $21 during the year ended April 26, 1997. If the Company had been
charged interest on all debt allocated by U.S. Office Products during fiscal
1997, interest expense would have totaled $590.

The Company expects that the Distribution Agreement with U.S. Office
Products will call for an allocation of $15.0 million of debt by U.S. Office
Products resulting in incremental debt of $5.4 million at October 25, 1997,
which would be reflected in the financial statements as a reduction in
stockholder's equity. The Company intends to enter into a credit facility
concurrently with the Distribution which will contain certain financial and
other covenants, including maintenance of certain financial tests and ratios,

F-24
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 8--CREDIT FACILITIES (CONTINUED)
limitations on capital expenditures and restrictions on the incurrence of debt
or liens, the sale of assets, the payment of dividends, transactions with
affiliates and other transactions.

NOTE 9--INCOME TAXES

The provision for income taxes consists of:

<TABLE>
<CAPTION>
FOR THE
FOUR FOR THE
MONTHS FISCAL
FOR THE YEAR ENDED ENDED YEAR ENDED
-------------------------------- ----------- -----------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26,
1994 1995 1996 1997
--------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Income taxes currently payable:
Federal................................... $ $ 435 $ 348 $ 991
State..................................... 18 75 43 159
----- ----- ----- -----------
18 510 391 1,150
----- ----- ----- -----------
Deferred income tax expense (benefit)....... 55 (136) (5)
----- ----- ----- -----------
Total provision for income taxes........ $ 18 $ 565 $ 255 $ 1,145
----- ----- ----- -----------
----- ----- ----- -----------
</TABLE>

Deferred taxes are comprised of the following:

<TABLE>
<CAPTION>
APRIL 30, APRIL 26,
1996 1997
----------- -----------
<S> <C> <C>
Current deferred tax assets:
Allowance for doubtful accounts........................................ $ 28 $ 36
Accrued liabilities.................................................... 191 229
----- -----
Total current deferred tax assets.................................... 219 265
----- -----
Long-term deferred tax liabilities:
Property and equipment................................................. (409) (680)
Intangible assets...................................................... (3)
Other.................................................................. 222
----- -----
Total long-term deferred tax liabilities............................. (409) (461)
----- -----
Net deferred tax liability $ (190) $ (196)
----- -----
----- -----
</TABLE>

F-25
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 9--INCOME TAXES (CONTINUED)
The Company's effective income tax rate varied from the U.S. federal
statutory tax rate as follows:

<TABLE>
<CAPTION>
FOR THE
FOUR FOR THE
MONTHS FISCAL
FOR THE YEAR ENDED ENDED YEAR ENDED
-------------------------------- ----------- -----------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26,
1994 1995 1996 1997
--------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. federal statutory rate..................................... 35.0% 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit........... 0.6 1.8 1.7 2.3
Subchapter S corporation income not subject to corporate level
taxation...................................................... (35.0) (21.4) (21.2) (24.7)
Nondeductible acquisition costs................................. 6.8
Other........................................................... 6.1
----- ----- ----- -----
Effective income tax rate....................................... 0.6% 15.4% 15.5% 25.5%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

Certain Pooled Companies were organized as subchapter S corporations prior
to the closing of their acquisitions by the Company and, as a result, the
federal tax on their income was the responsibility of their individual
stockholders. Accordingly, the specific Pooled Companies provided no federal
income tax expense prior to these acquisitions by the Company.

The following unaudited pro forma income tax information is presented in
accordance with SFAS 109 as if the specific Pooled Companies had been subject to
federal income taxes for the entire periods presented.

<TABLE>
<CAPTION>
FOR THE
FOUR FOR THE
MONTHS FISCAL
FOR THE YEAR ENDED ENDED YEAR ENDED
---------------------------- ----------- -----------
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 26,
1994 1995 1996 1997
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net income...................................................... $ 3,074 $ 3,098 $ 1,391 $ 3,343
Pro forma income tax provision adjustment....................... 1,082 784 348 1,108
------ ------ ----------- -----------
Pro forma net income............................................ $ 1,992 $ 2,314 $ 1,043 $ 2,235
------ ------ ----------- -----------
------ ------ ----------- -----------
</TABLE>

F-26
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 10--LEASE COMMITMENTS

The Company leases various types of office facilities, equipment, and
furniture and fixtures under noncancelable lease agreements, which expire at
various dates. Future minimum lease payments under noncancelable capital and
operating leases are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
1998..................................................................... $ 69 $ 1,113
1999..................................................................... 12 1,051
2000..................................................................... 985
2001..................................................................... 872
2002..................................................................... 438
Thereafter............................................................... 27
--- -----------
Total minimum lease payments............................................. 81 $ 4,486
-----------
-----------
Less: Amounts representing interest...................................... (6)
---
Present value of net minimum lease payments.............................. $ 75
---
---
</TABLE>

Rent expense for all operating leases for the years ended December 31, 1994
and 1995, the four months ended April 30, 1996 and the fiscal year ended April
26, 1997 was $1,791, $1,811, $573, and $1,903, respectively.

NOTE 11--COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company is, from time to time, a party to litigation arising in the
normal course of its business. Management believes that none of this litigation
will have a material adverse effect on the financial position, results of
operations or cash flows of the Company.

POSTEMPLOYMENT BENEFITS

The Company has entered into employment agreements with several employees
that would result in payments to these employees upon a change of control or
certain other events. No amounts have been accrued at April 30, 1996 or April
26, 1997 related to these agreements, as no change of control has occurred.

DISTRIBUTION

On or immediately after the Distribution, the Company expects to have a
credit facility in place. The terms of the credit facility is expected to
contain customary covenants including financial covenants. The Company plans to
use a portion of the proceeds from the credit facility to repay certain amounts
payable to U.S. Office Products.

On or before the date of the distribution, the Company, U.S. Office Products
and the other Spin-Off Companies will enter into the Distribution Agreement, the
Tax Allocation Agreement and the Employee Benefits Agreement, and the Spin-Off
Companies will enter into the Tax Indemnification Agreement and

F-27
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 11--COMMITMENTS AND CONTINGENCIES (CONTINUED)
may enter into other agreements, including agreements related to referral of
customers to one another. These agreements are expected to provide, among other
things, for U.S. Office Products and the Company to indemnify each other from
tax and other liabilities relating to their respective businesses prior to and
following the Distribution. Certain of the obligations of the Company and the
other spin-off companies to indemnify U.S. Office Products are joint and
several. Therefore, if one of the other spin-off companies fails to indemnify
U.S. Office Products when such a loss occurs, the Company may be required to
reimburse U.S. Office Products for all or a portion of the losses that otherwise
would have been allocated to other spin-off companies. In addition, the
agreements will allocate liabilities, including general corporate and securities
liabilities of U.S. Office Products not specifically related to the business
travel agency business, between U.S. Office Products and each spin-off company.

NOTE 12--EMPLOYEE BENEFIT PLANS

Effective September 1, 1996, the Company implemented the U.S. Office
Products 401(k) Retirement Plan (the "401(k) Plan") which allows employee
contributions in accordance with Section 401(k) of the Internal Revenue Code.
The Company matches a portion of employee contributions and all full-time
employees are eligible to participate in the 401(k) Plan after one year of
service.

Certain subsidiaries of the Company have, or had prior to implementation of
the 401(k) Plan, qualified defined contribution benefit plans, which allow for
voluntary pre-tax contributions by the employees. The subsidiaries paid all
general and administrative expenses of the plans and in some cases made matching
contributions on behalf of the employees. For the years ended December 31, 1994
and 1995, the four months ended April 30, 1996 and the fiscal year ended April
26, 1997 the subsidiaries incurred expenses totaling $194, $204, $73 and $249,
respectively, related to these plans.

NOTE 13--STOCKHOLDER'S EQUITY

EMPLOYEE STOCK PLANS

Prior to the Distribution, certain employees of the Company participated in
the U.S. Office Products 1994 Long-Term Incentive Plan covering employees of
U.S. Office Products. The Company intends to adopt an employee stock option plan
at approximately the time of the Distribution. The Company expects to replace
the options to purchase shares of common stock of U.S. Office Products held by
employees with options to purchase shares of common stock of the Company. At
April 26, 1997, there were approximately 114,116 options to purchase shares of
U.S. Office Products common stock held by Company employees.

Under a service agreement entered into with Jonathan J. Ledecky, the Board
of Directors of U.S. Office Products has agreed that Jonathan J. Ledecky will
receive a stock option for Company common stock from the Company as of the date
of the Distribution. The Board intends the option to be compensation for Mr.
Ledecky's services as a director of the Company, and certain services as an
employee of the Company. The option will cover up to 7.5% of the outstanding
Company common stock determined as of the date of the Distribution, with no
anti-dilution provisions in the event of issuance of additional shares of common
stock (other than with respect to stock splits or reverse stock splits). The
option will have a per share exercise price equal to the price of the first
trade on the day the Company's common stock is first publicly traded.

F-28
<PAGE>
TDOP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

NOTE 14--QUARTERLY FINANCIAL DATA (UNAUDITED)

The following presents certain unaudited quarterly financial data for the
year ended December 31, 1995 and the fiscal year ended April 26, 1997:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
Revenues.................................................... $ 8,486 $ 13,241 $ 12,005 $ 11,535 $ 45,267
Gross profit................................................ 3,142 6,305 5,093 4,891 19,431
Operating income............................................ 188 2,091 1,000 589 3,868
Net income.................................................. 217 1,558 792 531 3,098
Pro forma net income (see Note 9)........................... 162 1,163 592 397 2,314
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 26, 1997
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
Revenues................................................... $ 15,243 $ 13,770 $ 12,514 $ 16,150 $ 57,677
Gross profit............................................... 7,637 6,276 4,957 7,266 26,136
Operating income (loss).................................... 2,186 1,131 (407) 1,838 4,748
Net income (loss).......................................... 1,753 937 (367) 1,020 3,343
Pro forma net income (loss) (see Note 9)................... 1,198 616 (276) 697 2,235
</TABLE>

NOTE 15--SUBSEQUENT EVENTS

On January 13, 1998, U.S. Office Products announced its intention to
complete the Distribution described in Note 1. In addition, subsequent to April
26, 1997, the Company has completed six business combinations accounted for
under the purchase method for an aggregate purchase price of $80,639 consisting
of $1,699 of net cash acquired and the issuance of U.S. Office Products' common
stock with a market value of $82,338. The results of operations for the six
months ended October 25, 1997 include the results of the acquired companies from
their respective dates of acquisition.

The following presents the unaudited pro forma results of operations of the
Company for fiscal 1997 as if the acquisitions described above had been
consummated as of the beginning of fiscal 1997. The results presented below
include certain pro forma adjustments to reflect the amortization of intangible
assets, adjustments in executive compensation and the inclusion of a federal
income tax provision on all earnings:

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
APRIL 26, 1997
----------------
<S> <C>
(UNAUDITED)
Revenues.................................................................... $ 144,394
Net income.................................................................. 7,892
</TABLE>

F-29
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of
Associated Travel Services, Inc.:

We have audited the accompanying balance sheets of Associated Travel
Services, Inc. (the Company) as of December 31, 1995 and 1996, and the related
statements of income, shareholder's equity and cash flows for the years ended
December 31, 1994, 1995 and 1996. 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, such financial statements present fairly, in all material
respects, the financial position of Associated Travel Services, Inc. as of
December 31, 1995 and 1996, and the results of its operations and its cash flows
for the years ended December 31, 1994, 1995 and 1996, in conformity with
generally accepted accounting principles.

Deloitte & Touche LLP

Costa Mesa, California

May 22, 1997

F-30
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

BALANCE SHEETS

AS OF DECEMBER 31, 1995 AND 1996 AND MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1995 1996 1997
------------- ------------ -------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents (Note 2).................................. $ 218,192 $ 2,584,552 $ 468,041
Short-term investment (Note 2)...................................... 10,000
Investment securities available for sale, at estimated fair value
(Notes 2 and 3)................................................... 1,359,894 116,575 167,073
Trade receivables, less allowance for doubtful accounts of $41,911,
$42,203 and $42,203 (unaudited), respectively..................... 1,938,435 2,711,671 3,383,654
Other receivables (Note 8).......................................... 699,865 1,655,783 1,541,389
Note receivable (Note 8)............................................ 200,000
Prepaid expenses.................................................... 149,487 93,895 96,390
Deferred income taxes (Note 4)...................................... 175,211 458,118 510,918
------------- ------------ -------------
Total current assets.............................................. 4,741,084 7,630,594 6,167,465
Deferred income taxes (Note 4)........................................ 32,721 32,721
Property and equipment (Note 2):
Furniture, fixtures and equipment................................... 2,227,482 2,789,023 4,158,883
Leasehold improvements.............................................. 321,088 366,009 347,464
------------- ------------ -------------
2,548,570 3,155,032 4,506,347
Less accumulated depreciation and amortization.................... (1,660,671) (2,032,366) (2,159,952)
------------- ------------ -------------
Property and equipment, net....................................... 887,899 1,122,666 2,346,395
Other assets (Note 2):
Goodwill, net....................................................... 427,824 388,931 1,462,395
Covenants not-to-compete, net....................................... 255,561 39,825 368,919
Customer lists, net................................................. 41,643 26,912 1,484,231
Other, net.......................................................... 90,712 61,258 69,637
------------- ------------ -------------
Total other assets................................................ 815,740 516,926 3,385,182
------------- ------------ -------------
$ 6,444,723 $ 9,302,907 $ 11,931,763
------------- ------------ -------------
------------- ------------ -------------
</TABLE>

See accompanying notes to financial statements.

