SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2006

Commission File No. 001-31256

CLARK, INC.

(Exact name of Registrant as specified in its charter)

Delaware	52-2103926
(State of Incorporation)	(I.R.S. Employer Identification No.)

102 South Wynstone Park Drive
North Barrington, Illinois	60010
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number: (847) 304-5800

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~March~~June 3130, 2006, the registrant had outstanding 17,~~531~~663,~~085~~288 shares of common stock.

Table of Contents

TABLE OF CONTENTS

	PAGE
Forward-Looking Statements	3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	4
Condensed Consolidated Balance Sheets as of March 31, 2006
Condensed Consolidated Balance Sheets as of June 30, 2006
and December 31, 2005	4
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 2006 and 2005	5
Months and Six Months Ended June 30, 2006 and 2005	5
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2006 and 2005	6
Six Months Ended June 30, 2006 and 2005	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2426
Item 4. Controls and Procedures	2526
PART II - OTHER INFORMATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2526
Item 1A. Risk Factors	2527
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2527
Item 3. Defaults Upon Senior Securities	2527
Item 4. Submission of Matters to a Vote of Security Holders	2527
Item 5. Other Information	2527
Item 6. Exhibits	2527
SIGNATURES	2628
EXHIBITS
Index to Exhibits	2729

Table of Contents

FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project," and similar expressions. When we make forward-looking statements, we are basing them on management's beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties, and assumptions, including but not limited to, risks, uncertainties, and assumptions related to the following:

changes in tax legislation;

other federal and state laws and regulations;

general economic conditions;

competitive factors and pricing pressures;

Ÿ our dependence on key producers, consultants, and services of key personnel;

our dependence on persistency of existing business;

our ability to achieve our earnings projections;

risks associated with acquisitions;

significant intangible assets;

our dependence on a select group of insurance companies;

supplemental compensation arrangements with certain insurance companies; and

our dependence on information processing systems and risk of errors or omissions.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from those anticipated. Any forward-looking statements you read in this Form 10-Q reflect our current views with respect to future events and are subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. You should specifically consider the factors identified in our Form 10-K for the year ended December 31, 2005, included under the caption “Risk Factors,” or in the documents incorporated by reference in our Form 10-K, which could cause actual results to differ materially from those indicated by the forward-looking statements. In light of the foregoing risks and uncertainties, you should not unduly rely on such forward -looking statements when deciding whether to buy, sell, or hold any of our securities. We disclaim any intent or obligation to update or alter any of the forward-looking statements whether in response to new information, unforeseen events, changed circumstances, or otherwise.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~March~~June 3130, 2006 and December 31, 2005

(Unaudited)

(Dollars in thousands except share and per share data)

	March 31,			December 31,
	June 30,			December 31,
	2006			2005
ASSETS
Current Assets
Cash and cash equivalents	$	56,~~639~~205		$	5,077
Restricted cash		57,~~828~~889			7,799
Accounts and notes receivable, net		3329,~~142~~839			36,893
Prepaid income taxes		3,~~898~~926			3,845
Other current assets		32,~~413~~559			3,527
Total Current Assets		5150,~~920~~418			57,141
Intangible Assets, net		~~580~~577,~~543~~037			582,544
Equipment and Leasehold Improvements, net		11,~~724~~578			12,276
Cash Surrender Value of Life Insurance		12,~~056~~483			11,336
Other Assets		1113,~~757~~993			11,216
Total Assets	$	~~668~~665,~~000~~509		$	674,513
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	3,~~842~~667		$	4,243
Accrued liabilities		2635,~~652~~266			40,051
Deferred revenue		54,~~538~~154			2,469
Deferred tax liabilities		~~186~~96			186
Recourse debt maturing within one year		135,~~966~~602			3,730
Non-recourse debt maturing within one year		1514,~~151~~269			16,299
Total Current Liabilities		6563,~~335~~054			66,978
Trust Preferred Debt		45,000			45,000
Long-Term Recourse Debt		1,~~618~~228			1,998
Long-Term Non-Recourse Debt		~~232~~231,~~063~~568			238,296
Deferred Tax Liabilities		3334,~~637~~047			33,022
Deferred Compensation		1211,~~196~~341			11,443
Other Non-Current Liabilities		7,~~614~~419			7,758
Total Liabilities		~~397~~393,~~463~~657			404,495
Stockholders' Equity
Preferred stock
Authorized - 1,000,000 shares; $.01 par value, none issued		-			-
Common stock
Authorized - 40,000,000 shares; $.01 par value, 18,905,016 shares at
Authorized - 40,000,000 shares; $.01 par value issued -
March 31, 2006 and 18,892,516 shares at December 31, 2005		189			189
19,022,352 shares at June 30, 2006 and 18,892,516 shares at December 31, 2005		191			189
Paid-in capital		~~195~~197,~~653~~441			195,531
Retained earnings		9392,~~697~~785			94,103
Other comprehensive income (loss)		~~626~~991			383
Deferred compensation - 219,309 shares at March 31, 2006 and 181,418 shares at December 31, 2005		3,193			2,746
Deferred compensation - 224,702 shares at June 30, 2006 and 181,418 shares at December 31, 2005		3,264			2,746
Treasury stock, at cost - 1,373,931 shares at March 31, 2006 and 1,383,195 shares at December 31, 2005		(22,821	)		(22,934	)
Treasury stock, at cost - 1,359,064 shares at June 30, 2006 and 1,383,195 shares at December 31, 2005		(22,820	)		(22,934	)
Total Stockholders' Equity		~~270~~271,~~537~~852			270,018
Total Liabilities and Stockholders' Equity	$	~~668~~665,~~000~~509		$	674,513

See accompanying notes to these condensed consolidated financial statements.

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CLARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands except share and per share data)

	Three Months Ended						Six Months Ended
	March 31,
	June 30,						June 30,
	2006			2005			2006			2005
Revenue
First year commissions and consulting fees	$	3132,~~621~~819		$	2935,~~220~~947		$	64,440		$	65,167
Renewal commissions and related fees		3531,~~850~~659			3630,~~105~~819			67,509			66,924
Reimbursable expenses		21,~~005~~897			1,~~623~~680			3,902			3,303
Total Revenue		6966,~~476~~375			6668,~~948~~446			135,851			135,394
Operating Expenses
Commissions and fees		14,~~521~~105			1314,~~802~~240			28,626			28,042
General and administrative		4241,~~816~~008			4041,~~466~~192			83,824			81,658
Reimbursable expenses		21,~~005~~897			1,~~623~~680			3,902			3,303
Amortization		3,~~757~~758			3,~~844~~843			7,515			7,687
Total Operating Expenses		6360,~~009~~768			5960,~~735~~955			123,867			120,690
Operating Income		65,~~377~~607			7,~~213~~491			11,984			14,704
Other Income (Expense), net		1-			-1,615			1			1,615
Interest, net
Income		~~159~~140			~~164~~107			299			271
Expense		(5,~~470~~502	)		(5,~~552~~444	)		(10,972	)		(10,996	)
Total Interest, net		(5,~~311~~362	)		(5,~~388~~337	)		(10,673	)		(10,725	)
Income before taxes		~~1,067~~245			13,~~825~~769			1,312			5,594
Income taxes		(~~434~~100	)		(~~723~~897	)		(534	)		(1,620	)
Net Income	$	~~633~~145		$	12,~~102~~872		$	778		$	3,974
Basic Earnings per Common Share	$	0.0401		$	0.0616		$	0.04		$	0.22
Weighted Average Shares Outstanding - Basic		17,650,834			18,315,144
Weighted average shares outstanding - Basic		17,781,328			18,357,568			17,716,442			18,336,473
Diluted Earnings per Common Share	$	0.0401		$	0.0616		$	0.04		$	0.22
Weighted Average Shares Outstanding - Diluted		17,742,529			18,482,923
Weighted average shares outstanding - Diluted		17,903,297			18,476,680			17,821,851			18,479,750
Cash dividends:
Paid	$	0.06		$	-0.06		$	0.12		$	0.06
Declared	$	0.06		$	0.06		$	0.12		$	0.12

See accompanying notes to these condensed consolidated financial statements.

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CLARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	Six Months Ended June 30,
	March 31,
	2006			2005
Net Cash from Operating Activities	$	~~813~~15,232		$	~~695~~17,764
Investing Activities
Purchases of businesses, net of cash acquired		(3,~~106~~108	)		(89,~~843~~253	)
Purchases of equipment		(~~658~~1,672	)		(12,~~103~~663	)
Cash used in investing activities		(3,764	)		(9,946	)
Cash (used in) provided by investing activities		(4,780	)		(11,916	)
Financing Activities
Proceeds from borrowings		2869,~~700~~200			-
Repayment of borrowings		(2676,~~225~~856	)		(1214,~~320~~726	)
Dividends paid		(12,~~046~~090	)		-(1,093	)
Cash restricted for the repayment of non-recourse notes		~~1,971~~(90	)		43,~~939~~959
Employee benefit plans		~~113~~512			~~1,227~~673
Repurchase of company stock		-			(739	)
Cash (used in) provided by financing activities		3(9,~~513~~324	)		(611,~~893~~926	)
Net Increase (Decrease) in Cash and Cash Equivalents		~~562~~1,128			(166,~~144~~078	)
Cash and Cash Equivalents at Beginning of Period		5,077			23,199
Cash and Cash Equivalents at End of Period	$	56,~~639~~205		$	717,~~055~~121
Supplemental Disclosure for Cash Paid during the Period:
Interest paid	$	510,~~354~~753		$	510,~~434~~660
Income taxes, net of refunds		877			~~(374~~223	)
Supplemental Non-Cash Information:
Fair value of common stock issued in connection with acquisitions and acquisition contingent payouts	$	-		$	539
Fair value of common stock issued in connection with the purchase of minority interest		1,000			-

See accompanying notes to these condensed consolidated financial statements.

