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Five analysts and top management from four sector firms examine the human capital management sector in this special 54-page Human Capital Management issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info483.htm.

TWST: Brandt, how did you see the year 2001, and how would you differentiate between the performance of the various sectors of human capital management or human capital services, whichever term you prefer?

Mr. Sakakeeny: To me, as has been echoed by Randy and Adam, it was a trader’s market. We saw enormous volatility in the group several times throughout the year. A lot of the staffing companies started to take off again in the early part of January, rally in the spring, and then gave back all those gains and then some in the fall. In terms of a strategy, we attempted to make money in the short run, running these things up. Then, when they reached levels that we didn’t think were supported by the fundamentals, which have completely deteriorated, as my colleagues have stated, we tried to make money on the short side. So I think the volatility in the group lends itself to a trading strategy to make money on both the ups and the downs. I would say that, in general, the group was characterized by excessive valuations that weren’t supported by the underlying fundamentals. We have not yet seen stabilization in the business, and we don’t think that we’re going to see it anytime soon, and yet we continue to see the relative valuation of the group go up.

TWST: Brandt, are you looking for continued deterioration in the fourth quarter?

Mr. Sakakeeny: We are. We actually just revised our forecasts. Prior to September 11, we had been contemplating at least some stabilization in the fourth quarter, sequentially, versus the third quarter. We no longer expect this, particularly in light of some of the retail data and consumer confidence measures. While there are some glimmers of hope that perhaps we’re achieving some sort of stabilization in the economy, we don’t see it anywhere in the staffing businesses, either public or private. So we expect to see another sequential deceleration, perhaps not at the same rate at which we saw second quarter to third quarter deceleration, but significant nevertheless. We do not expect things to stabilize until probably the second quarter of this year at the earliest.

TWST: Brandt, Adam suggested that at Deutsche Banc Alex. Brown you are a bit more positive.

Mr. Sakakeeny: Not me, my economist.

TWST: I beg your pardon. Is Deutsche Banc looking for more of a V-shaped recovery?

Mr. Sakakeeny: I think our economist is somewhere between the two. I think he’s calling for a 6.5% unemployment rate peaking in the second quarter of this year, not the third quarter, and generally a quasi V-shaped recovery, or maybe a U-shaped recovery. We expect the recovery to be driven by a combination of excess liquidity and a more minimalist fiscal policy that says tax cuts should be enough to get things going. All that said, as we generalize the staffing space, I still think we’re seeing pockets of strength in some of the smaller cap companies we cover, and there are some opportunities outside of the headline staffing firms. In addition, if we define the human capital space more broadly, Adam and I cover a company called Corporate Executive Board (Nasdaq:EXBD) that has done consistently well through this period. So while we focus principally on the staffing companies that are the most cyclical, there are a handful of very well run human capital businesses that have weathered the storm incredibly well, with valuations that continue to do decently and earnings that continue to go up.

This special issue includes:

1) Human Capital Management - In an in-depth (16,600 words) Analyst Roundtable, Mark W. Allen, Managing Director at SunTrust Robinson Humphrey Capital Markets, Randall A. Mehl, Director at Robert W. Baird & Co., Brandt Sakakeeny, Director at Deutsche Banc Alex. Brown, Inc. and Adam Waldo, Senior Vice President at Lehman Brothers, examine the outlook for the sector including the effect of Fed rate cuts, investment approach and share specific stock recommendations.

2) Human Capital Management - In an in-depth (4,900 words) Analyst Interview, Mark S. Marcon, Analyst at Wachovia Securities, examines the outlook for the sector and shares specific stock recommendations.

3) The TWST confidential Off-The-Record survey of management performance of seventeen sector firms asked market insiders about the ability of management teams to create shareholder value.

4) CEO interviews (average 2,500 words). Top management of four sector firms examine the outlook for their firm and the sector.