F-31
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

BALANCE SHEETS (CONTINUED)

AS OF DECEMBER 31, 1995 AND 1996 AND MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1995 1996 1997
------------- ------------ -------------
<S> <C> <C> <C>
(UNAUDITED)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt (Note 7).......................... $ 235,281 $ 117,580 $ 557,579
Accounts payable.................................................... 1,125,209 1,063,485 1,550,609
Accrued expenses.................................................... 520,961 1,481,006 1,426,109
Accrued payroll and related costs................................... 937,385 1,645,706 1,650,706
Deferred revenue and customer deposits.............................. 215,013 850,015 901,515
------------- ------------ -------------

Total current liabilities......................................... 3,033,849 5,157,792 6,086,518

Deferred income taxes (Note 4)........................................ 58,474

Long-term debt (Note 7)............................................... 1,870,402 1,055,520 2,551,267

Commitments and contingencies (Note 5)

Shareholder's equity (Notes 2 and 3):
Common stock, no par value; 11,000,000 shares authorized; 10,000,088
shares issued and outstanding..................................... 682,080 682,080 682,080
Additional paid-in capital.......................................... 43,505 43,505 43,505
Retained earnings................................................... 785,433 2,355,717 2,560,100
Net unrealized gain (loss) on investment securities available for
sale, net of deferred tax of $25,079, $5,528 and $5,528
(unaudited), respectively......................................... (29,020) 8,293 8,293
------------- ------------ -------------
Total shareholder's equity........................................ 1,481,998 3,089,595 3,293,978
------------- ------------ -------------
$ 6,444,723 $ 9,302,907 $ 11,931,763
------------- ------------ -------------
------------- ------------ -------------
</TABLE>

See accompanying notes to financial statements.

F-32
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

AND THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
YEAR ENDED DECEMBER 31,
------------------------------------------- ----------------------------
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Travel commissions and fees (Note
2).................................. $ 20,541,061 $ 22,849,253 $ 26,304,860 $ 6,022,588 $ 8,765,598
Rebates (Note 2)...................... (4,028,845) (5,976,240) (6,186,654) (1,345,466) (1,230,457)
------------- ------------- ------------- ------------- -------------
Travel commissions and fees, net...... 16,512,216 16,873,013 20,118,206 4,677,122 7,535,141
Operating Expenses--Selling, general
and administrative (Notes 5 and
9).................................. (15,231,476) (15,481,639) (17,846,826) (4,086,334) (7,165,894)
------------- ------------- ------------- ------------- -------------
Operating Income...................... 1,280,740 1,391,374 2,271,380 590,788 369,247
Other income (expense):
Interest expense...................... (188,291) (146,297) (102,539) (31,298) (50,566)
Investment income..................... 82,279 209,094 279,189 26,446 9,479
Other................................. (539,767) 93,603 197,672 16,484 35,067
------------- ------------- ------------- ------------- -------------
Other income (expense), net......... (645,779) 156,400 374,322 11,632 (6,020)
------------- ------------- ------------- ------------- -------------
Income before extraordinary item and
provision for income taxes.......... 634,961 1,547,774 2,645,702 602,420 363,227
Provision for income taxes (Notes 2
and 4).............................. (272,973) (629,995) (1,075,418) (259,758) (158,844)
------------- ------------- ------------- ------------- -------------
Net income............................ $ 361,988 $ 917,779 $ 1,570,284 $ 342,662 $ 204,383
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND THE THREE MONTHS ENDED MARCH 31, 1997

(UNAUDITED)

<TABLE>
<CAPTION>
NET
UNREALIZED
(LOSS) GAIN
COMMON STOCK ADDITIONAL RETAINED ON
-------------------------- PAID-IN EARNINGS INVESTMENT
SHARES AMOUNT CAPITAL (DEFICIT) SECURITIES TOTAL
------------ ------------ ---------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
January 1, 1994............. 10,000,088 $ 682,080 $ 43,505 $ (494,334) $ -- $ 231,251
Net income.................... 361,988 361,988
Net unrealized loss on
investment securities
available for sale
(Note 3).................... (65,333) (65,333)
------------ ------------ ---------- ------------ ------------- ------------

BALANCES,
December 31, 1994........... 10,000,088 682,080 43,505 (132,346) (65,333) 527,906
Net income.................... 917,779 917,779
Net unrealized gain on
investment securities
available for sale
(Note 3).................... 36,313 36,313
------------ ------------ ---------- ------------ ------------- ------------

BALANCES,
December 31, 1995........... 10,000,088 682,080 43,505 785,433 (29,020) 1,481,998
Net income.................... 1,570,284 1,570,284
Net unrealized gain on
investment securities
available for sale
(Note 3).................... 37,313 37,313
------------ ------------ ---------- ------------ ------------- ------------

BALANCES,
December 31, 1996........... 10,000,088 682,080 43,505 2,355,717 8,293 3,089,595
Net income.................... 204,383 $ 204,383
------------ ------------ ---------- ------------ ------------- ------------

BALANCES,
March 31, 1997.............. 10,000,088 $ 682,080 $ 43,505 $ 2,560,100 $ 8,293 $ 3,293,979
------------ ------------ ---------- ------------ ------------- ------------
------------ ------------ ---------- ------------ ------------- ------------
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

AND THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- -----------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income...................................... $ 361,988 $ 917,779 $ 1,570,284 $ 342,662 $ 204,384
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 578,431 584,465 664,718 125,527 189,276
Realized gain on disposal of investments........ (110,988) (45,698) (131,356) 0 0
Bad debt expense................................ 26,964 40,435 0 (649)
Deferred income taxes........................... (442,789) 248,067 (404,709) 116,830 (52,800)
Loss on disposal of property and equipment...... 9,643 263 2,433
Changes in assets and liabilities:
Trade receivables............................... 225,670 (1,063,805) (813,671) 172,151 (671,334)
Other receivables............................... (81,262) (162,902) (955,918) (167,727) 114,394
Prepaid expenses................................ 75,186 (34,592) 85,046 33,695 (2,495)
Income taxes receivable......................... 203,389 0 0
Accounts payable................................ 16,024 (61,724) 90,000 487,124
Accrued expenses................................ 309,348 (389,809) 960,045 131,533 (54,897)
Accrued payroll and related costs............... 32,893 20,434 708,321 17,373 5,000
Deferred revenue and customer deposits.......... 37,459 82,222 635,002 (215,013) 51,500
----------- ----------- ----------- --------- ------------
Net cash provided by operating activities....... 1,189,325 199,149 2,306,116 647,294 271,936
Cash flows from investing activities:
Purchase of investment securities............... (2,589,105) (3,229,309) (8,079,244) (126,326) (50,498)
Proceeds from sale of investment securities..... 2,020,208 3,617,096 9,511,839 0 10,000
Acquisition of travel agency.................... (2,000,000)
(Increase) decrease in note receivable.......... (200,000) 200,000 0 0
Purchase of property and equipment.............. (261,178) (274,693) (639,768) (55,013) (368,897)
Increase in other assets........................ (52,818) (121,421) 85,203
----------- ----------- ----------- --------- ------------
Net cash (used in) provided by investing
activities.................................... (1,082,893) 113,094 992,827 (302,760) (2,324,192)
Cash flows from financing activities -
Proceeds from issuance of long-term debt........ 138,269 (79,251) 0
Repayments of long-term debt.................... (575,180) (485,598) (932,583) 0 (64,255)
----------- ----------- ----------- --------- ------------
Net cash used in financing activities........... (436,911) (485,598) (932,583) (79,251) (64,255)
----------- ----------- ----------- --------- ------------
Net (decrease) increase in cash and cash
equivalents................................... $ (330,479) $ (173,355) $ 2,366,360 $ 265,283 $ (2,116,511)
Cash and cash equivalents, beginning of year.... 722,026 391,547 218,192 218,192 2,584,552
----------- ----------- ----------- --------- ------------
Cash and cash equivalents, end of year.......... $ 391,547 $ 218,192 $ 2,584,552 $ 483,475 $ 468,041
----------- ----------- ----------- --------- ------------
----------- ----------- ----------- --------- ------------
Supplemental information
Cash paid during the year for:
Interest........................................ $ 191,766 $ 179,853 $ 101,955 $ 703 $ 20,000
----------- ----------- ----------- --------- ------------
----------- ----------- ----------- --------- ------------
Income taxes.................................... $ 573,794 $ 248,745 $ 1,176,875 $ 38,259 $ 301,500
----------- ----------- ----------- --------- ------------
----------- ----------- ----------- --------- ------------
</TABLE>

F-35
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

AND THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

(UNAUDITED)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

The Company purchased various assets of Sunbelt Travel, Inc., a Texas
corporation, and Sunbelt Travel of Houston, Inc., a Texas corporation,
(collectively, Sunbelt) for $2,000,000 in exchange for the issuance of a
long-term note for $2,000,000. In conjunction with the acquisition, assets and
liabilities were assumed as follows:

<TABLE>
<S> <C> <C>
Customer lists acquired..................................................... $1,461,000
Convenant not to compete.................................................... $ 400,000
Property and equipment...................................................... $ 139,000
Long-Term Debt Issued....................................................... $2,000,000
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

1. GENERAL

OPERATIONS--Associated Travel Services, Inc. (the Company), a California
corporation, was incorporated on July 24, 1979. The Company is in the travel
agency business and has offices located in several states, primarily California.

INTERIM UNAUDITED FINANCIAL INFORMATION--In the opinion of management, the
accompanying unaudited financial statements contain all adjustments (consisting
only of various normal accruals) necessary to present fairly the Company's
financial position, results of operations and cash flows. The financial position
at March 31, 1997 is not necessarily indicative of the financial position to be
expected at December 31, 1997 and the results of operations for the three months
ended March 31, 1997 are not necessarily indicative of the results of operations
to be expected for the year ending December 31, 1997.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR--The Company operates on a fiscal year ending on the Sunday
closest to December 31. For fiscal 1994, the last day was January 1, 1995. For
fiscal 1995, the last day was December 31, 1995. For fiscal 1996, the last day
was December 29, 1996. For convenience of presentation, the Company has
indicated its fiscal years end as December 31, 1994, 1995 and 1996.

CASH EQUIVALENTS--Cash equivalents include highly-liquid investments with
original maturities of 90 days or less.

SHORT-TERM INVESTMENT--Short-term investment consists of a certificate of
deposit with an original maturity of greater than three months and a remaining
maturity of less than one year. Short-term investment is stated at cost which
approximates market value.

INVESTMENT SECURITIES--The Company has classified its investment portfolio
as "available for sale." In accordance with Statement of Financial Accounting
Standards (SFAS) No. 115, investments classified as available for sale are
carried at fair value, and unrealized gains and losses, net of applicable income
taxes, are reported as a separate component of shareholder's equity.

Investments consist principally of marketable equity securities, tax-exempt
bonds and taxable bonds with maturities in excess of 90 days. Marketable equity
securities are not considered cash equivalents for purposes of the statement of
cash flows. The cost of marketable equity securities sold is based on the
average cost of all shares of each security held at the time of sale.

PROPERTY AND EQUIPMENT--Property and equipment are stated at cost. The
Company provides for depreciation and amortization of the cost of property and
equipment, principally on the straight-line method over the estimated useful
lives or lease periods, as applicable. Useful lives range from three to five
years. Depreciation and amortization expense amounted to $337,418, $352,085 and
$395,357 for the years ended December 31, 1994, 1995 and 1996, respectively.

GOODWILL--Goodwill, which relates to the acquisition of the Company, is
being amortized on the straight-line method over 20 years. Accumulated
amortization of goodwill amounted to $487,864 and $526,757 at December 31, 1995
and 1996, respectively. The Company periodically evaluates the recoverability of
goodwill by comparing the carrying value of goodwill to estimated future
operating income from the related operations.

ACQUISITIONS OF TRAVEL AGENCIES--The Company periodically buys the assets of
travel agencies in certain prime locations. These transactions are treated as
purchases of assets. Assets acquired typically include covenants not-to-compete,
customer lists, and property and equipment (Note 10).

F-37
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

COVENANTS NOT-TO-COMPETE--In conjunction with the acquisition of certain
travel agencies, the Company has negotiated covenants not-to-compete with the
prior owners. These agreements are being amortized on the straight-line method
over the periods specified in the agreements, which range from three to five
years. Accumulated amortization of covenants not-to-compete amounted to $674,939
and $890,676 at December 31, 1995 and 1996, respectively.

CUSTOMER LISTS--Customer lists purchased in connection with the acquisition
of certain travel agencies are being amortized using the straight-line method
over the shorter of their useful lives or ten years. Accumulated amortization of
customer lists amounted to $105,257 and $119,987 at December 31, 1995 and 1996,
respectively.

REVENUE RECOGNITION--Travel commissions and fees from ticketing,
reservations and other transaction services are recognized as earned. Included
in such revenues are certain amounts based on the volume of business with
various travel vendors. The amount which the Company will receive relative to
any given fiscal year is determined by the travel vendors, generally on a
quarterly basis.

REBATES--Rebates represent a portion of the travel commissions earned by the
Company which are rebated to certain commercial customers based on business
volume and other factors. Rebates are recognized when the travel commissions are
earned from ticketing, reservations and other transaction services.

GROSS REVENUES--Gross revenues, presented for information purposes,
represent the gross amount of transportation ticket revenue generated for and on
behalf of air, ground and sea carriers and other travel-related services sold by
the Company and on which the Company earns commissions and fees.

INCOME TAXES--The Company recognizes income tax expense and deferred taxes
in accordance with SFAS No. 109.

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 at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

STOCK SPLIT--On November 30, 1996, the Company amended its Articles of
Incorporation to increase the number of authorized shares of common stock from
5,000,000 to 11,000,000 and effected a 9.905-for-one stock split of its common
stock. All share amounts included in the accompanying financial statements and
footnotes have been restated to reflect the stock split.

LONG-LIVED ASSETS--The Company accounts for the impairment and disposition
of long-lived assets in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. In
accordance with SFAS No. 121, long-lived assets to be held are reviewed for
events or changes in circumstances which indicate that their carrying value may
not be recoverable. The Company periodically reviews the carrying value of
long-lived assets to determine whether or not an impairment to such value has
occurred.

RECLASSIFICATIONS--Certain reclassifications have been made to the 1994 and
1995 financial statements to conform to the 1996 presentation.

F-38
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The following table summarizes the Company's investment securities available
for sale as of December 31.
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>

Taxable bonds................................................ $ 500,388 $ 13,576 $ (900) $ 513,064
Equity securities............................................ 913,605 10,145 (76,920) 846,830
------------ ----------- ----------- ------------
Total available for sale................................... $ 1,413,993 $ 23,721 $ (77,820) $ 1,359,894
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<CAPTION>
1996
- -------------------------------------------------------------
<S> <C> <C> <C> <C>

Taxable bonds................................................ $ 100,599 $ 9,938 $ -- $ 110,537
Equity securities............................................ 2,155 3,883 $ -- 6,038
------------ ----------- ----------- ------------
Total available for sale................................... $ 102,754 $ 13,821 $ -- $ 116,575
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>

The contractual maturities of investments at December 31 are shown below.
Expected maturities may differ from contractual maturities.