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CLARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)

March 31, 2006

(Tables shown in thousands of dollars, except share and per share amounts)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The condensed consolidated financial statements include the accounts of Clark, Inc. (“the Company”) and its wholly-owned subsidiaries. Through the Company’s four operating segments, Corporate Solutions, Healthcare Group, Pearl Meyer & Partners, and Federal Policy Group, the Company designs, markets, and administers compensation and benefit programs for companies supplementing and securing employee benefits and provides executive compensation and related consulting services to U.S. corporations, banks, and healthcare organizations. The Company assists its clients in using customized life insurance products to finance their long-term benefit liabilities. In addition, the Company owns Clark Securities, Inc. (“CSI”), a registered broker/dealer through which it sells all its securities products and receives related commissions. All significant intercompany amounts and transactions have been eliminated in the accompanying condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the Company’s opinion, all adjustments, including ~~recurring~~normally recurring accruals, considered necessary for a fair presentation have been ~~included.~~ included. Operating results for the three and six months ended ~~March~~June 3130, 2006, are not necessarily indicative of the results that may be expected for the year ending December 31, 2006, or any other period.

The balance sheet at December 31, 2005 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, including a summary of significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s ~~annual~~Annual ~~report~~Report on Form 10-K for the year ended December 31, 2005.

Certain 2005 amounts have been reclassified to conform with the 2006 presentation due to the combination of Executive Benefits Practice, Banking Practice, and Insurance Company Practice into Corporate Solutions, which was effective January 1, 2006. An adjustment of approximately $820 thousand was recorded in the second quarter of 2006 to correct the liability relating to an employee benefit plan.

2. ~~SHARE~~RECENT ~~BASED~~ACCOUNTING ~~COMPENSATION~~PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation ("FIN") No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact to its financial statements of adoption of this Interpretation but it is not expected to be material.

3. SHARE BASED COMPENSATION

On January 1, 2006, the Company adopted SFAS 123(R), “Share-Based Payment,” which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards, made to employees and directors, including stock options, restricted stock, restricted stock units, and performance share units. In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 107 relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective application transition method, as of January 1, 2006, the first day of the Company’s fiscal year 2006. The condensed consolidated financial statements, as of and for the first quarter of fiscal 2006, reflect the impact of SFAS 123(R). In accordance with the modified prospective application transition method, the Company’s condensed consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R).

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CLARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company adopted SFAS 123(R) using the modified prospective application transition method, as of January 1, 2006, the first day of the Company’s fiscal year 2006. The condensed consolidated financial statements, as of and for the three and six months ended June 30, 2006, reflects the impact of SFAS 123(R). In accordance with the modified prospective application transition method, the Company’s condensed consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R).

Prior to the adoption of SFAS 123(R), the Company accounted for share-based awards to employees and directors using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”. Additionally, prior to January 1, 2006, the Company provided pro forma disclosure amounts in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure,” as if the fair value method defined by SFAS 123 had been applied to stock-based compensation. Under APB Opinion No. 25, the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the grant date, therefore, no share-based compensation expense was recognized in the Company’s condensed consolidated statement of income.

SFAS 123(R) requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model, where applicable. Share-based compensation expense recognized in the Company’s condensed consolidated statement of income for the ~~first~~three ~~quarter~~and ofsix ~~fiscal~~months ended June 30, 2006 includes ~~compensation~~ compensation expense for share-based awards granted (i) prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in ~~accordance~~ accordance with the original provisions of SFAS 123, and (ii) subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). The Company recognizes these compensation ~~costs~~ costs net of a forfeiture rate and recognizes the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of three to four years for restricted stock and performance share units and four years for stock options, respectively. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under SFAS 123 for periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

As a result of ~~adoption~~ SFAS 123(R) adoption, the impact to the condensed consolidated financial statements for income before income taxes and net income for the three and six months ended ~~March~~June 3130, 2006 was $~~139~~273 thousand and $82411 thousand; ~~lower,~~and $162 thousand and $244 thousand lower, respectively, than if we continued to account for stock-based compensation under APB 25. In addition, prior to the adoption of SFAS 123(R), the Company presented the tax benefit of stock option exercises as operating cash flows. Upon adoption of SFAS 123(R), tax benefits resulting from tax deductions in excess of compensation cost recognized for those options are classified as financing cash flows.

As of ~~March~~June 3130, 2006, $1.23 million of total unrecognized compensation cost related to stock based compensation is expected to be recognized over a weighted-average period of 23 years. The total unrecognized stock based compensation cost to be recognized in future periods as of ~~March~~June 3130, 2006 does not consider the effect of stock options that may be issued in subsequent periods.

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2006 and 2005, respectively:

	March 31,
	June 30,
	2006	2005	~~2005~~
Dividend yield	2.21%	None	~~None~~
Volatility	5751.31%	57.1%	~~57.1%~~
Risk-free interest rates	4.6%	4.2%	~~4.2%~~
Expected life (years)	5	5	5

The pro forma information regarding net income and earnings per share required by SFAS No. 123 has been determined as if the Company accounted for its stock-based compensation plans under the fair value method. Had compensation cost for the Company’s stock-based compensation plans been determined in accordance with SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

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CLARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The pro forma information regarding net income and earnings per share required by SFAS No. 123 has been determined as if the Company accounted for its stock-based compensation plans under the fair value method. Had compensation cost for the Company’s stock-based compensation plans been determined in accordance with SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2005			2005
Net Income
As reported	$	2,872		$	3,974
Deduct: stock option compensation expense, net of tax		(121	)		(569	)
Pro forma	$	2,751		$	3,405

Basic Earnings per Common Share
As reported	$	0.16		$	0.22
Pro forma	$	0.15		$	0.19

Diluted Earnings per Common Share
As reported	$	0.16		$	0.22
Pro forma	$	0.15		$	0.18

	Three Months Ended
	March 31, 2005
Net Income
As reported	$	1,102
Deduct: stock option compensation expense, net of tax		(545	)
Pro forma	$	557
Basic Earnings per Common Share
As reported	$	0.06
Pro forma	$	0.03
Diluted Earnings per Common Share
As reported	$	0.06
Pro forma	$	0.03

Stock Option Plan. The Company has various stock options plans for both employees and non-employee directors which have been approved by the Board of Directors. Vesting of stock options is generally between three to five years and expires ten years from the grant date. For the three and six months ended June 30, 2006, there is approximately $227 thousand and $317 thousand, respectively, of expense included in the condensed consolidated statement of income associated with this plan. There were no expenses for this plan for the three and six months ended June 30, 2005. As of June 30, 2006, approximately 3.5 million options have been granted under these programs and a total of approximately 2.8 million shares of the Company’s common stock remain available for grant for all active plans.

Stock Option Plan. The Company has various stock options plans for both employees and non-employee directors which have been approved by the Board of Directors. Vesting of stock options is generally between three to five years and expires ten years from the grant date. For the three months ended March 31, 2006, there is approximately $90 thousand of expense included in the condensed consolidated statement of income associated with this plan. There are no expenses for this plan for the three months ended March 31, 2005. As of March 31, 2006, approximately 3.1 million options have been granted under these programs and a total of approximately 2.5 million shares of the Company’s common stock remain available for grant for all active plans.

The following table summarizes the combined status of all of the Company’s stock option plans:

	Options			Weighted Average Exercise Price
Outstanding at January 1, 2004		1,585,272		$	15.41
Granted		330,000			19.36
Exercised		(153,500	)		10.02
Forfeited		(323,636	)		20.39
Outstanding at December 31, 2004		1,438,136			17.02
Granted		182,000			15.03
Exercised		(64,100	)		11.02
Forfeited		(118,549	)		18.02
Outstanding at December 31, 2005		1,437,487			16.82
Granted		~~196~~252,430			12.2041
Exercised		(1253,500	)		9.0056
Forfeited		(1316,~~933~~233	)		15.3610
Outstanding at March 31, 2006		1,607,484		$	16.34
Outstanding at June 30, 2006		1,620,184		$	16.40
Exercisable at March 31, 2006		1,331,490
Exercisable at June 30, 2006		1,352,595
Exercisable at December 31, 2005		1,308,077
Exercisable at December 31, 2004		1,194,587

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CLARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table summarizes the stock options outstanding and exercisable as of ~~March~~June 3130, 2006:

Options Outstanding							Options-Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life(years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$4.80 - $7.00		61,101		0.7	$	5.70		61,101	$	5.70
$9.00		8354,416		1.9		9.00		8354,416		9.00
$9.94 - $11.50		~~188~~175,~~630~~830		6.8		10.58		~~102~~111,~~000~~007		10.47
$11.60 - $14.40		~~302~~357,~~300~~400		8.3		13.58		~~112~~154,~~936~~634		13.34
$14.75 - $15.96		214,~~600~~000		6.5		15.27		214,600		15.27
$16.65 - $18.13		138,102		5.6		17.19		138,102		17.19
$18.49 - $19.70		314,000		7.5		19.28		314,000		19.28
$20.30 - $22.90		100,335		7.0		21.72		100,335		21.72
$23.24 - $25.28		195,000		5.7		25.12		195,000		25.12
$27.49		10,000		6.1		27.49		10,000		27.49
		1,607,484						1,331,490
		1,620,184						1,352,595

Performance Share Award (“Restricted Stock”). On July 26, 2005, the Compensation Committee of the Board of Directors approved a Long Term Incentive Compensation Plan. One of the components of this plan is restricted stock. There are five approved participants in this plan. Restricted stock is awarded based upon achievement of three-year performance targets for cumulative earnings per share for the period 2005 through 2007 and will cliff-vest effective December 31, 2007. Restricted stock awards for 2007 will be made, as determined by the Compensation Committee, with cliff vesting effective December 31, 2007. For the three and six months ended ~~March~~June 3130, 2006, there is was approximately $24 thousand and $48 thousand of expense, ~~included~~respectively, included in the condensed consolidated ~~statement~~ statements of income associated with this plan. There was no expense for this plan for the three and six months ended ~~March 31~~June 30, 2005.

Stock Purchase Plan. On January 28, 2003, the Board of Directors adopted the amended and restated Employee Stock Purchase Plan (“ESPP”), under which a total of 400 thousand shares of common stock have been reserved for issuance. Any employee who has been employed for 30 days is eligible to participate in offerings under the Stock Purchase Plan. During the three months ended ~~March~~June 3130, 2006 and 2005, the Company’'s employees purchased 14 10,~~148,~~881 shares and 911,~~321~~312 shares, respectively, of common stock at an average cost to employees of $1011.~~04,~~22 and $1312.1618, ~~per~~respectively. During ~~share~~the six months ended June 30, 2006 and 2005, the Company's employees purchased 25,029 shares and 20,622 shares, respectively, of common stock at an average cost to employees of $10.55 and $12.62, respectively. For the three and six months ended ~~March~~June 3130, 2006, there is approximately $25 thousand and $2547 thousand of expense, respectively, included in the condensed consolidated statement of income associated with this plan. There was no expense for this plan for the three and six months ended ~~March~~June 3130, 2005.

34. RESTRUCTURING

In the fourth quarter of 2003, the Company reorganized its executive compensation consulting practices and recorded a charge of $7.5 million relating to the reorganization, of which $2.64 million remains accrued on the condensed consolidated balance sheet as of ~~March~~June 3130, 2006. Effective January 1, 2005, the Human Capital Practice was merged into Executive Benefits Practice which, as of January 1, 2006, is part of the Corporate Solutions Practice. In the first and second quarter of 2006, the Company adjusted its estimate of net future lease ~~costs~~ costs based upon accretion. ~~The~~In ~~adjustment~~addition, during the second quarter of $72006, the Company ~~thousand~~adjusted isits ~~included~~estimate infor ~~general~~employee termination costs due to settlement ~~and~~of a dispute with a former employee. The adjustment amounts are included in general and administrative expenses in the condensed consolidated statement of income for the three and six months ended ~~March~~June 3130, 2006.

The Company will continue to evaluate the remaining restructuring reserve as plans are being executed. As a result, there may be adjustments to the reserve in future periods. A summary of the activity in the reserve account as of March 31, 2006, is as follows:

	Reserve Balance January 1, 2006		Cash Payments			Adjustments		Reserve Balance March 31, 2006
Employee termination costs	$	325	$	-		$	-	$	325
Lease costs		2,400		(123	)		7		2,284
Total	$	2,725	$	(123	)	$	7	$	2,609

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4The Company will continue to evaluate the remaining restructuring reserve as plans are being executed. As a result, there may be adjustments to the reserve in ~~ACCOUNTS~~future ~~RECEIVABLE~~periods. A summary of the activity in the reserve account as of June 30, 2006, is as follows:

	Reserve Balance January 1, 2006		Cash Payments			Adjustments			Reserve Balance June 30, 2006
Employee termination costs	$	325	$	-		$	(120	)	$	205
Lease costs		2,400		(236	)		16			2,180
Total	$	2,725	$	(236	)	$	(104	)	$	2,385

5. ACCOUNTS RECEIVABLE

Major categories of accounts receivable are as follows:

	As of March 31, 2006			As of December 31, 2005
	As of June 30, 2006			As of December 31, 2005
Accounts receivable - trade	$	3431,~~979~~744		$	38,747
Accounts receivable allowance		(1,~~837~~905	)		(1,854	)
	$	3329,~~142~~839		$	36,893

A summary of the activity in the allowance for uncollectible accounts ~~receivable~~receivables is as follows:

	Three Months Ended March 31, 2006			Year Ended December 31, 2005
	Six Months Ended June 30, 2006			Year Ended December 31, 2005
Beginning balance	$	(1,854	)	$	(1,467	)
Write offs		~~188~~303			661
Expense		(~~171~~354	)		(1,048	)
Ending balance	$	(1,~~837~~905	)	$	(1,854	)

As of ~~March~~June 3130, 2006, and December 31, 2005, there were approximately $~~1.2~~910 ~~million~~thousand and $670 thousand, respectively, of unbilled receivables included in accounts receivable on the condensed consolidated balance sheets. These unbilled amounts, the majority of which relate to in-process consulting projects, are typically billed during the quarter immediately following the reporting period.

56. GOODWILL ~~GOODWILL~~ AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the ~~three~~six months ended ~~March~~June 3130, 2006, by reporting units are as follows:

	Balance January 1, 2006		~~Acquired~~Earnouts/ ~~During Period~~Other		~~Earnouts/~~Balance ~~Other~~June 30, 2006		~~Balance March 31, 2006~~
Corporate Solutions	$	81,986	$	-1,950	$	183,~~750~~936	$	~~83,736~~
Healthcare Group		14,076		-		-14,076		~~14,076~~
Management Science Associates		5,010		-		-5,010		~~5,010~~
Pearl Meyer & Partners		36,981		-		-36,981		~~36,981~~
Federal Policy Group		8,766		-		-8,766		~~8,766~~
Corporate		4,090		57		-4,097		~~4,095~~
Total	$	150,909	$	5	$	1,750	$	152,664
TOTAL	$	150,909	$	1,957	$	152,866

Information regarding the Company’s other intangible assets follows:

	As of March 31, 2006							As of December 31, 2005
	Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net
Inforce revenue	$	500,555	$	(77,998	)	$	422,557	$	500,555	$	(74,691	)	$	425,864
Non-compete agreements		12,199		(6,877	)		5,322		12,199		(6,428	)		5,771
Total	$	512,754	$	(84,875	)	$	427,879	$	512,754	$	(81,119	)	$	431,635

Amortization expense of other intangible assets was $3.8 million for both the three months ended March 31, 2006, and March 31, 2005.

The Company estimates that its amortization for 2006 through 2010 for intangible assets related to all acquisitions consummated through March 31, 2006 will be approximately as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Year	Amount
2006	$	15,018
2007		14,630
2008		14,190
2009		13,338
2010		13,795

Information regarding the Company’s other intangible assets follows:

6. CONTINGENT CONSIDERATION

	As of June 30, 2006							As of December 31, 2005
	Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net

Inforce revenue	$	500,555	$	(81,305	)	$	419,250	$	500,555	$	(74,691	)	$	425,864
Non-compete agreements		12,250		(7,329	)		4,921		12,199		(6,428	)		5,771
Total	$	512,805	$	(88,634	)	$	424,171	$	512,754	$	(81,119	)	$	431,635

AsAmortization ~~a result~~expense of ~~the~~other ~~Company’s~~intangible ~~acquisition~~assets ~~program,~~was ~~there is~~ $83.78 million offor ~~contingent consideration~~both ~~potentially due to~~ the ~~former~~three ~~owners of its acquired entities,~~months ~~including~~ended ~~$2.9~~June ~~million~~30, ~~that~~2006 ~~has been earned~~ and isJune ~~accrued on the condensed consolidated balance sheet as of March 31~~30, ~~2006~~2005. IfAmortization ~~and~~expense ~~when the acquired entities meet certain criteria negotiated at the time~~ of ~~the~~other ~~purchase, these~~intangible ~~amounts~~assets ~~are~~was ~~payable~~$7.5 asmillion ~~additional~~and ~~consideration~~$7.7 Amillion ~~summary~~for of the ~~amounts payable~~six ifmonths ~~the~~ended ~~criteria~~June ~~are met is as follows for acquisitions that were~~30, ~~completed~~2006 and asJune of30, ~~March 31~~2005, ~~2006:~~respectively.

Potential Amount Payable In	Cash
2006	$	1,103
2007		4,000
2008		-
2009		600
2010		600
2011 and later		2,400
	$	8,703

The Company estimates that its amortization from 2006 through 2010 for intangible assets related to all acquisitions consummated through June 30, 2006 will be approximately as follows:

7. STATEMENT OF COMPREHENSIVE INCOME

Year	Amount
2006	$	15,019
2007		14,631
2008		14,198
2009		13,350
2010		13,802

7. CONTINGENT CONSIDERATION

As a result of the Company’s acquisition program, the Company has approximately $8.7 million of contingent consideration potentially due to the former owners of its acquired entities, including $3.1 million that has been earned and is accrued on the condensed consolidated balance sheet as of June 30, 2006. If and when the acquired entities meet certain criteria negotiated at the time of the purchase, these amounts are payable as additional consideration. A summary of the amounts payable if the criteria are met is as follows for acquisitions that were completed as of June 30, 2006:

Potential Amounts Payable in	Cash
2006	$	1,103
2007		4,000
2008		-
2009		600
2010		600
2011 and later		2,400
	$	8,703

8. STATEMENT OF COMPREHENSIVE INCOME

Under SFAS No. 130, Comprehensive Income, the comprehensive income for the Company consists of net income and changes in fair value of interest rate swaps, net of tax. Shown below is the Company’s comprehensive income:

	Three Months Ended March 31,
	Three Months Ended June 30,					Six Months Ended June 30,
	2006		2005			2006		2005
Net income	$	~~633~~145	$	12,~~102~~872		$	778	$	3,974
Change in fair value of interest rate swap, net of tax		~~243~~365		~~235~~(230	)		608		5
Comprehensive income	$	~~876~~510	$	12,~~337~~642		$	1,386	$	3,979

8. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended March 31,
	2006		2005
Numerator for basic and diluted earnings per common share	$	633	$	1,102
Denominator:
Basic earnings per common share - weighted average shares outstanding		17,650,834		18,315,144
Effect of dilutive securities:
Stock options		91,695		141,777
Contingent shares earned not issued		-		26,002
Diluted earnings per share - weighted average shares plus assumed conversions		17,742,529		18,482,923
Basic earnings per common share	$	0.04	$	0.06
Diluted earnings per common share	$	0.04	$	0.06