<TABLE>
<CAPTION>
1995 1996
-------------------------- ------------------------
ESTIMATED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Taxable bonds:
Due in one year or less.................................. $ 14,795 $ 14,795 $ -- $ --
Due after ten years...................................... 485,593 498,269 100,599 110,537
------------ ------------ ------------ ----------
500,388 513,064 100,599 110,537
Equity securities.......................................... 913,605 846,830 2,155 6,038
------------ ------------ ------------ ----------
$ 1,413,993 $ 1,359,894 $ 102,754 $ 116,575
------------ ------------ ------------ ----------
------------ ------------ ------------ ----------
</TABLE>

The Company determined that certain marked table securities are available
for use in current operations and, accordingly, classified such securities as
current assets without regard to the securities' contractual maturity dates.

F-39
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

4. INCOME TAXES

Components of the provision for income taxes for the year sended December 31
are as follows:

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Current income taxes:
Federal.............................................................................. $ 282,836 $ 1,104,936
State................................................................................ 99,092 347,934
----------- ------------
Total current income taxes....................................................... 381,928 1,452,870

Deferred income taxes:
Federal.............................................................................. 211,542 (265,674)
State................................................................................ 36,525 (111,778)
----------- ------------
Total deferred income taxes...................................................... 248,067 (377,452)
----------- ------------
Total provision for income taxes....................................................... $ 629,995 $ 1,075,418
----------- ------------
----------- ------------
</TABLE>

The following is a reconciliation of the provision for income taxes computed
by applying the federal statutory tax rate to pretax income and the recorded
provision for income taxes for the years ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
--------------------- --------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT % AMOUNT % AMOUNT %
---------- --- ---------- --- ------------ ---
Statutory federal income tax............................. $ 222,236 35% $ 541,721 35% $ 925,995 35%
State tax, net of federal benefit........................ 41,373 7% 89,507 6% 158,742 6%
Amortization of intangibles.............................. 13,612 2% 13,224 1% 14,911 1%
Other.................................................... (4,248) (1)% (14,457) (1)% (24,230) (1)%
---------- --- ---------- --- ------------ ---
Total provision for income taxes......................... $ 272,973 43% $ 629,995 41% $ 1,075,418 41%
---------- --- ---------- --- ------------ ---
---------- --- ---------- --- ------------ ---
</TABLE>

F-40
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

4. INCOME TAXES (CONTINUED)
The major components of the Company's deferred income taxes are as follows:

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Accrued vacation and bonuses............................................. $ 111,291 $ 109,981 $ 202,376
Deferred revenue......................................................... 259,077
State income taxes....................................................... 44,824 33,691
Allowance for doubtful accounts.......................................... 10,752 18,147 17,998
Amortization of intangibles.............................................. 81,680 123,205 213,278
Litigation settlement accrual............................................ 270,683
Other.................................................................... 49,287 13,392 26,736
----------- ----------- -----------
Total deferred tax assets............................................ 568,517 298,416 719,465

Deferred tax liabilities:
Book versus tax basis in property and equipment, after depreciation and
amortization........................................................... (203,713) (181,679) (128,418)
Unrealized gain on investment securities................................. (5,528)
State income taxes....................................................... (44,630)
Other.................................................................... (50,050)
----------- ----------- -----------
Total deferred tax liabilities....................................... (203,713) (181,679) (228,626)
----------- ----------- -----------
Deferred income taxes, net................................................. $ 364,804 $ 116,737 $ 490,839
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Management believes it is more likely than not that the Company will utilize
a portion of its deferred tax assets by applying them against taxable income to
be generated in future years. The Company estimates that the majority of its
deferred tax assets will be realized during the next three years.

5. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS--The Company has entered into operating leases for its
sales and administrative offices, certain equipment and automobiles, which
expire at various dates through 1999. At December 31, 1996, future minimum lease
payments under noncancelable operating leases which have initial or remaining
terms in excess of one year are as follows:

<TABLE>
<CAPTION>
OFFICE EQUIPMENT AND
FISCAL YEAR FACILITIES AUTOMOBILES TOTAL
- --------------------------------------------------------------------- ------------ -------------- ------------
<S> <C> <C> <C>
1997................................................................. $ 616,859 $ 46,600 $ 663,459
1998................................................................. 439,596 36,217 475,813
1999................................................................. 176,948 31,290 208,238
2000................................................................. 154,578 2,666 157,244
2001................................................................. 125,056 125,056
------------ -------------- ------------
$ 1,513,037 $ 116,773 $ 1,629,810
------------ -------------- ------------
------------ -------------- ------------
</TABLE>

Rent expense was $709,254, $622,497 and $702,008 for the years ended
December 31, 1994, 1995 and 1996, respectively.

F-41
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
RESERVATION SYSTEM--The Company entered into an operating lease agreement
with a major airline for use of the airline's reservation system. The agreement
states that no lease payments have to be made by the Company if the Company
maintains a specified level of transactions per terminal per month. In the event
the Company does not achieve this average transaction level, it is required to
pay an amount per terminal, per month, per transaction deficiency.

LITIGATION:

(I) LITIGATION WITH DEVELOPER OF CERTAIN OF THE COMPANY'S QUALITY CONTROL
SOFTWARE--The Company has been named in a lawsuit alleging breach of an alleged
joint venture agreement, breach of fiduciary duty, breach of contract, bad faith
denial of existence of a contract and conversion. The formal lawsuit was
dismissed on May 14, 1996, concurrent with the parties entering into a
settlement agreement. Such settlement agreement specifies the manner in which
the settlement amount is to be determined. As the settlement amount has not been
finalized, the ultimate outcome of this matter cannot presently be determined.
Accordingly, no provision for any loss that may result upon resolution of this
matter has been made in the accompanying financial statements.

(II) LITIGATION WITH PRIOR OWNER OF AN ACQUIRED TRAVEL AGENCY--The Company
was party to arbitration which arose from the fiscal year 1993 termination (as
employees) of the prior owners of an acquired travel agency. The matter was
arbitrated in November and December 1994, and Associated Travel paid
approximately $632,000 in 1995, in full payment of all amounts owing under the
employment agreement of one of said employees and all other matters related to
this litigation. Such amount was fully expensed in the fiscal 1994 financial
statements.

(III) NORMAL COURSE OF BUSINESS LITIGATION--The Company is involved in
litigation arising in the normal course of business. It is the opinion of
management that the outcome of this litigation will have no material adverse
effect on the financial position of the Company.

BONUS AGREEMENT--In February 1989, the Company entered into a deferred bonus
agreement with an officer which entitles such officer to 5% of all consideration
received in the event of a sale of the Company. Pursuant to the terms of the
agreement, the officer must be employed with the Company at the time of the sale
in order to receive such benefits. As the Company has no liability to the
officer if a sale is not consummated, no compensation expense has been
recognized as of December 31, 1996 by the Company related to this agreement.

STOCK APPRECIATION RIGHTS--In July 1992, the Company granted 100,000 stock
appreciation rights units to an officer which entitles the holder to receive a
cash payment equal to any increase between the unit's initial value and the
value upon the exercise of the units. The initial value is zero for 50,000 of
the units and $.85 per unit for the remaining 50,000 units. The rights to the
units vest over a period of seven years. The Company recorded compensation
expense of approximately $10,000 in 1996 related to such stock appreciation
rights.

6. LINE OF CREDIT

The Company has available two credit facilities with a commercial bank that
expire on March 1, 1998. Under the terms of the first facility, a line of credit
is available under which the Company may borrow up to $1,000,000 through April
15, 1997, at which time the maximum available borrowings will be reduced to
$600,000. Borrowings thereunder bear interest at the bank's prime rate plus .5%
and are collateralized by substantially all of the Company's assets. As of
December 31, 1995 and 1996, no amounts were outstanding

F-42
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

6. LINE OF CREDIT (CONTINUED)
on the line. This facility also provides for standby letters of credit up to
$150,000. This letter of credit expires on March 2, 1997. The terms of the
second facility provide for a standby letter of credit not to exceed $1,082,500.
The maximum amount available reduces to $866,000 on February 11, 2000 and to
$433, 000 on February 11, 2001. These facilities are guaranteed by the sole
shareholder. No amounts were outstanding on the letters of credit as of December
31, 1996.

7. LONG-TERM DEBT

Long-term debt at December 31 consists of the following:

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
5.7% unsecured promissory note to shareholder, with interest payable in monthly
installments through November 25, 2003, principal due in full on December 1, 2003... $ 1,742,776 $ 1,042,776
Noninterest-bearing leasehold improvement loan, principal due in monthly installments
of $1,417, maturing October 1, 1998................................................. 46,747 29,744
Unsecured promissory note, subordinated to all other debt, personally guaranteed by
the sole shareholder with interest at the daily average of the bank's prime interest
rate for the preceding calendar year, principal due in October 1997................. 81,160 40,580
Unsecured promissory note, subordinated to all other debt, personally guaranteed by
the sole shareholder with interest at 6.25%, repaid in 1996......................... 15,000
8 1/2% unsecured promissory note, personally guaranteed by the sole shareholder,
principal due in fiscal 1997........................................................ 120,000 60,000
Unsecured promissory note with interest at 9% per annum through October 1995 and 12%
per annum from November 1995 through October 1996, repaid in 1996................... 100,000
------------ ------------
Total debt............................................................................ 2,105,683 1,173,100
Current portion....................................................................... (235,281) (117,580)
------------ ------------
$ 1,870,402 $ 1,055,520
------------ ------------
------------ ------------
</TABLE>

Future principal payments required on long-term debt are as follows:

<TABLE>
<CAPTION>
SUBORDINATED
PROMISSORY
FISCAL YEAR NOTE OTHER TOTAL
- ----------------------------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
1997................................................................... $ 40,580 $ 77,000 $ 117,580
1998................................................................... 12,744 12,744
1999...................................................................
2000...................................................................
2001...................................................................
Thereafter............................................................. 1,042,776 1,042,776
------------ ------------ ------------
$ 40,580 $ 1,132,520 $ 1,173,100
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

F-43
<PAGE>
ASSOCIATED TRAVEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)

8. RELATED-PARTY TRANSACTIONS

The Company pays certain expenses on behalf of an affiliated entity. The
Company is subsequently reimbursed by the affiliate for such amounts. Accounts
receivable from the affiliate were $687,696 and $1,399,165 at December 31, 1995
and 1996, respectively, and have been included in other receivables in the
accompanying balance sheets. The Company also had a note receivable from its
sole shareholder at December 31, 1995 in the amount of $200,000 which bore
interest at 6% and was repaid during 1996.

9. EMPLOYEE BENEFIT PLANS

The Associated Travel Services, Inc. Cash Option Profit-Sharing Plan (the
Plan) is a defined contribution plan covering substantially all employees who
have completed at least 1,000 hours of service. The Plan, which commenced
January 1, 1985, is subject to the provisions of the Employee Retirement Income
Security Act of 1974 and is qualified under Section 401(k) of the Internal
Revenue Code and, therefore, is exempt from federal and state income taxes.
Company contributions amounted to $55,629, $56,229 and $60,000 for the years
ended December 31, 1994, 1995 and 1996, respectively, and are included in
selling, general and administrative expenses in the accompanying financial
statements.

10. SUBSEQUENT EVENT

ACQUISITION--On January 6, 1997, the Company acquired the travel agency
business and substantially all of the related assets of Sunbelt Travel, Inc., a
Texas corporation, and Sunbelt Travel of Houston, Inc., a Texas corporation,
(collectively, Sunbelt). The aggregate purchase price of the acquisition was
$3,000,000, consisting of $2,000,000 in cash, and a $1,000,000 promissory note.
The promissory note is collateralized by an irrevocable letter of credit issued
by a bank. This acquisition was accounted for as a purchase.

In connection with the purchase, the Company entered into an employment
agreement and two consulting agreements expiring on December 31, 1998 with the
three former stockholders of Sunbelt. Minimum annual aggregate compensation
under those agreements is $91,000 plus an annual travel account of $20,000. The
Company has also agreed to additional aggregate compensation ranging from a
minimum of $300,000 to a maximum of $500,000, annually, based on the pre-tax
profit of the Company during 1997 and 1998. This compensation is due annually on
March 15, 1998 and 1999. As a condition of the purchase, the Company has pledged
280,024 shares of the Company's common stock as collateral for the additional
compensation.

POTENTIAL SALE--The Company is currently negotiating the potential sale of
the Company to outside investors. There can be no assurance that the sale will
be consummated.

F-44
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Boards of Directors and Shareholders of
Evans Travel Group, Inc. and Evans Consulting Services, Inc.

In our opinion, the accompanying combined balance sheet and the related
combined statements of income and retained earnings and of cash flows present
fairly, in all material respects, the financial position of Evans Travel Group,
Inc. and its subsidiary and Evans Consulting Services, Inc. (collectively, the
"Company") at July 25, 1997, and the results of their operations and their cash
flows for the year then ended in conformity with generally accepted accounting
principles. 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 of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Denver, Colorado
February 3, 1998

F-45
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

COMBINED BALANCE SHEET

JULY 25, 1997

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................... $ 629,263
Receivables, less allowance for doubtful accounts of $13,328.................. 345,449
Other receivables............................................................. 637,434
Receivable from shareholder................................................... 95,816
Other current assets.......................................................... 19,359
---------
Total current assets...................................................... 1,727,321
Property and equipment, net..................................................... 128,476
Intangible assets, net of accumulated amortization of $318,865.................. 271,887
Other assets.................................................................... 1,313
---------
Total assets.............................................................. $2,128,997
---------
---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................................. $ 24,592
Accrued liabilities:
Compensation................................................................ 49,427
Rebates..................................................................... 85,375
Customer deposits........................................................... 77,293
Other....................................................................... 4,508
Income taxes payable.......................................................... 41,000
Current portion of notes payable.............................................. 52,664
Current portion of deferred income............................................ 156,757
---------
Total current liabilities................................................. 491,616
Notes payable................................................................... 79,778
Deferred income................................................................. 298,670
---------
Total liabilities......................................................... 870,064
Commitments (Note 4)
Shareholders' equity:
Common stock (no par value; 300 shares authorized;
299 shares issued and outstanding)............................................
Additional paid-in capital.................................................... 91,746
Retained earnings............................................................. 1,167,187
---------
Total shareholders' equity................................................ 1,258,933
---------
Total liabilities and shareholders' equity................................ $2,128,997
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-46
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS

FOR THE YEAR ENDED JULY 25, 1997

<TABLE>
<S> <C>
Commission revenue.............................................................. $4,214,177
Other operating revenue......................................................... 1,907,971
---------
Total revenue............................................................... 6,122,148
Rebates......................................................................... 317,716
---------
Net revenue..................................................................... 5,804,432
Operating expenses:
Salaries...................................................................... 3,830,521
General and administrative.................................................... 1,670,718
---------
Total operating expenses.................................................... 5,501,239
---------
Income from operations.......................................................... 303,193
Other income (expense):
Interest income............................................................... 16,224
Interest expense.............................................................. (16,560)
---------
Total other income (expense)................................................ (336)
---------
Income before income taxes...................................................... 302,857
Income tax expense.............................................................. 19,984
---------
Net income...................................................................... 282,873
Retained earnings at beginning of year.......................................... 884,314
---------
Retained earnings at end of year................................................ $1,167,187
---------
---------
Unaudited pro forma information (see Note 2)
Income before income taxes.................................................... $ 302,857
Pro forma income tax expense.................................................. 121,143
---------
Pro forma net income........................................................ $ 181,714
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-47
<PAGE>
EVANS TRAVEL GROUP, INC. AND CONSULTING SERVICES, INC.

COMBINED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JULY 25, 1997

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................................... $ 282,873
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................ 107,371
Deferred revenue............................................................. 307,427
Change in assets and liabilities:
Receivables.............................................................. (38,237)
Other receivables........................................................ (460,334)
Other assets............................................................. (4,912)
Accounts payable......................................................... (141,536)
Income taxes payable..................................................... 17,000
Accrued liabilities...................................................... (9,186)
---------
Net cash provided by operating activities................................ 60,466
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................. (21,194)
Cash proceeds from sale of assets................................................ 42,521
---------
Net cash provided by investing activities................................ 21,327
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in receivable from shareholder............................................ 36,619
Payments on long-term debt....................................................... (131,191)
---------
Net cash used in financing activities.................................... (94,572)
---------
Net decrease in cash and cash equivalents........................................ (12,779)
Cash and cash equivalents at beginning of year................................... 642,042
---------
Cash and cash equivalents at end of year......................................... $ 629,263
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................................................... $ 16,558
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-48
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. REPORTING ENTITY AND BASIS OF ACCOUNTING

Effective July 25, 1997, Evans Consulting Services, Inc. was contributed to
Evans Travel Group, Inc. (collectively, the "Company"), and a subsidiary of U.S.
Office Products Company, a Delaware company, merged with Evans Travel Group,
Inc. The Company is a full-service travel agency, providing reservation services
and information for travel, lodging and tours to commercial, individual and
group customers from offices throughout Louisiana and northern Florida. The
Company's operations are primarily concentrated in one market segment--airline
travel--and its customers are geographically concentrated primarily in
Louisiana; management considers a downturn in this market segment and
geographical location to be unlikely.

The Company's combined financial statements includes the balances of Evans
Travel Group, Inc. and its wholly owned subsidiary, and Evans Consulting
Services, Inc. Both companies have common ownership and operate in the same line
of business. All significant intercompany balances and transactions have been
eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Commissions from ticketing, reservations and other transportation services
are recognized when the ticket is validated or reservation utilized. Revenue
from certain incentive plans offered by major airlines are accrued as earned.

The Company sells tours sponsored by other companies. Commissions received
from the sale of tours are recognized, net of estimated cancellation
adjustments, when payment is made to the tour company. All customer receipts for
such tours are recorded as a customer deposit liability until paid.

CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash
equivalents generally consist of money market funds, for which cost approximates
fair value.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets, generally five to seven years. Capital leases and leasehold improvements
are amortized over the shorter of their economic useful lives or the lease term.

INTANGIBLE ASSETS

The cost of purchased companies in excess of the underlying fair value of
net assets at the date of acquisition are recorded as goodwill and amortized
over five years on a straight-line basis. Purchase price allocated to covenants
not-to-compete are amortized over the term of the agreement which is typically
five years. As of July 25, 1997, intangible assets consisted of net goodwill of
$202,000, net covenants not-to-compete of $56,000 and other intangible assets of
$13,887. The carrying value of intangible assets is assessed for recoverability
by management based on an analysis of undiscounted expected future cash flows

F-49
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
from the related acquired entities. The Company believes that there has been no
impairment thereof as of July 25, 1997.

DEFERRED INCOME

The Company received a one-time promotional support payment from the entity
that leases the Company its reservation system. The Company is required to
utilize the reservation system throughout the contract term and there is
substantial penalty for early termination of the contract. The Company has
deferred the payment and is recognizing income using the straight-line method
over the five year term of the contract.

INCOME TAXES

Prior to January 1, 1997, Evans Travel Group, Inc. accounted for income
taxes in accordance with the provisions of Statement of Financial Accounting
Standards No. 109. Deferred income taxes are provided for temporary differences
between the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. As of January 1, 1997, there were no
deferred tax assets or liabilities.

Effective January 1, 1997, the Evans Travel Group, Inc. was granted
S-Corporation reporting status by the Internal Revenue Service. The notice of
acceptance was received in May 1997. As a result, there is no federal or state
income tax liability of Evans Travel Group, Inc. for the period from January 1,
1997 through July 25, 1997 reflected in the combined financial statements. Evans
Consulting Services, Inc. has been an S-Corporation since inception. Any
liability arising during this period is the responsibility of the shareholders
of the Company. The income tax payable of $41,000 and tax expense of $20,000
relates to tax liabilities arising prior to January 1, 1997 which were paid in
August 1997. The Company's S-Corporation status terminated on consummation of
the merger discussed in Note 1 above.

The unaudited pro forma income tax information included in the Statement of
Operations is presented in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", as if the Company had been
subject to federal income taxes for the entire periods presented.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments, including cash
and cash equivalents, receivables and payables and long-term debt, approximate
their fair values.

USE OF ESTIMATES

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of certain assets and
liabilities. Actual results could differ from those estimates. Management
believes that the estimates used are reasonable.

F-50
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at July 25, 1997:

<TABLE>
<S> <C>
Furniture and fixtures............................................ $ 230,560
Computer and telephone equipment.................................. 38,512
Computer software................................................. 23,804
---------
292,876
Less: accumulated depreciation and amortization................... 164,400
---------
Net property and equipment........................................ $ 128,476
---------
---------
</TABLE>

4. COMMITMENTS

The Company leases certain office space and furniture under noncancelable
operating leases. Rent expense for the year ended July 25, 1997 was
approximately $74,000. Future minimum lease payments under these operating
leases as of July 25, 1997 are as follows:

<TABLE>
<S> <C>
1998.............................................................. $ 162,400
1999.............................................................. 150,200
2000.............................................................. 85,400
2001.............................................................. 42,600
---------
Total............................................................. $ 440,600
---------
---------
</TABLE>

5. RELATED PARTY TRANSACTIONS

The $95,816 receivable from shareholder at July 25, 1997 was paid in full
during August 1997. Additionally, immediately following the merger with U.S.
Office Products, Inc. discussed in Note 1, real estate with a book value of
approximately $210,000 was sold to the shareholder for the assumption of a note
payable aggregating $167,479 and cash of $42,521. The book value approximated
fair market value.

6. INDEBTEDNESS

The Company's outstanding indebtedness at July 25, 1997 is comprised of the
following:

<TABLE>
<S> <C>
Promissory note to former shareholder, interest at 8%, payable
monthly installments of $376 principal plus interest through
December 1, 1999................................................ $ 9,873
Promissory note to former shareholder, noninterest bearing,
payable monthly installments of $3,150 through December 1,
1999............................................................ 90,138
Various capital lease obligations, payable in monthly installments
of principal plus interest through October 2001................. 32,431
---------
132,442
Less current maturities........................................... 52,664
---------
Long-term portion of notes payable................................ $ 79,778
---------
---------
</TABLE>

F-51
<PAGE>
EVANS TRAVEL GROUP, INC. AND EVANS CONSULTING SERVICES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. INDEBTEDNESS (CONTINUED)
Scheduled maturities at July 25, 1997 are as follows:

7. EMPLOYEE BENEFIT PLAN

The Company has established a 401(k) defined contribution plan to provide
benefits based on a percentage of contributions made by eligible employees.
During the year ended July 25, 1997, the Company contributed approximately
$18,000 to this plan.

F-52
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Stockholders of

McGregor Travel Management, Inc.

We have audited the accompanying balance sheets of McGregor Travel
Management, Inc. as of December 31, 1995 and 1996, and the related statements of
income and retained earnings, and cash flows for the years 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 audits in accordance with generally accepted auditing
standards. These 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 McGregor Travel Management,
Inc. as of December 31, 1995 and 1996, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.

As discussed in Note 10 to the financial statements, certain errors
resulting in the understatement of accounts receivable, goodwill and
stockholders' equity as of December 31, 1995 and 1996, were discovered by
management in the current year. Accordingly, the 1995 and 1996 financial
statements have been restated (and an adjustment has been made to retained
earnings as of January 1, 1995) to correct these errors.

Walter J. McKeever & Company

Greenwich, Connecticut

March 6, 1997, Except for Note 10, Note 12 and the last paragraph of Note 1,
as to which the date is January 29, 1998

F-53
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996 SEPTEMBER 30, 1997
------------ ------------ ------------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current Assets
Cash and Cash Equivalents....................................... $ 785,600 $ 611,063 $ 1,909,576
Marketable Equity Securities (Cost 1995: $128,625 Note 1)....... 328,500
Accounts Receivable--Trade...................................... 207,705 155,539 398,401
--Other (Note 10)......................................... 925,156 1,552,456 1,537,019
Due from Employees (Note 5)..................................... 68,250 85,858 2,002,927
Prepaid Insurance............................................... 97,007 28,816 20,982
Prepaid Expenses--Other......................................... 80,025 15,533 15,516
------------ ------------ ------------------
Total Current Assets........................................ 2,492,243 2,449,265 5,884,421
------------ ------------ ------------------
Property and Equipment
Automobiles..................................................... 251,136 75,792 181,156
Office Furniture and Equipment.................................. 360,634 641,897 1,134,769
Real Property................................................... 325,500 325,500 323,451
Leasehold Improvements.......................................... 212,263 272,925 299,742
------------ ------------ ------------------
1,149,533 1,316,114 1,939,118
Less Accumulated Depreciation................................... 314,888 358,042 461,866
------------ ------------ ------------------
Net Property and Equipment.................................. 834,645 958,072 1,477,252
------------ ------------ ------------------
Intangible Assets (Note 1)
Goodwill (Note 10).............................................. 2,437,154 2,437,154 3,387,084
Customer List................................................... 148,418 148,418 148,418
Restrictive Covenant............................................ 186,919 186,919 555,585
------------ ------------ ------------------
2,772,491 2,772,491 4,091,087
Less Accumulated Amortization............................... 503,173 641,649 765,642
------------ ------------ ------------------
Net Intangible Assets............................................. 2,269,318 2,130,842 3,325,445

Other Assets
Cash Surrender Value of Life...................................... 52,232 10,943 10,943
Insurance
Building Deposit (Note 4)....................................... 100,000
Security Deposits............................................... 7,957 7,957 7,957
Other........................................................... 1,400 1,400 24,372
------------ ------------ ------------------
Total Other Assets.......................................... 161,589 20,300 43,272
------------ ------------ ------------------
Total Assets.............................................. $ 5,757,795 $ 5,558,479 $ 10,730,390
------------ ------------ ------------------
------------ ------------ ------------------
</TABLE>

F-54
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996 SEPTEMBER 30, 1997
------------ ------------ ------------------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable................................................ $ 1,182,897 $ 1,637,395 $ 2,835,397
Accrued Taxes................................................... 16,532 37,044 1,654
Accrued Interest................................................ 43,397 30,544 30,434
Deferred Income Taxes (Note 6).................................. 418,786 713,213
Note Payable, Bank Line of Credit (Note 2)...................... 617,250 1,493,274
Notes Payable, Shareholders (Note 5)............................ 983,702 41,550 366,550
Current Portion of Long-Term Debt (Note 3)...................... 786,217 899,325 1,223,699
------------ ------------ ------------------
Total Current Liabilities................................... 3,431,531 3,976,321 5,951,008
Noncurrent Liabilities
Long-term debt, less current Portion (Note 3)................... 922,493 176,666 35,051
------------ ------------ ------------------
Total Liabilities........................................... 4,354,024 4,152,987 5,986,059
------------ ------------ ------------------
Stockholders' Equity
Common Stock, no par value......................................
5,000 shares authorized.......................................
1,000 shares issued (Note 10)................................. 165,333 165,333 165,333
Retained Earnings............................................... 1,038,563 1,240,159 4,578,998
Net unrealized gain on current
Marketable securities (Note 1)................................ 199,875
------------ ------------ ------------------
Total Stockholders' Equity.................................. 1,403,771 1,405,492 4,744,331
------------ ------------ ------------------
Total Liabilities and Stockholders' Equity.................... $ 5,757,795 $ 5,558,479 $ 10,730,390
------------ ------------ ------------------
------------ ------------ ------------------
</TABLE>

See auditor's report and accompanying notes to financial statements.