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~For the three months ended March 31, 2006 and 2005, there were approximately 1~~9.~~2 million~~ EARNINGS ~~and~~PER 860 thousand, respectively, of outstanding stock options, which are not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market prices of the Company’s common shares during the respective periods. The range of exercise prices for these antidilutive stock options was between $13.37 and $27.49 at March 31, 2006 and $15.51 to $27.49 at March 31, 2005.SHARE

9.The ~~FINANCIAL~~following ~~INSTRUMENTS~~table sets forth the computation of basic and diluted earnings per common share:

The Company has limited transactions that fall under the accounting rules of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, SFAS No. 138 and SFAS No. 149. From time to time, the Company uses financial instruments, including interest rate swap agreements, to manage exposure to interest rates. On November 15, 2005, we entered into an interest rate swap with an initial notional amount of $4.8 million and an effective date of January 1, 2006, which increases $1.4 million each calendar quarter until December 31, 2007, and then remains at $16 million until maturity. During 2005, 2004, and 2003, the Company entered into several other interest rate swaps to hedge its LIBOR-based debt. These swaps have been designated as cash flow hedges. As such, the changes in the fair value of the interest rate swaps are recorded in other comprehensive income (“OCI”) for the effective portion of the hedge, while the ineffective portion is recorded immediately in earnings. Amounts are reclassified from OCI to earnings as the interest rate swaps effect earnings. There have been no charges to earnings for ineffectiveness of interest rate hedges for the three months ended March 31, 2006. The fair value of these interest rate swap agreements, based upon bank quotes, was an asset of approximately $1.2 million at March 31, 2006. The terms of these interest rate swaps are as follows (fair value in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
Numerator for basic and diluted earnings per common share	$	145	$	2,872	$	778	$	3,974

Denominator:
Basic earnings per common share -
weighted average shares outstanding		17,781,328		18,357,568		17,716,442		18,336,473
Effect of dilutive securities:
Stock options		121,969		119,112		105,409		130,348
Contingent shares earned not issued		-		-		-		12,929
Diluted earnings per share - weighted average shares plus assumed conversions		17,903,297		18,476,680		17,821,851		18,479,750

Basic earnings per common share	$	0.01	$	0.16	$	0.04	$	0.22

Diluted earnings per common share	$	0.01	$	0.16	$	0.04	$	0.22

Effective Date	Maturity Date		Notional Amount at March 31, 2006		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of March 31, 2006
January 1, 2006		December 31, 2015	$	6.2 million		5.26	%		LIBOR	$	27
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR		475
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		300
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		142
January 7, 2003		December 31, 2007	$	9.8 million		2.85	%		LIBOR		220
Total			$	45.0 million						$	1,164

For the three and six months ended June 30, 2006, there are approximately 1.3 million and 1.2 million, respectively, of outstanding stock options which are not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market prices of the Company’s common shares during the respective periods. For the three and six months ended June 30, 2005, there are approximately 950 thousand outstanding stock options which are not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market prices of the Company’s common shares during the respective periods. The range of exercise prices for these antidilutive stock options was between $12.49 and $25.28 at June 30, 2006, and $15.51 and $25.28 at June 30, 2005.

10. ~~DIVIDENDS~~FINANCIAL INSTRUMENTS

OnThe ~~April~~Company has limited transactions that fall under the accounting rules of SFAS 25No. 133, ~~2006~~Accounting for Derivative Instruments and Hedging Activities, as amended ~~the~~by ~~Board~~SFAS ofNo. ~~Directors~~137, ~~authorized~~SFAS aNo. ~~dividend~~138 ofand $0SFAS No.06 ~~per~~149. ~~share~~From time to time, ~~(approximately~~the Company ~~$1.1~~uses ~~million)~~financial instruments, including interest rate swap agreements, to manage ~~stockholders~~exposure to interest rates. On November 15, 2005, we entered into an interest rate swap with an initial notional amount of ~~record~~$4.8 asmillion and an effective date of ~~June~~January 1, 2006, which increases $1.4 million each calendar ~~payable~~quarter onuntil ~~July~~December 131, ~~2006.~~2007, Onand ~~February~~then 1remains at $16 million until maturity. During 2005, ~~2006~~2004, and 2003, the ~~Board~~Company ofentered ~~Directors~~into ~~authorized~~several other interest arate ~~dividend~~swaps ofto $0hedge its LIBOR-based debt.06 ~~per~~These ~~share~~swaps ~~(approximately~~have $1been designated as cash flow hedges.1 ~~million~~As such, the changes in the fair value of the interest rate swaps are recorded in other comprehensive income (“OCI”) tofor ~~stockholders~~the effective portion of the hedge, while the ineffective portion is recorded immediately ~~record~~in earnings. Amounts are reclassified from OCI to earnings as the interest rate swaps effect earnings. There have been no charges to earnings for ineffectiveness of ~~March~~interest 1rate hedges for the three and six months ended June 30, 2006. The fair value of these interest rate swap agreements, ~~payable~~based onupon ~~April~~bank quotes, was an asset of approximately $1.8 million at June 30, 2006. The terms of these interest rate swaps are as follows (fair value in thousands):

Effective Date	Maturity Date		Notional Amount at June 30, 2006		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of June 30, 2006
January 1, 2006		December 31, 2015	$	7.6 million		5.26	%		LIBOR	$	385
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR		588
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		400
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		191
January 7, 2003		December 31, 2007	$	8.4 million		2.85	%		LIBOR		193
Total			$	45.0 million						$	1,757

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

11. DIVIDENDS

On July 25, 2006, the Board of Directors authorized a dividend of $0.06 per share (approximately $1.1 million) to stockholders of record as of September 1, 2006, payable on October 1, 2006. On April 25, 2006, the Board of Directors authorized a dividend of $0.06 per share (approximately $1.1 million) to stockholders of record as of June 1, 2006, payable on July 1, 2006. On February 1, 2006, the Board of Directors authorized a dividend of $0.06 per share (approximately $1.1 million) to stockholders of record as of March 1, 2006, payable on April 1, 2006.

During each of its 2005 quarterly Board of Directors meetings, the Board authorized the Company to pay a quarterly dividend of $0.06 per share (approximately $1.1 million). The dividends were paid on January 1, 2006, October 1, 2005, July 1, 2005, and April 1, 2005 to stockholders of record as of December 1, 2005, September 1, 2005, June 1, 2005, and March 1, 2005, respectively.

1112. SEGMENTS ~~SEGMENTS~~ AND RELATED INFORMATION

The Company has four reportable segments:

Corporate Solutions - provides strategic investment solutions, consulting, and administrative services to clients.

Healthcare Group - provides specialized compensation and benefit services for large and medium sized not-for-profit healthcare organizations.

Pearl Meyer & Partners - specializes in executive compensation and retention programs.

Federal Policy Group - provides a variety of legislative and regulatory strategic services.

13The segment information as of, and for the periods ended June 30, 2006 and 2005, for the Corporate Solutions segment reflects the results of, and information related to, the Executive Benefits Practice, the Banking Practice, and the Insurance Company Practice, which were combined into one segment effective January 1, 2006. Corporate/CSI includes the results of Clark Benson and MedEx for the three and six months ended June 30, 2006.

~~CLARK~~The four reportable segments operate as independent and autonomous business units with a central corporate staff in North Barrington, Illinois responsible for finance, ~~INC~~ strategic planning, human resources and company-wide policies. ~~AND~~Each ~~SUBSIDIARIES~~segment has its own client base as well as its own marketing, administration, and management.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The segment information as of, and for the periods ended, March 31, 2005 for the Corporate Solutions segment reflects the results of, and information related to, the Executive Benefits Practice, the Banking Practice, and the Insurance Company Practice, which were combined into one segment effective January 1, 2006. The Corporate/CSI segment includes the results of Clark Benson and MedEx for the three months ended March 31, 2006.

The four reportable segments operate as independent and autonomous business units with a central corporate staff in North Barrington, Illinois responsible for finance, strategic planning, human resources, and company-wide policies. Each segment has its own client base as well as its own marketing, administration, and management.

The Company has disclosed income from operations as the primary measure of segment earnings (loss). This is the measure of profitability used by the Company’s chief operating decision-maker and the most consistent with the presentation of profitability reported within the condensed consolidated financial statements. The accounting policies of the business segment reports are the same as those described in Note 1 “Nature of Operations and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

The Company evaluates performance and allocates resources based on operating income before income taxes, interest, and corporate administrative expenses. There are no material inter-segment revenues or expenses.

Segment information for the three and six month periods ended June 30, 2006 and 2005, is as follows:

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(Unaudited)

Segment information for the three month periods ended March 31, 2006 and 2005, is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenues
Corporate Solutions	$	43,783		$	45,550		$	88,476		$	90,051
Healthcare Group		10,173			9,725			21,625			19,906
Pearl Meyer & Partners		7,352			8,274			15,374			16,528
Federal Policy Group		2,812			2,932			5,761			5,832
Total segments - reported		64,120			66,481			131,236			132,317
Corporate/CSI		2,255			1,965			4,615			3,077
Total consolidated - reported	$	66,375		$	68,446		$	135,851		$	135,394
Operating Income (Loss) and Income Before Taxes
Corporate Solutions	$	6,573		$	7,495		$	12,795		$	14,603
Healthcare Group		1,162			1,416			3,888			3,602
Pearl Meyer & Partners		761			1,063			1,965			2,000
Federal Policy Group		411			655			971			936
Total segments - reported		8,907			10,629			19,619			21,141
Corporate/CSI		(3,300	)		(3,138	)		(7,635	)		(6,437	)
Other income (expense)		-			1,615			1			1,615
Interest - net		(5,362	)		(5,337	)		(10,673	)		(10,725	)
Income before taxes	$	245		$	3,769		$	1,312		$	5,594
Depreciation and Amortization
Corporate Solutions	$	4,005		$	4,132		$	8,016		$	8,272
Healthcare Group		409			534			819			1,068
Pearl Meyer & Partners		117			126			238			252
Federal Policy Group		100			100			199			201
Total segments - reported		4,631			4,892			9,272			9,793
Corporate/CSI		293			342			609			679
Total consolidated - reported	$	4,924		$	5,234		$	9,881		$	10,472
Capital Expenditures
Corporate Solutions	$	679		$	963		$	1,279		$	1,693
Healthcare Group		65			64			82			416
Pearl Meyer & Partners		42			390			62			482
Federal Policy Group		3			-			3			-
Total segments - reported		789			1,417			1,426			2,591
Corporate/CSI		225			143			246			72
Total consolidated - reported	$	1,014		$	1,560		$	1,672		$	2,663