F-55
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
NINE MONTHS ENDED:
YEAR ENDED DECEMBER 31 : ----------------------------
---------------------------- SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
INCOME
Commissions Earned................................ $ 10,257,855 $ 19,292,560 $ 15,625,051 $ 18,065,333
------------- ------------- ------------- -------------
Total Income.................................... 10,257,855 19,292,560 15,625,051 18,065,333
OPERATING EXPENSES
Salaries.......................................... 5,255,320 10,585,438 7,814,144 7,251,445
General and administrative........................ 4,227,246 8,378,982 6,934,108 8,091,213
------------- ------------- ------------- -------------
Total Operating Expenses........................ 9,482,566 18,964,420 14,748,252 15,342,658
------------- ------------- ------------- -------------
Income From Operations.......................... 775,289 328,140 876,799 2,722,675
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSES)
Interest Income................................... 37,233 43,116 26,105 65,702
Interest Expense.................................. (230,457) (179,742) (135,067) (153,716)
Gains realized on sale of marketable securities 368,858
Other, net........................................ (25,665) (16,468) (6,706) (1,415)
------------- ------------- ------------- -------------
Other Income (Expenses), Net.................... (218,889) 215,764 (115,668) (89,429)
------------- ------------- ------------- -------------
Income Before Income Taxes...................... 556,400 543,904 761,131 2,633,246
------------- ------------- ------------- -------------
PROVISION FOR TAXES
Federal (Note 6).................................. 230,918 259,325 185,470 (548,795)
State (Note 6).................................... 67,888 82,983 52,990 (156,798)
------------- ------------- ------------- -------------
Total Taxes..................................... 298,806 342,308 238,460 (705,593)
------------- ------------- ------------- -------------
Net Income.................................... 257,594 201,596 522,671 3,338,839
Retained Earnings, January 1........................ 772,710 1,038,563 1,038,563 1,240,159
Prior Period Adjustments, Net of Applicable Income
Taxes of $109,620--Note 10)....................... 8,259
------------- ------------- ------------- -------------
Retained Earnings, December 31...................... $ 1,038,563 $ 1,240,159 $ 1,561,234 $ 4,578,998
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Unaudited pro forma information (see Note 2)
Income before income taxes........................ $ $ $ $ 2,633,246
Pro forma provision for income taxes.............. 1,053,299
------------- ------------- ------------- -------------
Pro forma net income.......................... $ $ $ $ 1,579,947
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

See auditor's report and accompanying notes to financial statements.

F-56
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31: NINE MONTHS ENDED:
------------------------- ----------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996 1997
----------- ------------ ------------- -------------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from Operating Activities:
Net Income............................................ $ 257,594 $ 201,596 $ 522,671 $ 3,338,839
----------- ------------ ------------- -------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and Amortization......................... 256,932 250,158 173,585 227,817
Gains realized, sales of marketable securities........ (368,858)
Loss on Disposition of Fixed Assets................... 16,426
Noncash officers' compensation (Note 5)
Marketable securities............................... 708,174
Automobiles......................................... 106,817
Building Deposit.................................... 100,000
Cash value of life insurance........................ 65,732
Decrease (Increase) in Accounts Receivable............ (93,252) 52,166 (45,814) (242,862)
Decrease (Increase) in Other Receivables.............. (573,071) (627,300) (696,036) 15,437
Increase in Due From Employees........................ (8,823) (17,608) (9,336) (1,917,069)
Decrease (Increase) in Prepaid Insurance.............. (71,313) 68,191 38,579 7,834
Decrease (Increase) in Prepaid Expenses-- Other....... (68,032) 64,492 112,421 (22,956)
Decrease in Prepaid Taxes............................. 15,375
Increase in Accounts Payable and Accrued Expenses....... 565,599 441,645 2,149,803 1,197,893
Increase (Decrease) in Accrued Taxes.................. (2,636) 20,512 33,853 (35,390)
Increase in Deferred Taxes............................ 274,512 294,427 227,641 (713,213)
----------- ------------ ------------- -------------
Total Adjustments....................................... 311,717 1,158,548 1,984,696 (1,482,509)
----------- ------------ ------------- -------------
Net Cash provided by Operating Activities............... $ 569,311 $ 1,360,144 $ 2,507,367 $ 1,856,330
----------- ------------ ------------- -------------
</TABLE>

See auditor's report and accompanying notes to financial statements.

F-57
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31: NINE MONTHS ENDED :
------------------------ ----------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996 1997
----------- ----------- ------------- -------------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from Investing Activities:
Purchases of marketable securities....................... $ (117,625) $ (210,692) $ (64,625)
Purchases of property and equipment...................... (154,250) (341,926) (289,090) $ (623,004)
Increase in cash surrender value life insurance.......... (24,605) (24,443)
Proceeds on sale of fixed assets......................... 6,848
Purchase of travel agency................................ (103,000) (1,318,596)
Decrease in security deposit............................. 1,750
----------- ----------- ------------- -------------
Net cash used by Investing Activities.................... (390,882) (577,061) (353,715) (1,941,600)
----------- ----------- ------------- -------------
Cash flows from Financing Activities
Borrowing on line of credit.............................. 617,250 2,596,279
Borrowing from stockholders.............................. 983,702 325,000
Borrowing on long-term notes Payable..................... 50,000 741,728
Principal payments, loans from Stockholders.............. (452,595) (942,152) (983,702)
Principal payments on line of credit..................... (1,720,255)
Principal payments, long-term notes Payable.............. (387,898) (632,718) (383,083) (558,969)
----------- ----------- ------------- -------------
Cash (used) provided by Financing Activities............. 193,209 (957,620) (1,366,785) 1,383,783
----------- ----------- ------------- -------------
Net (decrease) increase in cash.......................... 371,638 (174,537) 786,867 1,298,513
Cash and cash equivalents, beginning of period........... 413,962 785,600 785,600 611,063
----------- ----------- ------------- -------------
Cash and cash equivalents, end of period................. $ 785,600 $ 611,063 $ 1,572,467 $ 1,909,576
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest expense....................................... $ 148,089 $ 192,595 $ 150,186 $ 80,006
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Income taxes........................................... $ 26,930 $ 25,533 $ 14,201 $ 25,535
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
</TABLE>

See auditor's report and accompanying notes to financial statements.

F-58
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

McGregor Travel Management, Inc., incorporated in 1977, provides travel
management services to corporate clients throughout the U.S. Its main office is
located in Stamford, Connecticut. The Company's name was changed from McGregor
Travel, Inc. in 1995.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

MARKETABLE EQUITY SECURITIES

As required by Statement of Financial Accounting Standards No. 115 for years
beginning after December 15, 1993, the Company records its investments in
marketable equity securities at market value as of the balance sheet date.
Unrealized gains are reported in the Stockholders' Equity section of the balance
sheet.

PROPERTY AND EQUIPMENT

Property and Equipment are recorded at cost. Acquisitions made prior to 1989
are depreciated under the Accelerated Cost Recovery System (as modified by the
Tax Reform Act of 1986), using the applicable recovery periods. The difference
between straight-line and accelerated methods is considered to be immaterial for
those years. Personal property acquired after December 31, 1988 is depreciated
over five to seven years using the straight-line method for financial reporting
and accelerated methods for tax purposes. Real property is depreciated over 27
1/2 to 39 years using the straight-line method for both financial statement and
tax reporting purposes.

INTANGIBLE ASSETS

Intangible assets are recorded at cost. Intangible assets acquired in the
purchase of Riis family stock in 1993 (Note 10) and in connection with the
purchases of travel agencies in 1992 and 1995, are amortized over the following
estimated useful lives:

<TABLE>
<S> <C>
Goodwill...................................................... 25--40 years
Customer Lists................................................ 5 years
Restrictive Covenant.......................................... 3 years
</TABLE>

Goodwill is not amortized for tax purposes. In years prior to 1992, goodwill
was immaterial and was not amortized for financial statement purposes.

RECLASSIFICATION OF PRIOR YEAR'S STATEMENTS

In addition to the prior period adjustments described in Note 10, certain
items previously reported have been reclassified to conform with the current
year's presentation.

F-59
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

INTERIM FINANCIAL DATA

The interim financial data as of September 30, 1997 and for the nine months
ended September 30, 1996 and 1997 is unaudited; however, in the opinion of
management of the Company, the interim data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
results for the interim periods presented.

Effective January 1, 1997, the Company was granted S-Corporation reporting
status by the Internal Revenue Service. As a result, there is no federal or
state income tax liability of the Company for the period subsequent to January
1, 1997. Any liability arising during this period is the responsibility of the
shareholders of the Company. As a result of the election to be taxed under the
provisions of Subchapter S of the Internal Revenue Service, deferred income
taxes of $705,593 that existed prior to the election of Subchapter S have been
eliminated and recognized as income during the nine months ended September 30,
1997.

The unaudited pro forma income tax information included in the Statement of
Income is presented in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", as if the Company had been
subject to federal income taxes for the entire periods presented.

NOTE 2. LINE OF CREDIT

On November 6, 1996 the Company obtained a line of credit from Merrill Lynch
Business Financial Services, Inc. which allows the Company to borrow up to
$1,400,000. This credit limit was increased to $1,700,000 in January 1997.
Amounts borrowed under the line of credit must be repaid November 30, 1997.
Interest at the 30-Day Commercial Paper Rate, as published in the Wall Street
Journal, plus 2.3% is payable monthly. Principal outstanding at December 31,
1996 was $617,250.

In connection with the line of credit the Company paid in advance an annual
fee of $7,000 of which $6,417 is included in prepaid expenses at December 31,
1996. An additional fee of $1,500 was paid in January 1997 when the credit limit
was increased.

The line of credit is secured by marketable securities owned by stockholders
Douglas R. Knight and Sam A. DeFranco and held in Merrill Lynch pledged
collateral accounts.

F-60
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 3. LONG-TERM NOTES PAYABLE

Long-term notes payable are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
------------ -------------
<S> <C> <C>
Notes payable to former shareholders (Note 10). Interest at prime plus 2% and
principal aggregating $112,745 payable quarterly from March 31, 1994 to March 31,
1995, based on a seven-year amortization of principal. Payments of interest and
principal aggregating $174,278 payable quarterly from June 30, 1995 to March 31,
1998, based on a three-year amortization of principal. Secured by Treasury stock
and guaranteed by Douglas Knight and Sam DeFranco.

The balances of the individual notes are:
John Riis............................................................................ $ 684,135 $ 431,778
Marie-Therese Riis................................................................... 228,042 143,924
Johan Riis (in trust)................................................................ 166,470 105,064
Elise Bohner......................................................................... 166,470 105,064
Mette Riis........................................................................... 166,470 105,064
Siri Riis............................................................................ 166,470 105,064
------------ -------------
Total............................................................................ 1,578,057 995,958
Mortgage note payable to Citibank, N.A. Interest at 12.00% and principal of $2,135
are payable monthly until April, 1997 when the remaining balance of $59,045 is due.
Secured by condominium............................................................. 91,070 65,450
Note payable to Jack Skloff (Note 11) Non-interest bearing. Principal payments of
$2,083, payable monthly until July 1, 1997......................................... 39,583 14,583
------------ -------------
Total................................................................................ 1,708,710 1,075,991
Less Current Portion................................................................. (786,217) (899,325)
------------ -------------
Long-Term Notes Payable.............................................................. $ 922,493 $ 176,666
------------ -------------
------------ -------------
</TABLE>

Long-term notes are scheduled to mature as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- --------------------------------------------------------------------------------
<S> <C>
1997.......................................................................... $ 899,325
1998.......................................................................... 176,666
------------
Total....................................................................... $ 1,075,991
------------
------------
</TABLE>

NOTE 4. COMMITMENTS

On November 30, 1996, the Company began leasing its headquarters in
Stamford, Connecticut, from DeFranco & Knight, LLC (Note 5), which bought the
building from John Riis (Note 10), the former landlord. The lease calls for
annual minimum lease payments of $190,091 for five years. The Company assumed
the lease of the Washington, DC agency purchased in 1995 (Note 11). This lease
had a remaining

F-61
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 4. COMMITMENTS (CONTINUED)
term of 8 months at December 31, 1996. The Company has also entered into several
noncancellable leases for furniture and office equipment.

Future minimum payments under the leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1997............................................................................ $ 257,696
1998............................................................................ 207,939
1999............................................................................ 193,066
2000............................................................................ 174,250
----------
Total......................................................................... $ 832,951
----------
----------
</TABLE>

The Company also has several other small leases for office space at branch
locations.

<TABLE>
<CAPTION>
Total Rent Expense is:
1995 1996
--------- ---------
<S> <C> <C>
Office Space.......................................... $ 305,924 $ 384,728
Furniture & Telephone................................. 133,723 140,668
--------- ---------
$ 439,647 $ 525,396
--------- ---------
--------- ---------
</TABLE>

The Company is committed to pay the following amounts to John Riis under the
covenant not to compete described in Note 10:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1997............................................................................ $ 64,599
1998............................................................................ 64,599
1999............................................................................ 64,599
----------
Total......................................................................... $ 193,797
----------
----------
</TABLE>

Non-Compete Payments are included in salary expense in the year they are
paid.

NOTE 5. RELATED PARTY TRANSACTIONS

Starting in 1996, the Company has a client support agreement with McGregor
Travel Management (UK) Limited, a United Kingdom corporation owned by Douglas
Knight and Sam DeFranco. McGregor Travel Management (UK) Limited provided travel
management services to the clients of McGregor Travel Management, Inc. In
connection with this agreement the Company paid McGregor Travel Management (UK)
Limited $377,476 for 1996 This amount is included in client support expense
- -overseas in the statement of income for 1996.

F-62
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
Amounts due to and from McGregor Travel Management (UK) Limited are included
on the Company's balance sheets as follows:

<TABLE>
<S> <C>
Payable at December 31, 1996...................................... $ 283,849
Receivable at December 31, 1995................................... 80,025
</TABLE>

1996 transactions relating to demand notes payable to Douglas Knight and Sam
DeFranco were:

<TABLE>
<CAPTION>
DOUGLAS KNIGHT SAM DEFRANCO
-------------- -------------
<S> <C> <C>
Note payable balance 12/31/95..................................................... $ 507,620 $ 476,083
Principal Repaid in 1996.......................................................... (466,070) (476,083)
-------------- -------------
Note payable balance 12/31/96..................................................... $ 41,550 $ 0
-------------- -------------
-------------- -------------
Interest paid in 1996 at 12%...................................................... $ 15,280 $ 6,961
-------------- -------------
-------------- -------------
</TABLE>

The Company also made short-term advances of $23,167 to Mr. Knight and
$42,924 to Mr. DeFranco which are included in Due from Employees on the balance
sheet at December 31, 1996

During 1996 the Company transferred certain non-cash assets to Mr. Knight
and Mr. DeFranco. These amounts were included in their 1996 salaries:

<TABLE>
<S> <C>
Marketable securities............................................. $ 708,174
Automobiles....................................................... 106,817
Building deposit.................................................. 100,000
Cash value of life insurance...................................... 65,732
</TABLE>

NOTE 6. INCOME TAXES

Federal income tax expense is calculated after adding back to income
non-deductible expenses (mainly officers' life insurance premiums and
nondeductible meals and entertainment) totaling $157,750 in 1996 and $43,094 in
1995. Financial statement net income also differs from Federal taxable income
because of timing differences in reporting certain income items (Note 10), as
well as depreciation and amortization expense. These timing differences result
in deferred tax liabilities at December 31, 1996 and 1995.

F-63
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 6. INCOME TAXES (CONTINUED)
Federal and State income tax amounts consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1995 1996
---------- ----------
FEDERAL INCOME TAX EXPENSE
Current tax expense....................................................................... $ 14,495 $ 30,735
Deferred tax expense...................................................................... 216,423 228,590
---------- ----------
Total................................................................................. $ 230,918 $ 259,325
---------- ----------
---------- ----------
STATE INCOME TAX EXPENSE
Current tax expense....................................................................... $ 9,799 $ 17,146
Deferred tax expense...................................................................... 58,089 65,837
---------- ----------
Total................................................................................. $ 67,888 $ 82,983
---------- ----------
---------- ----------
TOTAL DEFERRED TAX LIABILITY:
Federal................................................................................... $ 329,377 $ 557,967
State..................................................................................... 89,409 155,246
---------- ----------
Total................................................................................. $ 418,786 $ 713,213
---------- ----------
---------- ----------
</TABLE>

NOTE 7. RETIREMENT PLAN

The Company adopted a 401 (k) retirement plan effective July 1, 1990. All
employees are eligible to participate in the plan on the quarterly entry date
following completion of 6 months of employment and attainment of age 18. Each
participant may elect to contribute up to 15% of base compensation to an annual
maximum of $9,240 (adjusted annually for inflation). The Company matches 50% of
the first 5% of employee contributions (up to 2.50% of base compensation) for
participants employed on the last day of the plan year. Profit-sharing expense
was $39,996 in 1995 and $59,119 in 1996.

NOTE 8. DEPRECIATION

For the year ended December 31, 1995, depreciation expense of $110,679 and
$11,835 is included in general and administrative expenses and other expenses,
respectively. For the year ended December 31, 1996, depreciation expense of
$99,850 and $11,832 is included in general and administrative expenses and other
expenses, respectively.

NOTE 9. CONCENTRATION OF CREDIT RISK

At December 31, 1996, the Company had cash deposits at one banking
institution in excess of federally insured limits. A possible loss exists for
the amount in excess of $100,000.

NOTE 10. RESTATEMENT OF FINANCIAL STATEMENTS

On April 14, 1993, the Company repurchased 3,600 shares of its common stock
in return for notes payable to former stockholders John Riis, Marie-Therese Riis
and their children totaling $2,400,000 (Note 3). Also on April 14, 1993, a total
of 800 new shares were issued to remaining stockholders Douglas Knight

F-64
<PAGE>
MCGREGOR TRAVEL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 10. RESTATEMENT OF FINANCIAL STATEMENTS (CONTINUED)
and Sam DeFranco for a total of $105,833. Because of the resulting change of
ownership, the $2,400,000 has been reclassified as goodwill and is being
amortized over 25 years according to generally accepted accounting principles.
Previously this transaction was treated as a purchase of treasury stock.

Also, income receivable from override commissions and SABRE automation
incentives earned in the fourth quarter of each year, totaling $894,094 as of
December 31, 1995 and $1,552,456 as of December 31, 1996 was not previously
considered to be accruable at year-end. This income has now been accrued and is
included in Accounts Receivable--Other on the Balance Sheet. Deferred taxes on
these amounts were $312,932 as of December 31, 1995 and $543,358 as of December
31, 1996.

The effect of these restatements on Retained Earnings at January 1, 1995 is
as follows:

<TABLE>
<S> <C>
Additional commission income receivable........................... $ 313,200
Amortization of goodwill.......................................... (164,000)
Deferred taxes.................................................... (140,941)
---------
Prior Period Adjustment, Net...................................... $ 8,259
---------
---------
</TABLE>

NOTE 11. PURCHASE OF TRAVEL AGENCY ASSETS

On July 1, 1995, the Company purchased the assets of the Washington, D.C.
travel agency, Dimensions Travel Company, Inc., from Jack Skloff for $150,000.
The assets are recorded at cost as follows:

<TABLE>
<S> <C>
Customer List..................................................... $ 50,000
Furniture & Equipment............................................. 50,000
Restrictive Covenant.............................................. 25,000
Goodwill.......................................................... 25,000
---------
Total......................................................... $ 150,000
---------
---------
</TABLE>

The assets were purchased for $100,000 down and a $50,000, 24 month,
non-interest bearing note, with a monthly payment of $2,083.33, commencing
August 1, 1995.

NOTE 12. SUBSEQUENT EVENT

Effective October 24, 1997, the Company and its stockholders entered into a
definitive agreement with U.S. Office Products Company ("U.S. Office Products")
pursuant to which U.S. Office Products acquired all outstanding shares of the
Company's common stock in exchange for common stock of U.S. Office Products.

F-65
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Omni Travel Service, Inc.:

In our opinion, the accompanying balance sheets and the related statements
of income and retained earnings and of cash flows present fairly, in all
material respects, the financial position of Omni Travel Service, Inc. at
December 31, 1996, and the results of their operations and their cash flows for
the year ended June 30, 1996 and the six months ended December 31, 1996, in
conformity with generally accepted accounting principles. 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 of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

As discussed in Note 10 of the financial statements, certain adjustments
have been made to the previously issued financial statements for the year ended
June 30, 1996. These adjustments were discovered subsequent to the issuance of
the financial statements. The financial statements have been restated to reflect
these corrections.

NARDELLA & TAYLOR

Lexington, Massachusetts

August 22, 1996, except for Note 10, as to which the date is January 30,
1998, for the audited financial statements as of June 30, 1996, and January 30,
1998 for the audited financial statements as of December 31, 1996

F-66
<PAGE>
OMNI TRAVEL SERVICE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and equivalents............................................................... $1,443,151 $ 1,435,442
Accounts receivable, trade......................................................... 318,500 328,383
Prepaid expenses and other current assets.......................................... 28,491 32,674
------------ ------------
Total current assets........................................................... 1,790,142 1,796,499
------------ ------------
Property and equipment, at cost (note 4)
Office furniture and equipment..................................................... 840,862 867,808
Computer equipment................................................................. 603,422 635,245
Leasehold improvements............................................................. 440,548 448,194
Motor vehicles..................................................................... 11,434 11,434
------------ ------------
1,896,266 1,962,681
Less accumulated depreciation.................................................. 1,114,024 1,162,023
------------ ------------
Property and equipment, net.................................................. 782,242 800,658
------------ ------------
Total assets................................................................. $2,572,384 $ 2,597,157
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................................. $ 343,653 $ 566,367
Deferred revenue................................................................... 388,648 337,629
Current maturities of capital lease obligation (note 4)............................ 18,341 12,730
------------ ------------
Total current liabilities...................................................... 750,642 916,726
Capital lease obligation, net of current maturities (note 4)......................... 3,280 --
Deferred rent........................................................................ 206,610 208,917
Deferred income taxes (note 6)....................................................... -- --
------------ ------------
Total liabilities.............................................................. 960,532 1,125,643
------------ ------------
Commitments and contingent liabilities (note 7)
Stockholders' equity:
Common stock, no par value; 100 shares authorized, issued and outstanding.......... 55,000 55,000
Retained earnings.................................................................. 1,556,852 1,416,514
------------ ------------
Total stockholders' equity..................................................... 1,611,852 1,471,514
------------ ------------
Total liabilities and stockholders' equity..................................... $2,572,384 $ 2,597,157
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-67
<PAGE>
OMNI TRAVEL SERVICE, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
------------- -----------------------------------------------
JUNE 30, DECEMBER 31, JUNE 30, JUNE 30,
1996 1996 1996 1997
------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues:
Sales.......................................... $ 49,934,464 $ 26,302,520 $ 22,403,211 $ 28,795,132
Direct commissions............................. 622,953 314,694 301,748 408,057
Override commissions........................... 520,918 202,171 311,813 199,988
Administrative and management fees (note 9).... 156,566 -- -- --
------------- ------------- ----------------- -------------
51,234,901 26,819,385 23,016,772 29,403,177
Cost of revenues................................. 45,518,045 23,817,096 20,320,222 26,057,637
------------- ------------- ----------------- -------------
Net commission revenue....................... 5,716,856 3,002,289 2,696,550 3,345,540
Selling, general and administrative expenses..... 5,620,614 2,474,588 2,553,851 2,663,645
------------- ------------- ----------------- -------------
Operating income............................. 96,242 527,701 142,699 681,895
------------- ------------- ----------------- -------------
Other income (expense):
Interest income (note 8)......................... 57,812 33,608 43,407 29,753
Interest expense................................. (6,112) (2,326) (2,752) (1,986)
Other income (expense)........................... (790) -- (7,579) --
------------- ------------- ----------------- -------------
Total other income (expense)................. 50,910 31,282 33,076 27,767
------------- ------------- ----------------- -------------
Income before income taxes................... 147,152 558,983 175,775 709,662
Income tax benefit (provision) (note 6).......... (54,850) 52,961 (54,850) --
------------- ------------- ----------------- -------------
Net income................................... 92,302 611,944 120,925 709,662
------------- ------------- ----------------- -------------
Retained earnings, beginning of period, as
previously stated.............................. 900,122 992,516 871,591 1,556,852
Prior period adjustment.......................... 92 -- -- --
------------- ------------- ----------------- -------------
Retained earnings, beginning of period, as
restated....................................... 900,214 992,516 871,591 1,556,852
Distributions to stockholders.................... -- (47,608) -- (850,000)
------------- ------------- ----------------- -------------
Retained earnings, end of period................. $ 992,516 $ 1,556,852 $ 992,516 $ 1,416,514
------------- ------------- ----------------- -------------
------------- ------------- ----------------- -------------
Unaudited pro forma information (see Note 2)
Income before income taxes..................... $ 558,983 $ 709,662
Pro forma income tax provision................. 223,593 283,865
------------- -------------
Pro forma net income......................... $ 335,390 $ 425,797
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-68
<PAGE>
OMNI TRAVEL SERVICE, INC.

STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
----------- -----------------------------------------
<S> <C> <C> <C> <C>
JUNE 30, DECEMBER 31, JUNE 30, JUNE 30,
1996 1996 1996 1997
----------- ------------- ----------- -------------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 92,302 $ 611,944 $ 120,925 $ 709,662
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation....................................... 78,023 42,150 42,023 48,000
Deferred income taxes.............................. 5,905 (52,961) 5,907 --
Changes in operating assets and liabilities:
Accounts receivable, trade....................... (19,634) 64,632 (11,234) (9,883)
Refundable income taxes.......................... 24,077 -- 3,503 --
Prepaid expenses and other current assets........ (6,151) (12,917) 502,018 (4,183)
Accounts payable and accrued expenses............ (139,012) (156,455) (288,715) 222,714
Deferred revenue................................. 9,615 234,437 (38,789) (51,019)
Deferred rent.................................... 35,304 12,687 12,687 2,307
----------- ------------- ----------- -------------
Net cash provided by operating activities.............. 80,429 743,517 348,325 917,598
----------- ------------- ----------- -------------
Cash flows from investing activities:
Purchase of property and equipment..................... (73,534) (73,194) (51,657) (66,417)
----------- ------------- ----------- -------------
Cash flows from financing activities:
Repayment of advances to stockholder................... 486,200 -- -- --
Distributions to stockholders.......................... -- (47,608) -- (850,000)
Repayments of capital lease obligations................ (15,272) (8,364) (7,868) (8,890)
----------- ------------- ----------- -------------
Net cash provided (used) by financing activities....... 470,928 (55,972) (7,868) (858,890)
----------- ------------- ----------- -------------
Net increase (decrease) in cash and
equivalents.................................... 477,823 614,351 288,800 (7,709)

Cash and equivalents, beginning of period................ 350,977 828,800 540,000 1,443,151
----------- ------------- ----------- -------------
Cash and equivalents, end of period...................... $ 828,800 $ 1,443,151 $ 828,800 $ 1,435,442
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------

Supplemental disclosures of cash flow information:
Cash paid for: Interest..................... $ 6,112 $ 2,326 $ 2,752 $ 1,986
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Income taxes................... $ 15,870 $ 49,165 $ 5,085 $ --
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-69
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

(1) INTERIM FINANCIAL DATA

The interim financial data for the six months ended June 30, 1996 and June
30, 1997 is unaudited, however, in the opinion of management of the Company, the
interim data includes all adjustments, consisting only of normal adjustments,
necessary for a fair presentation of the results for the interim periods
presented. All data presented in these notes for such periods is unaudited.

(2) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) ORGANIZATION AND NATURE OF BUSINESS

Omni Travel Service, Inc. (the "Company") was incorporated in March, 1979.
The Company is a full-service travel agency, providing reservation services and
information for travel, lodging and tours to commercial, individual and group
clients from offices in Cambridge, Massachusetts. The Company's operations are
primarily concentrated in one market segment--airline travel--and the customers
are geographically concentrated primarily in Massachusetts; management considers
a downturn in this market segment and geographical location to be unlikely.

Effective September 26, 1997, the Company and its stockholders entered into
a definitive agreement with U.S. Office Products Company ("U.S. Office
Products") pursuant to which U.S. Office Products acquired all outstanding
shares of the Company's common stock in exchange for common stock of U.S. Office
Products.

(b) REVENUE RECOGNITION

The Company sells tours sponsored by other companies. Commissions received
from the sale of tours are recognized when payment is made to the tour company.
Costs for tours which have not yet departed are recorded as a deposit in
receivables and all customer receipts for such tours are recorded as a customer
deposit liability in deferred revenue.

Management has determined that all accounts receivable are collectible and
that there is no requirement for an allowance for doubtful accounts as of
December 31, 1996.

(d) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization is
provided using straight-line and accelerated methods over the estimated useful
lives of the assets.

(e) DEFERRED REVENUE

Deferred revenue represents travel revenue received in the current year
which relates to a future reporting period.

(f) INCOME TAXES

Prior to July 1, 1996, income taxes are accounted for in accordance with the
provisions of Statement of Financial Accounting Standards No. 109. Deferred
income tax assets and liabilities are computed annually

F-70
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(2) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
for differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.