								June 30,			December 31,
Identifiable Assets								2006			2005
Corporate Solutions							$	539,299		$	551,509
Healthcare Group								29,240			30,336
Pearl Meyer & Partners								47,544			48,100
Federal Policy Group								11,107			10,891
Total segments - reported								627,190			640,836
Corporate/CSI								38,319			33,678
Total consolidated - reported							$	665,509		$	674,513

	Three Months Ended March 31,
	2006			2005
Revenues
Corporate Solutions	$	44,693		$	44,501
Healthcare Group		11,452			10,180
Pearl Meyer & Partners		8,022			8,254
Federal Policy Group		2,949			2,900
Total segments - reported		67,116			65,835
Corporate/CSI		2,360			1,113
Total consolidated - reported	$	69,476		$	66,948
Operating Income (Loss) and Income Before Taxes
Corporate Solutions	$	6,222		$	7,107
Healthcare Group		2,725			2,186
Pearl Meyer & Partners		1,274			937
Federal Policy Group		560			281
Total segments - reported		10,781			10,511
Corporate/CSI		(4,404	)		(3,298	)
Other income (expense)		1			-
Interest, net		(5,311	)		(5,388	)
Income before taxes	$	1,067		$	1,825
Depreciation and Amortization
Corporate Solutions	$	4,011		$	4,140
Healthcare Group		411			534
Pearl Meyer & Partners		121			126
Federal Policy Group		100			101
Total segments - reported		4,643			4,901
Corporate/CSI		314			337
Total consolidated - reported	$	4,957		$	5,238
Capital Expenditures
Corporate Solutions	$	600		$	730
Healthcare Group		17			352
Pearl Meyer & Partners		20			92
Federal Policy Group		-			-
Total segments - reported		637			1,174
Corporate/CSI		21			(71	)
Total consolidated - reported	$	658		$	1,103
		March 31,			December 31,
Identifiable Assets		2006			2005
Corporate Solutions	$	543,744		$	551,509
Healthcare Group		30,474			30,336
Pearl Meyer & Partners		47,971			48,100
Federal Policy Group		12,014			10,891
Total segments - reported		634,203			640,836
Corporate/CSI		33,797			33,678
Total consolidated - reported	$	668,000		$	674,513

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

1213. LITIGATION AND CONTINGENCIES

From time to time, the Company is involved in various claims and lawsuits incidental to its business, including claims and lawsuits alleging breaches of contractual obligations under agreements with its employee consultants and independent producers. The following is a summary of the current material legal proceedings pending against the Company:.

Independent Sales Producers’ Disputes

In March 2004, two of the Company’s independent sales producers exercised their termination rights under their agreement(s) with the Company. Included in the Company’s condensed consolidated balance sheets is a receivable of approximately $1.4 million from these two producers and a related salesperson with respect to certain chargeback commissions to be repaid to the Company from the surrender of policies in 2003. Upon termination, the producers disputed the chargeback and asserted other miscellaneous claims. The producers entered into an arbitration agreement with the Company, dated May 23, 2005, in order to resolve the dispute regarding chargebacks with an arbitration hearing ~~scheduled~~likely ~~for~~to ~~the~~occur ~~third quarter~~in of 2006. While it is not possible to predict with certainty the outcome of the disputes, the Company does not believe resolution will have a material adverse effect on its financial position or results of operations.

epicRealm Licensing

On August 8, 2005, an action was commenced by epicRealm in the U.S. District Court, Marshall, Texas, in which epicRealm claims that the Company and ~~five~~several other unrelated entities have infringed two epicRealm patents relating to online generation of dynamic web pages. The Plaintiff seeks unspecified actual and enhanced (based on asserted willful infringement) damages, attorneys fees and costs, and injunctive relief. The Company has filed its Answer and Counterclaim. The Company has denied any infringement or liability and challenges the validity and enforceability of epicRealm’s patents. Management believes that the Company has meritorious defenses and it intends to vigorously defend all allegations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Tables shown in thousands of dollars, except share and per share amounts.)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, the notes thereto, and other information appearing elsewhere in this Form 10-Q.

Overview

We design, market, and administer compensation and benefit programs for companies supplementing and securing employee benefits and provide executive compensation and related consulting services to U.S. corporations, banks, and healthcare organizations. We generally compete with regional firms while we market our products and services nationwide. A majority of our revenues result from commissions paid by insurance companies that underwrite the insurance policies used to finance our clients’ benefit programs. Most of our clients’ benefit programs are financed by business-owned life insurance and other financial products. We pay commissions to employee and independent producers based upon a percentage of our commission revenue. We work closely with clients to design customized products that meet the specific organizational needs of the client and with insurance companies to develop unique policy features and competitive pricing.

A significant portion of our growth in the last ten years has been acquisition related. Business-owned life insurance programs have tax advantages ~~associated with products~~ that are attractive to our clients. Portions of our product offerings are interest rate sensitive. Changes in tax and legislative laws can have an affect on our business. We have been expanding our compensation consulting practices to diversify our product offerings. The largest component of our general and administrative expense is salary and other benefit related costs.

Recent Events

Clark Benson LLC Acquisition

On, April 21, 2006, we announced a minority interest (10%) purchase in the insurance platform and broker dealer of ValMark Securities, Inc. for $1.5 million cash and $1 million of Clark, Inc. common stock. The ValMark Group of companies also includes ValMark Insurance Agency, LLC, Executive Insurance Agency, Inc., and ValMark Advisers, Inc., which specialize in wealth transfer products and planning services for independent wealth management firms. Combined, these companies represent a continuum of broker dealer, insurance, and advisory firm services for the Clark Benson financial and estate planning subsidiary.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. The Securities and Exchange Commission (“SEC”) has defined a company’s most critical accounting policies as those that are most important to the portrayal of its financial condition and the results of operations, and which require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Although we believe that our estimates and assumptions are reasonable, they are based upon information available when they are made. Actual results may differ significantly from these estimates under different assumptions and conditions.

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Revenue Sources and Recognition

Our operating segments derive their revenue primarily from:

commissions and other compensation paid by insurance companies issuing the policies underlying our client’s benefit programs;

program design and administrative service fees paid by our clients;

executive compensation and benefit related consulting fees; and

fees for legislative liaison and related advisory services.

Our commission revenue is typically recurring, paid annually, and extends for a period of twenty years or more after the sale. Commissions are paid by insurance companies and vary by policy and by program and represent a percentage of the premium or the cash surrender value of the insurance policies underlying the program.

First Year Commissions and Consulting Fees. First year commissions and consulting fees are derived from three principal sources; (a) the commission we earn when the client first purchases the policies, which revenue is recognized at the time the application is substantially completed, the client is contractually committed to purchase the insurance policies and the premiums are paid (which is the effective date of the insurance policy), by the client, to the insurance company or, in certain instances, when cash is received; (b) fees for the services related to the enrollment and initial administration of the benefit programs and underlying policies; and (c) consulting fees.17

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First Year Commission Revenue and Consulting Fees. First year commissions and consulting fees are derived from three principal sources; (a) the commission we earn when the client first purchases the policies, which revenue is recognized at the time the application is substantially completed, the client is contractually committed to purchase the insurance policies and the premiums are paid (which is the effective date of the insurance policy), by the client, to the insurance company or, in certain instances, when cash is received; (b) fees for the services related to the enrollment and initial administration of the benefit programs and underlying policies; and (c) consulting fees.

Our first year commission revenue is frequently subject to chargeback, which means that insurance companies retain the right to recover commissions in the event policies prematurely terminate. The chargeback schedules differ by product and usually apply to first year commission only.

A typical chargeback schedule, based on a percent of first year commission, is as follows:

~~Year 1~~	Year 1	100%	%
~~Year 2 and 3~~	Year 2 and 3	50%	%
~~Year 4~~	Year 4	25%	%
~~Year 5 and beyond~~	Year 5 and beyond	0%	%

Given the homogenous nature of such cases and historical information about chargebacks, we believe we are able to accurately estimate the revenue earned. We currently maintain a chargeback allowance, which is monitored on a quarterly basis for adequacy. The chargeback allowance is calculated based on the average percentage rate of the last two years of chargebacks multiplied by first year revenue for the trailing twelve months.

Consulting fee revenue consists of fees for services we perform in advising our clients on their executive compensation programs and related consulting services, retirement, benefit, investment advisory services, people strategy, compensation surveys, and fees from legislative and regulatory policy matters. These fees are generally based on a rate per hour arrangement or a fixed monthly fee and are earned when the service is rendered.

Renewal Commission Revenue and Related Fees. Renewal revenue is recognized on the date that the renewal premium is due or paid by the client to the insurance company depending on whether a policy is considered fixed or variable. Fixed renewal policies have predictable set premium amounts. Revenue on these policies is recognized on the premium due date. Variable renewal policy premiums can be based upon such items as value of underlying investments in the policy, cash surrender value of the policy, or mutual fund values. In some cases, we are able to obtain information directly from the carriers allowing us to reasonably and reliably estimate the expected renewal premiums. Revenue is recognized based upon these estimates at a policy’s renewal date. For those policies where we are unable to obtain information to reasonably estimate the expected renewal premiums, revenue is not recognized until the confirmation has been received from the insurance carrier that the client’s premium payment has been received. We are notified in advance if a client plans to surrender, so adjustments in subsequent periods due to cancellations are infrequent and minor. Revenue associated with policies to be surrendered is not recognized.