The provision for income taxes for the year ended June 30, 1996 includes
federal and state income taxes currently payable and those deferred because of
temporary differences between financial statement and tax bases of assets and
liabilities.

Effective on July 1, 1996, the Company was granted S-Corporation reporting
status by the Internal Revenue Service. As a result, there is no federal or
state income tax liability of the Company for the period subsequent to July 1,
1996. Any liability arising during this period is the responsibility of the
shareholders of the Company.

As a result of the election to be taxed under the provisions of Subchapter S
of the Internal Revenue Code, deferred income taxes in the amount of $52,961
that existed prior to the election of Subchapter S status have been eliminated
and recognized as income during the six months ended December 31, 1996.

(g) CASH AND EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with an original maturity of three months or less
to be cash equivalents.

(h) CONCENTRATION OF CREDIT RISK

Financial instruments which subject the Company to credit risk consist
principally of temporary cash investments and trade receivables. The Company
places its temporary cash investments ($1,443,151 at December 31, 1996) with
high quality financial institutions. At times such investments may be in excess
of the FDIC limit. The Company's policy with respect to the credit risk of trade
receivables is to evaluate, prior to completion of travel reservations, each
customer's financial condition and determine the amount of open credit to be
extended.

(i) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's financial instruments, including cash
and equivalents, receivables and payables and the capital lease obligation,
approximates fair market value.

(j) 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 amount 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.

F-71
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) LINE OF CREDIT

The Company has a line of credit agreement with a bank due upon demand,
bearing interest at the bank's prime rate plus 1% per annum (9.25% at December
31, 1996). The note is secured by substantially all assets of the Company. The
agreement is subject to an Intercreditor and Subordination Agreement between and
among the bank, the Company, its stockholders and a related party, Bow Street
Properties, Inc. (note 7). The maximum borrowings allowed under this agreement
are $250,000. At December 31, 1996, no borrowings were outstanding under this
agreement.

The agreement is subject to various affirmative, negative and financial
covenants including, among others, profitability and debt to net worth
covenants. At December 31, 1996, the Company was deemed by the lending
institution to be in substantial compliance with the covenants.

(4) CAPITAL LEASE OBLIGATION

The Company leases certain office equipment under a capital lease. Equipment
held under the capital lease as of December 31, 1996 is as follows:

<TABLE>
<S> <C>
Cost............................................................... $ 65,722
Accumulated amortization........................................... 26,289
---------
Net book value..................................................... $ 39,433
---------
---------
</TABLE>

Future minimum lease payments due under the capital lease and the present
value of the net minimum lease payments as of December 31, 1996 are as follows:

<TABLE>
<CAPTION>
AMOUNT
---------
<S> <C>
1997............................................................................... $ 19,985
1998............................................................................... 3,331
---------
Total minimum lease payments....................................................... 23,316
Less amount representing interest.................................................. 1,695
---------
Present value of net minimum lease payments........................................ 21,621
Less current maturities............................................................ 18,341
---------
Capital lease obligation, net of current maturities................................ $ 3,280
---------
---------
</TABLE>

(5) PROFIT-SHARING RETIREMENT PLAN

The Company has in effect a qualified profit-sharing retirement plan
covering substantially all employees. The plan includes an employee thrift
savings plan established under Internal Revenue Code Section 401(k). Each
eligible participant may elect to defer up to 15% of compensation subject to
Internal Revenue Code limitations. Company profit-sharing contributions to the
plan are made at the discretion of the Board of Directors, but may not exceed
the maximum allowable deduction permitted under the Internal Revenue Code at the
time of the contribution. During the six months ended December 31, 1996 and the
year ended June 30, 1996, the Company made no contributions to the plan.

F-72
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(6) INCOME TAXES

The provision for income taxes for the year ended June 30, 1996 is comprised
of the following:

<TABLE>
<S> <C>
Current provision:
Federal............................................................ $ 35,151
State.............................................................. 13,792
---------
48,943
---------
Deferred provision:
Federal............................................................ 4,549
State.............................................................. 1,358
---------
5,907
---------
$ 54,850
---------
---------
</TABLE>

Temporary differences which give rise to deferred tax liabilities are
comprised of financial and tax reporting depreciation differences.

The differences between the statutory federal income tax rate of 34% and
income taxes reported in the statement of income for the year ended June 30,
1996 are as follows:

<TABLE>
<S> <C>
Statutory rate..................................................... $ 47,273
Reduction due to graduated income tax rates........................ (7,573)
State and local taxes, net of federal benefit...................... 9,999
Other.............................................................. 5,151
---------
$ 54,850
---------
---------
</TABLE>

The federal and state income tax benefit for the six months ended December
31, 1996 is the result of the Company's election to be taxed under the
provisions of Subchapter S of the Internal Revenue Code, whereby deferred income
taxes in the amount of $52,961 that existed prior to the election of Subchapter
S status have been eliminated and recognized as income during the six months
ended December 31, 1996.

As a result of the Company's election of Subchapter S, there was no income
tax provision or benefit for the six months ended December 31, 1996 other than
the reversal of the deferred income taxes as discussed above.

(7) COMMITMENTS AND CONTINGENT LIABILITIES

The Company leased a sales office facility under a noncancellable operating
lease agreement which expired in December, 1995. The agreement required the
payment of utilities, real estate taxes and insurance. The Company also leases
certain vehicles under noncancellable operating leases expiring through
September, 2000 and additional equipment on a month to month basis. Rent expense
under these operating leases amounted to $15,550 for the six months ended
December 31, 1996 and $52,696 for the year ended June 30, 1996.

In addition, the Company leases its administrative and sales office facility
from Bow Street Properties, Inc., a related party (note 8), under a long-term
noncancellable operating lease agreement expiring in

F-73
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(7) COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
December, 2001. The agreement provides for monthly rental payments, utilities,
real estate taxes, insurance and repairs. Total rent expense, excluding
operating expenses, paid to Bow Street Properties, Inc. amounted to $208,380 for
the six months ended December 31, 1996 and $406,830 for the year ended June 30,
1996.

At December 31, 1996, future minimum annual rental payments required under
the noncancellable operating leases, are as follows:

<TABLE>
<S> <C>
1998............................................................ $ 448,440
1999............................................................ 470,880
2000............................................................ 494,400
2001............................................................ 519,000
Thereafter...................................................... 265,800
---------
$2,198,520
---------
---------
</TABLE>

In connection with the Intercreditor and Subordination Agreement, the
Company has guaranteed certain debt obligations of Bow Street Properties, Inc.,
a related party, amounting to $1,125,000 as of December 31, 1996.

(8) RELATED PARTY TRANSACTIONS

The Company leases its administration and sales office from Bow Street
Properties, Inc., a corporation owned by the Company's principal stockholder. In
addition, the Company has guaranteed certain debt obligations of Bow Street
Properties, Inc. (note 7).

The Company, from time to time, has made interest bearing advances to a
stockholder. The advances, which are unsecured, bear interest at 6% per annum.
At December 31, 1996, no amounts were due from the stockholder. Interest income
earned and accrued on these advances during the year ended June 30, 1996
amounted to $29,772.

(9) CONTRACTUAL ARRANGEMENTS

During the year ended June 30, 1996, the Company, under a five-year
contractual agreement which expired in December 1995, provided administrative
and management services to another travel agency. Under this agreement, the
Company recorded all travel revenues, and related travel operating costs of the
agency. The Company received a management fee which is included in travel
revenues in the accompanying income statement. Management fees earned, net of
certain related operating costs, amounted to approximately 22% of the Company's
net income before taxes for the year ended June 30, 1996.

F-74
<PAGE>
OMNI TRAVEL SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(10) REISSUANCE ADJUSTMENTS

Two adjustments were made to the previously issued financial statements for
the year ended June 30, 1996. The net effect of these adjustments was a $92
increase in prior period retained earnings. However, the adjustments were made
to ensure adherence to generally accepted accounting principles. Detail of the
two reissuance adjustments follows:

(a) OVERRIDE COMMISSIONS

Subsequent to the issuance of the financial statements for the year ended
June 30, 1996, it was determined that the Company was not recording revenue from
override commissions in the proper periods. Accordingly, current year and prior
period adjustments were made to properly state the related accounts receivable,
revenue, expense, and retained earnings accounts. The net effect of these
adjustments was a $43,418 increase in override commissions revenue for the year
ended June 30, 1996 and a $158,711 increase in prior period retained earnings.

(b) DEFERRED RENT

Generally accepted accounting principles require that rental expense must be
recorded on a straight-line basis over the rental term. Previously, the Company
was expensing actual rent payments. Accordingly, adjustments were made to
properly record the related expense and retained earnings accounts. The net
effect of these adjustments was a $35,304 increase in rent expense for the year
ended June 30, 1996 and a $158,619 decrease to retained earnings.

(11) SUBSEQUENT EVENTS

During September and October 1997, the airlines implemented a commission cap
of 8% on all domestic travel (maximum commission on a round trip flight remained
$50) and international travel (no maximum commission amount) which should
negatively impact the Company's operating results, although an amount cannot be
determined at this time.

On November 7, 1997, the Company was released from its guaranty obligations
relating to the entity owned by the Company's principal shareholder (note 8).

F-75
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Boards of Directors and Shareholders
of Travel Consultants, Inc. and Envisions Vacations, Inc.

In our opinion, the accompanying combined balance sheet and the related
combined statements of income and retained earnings and of cash flows present
fairly, in all material respects, the financial position of Travel Consultants,
Inc. and Envisions Vacations, Inc. (collectively, the "Company") at October 24,
1997, and the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles. 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 of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
Denver, Colorado
January 23, 1998

F-76
<PAGE>
TRAVEL CONSULTANTS, INC. AND ENVISION VACATIONS, INC.

COMBINED BALANCE SHEET

OCTOBER 24, 1997

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash.......................................................................... $ 3,018
Receivables, less allowance for doubtful accounts of $20,000.................. 1,410,799
Other receivables............................................................. 741,337
Receivable from affiliates.................................................... 911,124
Receivable from shareholders.................................................. 244,365
Other current assets.......................................................... 89,267
---------

Total current assets...................................................... 3,399,910

Property and equipment, net..................................................... 1,564,496
Intangible assets, net of accumulated amortization of $404,777.................. 234,814
Investments..................................................................... 156,355
Other........................................................................... 13,835
---------

Total assets.............................................................. $5,369,410
---------
---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.......................................... $ 186,037
Line of credit................................................................ 489,908
Accounts payable.............................................................. 1,683,431
Accrued liabilities:
Compensation................................................................ 357,653
Rebates..................................................................... 287,425
Other....................................................................... 347,255
Customer deposits............................................................. 306,164
Deferred income--current portion.............................................. 195,996
---------

Total current liabilities................................................. 3,853,869

Long-term debt.................................................................. 315,637
Deferred income--long-term portion.............................................. 192,004
---------

Total liabilities......................................................... 4,361,510

Commitments (Note 5)

Shareholders' equity:
Common stock ($1 par value; 100,000 shares authorized; 38,432 shares
issued)..................................................................... 38,432
Common stock ($5 par value; 60,000 shares authorized; 2,000 shares issued).... 10,000
Additional paid-in capital.................................................... 156,906
Retained earnings............................................................. 802,562
---------

Total shareholders' equity................................................ 1,007,900
---------

Total liabilities and shareholders' equity................................ $5,369,410
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-77
<PAGE>
TRAVEL CONSULTANTS, INC. AND ENVISIONS VACATIONS, INC.

COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS

FOR THE YEAR ENDED OCTOBER 24, 1997

<TABLE>
<S> <C>
Commission revenue.............................................................. $9,163,283
Other operating revenue......................................................... 3,510,597
---------
Total revenue............................................................... 12,673,880
Rebates......................................................................... 673,123
---------
Net revenue..................................................................... 12,000,757
Operating expenses:
Salaries...................................................................... 6,462,100
General and administrative.................................................... 4,453,509
---------
Total operating expenses.................................................... 10,915,609
---------
Income from operations.......................................................... 1,085,148
Interest expense................................................................ 109,466
---------
Net income...................................................................... 975,682
Retained deficit at beginning of year........................................... (173,120)
---------
Retained earnings at end of year................................................ $ 802,562
---------
---------
Unaudited pro forma information (see Note 2)
Net income.................................................................... $ 975,682
Pro forma provision for income taxes.......................................... 390,273
---------
Pro forma net income........................................................ $ 585,409
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-78
<PAGE>
TRAVEL CONSULTANTS, INC. AND
ENVISIONS VACATIONS, INC.

COMBINED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED OCTOBER 24, 1997

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................................... $ 975,682
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................ 473,005
Deferred revenue............................................................. 54,000
Change in assets and liabilities:
Receivables................................................................ (44,260)
Other receivables.......................................................... (265,144)
Other assets............................................................... 33,645
Accounts payable........................................................... 614,392
Accrued liabilities........................................................ 19,481
---------
Net cash provided by operating activities................................ 1,860,801
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................. (943,239)
Purchase of investments.......................................................... (98,098)
---------
Net cash used in investing activities.................................... (1,041,337)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in receivable from shareholders and affiliates...................... (389,641)
Payments on long-term debt....................................................... (266,713)
Net proceeds on line of credit................................................... 269,908
Payment of shareholder distributions............................................. (430,000)
---------
Net cash used in financing activities.................................... (816,446)
---------
Net increase in cash............................................................. 3,018
Cash at beginning of year........................................................ 0
---------
Cash at end of year.............................................................. $ 3,018
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................................................... $ 106,030
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-79
<PAGE>
TRAVEL CONSULTANTS, INC. AND
ENVISIONS VACATIONS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. REPORTING ENTITY AND BASIS OF ACCOUNTING

Effective October 24, 1997, a subsidiary of U.S. Office Products Company, a
Delaware company, merged with Travel Consultants, Inc. and Envision Vacations,
Inc. (collectively, the "Company"). Travel Consultants, Inc. is a full-service
provider of travel reservation services and information to commercial,
individual and group customers. Envision Vacations, Inc. is a leisure travel
company servicing the needs of specific member groups and individual customers.
The Company is located in Grand Rapids, Michigan. The Company's operations are
primarily concentrated in one market segment--airline travel--and the customers
are geographically concentrated in Michigan; management considers a downturn in
this market segment and geographical location to be unlikely.

The Company's combined financial statements include the accounts of Travel
Consultants, Inc. and Envision Vacations, Inc. Both companies have common
ownership and operate in the same line of business. All significant intercompany
accounts and transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

INVESTMENTS

All investments are classified as available-for-sale and are available to
support current operations or to take advantage of other investment
opportunities. Accordingly, these investments have been recorded at cost which
approximates fair market value. There were no significant differences between
cost and estimated fair value at October 24, 1997.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets, generally five to seven years, and leasehold improvements are amortized
over the shorter of their economic useful lives or the lease term.

INTANGIBLE ASSETS

The cost of purchased companies in excess of the underlying fair value of
net assets at the date of acquisition are recorded as goodwill and amortized
over 15 years on a straight-line basis. Purchase price allocated to covenants
not-to-compete are amortized over the term of the agreement which is typically
five years. As of October 24, 1997, intangible assets consisted of net covenants
not-to-compete of $221,867 and other assets of $12,947. The carrying value of
intangible assets is assessed for recoverability by management based on an
analysis of undiscounted expected future cash flows from the related acquired
entities. The Company believes that there has been no impairment thereof as of
October 24, 1997.

F-80
<PAGE>
TRAVEL CONSULTANTS, INC. AND
ENVISIONS VACATIONS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

DEFERRED INCOME

INCOME TAXES

The Company is an S-Corporation for income tax purposes and, accordingly,
any income tax liabilities are the responsibility of the shareholders. The
Company's S-Corporation status terminated on consummation of the merger
discussed in Note 1 above.

The unaudited pro forma income tax information included in the Statement of
Operations is presented in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," as if the Company had been
subject to federal income taxes for the entire periods presented.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments, including cash
and cash equivalents, receivables and payables and long-term debt, approximate
their fair values.

USE OF ESTIMATES

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at October 24, 1997:

<TABLE>
<S> <C>
Office and computer equipment................................... $2,437,391
Furniture and fixtures.......................................... 983,778
Leasehold improvements.......................................... 158,875
Vehicles........................................................ 24,886
---------
3,604,930
Less: accumulated depreciation and amortization................. 2,040,434
---------
Net property and equipment...................................... $1,564,496
---------
---------
</TABLE>

F-81
<PAGE>
TRAVEL CONSULTANTS, INC. AND
ENVISIONS VACATIONS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM DEBT

<TABLE>
<S> <C>
Promissory notes, interest at 9.3%, payable in monthly
installments of $13,600 principal plus interest through
November 1, 2000................................................ $ 444,674

Non-interest bearing promissory note, payable in annual
installments of $57,000 through November 4, 1997................ 57,000
---------
501,674
Less current maturities........................................... 186,037
---------
Long-term debt.................................................... $ 315,637
---------
---------
</TABLE>

The Company's borrowed funds provided by commercial promissory notes require
maintenance of certain ratios, and are secured by substantially all assets of
the Company.

Scheduled maturities of long-term debt at October 24, 1997 are as follows:

At October 24, 1997, the Company has drawn $489,908 on a $1,250,000 line of
credit with a financial institution which bears interest at the bank's prime
rate (8.5% at October 24, 1997) and expires on April 1, 1998. The line is
secured by the Company's accounts receivable and other assets. The Company also
maintains a $90,000 letter of credit which was unused at October 24, 1997.

5. COMMITMENTS

The Company leases office space under various noncancelable operating leases
for several locations. Rent expense for the year ended October 24, 1997 was
approximately $901,104. Future minimum rental payments for these leases are
summarized as follows as of October 24, 1997:

The Company has guaranteed approximately $2,644,000 of outstanding debt
related to the office space leased from a related party as described in Note 7.

F-82
<PAGE>
TRAVEL CONSULTANTS, INC. AND
ENVISIONS VACATIONS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. EMPLOYEE BENEFIT PLAN

The Company has established a 401(k) defined contribution plan to provide
benefits based on a percentage of contributions made by eligible employees.
During the year ended October 24, 1997, the Company contributed approximately
$39,000 to this plan.

7. RELATED PARTY TRANSACTIONS

The Company leases office space for its headquarters from an entity in which
the Company's shareholders are partners. Rent expense for this facility was
approximately $195,000 during the year ended October 24, 1997.

In conjunction with the merger discussed in Note 1, U.S. Office Products
Company purchased the headquarters facility for $3,125,000 in stock and assumed
related debt of $2,644,112 on October 24, 1997. Additionally, $901,000 of
receivables from shareholders and affiliates was distributed in the form of a
dividend to shareholders in conjunction with the merger discussed in Note 1.

F-83
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary......................................... 1
Risk Factors.................................... 4
The Spin-Off from U.S. Office Products.......... 11
Use of Proceeds................................. 14
Dividend Policy................................. 14
Dilution........................................ 15
Capitalization.................................. 16
Selected Financial Data......................... 17
Management's Discussion and Analysis of
Financial Condition and Results of Operations
of TDOP....................................... 19
Industry Overview............................... 26
Business........................................ 26
Management of TDOP.............................. 34
Related Party Transactions...................... 38
Principal Stockholders of TDOP.................. 39
Description of TDOP Capital Stock............... 40
Underwriting.................................... 42
Experts......................................... 43
Legal Matters................................... 43
Index to Financial Statements................... F-1
</TABLE>

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

Until , 1998 (25 days after the commencement of the offering),
all dealers effecting transactions in the Common Stock, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.

TDOP, INC.

COMMON STOCK

---------
PROSPECTUS
, 1998
---------

SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY
SECURITIES LLC

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the fees and expenses payable by the Company
in connection with the issuance and distribution of the securities. All of such
expenses except the Securities and Exchange Commission registration fee are
estimated:

<TABLE>
<S> <C>
SEC Registration................................................................... $ 14,750
National Association and Securities Dealers Inc. Filing Fee........................ $ 5,500
Nasdaq Listing Fee................................................................. $ *
Transfer Agent Fees and Expenses................................................... $ *
Legal Fees and Expenses............................................................ $ *
Accounting Fees and Expenses....................................................... $ *
Printing Fees and Expenses......................................................... $ *
Blue Sky Fees and Expenses......................................................... $ *
Miscellaneous...................................................................... $ *
---------
Total.............................................................................. $ *
</TABLE>

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

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Nine of the Certificate of Incorporation provides that the Company
shall indemnify its directors and officers to the fullest extent permitted by
the General Corporation Law of the State of Delaware.

Section 145 of the General Corporation Law of the State of Delaware permits
a corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.

Article Eight of the Certificate of Incorporation states that directors of
the Company will not be liable to the Company or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the state of Delaware, which makes

II-1
<PAGE>
directors liable for unlawful dividends or unlawful stock repurchases or
redemptions or (iv) for any transaction from which the director derived an
improper personal benefit.

Article IV of the Bylaws provides that the Company shall indemnify its
officers and directors (and those serving at the request of the Company as an
officer or director of another corporation, partnership, joint venture, trust or
other enterprise), and may indemnify its employees and agents (and those serving
at the request of the Company as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred, if such officer, director, employee or agent
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In a derivative action, indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such officer,
director, employee or agent in the defense or settlement of such action or suit,
and no indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall deem proper.

Unless the Board of Directors of the Company otherwise determines in a
specific case, expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the officer or director to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See index to exhibits.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing or closings specified in the Underwriting Agreement, certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.

The undersigned Registrant hereby further undertakes that:

(1) 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(b) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) 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.

(3) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934

II-2
<PAGE>
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement 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.

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 Act
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 Act and will be governed by the final adjudication of
such issue.

II-3
<PAGE>
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 Englewood, State of
Colorado, on March 6, 1998.

TDOP, INC.

BY: /S/ EDWARD S. ADAMS
-----------------------------------------
Name: Edward S. Adams
TITLE: CHIEF EXECUTIVE OFFICER

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.

SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- -------------------

/s/ EDWARD S. ADAMS Chief Executive Officer 3/6/98
- ------------------------------ (Principal Executive
Edward S. Adams Officer); Director

Chief Financial Officer and 3/6/98
/s/ ROBERT C. GRIFFITH Treasurer (Principal
- ------------------------------ Financial and Accounting
Robert C. Griffith Officer)

II-4
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>

1.1* Form of Underwriting Agreement

3.1* Certificate of Incorporation

3.2* Bylaws

4.1* Form of certificate representing shares of Common Stock

5* Opinion of Wilmer, Cutler & Pickering as to legality of securities being offered

8* Tax opinion of Wilmer, Cutler & Pickering

10.1* Form of Distribution Agreement among U.S. Office Products Company, Workflow Graphics, Inc., Paradigm
Concepts, Inc., TDOP, Inc. and School Specialty, Inc.

10.2* Form of Tax Allocation Agreement among U.S. Office Products Company, Workflow Graphics, Inc., Paradigm
Concepts, Inc., TDOP, Inc. and School Specialty, Inc.

10.3* Form of Tax Indemnification Agreement among Workflow Graphics, Inc., Paradigm Concepts, Inc., TDOP, Inc.
and School Specialty, Inc.

10.4+ Employment Agreement dated as of January 24, 1997 between Edward S. Adams and Professional Travel
Corporation.

10.5+ Employment Agreement dated as of January 24, 1997 between Robert C. Griffith and Professional Travel
Corporation.

10.6* Agreement dated as of January 13, 1998 between U.S. Office Products and Jonathan J. Ledecky.

10.7* Form of Employee Benefits Agreement among U.S. Office Products Company, Workflow Graphics, Inc.,
Paradigm Concepts, Inc., TDOP, Inc. and School Specialty, Inc.

10.8* Form of Agent Reporting Agreement with Airline Reporting Company.

21* Subsidiaries of Registrant

23.1 Consent of Price Waterhouse LLP

23.2 Consent of Deloitte & Touche LLP

23.3 Consent of Deloitte & Touche LLP

23.4 Consent of Walter J. McKeever & Company

23.5 Consent of Nardella & Taylor

23.6 Consent of Jonathan Ledecky to be named as a director

23.7 Consent of Vassilios Sirpolaidis to be named as a director

23.8 Consent of Ned A. Minor to be named as a director

23.10* Consent of Wilmer, Cutler & Pickering contained in Exhibits 5 and 8 hereto

27 Financial data schedule
</TABLE>

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

* To be filed by amendment.

+ Incorporated by reference herein from the Company's Registration Statement
on Form S-1 filed with the Securities and Exchange Commission on February
19, 1998 (File No. 333-46539).

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 6, 1998 relating
to the consolidated financial statements of TDOP, Inc., our report dated
February 3, 1998 relating to the combined financial statements of Evans Travel
Group, Inc. and Evans Consulting Services, Inc., and our report dated January
23, 1998 relating to the combined financial statements of Travel Consultants,
Inc. and Envisions Vacations, Inc., all of which appear in such Prospectus. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.

PRICE WATERHOUSE LLP
Denver, Colorado
March 6, 1998

<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We hereby consent to the inclusion in the Prospectus, which is part of this
Registration Statement on Form S-1 of TDOP, Inc., of our report dated September
23, 1996 relating to the financial statements of MTA, Inc. (not presented
separately herein) as of December 31, 1995, and for the period from January 25,
1995 (date of incorporation) to December 31, 1995.

/s/ Deloitte & Touche, LLP

DELOITTE & TOUCHE LLP
Seattle, Washington
March 6, 1998

<PAGE>
EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of TDOP, Inc. on Form
S-1 of our report dated May 22, 1997 on the financial statements of Associated
Travel Services, Inc., appearing in the Prospectus, which is a part of this
Registration Statement.

/s/ Deloitte & Touche LLP

Costa Mesa, California
March 6, 1998

<PAGE>
EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated March 6, 1997 (except for
Note 10, Note 12 and the last paragraph of Note 1, as to which the date is
January 29, 1998) relating to the financial statements of McGregor Travel
Management, Inc. which appears in such prospectus.

Walter J. McKeever & Company
Greenwich, Connecticut
March 6, 1998

<PAGE>
EXHIBIT 23.5

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 22, 1996 (except
for Note 10 as to which the date is January 30, 1998) relating to the financial
statements of Omni Travel Service, Inc., which appears in such Prospectus.

Nardella & Taylor
Lexington, Massachusetts
March 6, 1998

<PAGE>
EXHIBIT 23.6

CONSENT TO BE NAMED AS A DIRECTOR

I hereby consent to be named as a person who will become a director of TDOP,
Inc. (the "Company") in the registration statement on Form S-1 to be filed by
the Company with the Securities and Exchange Commission relating to the initial
public offering by the Company of shares of common stock, par value $.001, of
the Company.

<TABLE>
<S> <C>
Dated: March 5, 1998 /s/ JONATHAN J. LEDECKY
------------------------------------------
Jonathan J. Ledecky
</TABLE>

<PAGE>
EXHIBIT 23.7

CONSENT TO BE NAMED AS A DIRECTOR

<TABLE>
<S> <C>
Dated: March 3, 1998 /s/ VASSILIOS SIRPOLAIDIS
------------------------------------------
Vassilios Sirpolaidis
</TABLE>

<PAGE>
EXHIBIT 23.8

CONSENT TO BE NAMED AS A DIRECTOR

<TABLE>
<S> <C>
Dated: March 4, 1998 /s/ NED A. MINOR
------------------------------------------
Ned A Minor
</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE REGISTRATION
STATEMENT ON FORM S-1.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-26-1997
<PERIOD-START> MAY-1-1996
<PERIOD-END> APR-26-1997
<CASH> 6,952
<SECURITIES> 0
<RECEIVABLES> 6,236
<ALLOWANCES> (271)
<INVENTORY> 0
<CURRENT-ASSETS> 13,692
<PP&E> 7,954
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,339
<CURRENT-LIABILITIES> 12,411
<BONDS> 2,799
0
0
<COMMON> 0
<OTHER-SE> 13,483
<TOTAL-LIABILITY-AND-EQUITY> 29,339
<SALES> 57,677
<TOTAL-REVENUES> 57,677
<CGS> 31,541
<TOTAL-COSTS> 31,541
<OTHER-EXPENSES> 21,388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 587
<INCOME-PRETAX> 4,488
<INCOME-TAX> 1,145
<INCOME-CONTINUING> 3,343
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,343
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>EPS has not been presented as such amounts are not deemed meaningful
due to the significant change in the Company's capital structure that will
occur upon the consummation of the Distribution.
</FN>

</TABLE>