Administrative service fee revenue consists of fees we charge our clients for the administration of their benefit programs and are earned when services are rendered. These revenues are mainly included in our renewal revenue line on our condensed consolidated statements of income.

Supplemental Compensation Agreements. A portion of our revenue is derived from certain supplemental compensation arrangements with insurance carriers. These arrangements generate additional revenue with respect to primarily existing and, to a lesser extent, new blocks of business. Payments under such arrangements are typically based on the cash value (or fair value) of our existing in-force business with these carriers at specified dates of measurement and, to a much lesser extent, based on the value of new business generated. We realized approximately $2.1 million and $4.9 million in revenue under such arrangements for the three and six months ended June 30, 2006, respectively. We realized approximately $2.5 million and $5.7 million in revenue under such arrangements for the three and six months ended June 30, 2005, respectively.

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Supplemental Compensation Agreements. A portion of our revenue is derived from certain supplemental compensation arrangements with insurance carriers. These arrangements generate additional revenue with respect to primarily existing and, to a lesser extent, new blocks of business. Payments under such arrangements are typically based on the cash value (or fair value) of our existing in-force business with these carriers at specified dates of measurement and, to a much lesser extent, based on the value of new business generated. We realized approximately $2.7 million and $3.2 million in revenue under such arrangements for the three months ended March 31, 2006, and 2005, respectively.

We record revenue on a gross basis when we:

· act as the principal in the transaction by helping clients select the right product or service;

· take responsibility for the acceptability of the products and services;

· provide services through employees and exclusive independent producers;

· have latitude in establishing the price the customer will pay;

· have discretion in carrier selection with multiple carriers;

· have chargeback and credit risk; and/or

· are viewed by the client as the administrator of the program once the product is sold.

We record revenue on a net basis when we provide a lead on a case (in the capacity of a finder) and another company has control of the case and bears the credit risk (i.e., working directly with a client to determine the product and design of the plan).

Intangible Assets

Our intangible assets ~~represent~~include the excess of the costs of acquired businesses over ~~the~~ the fair values of the tangible net assets associated with an acquisition. Our intangible assets consist of the net present value of future cash flows from policies inforce at the acquisition date, non-compete agreements with the former owners, other identifiable intangibles, and goodwill. Non-compete agreements are amortized over the period of the agreements and other identifiable intangibles are amortized over their useful lives.

The net present value of inforce revenue is typically amortized between 20 and 30 years (the expected average policy duration). The determination of the amortization schedule involves making certain assumptions related to persistency, expenses, and discount rates that are used in the calculation of the carrying value of inforce revenue. If any of these assumptions change or actual experience differs materially from the assumptions used, it could affect the carrying value of the inforce revenue.

We are required to assess potential impairments of long-lived assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment of Long-Lived Assets, if events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. In assessing the recoverability of goodwill, in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, and ~~and~~ the net present value of future cash flows from policies inforce, we must make assumptions regarding estimated future cash flows, mortality, lapse, and other factors to determine the fair value of the respective assets. If these estimates and related assumptions change in the future, we may be required to record impairment charges.

Income Taxes

Significant judgement is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities, and any valuation allowance recorded against the deferred tax assets. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, our tax returns are subject to audit by federal and various state authorities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome will not be materially different from that which is reflected in our historical income tax provisions and accruals. In assessing the realizability of deferred tax assets, we consider the likelihood that some portion or all of the deferred tax assets may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

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Restructuring Costs

We make provisions for restructuring costs in accordance with SFAS No.146, Accounting for Costs Associated with Exit or Disposal Activities. To determine the amounts expensed in any period, we estimate the amounts we will receive in the future for subleasing office space that is no longer required for our existing operations. Should these estimates not reflect actual results in future periods, we adjust the provision through the income statement.

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Results of Operations

	Three Months Ended March 31,
	Three Months Ended June 30,									Six Months Ended June 30,
	2006			2005			% Change			2006			2005			% Change
Total Revenue	$	6966,~~476~~375		$	6668,~~948~~446			(3.80	)%	$	135,851		$	135,394			0.3	%
Operating Expense
Commissions and fees		14,~~521~~105			1314,~~802~~240			5(1.20	)%		28,626			28,042			2.1	%
% of revenue		2021.93	%		20.68	%					21.1	%		20.7	%
Other operating expenses		4846,~~578~~663			4546,~~933~~715			5(0.81	)%		95,251			92,648			2.8	%
% of revenue		6970.93	%		68.63	%					70.1	%		68.4	%
Operating Income	$	65,~~377~~607		$	7,~~213~~491			(1125.62	)%	$	11,984		$	14,704			(18.5	)%

Quarter ended ~~March~~June 3130, 2006 compared to quarter ended ~~March~~June 3130, 2005.

Revenue. Total revenue for the three months ended ~~March~~June 3130, 2006, was $6966.54 million, compared to revenue of $6668.94 million in ~~first~~second quarter 2005. First year commission and consulting fees for the three months ended ~~March~~June 3130, 2006, were $3132.68 million compared to $2935.29 million for the three months ended ~~March~~June 3130, 2005. ~~Most~~First ofyear commission revenue has declined over the past year due to the interest rate ~~increase~~environment inand Section 409A of the Internal Revenue Code compliance efforts. However, the first year commission ~~and~~revenue ~~consulting~~decline ~~fees~~is ~~relates~~partially tooffset ~~the~~by ~~fourth~~the revenue ($2.5 million) generated from the fourth quarter 2005 acquisitions of Stratford and MedEx. In addition, Healthcare revenue increased ~~reflecting~~due to continuing growth in fee-based businesses. Renewal revenue for the three months ended ~~March 31~~ June 30, 2006, was $3531.97 compared to $3630.18 million for the three months ended ~~March 31~~June 30, 2005. The ~~decrease~~increase in renewal revenue was primarily the result of ~~changes in contract renewal rates that carriers pay~~premium ~~on certain~~payment ~~cases~~timing asfrom ~~the~~certain ~~policies age~~clients. Total revenue for the three months ended ~~March~~June 3130, 2006 and 2005, included approximately $2.71 million and $3.2.5 million, respectively, related to supplemental compensation arrangements. We expect ~~renewal~~ revenue based on our inforce block of business to be less in 2006 than 2005. In February 2006, we amended a supplemental compensation arrangement with one ~~one~~ of our insurance carriers. In exchange for a longer term arrangement, the percentage used to calculate payments based on our inforce block of business was reduced. However, there are additional opportunities to earn revenue should we meet certain production targets for new business.

Commissions and fees expense. Commissions and fees expense for the three months ended ~~March~~June 3130, 2006, was $14.5 1 million, or 2021.93% of total revenue, compared to $1314.82 million, or 20.68% of total revenue, in ~~first~~the second quarter 2005. The slight increase in percentage is a result of the fourth quarter 2005 acquisition of MedEx whose commission percentages are higher than our core business. In addition, there is no commission expense associated with the supplemental compensation arrangements and consulting fees are typically not subject to commissions.

General and administrative expenses. General and administrative expenses were $4241.80 million for the three months ended ~~March~~June 3130, 2006, compared to $4041.52 million for the three months ended ~~March~~June 3130, 2005. The ~~increase in~~ general and administrative expenses ~~was~~for ~~attributable~~the tothree ~~$600~~months ended June 30, 2006 include $430 thousand in Clark Benson ~~start-up~~ expenses, $~~139~~273 thousand of SFAS 123(R) ~~equity~~ equity based compensation expenses, ~~and~~ $1.35 million of expenses related to our ~~fourth~~ fourth quarter 2005 acquisitions and an $820 thousand expense reduction to correct the liability relating to one of our employee benefit plans. In addition, legal fees have increased approximately $~~500~~380 thousand for the three months ended ~~March~~June 3130, 2006 compared to ~~March~~June 3130, 2005 based upon the number of pending legal matters. weGeneral ~~are~~and ~~involved~~administrative expenses for the three months ended June 30, 2006 included approximately $700 thousand of severance expense associated with a reduction in force of 16 associates.

Amortization expense. Amortization expense for the three months ended June 30, 2006 and 2005, was $3.8 million.

Other income. In the second quarter of 2005, we received $1.6 million of non-taxable life insurance proceeds following the death of an executive in our Healthcare Practice.

Interest expense. Interest expense for the three months ended June 30, 2006 was $5.5 million compared to $5.4 million for the three months ended June 30, 2005 based on lower borrowing levels but higher interest rates in 2006.

Income taxes. Income taxes for the three months ended June 30, 2006, were $100 thousand, or 40.8% of income before taxes, compared to $897 thousand, or 23.8% of income before taxes for the three months ended June 30, 2005. The lower effective tax rate for the three months ended June 30, 2005 is due to $1.6 million of non-taxable life insurance proceeds in the quarter.

Net income. Net income for the quarter ended June 30, 2006, was $145 thousand, or $0.01 per diluted share, as compared to net income of $2.9 million, or $0.16 per diluted share, in the comparable quarter of 2005.

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~~Amortization~~Six ~~expense. Amortization expense for the three~~ months ended ~~March~~June 3130, 2006 ~~and~~compared ~~2005,~~to ~~was~~six ~~$3.8~~months ended June 30, ~~million~~2005.

~~Interest~~Revenue. ~~expense.~~Total ~~Interest~~revenue ~~expense~~ for the ~~three~~six months ended ~~March~~June 3130, 2006, was $5135.59 million, compared to revenue of $135.4 million for the six months ended June 30, 2005. First year commission and consulting fees for the six months ended June 30, 2006, were $64.4 million compared to $65.2 million for the six months ended June 30, 2005. First year commission revenue has declined over the past year due to the interest rate environment and Section 409A of the Internal Revenue Code compliance efforts. However, the first year commission revenue decline is partially offset by the revenue ($4.9 million) generated from the fourth quarter 2005 acquisitions of Stratford and MedEx. In addition, Healthcare revenue increased due to continuing growth in fee-based businesses. Renewal revenue for the six months ended June 30, 2006, was $67.5 compared to $66.69 million for the six months ended June 30, 2005. The increase in renewal revenue was primarily the ~~three~~result of premium payment timing from certain clients. Total revenue for the six months ended ~~March~~June 3130, 2006 and 2005, included approximately $4.9 million and $5.7 million, respectively, related to supplemental compensation arrangements. We expect revenue based on our inforce block of business to be less in 2006 ~~lower~~than 2005. ~~borrowing~~In ~~levels~~February ~~mostly~~2006, ~~offset~~we byamended ~~higher~~a ~~interest~~supplemental ~~rates~~compensation arrangement with one of our insurance carriers. In exchange for a longer term arrangement, the percentage used to calculate payments based on our inforce block of business was reduced. However, there are additional opportunities to earn revenue should we meet certain production targets for new business.

~~Income~~Commissions ~~taxes.~~and ~~Income~~fees expense. ~~taxes~~Commissions and fees expense for the ~~three~~six months ended ~~March~~June 3130, 2006, ~~were~~was $~~434 thousand~~28.6 million, or 4021.71% of ~~income~~ ~~before~~total ~~taxes~~revenue, compared to $~~723~~28.0 ~~thousand~~million, or 3920.67% of ~~income before taxes~~ total revenue, for the ~~three~~six months ended ~~March~~June 3130, 2005. The slight increase in percentage is a result of the fourth quarter 2005 acquisition of MedEx whose commission percentages are higher than our core business. In addition, there is no commission expense associated with the supplemental compensation arrangements and consulting fees are typically not subject to commissions.

~~Net~~General ~~income~~and administrative expenses. General and ~~Net~~administrative expenses were $83.8 million for the six months ended June ~~income~~30, 2006, compared to $81.7 million for the ~~quarter~~six months ended ~~March~~June 3130, ~~2006~~2005. The general and administrative expenses for the six months ended June 30, ~~was~~2006 include $~~633~~1.0 ~~thousand~~million in Clark Benson expenses, or$411 thousand of SFAS 123(R) equity based compensation expenses, $02.048 ~~per~~million of expenses related to our ~~diluted~~fourth ~~share,~~quarter ~~versus~~2005 ~~net~~acquisitions and an $860 ~~income~~thousand expense reduction to correct the liability relating to one of our employee $1benefit plans.1 ~~million~~In addition, orlegal fees have increased approximately $0900 thousand for the six months ended June 30, 2006 compared to the six months ended June 30, 2005 based upon the number of pending legal matters.06 ~~per~~General and administrative ~~diluted~~expenses ~~share~~for the six months ended June 30, 2006 included approximately $900 thousand of severance expense associated with reductions in force of 20 associates. The expected annual savings from the ~~comparable~~reductions ~~quarter~~in force is ofapproximately ~~2005~~$2.0 million.

~~The~~Amortization ~~tables~~expense. ~~that~~Amortization expense ~~follow~~for ~~present~~ the ~~operating~~six ~~results~~months ofended ~~our~~June ~~four~~30, ~~segments~~2006 ~~for~~and ~~the~~2005, was $7.5 million and ~~three~~$7.7 ~~months~~million, ~~ended~~respectively. ~~March~~The ~~31,~~decrease ~~2006~~is ~~and~~based ~~2005~~on the timing of scheduled amortization of our acquired inforce revenue.

Corporate Solutions
	Three Months Ended March 31,
	2006			2005
Total Revenue	$	44,693		$	44,501
Operating Expenses
Commissions and fees		12,711			12,572
Other operating expenses		25,760			24,822
Operating Income	$	6,222		$	7,107
% of revenue		13.9	%		16.0	%

Other income. In the second quarter of 2005, we received $1.6 million of non-taxable life insurance proceeds following the death of an executive in our Healthcare Practice.

AsInterest ofexpense. ~~January~~Interest 1,expense ~~2006,~~for the ~~Executive~~six ~~Benefits~~months ~~Practice,~~ended ~~the~~June ~~Banking~~30, ~~Practice~~2006 and ~~the Insurance~~ ~~Company~~2005 ~~Practice~~was ~~(previously included in Corporate/CSI segment) were combined into the Corporate Solutions Practice~~$11. ~~As a result, all years presented~~0 ~~have been reclassified to reflect this combination~~million.

~~Total~~Income ~~revenue for the three months ended March 31, 2006, was $44~~taxes.7 ~~million compared~~Income ~~to $44.5~~taxes ~~million~~ for the ~~three~~six months ended ~~March~~June 3130, ~~2005. First year commission and consulting fees for the three months ended March 31,~~ 2006, ~~was~~were $~~12.9~~534 ~~million compared to $12.8 million for the three months ended March 31~~thousand, ~~2005.~~or ~~First~~40.7% ~~year~~of ~~commission~~income ~~and~~before ~~consulting~~taxes, ~~fees~~compared ~~included~~to $1.26 million, ~~related~~or to29.0% ~~the fourth quarter 2005 acquisition~~ of ~~Stratford.~~income ~~Renewal~~before ~~revenue~~ taxes, for the ~~three~~six months ended ~~March~~June 3130, ~~2006, was $31~~2005.7 ~~million~~The ~~compared~~lower toeffective ~~$31.6~~tax ~~million~~rate for the ~~three~~ six months ended ~~March~~June 3130, 2005. ~~Total~~is ~~revenue~~due ~~for~~to ~~the three months ended March 31, 2006 and 2007 included approximately~~ $1.36 million ~~and~~of ~~$1.7~~non-taxable ~~million, respectively,~~life ~~related to supplemental compensation arrangements. We expect~~insurance ~~renewal~~proceeds ~~revenue based on our inforce block of business to be less~~ in ~~2006 than 2005. In February 2006, we amended a supplemental compensation arrangement with one of our insurance carriers. In exchange for a longer term arrangement,~~ the ~~percentage~~ ~~used to calculate future payments based on our inforce block of business was reduced~~quarter. ~~However, there are additional opportunities to earn revenue should we meet certain production targets for new business.~~

~~Commission~~Net ~~expense as a percentage of total revenue was 28~~income.4% ~~for the three months ended~~Net ~~March~~income ~~31, 2006, and 28.3%~~ for the ~~three~~six months ended ~~March~~June 3130, ~~2005. General and administrative expense for the three months ended March 31~~2006, ~~2006~~ was $~~22.4 million~~778 ~~compared~~thousand, toor $210.~~4 million for the three months ended March 31, 2005.~~04 ~~These expenses increased primarily as a result of $230 thousand of severance~~per ~~expense~~diluted share, ~~costs~~as ofcompared ~~temporary associates~~ to ~~assist~~net ~~with~~income ~~Section 409A~~ of ~~the Internal Revenue Code compliance, and~~ $14.10 million ~~of operating expenses associated with the fourth quarter 2005 Stratford acquisition. Amortization expense for the three months ended March 31~~, ~~2006~~or ~~was~~ $30.322 ~~million~~per ~~compared~~diluted ~~to $3.4 million for the three months ended March 31~~share, ~~2005.~~in ~~The decrease is based on~~ the ~~timing~~comparable ofperiod ~~scheduled amortization~~ of ~~our acquired inforce revenue~~2005.

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Healthcare Group
	Three Months Ended March 31,
	2006			2005
Total Revenue	$	11,452		$	10,180
Operating Expenses
Commissions and fees		1,282			1,230
Other operating expenses		7,445			6,764
Operating Income	$	2,725		$	2,186
% of revenue		23.8	%		21.5	%

The tables that follow present the operating results of our four reportable segments for the three and six months ended June 30, 2006 and 2005.

Healthcare Group revenue for the three months ended March 31, 2006 was $11.5 million, compared to $10.2 million for the three months ended March 31, 2005. The increase in revenue is primarily a result of continued growth of consulting fee revenue from several services. Commission expense for the three months ended March 31, 2006 was $1.3 million compared to $1.2 million for the three months ended March 31, 2005. General and administrative expense for the three months ended March 31, 2006 was $7.2 million compared to $6.5 million for the three months ended March 31, 2005. The general and administrative expense increase is due to incremental costs associated with higher headcount of fee based revenue producing associates.

*Corporate Solutions*
	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Total Revenue	$	43,783		$	45,550		$	88,476		$	90,051
Operating Expenses
Commissions and fees		12,209			13,009			24,920			25,581
Other operating expenses		25,001			25,046			50,761			49,867
Operating (Loss) Income	$	6,573		$	7,495		$	12,795		$	14,603
% of revenue		15.0	%		16.5	%		14.5	%		16.2	%

Pearl Meyer & Partners
	Three Months Ended March 31,
	2006			2005
Total Revenue	$	8,022		$	8,254
Operating Expenses		6,748			7,317
Operating Income	$	1,274		$	937
% of revenue		15.9	%		11.4	%

As of January 1, 2006, the Executive Benefits Practice, the Banking Practice and the Insurance Company Practice (previously included in Corporate/CSI) were combined into the Corporate Solutions Practice. As a result, all years presented have been reclassified to reflect this combination.

~~Pearl~~Total ~~Meyer & Partners~~ revenue for the three months ended ~~March~~June 3130, 2006, was $843.08 million compared to $45.6 million for the three months ended June 30, 2005. First year commission and consulting fees for the three months ended June 30, 2006, was $14.5 million compared to $817.34 million for the three months ended March 31, 2005. The decline ~~Due~~in first year commission and consulting fees resulted primarily from lower toinsurance ~~involuntary~~based ~~and~~sales. ~~voluntary~~First ~~terminations~~year ~~which~~commission ~~occurred~~and inconsulting ~~2005,~~fees ~~there~~for ~~are~~the three ~~less revenue~~months ~~producing~~ended ~~consultants~~June in30, 2006, ~~compared~~included $1.4 million related to ~~2005.~~the ~~Operating~~fourth ~~expenses~~quarter ~~were $6~~2005 acquisition of Stratford.7 ~~million~~Renewal revenue for the three months ended ~~March 31~~June 30, 2006, was $29.2 million compared to $728.31 million for the three months ended June 30, 2005. The increase in renewal revenue was primarily the result of premium payment timing from certain clients. Total revenue for the three months ended ~~March~~June 3130, 2006 and 2005 included approximately $1.4 ~~The~~million ~~decrease~~and $1.7 million, respectively, related to supplemental compensation arrangements. We expect revenue based on our inforce block of business to be less in ~~operating~~2006 ~~expenses~~than is2005. In February 2006, we amended a supplemental compensation arrangement with one of our insurance carriers. In exchange for a ~~result~~longer term arrangement, the percentage used to calculate future payments based on our inforce block of business ~~lower~~was ~~headcount~~reduced. ~~(84~~However, inthere ~~2006~~are ~~and~~additional ~~101~~opportunities into ~~2005~~earn revenue should we meet certain production targets for new business.)

Federal Policy Group
	Three Months Ended March 31,
	2006			2005
Total Revenue	$	2,949		$	2,900
Operating Expenses		2,389			2,619
Operating Income	$	560		$	281
% of revenue		19.0	%		9.7	%

Commission expense as a percentage of total revenue was 27.9% for the three months ended June 30, 2006, and 28.6% for the three months ended June 30, 2005 reflecting an increase in fee based business not subject to commission. General and administrative expense for both the three months ended June 30, 2006 and June 30, 2005 was $21.7 million. The general and administrative expenses for the three months ended June 30, 2006 included approximately $700 thousand of severance expense associated with a reduction in force of 16 associates, costs of temporary associates to assist with Section 409A of the Internal Revenue Code compliance and $1.3 million of expenses associated with a fourth quarter 2005 acquisition. Amortization expense for the three months ended June 30, 2006 was $3.3 million compared to $3.4 million for the three months ended June 30, 2005. The decrease is based on the timing of scheduled amortization of our acquired inforce revenue.

~~Revenue~~Trends ~~for~~ in the ~~three~~six ~~months~~month results ended ~~March~~June 3130, 2006 ~~and~~as ~~2005~~compared ~~was~~to ~~$2.9~~the ~~million.~~comparable ~~Operating~~period ~~expenses~~in ~~for~~2005 were the ~~three~~same ~~months~~as ~~ended~~those ~~March~~experienced ~~31,~~for ~~2006~~the ~~were $2~~quarter.4 ~~million~~General ~~compared~~and ~~to $2.6~~administrative ~~million~~expenses for the ~~three~~six months ended ~~March~~June 3130, ~~2005.~~2006 ~~Operating expense for~~included ~~the~~approximately ~~three~~$900 ~~months~~thousand ~~ended~~of ~~March~~severance ~~31,~~expense ~~2005~~associated ~~included~~with ~~a $250 thousand payment as~~reductions ~~required~~in force byof an20 ~~employment agreement~~associates. NoThe ~~such~~expected ~~payment~~annual ~~was~~savings ~~required~~from the reductions in ~~2006~~force is approximately $2.0 million.

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*Healthcare Group*
	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Total Revenue	$	10,173		$	9,725		$	21,625		$	19,906
Operating Expenses
Commissions and fees		1,310			1,231			2,591			2,461
Other operating expenses		7,701			7,078			15,146			13,843
Operating Income	$	1,162		$	1,416		$	3,888		$	3,602
% of revenue		11.4	%		14.6	%		18.0	%		18.1	%

Healthcare Group revenue for the three months ended June 30, 2006 was $10.2 million, compared to $9.7 million for the three months ended June 30, 2005. The increase in revenue is primarily a result of continued growth of consulting fee revenue from several services. Commission expense for the three months ended June 30, 2006 was $1.3 million compared to $1.2 million for the three months ended June 30, 2005. General and administrative expense for the three months ended March 31, 2006 was $7.5 million compared to $6.8 million for the three months ended June 30, 2005. The general and administrative expense increase is primarily due to incremental costs associated with higher headcount of fee based revenue producing associates.

Trends in the six month results ended June 30, 2006 as compared to the comparable period in 2005 were the same as those experienced for the quarter.

*Pearl Meyer & Partners*
	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Total Revenue	$	7,352		$	8,274		$	15,374		$	16,528
Operating Expenses		6,591			7,211			13,409			14,528
Operating Income	$	761		$	1,063		$	1,965		$	2,000
% of revenue		10.4	%		12.8	%		12.8	%		12.1	%

Pearl Meyer & Partners revenue for the three months ended June 30, 2006 was $7.4 million compared to $8.3 million for the three months ended June 30, 2005. Due to involuntary and voluntary terminations which occurred in the second half of 2005, there are less revenue producing consultants in 2006 compared to 2005. Operating expenses were $6.6 million for the three months ended June 30, 2006 compared to $7.2 million for the three months ended June 30, 2005. The decrease in operating expenses is also a result of lower headcount (87 in 2006 and 100 in 2005.)

Trends in the six month results ended June 30, 2006 as compared to the comparable period in 2005 were the same as those experienced for the quarter.

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*Federal Policy Group*
	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Total Revenue	$	2,812		$	2,932		$	5,761		$	5,832
Operating Expenses		2,401			2,277			4,790			4,896
Operating Income	$	411		$	655		$	971		$	936
% of revenue		14.6	%		22.3	%		16.9	%		16.0	%

Federal Policy Group revenue for the three months ended June 30, 2006 and 2005 was $2.8 million and $2.9 million, respectively. Operating expenses for the three months ended June 30, 2006 were $2.4 million compared to $2.3 million for the three months ended June 30, 2005.

Trends in the six month results ended June 30, 2006 as compared to the comparable period in 2005 were generally the same as those experienced for the quarter. Operating expenses for the six months ended June 30, 2006 and 2005 were $4.8 million and $4.9 million, respectively. Operating expense for the six months ended June 30, 2005 included a $250 thousand payment as required by an employment agreement. No such payment was required in 2006.

Liquidity and Capital Resources

Selected Measures of Liquidity and Capital Resources

	March 31,			December 31,
	June 30,			December 31,
	2006			2005
Cash and cash equivalents	$	56,~~639~~205		$	5,077
Working capital (1)	$	(1312,~~415~~636	)	$	(9,837	)
Current ratio - to one		0.7980			0.85
Stockholders’ equity per common share (2)	$	15.43		$	15.42
Shareholders’ equity per common share (2)	$	15.39		$	15.42
Debt to total capitalization (3)		5352.23	%		53.1	%

(1) Includes restricted cash and current portion of debt associated with asset-backed non-recourse notes

(2) Total stockholders’ equity divided by actual shares outstanding

(3) Current debt plus long term debt divided by current debt plus long term debt plus stockholders’ equity

As a company with historically strong operating cash flow, we believe we have little need to maintain substantial cash balances. To the extent we have net cash from operating activities, we use it to fund capital expenditures and service existing debt. We expect large cash outlays such as future acquisitions will be financed primarily through externally available funds. However, we can offer no assurance such funds will be available and, if so, on terms acceptable to us.

Below is a table summarizing our cash flow:

	Three Months Ended March 31,
	Six Months Ended June 30,
	2006			2005
Cash flows from (used in):
Cash flows (used in) provided by:
Operating activities	$	~~813~~15,232		$	~~695~~17,764
Investing activities		(34,~~764~~780	)		(911,~~946~~916	)
Financing activities		3(9,~~513~~324	)		(611,~~893~~926	)

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Cash Flows from Operating Activities

Our cash flows from operating activities were as follows:

	Three Months Ended March 31,
	Six Months Ended June 30,
	2006			2005
Net income plus non-cash expenses	$	810,~~470~~812		$	818,~~294~~439
Changes in operating assets and liabilities		(74,~~657~~420	)		(~~7,599~~675	)
Cash flows from operating activities	$	~~813~~15,232		$	~~695~~17,764

Non-cash expenses include primarily depreciation of equipment and leasehold improvements, amortization of intangibles, SFAS 123(R) equity based compensation expense, and deferred tax expense. The 2006 ~~decrease~~increase in cash relating to changes in operating assets and liabilities relates primarily to the ~~payment~~collection of ~~accrued liabilities~~accounts ~~for 2005 bonuses and earnout payments~~receivable.

Cash Used in Investing Activities

For the ~~three~~six months ended ~~March~~June 3130, 2006, approximately $3.1 million of ~~our~~ cash was used ~~used~~primarily for contingent consideration payments to prior owners of businesses we acquired and approximately $~~650~~1.7 ~~thousand~~million of our cash was used for the purchase of fixed assets.

A substantial portion of the purchase price used to fund acquisitions has historically been paid in cash. This is primarily due to our desire to avoid diluting our existing stockholders. We expect acquisitions to continue to be financed primarily from available credit lines and possible additional equity. However, we can offer no assurances such will be the case.

23Cash Flows Used in Financing Activities

~~Table~~For the six months ended June 30, 2006, approximately $9.3 million of ~~Contents~~cash was used in financing activities. We used approximately $7.7 million for the net repayment of borrowings and approximately $2.1 million for the payment of dividends. As of June 30, 2006, we had restricted cash of approximately $7.9 million, a decrease of $100 thousand from December 31, 2005, which will be used to pay down the asset-backed notes issued to finance the acquisition of LongMiller. This cash is not available for general corporate purposes, but is solely to service securitization indebtedness incurred to finance the acquisition of LongMiller.

~~Cash~~On ~~Flows~~August 31, 2005, we added a participant bank to our senior credit facility ($10 million) and one of the existing participants increased their commitment ($7 million). As a result, the current amount available under this facility is $89 million. As of June 30, 2006, there was $4.1 million outstanding on the facility. Our assets are pledged to the bank group as part of the credit facility except for cash flows from ~~Financing~~commissions ~~Activities~~to be received upon the renewals of specified inforce policies acquired in connection with the acquisition of LongMiller. In September 2004, we amended our credit agreement to allow for potential stock repurchases and dividend payments. The remaining provisions of the agreement remained substantively the same. Our credit facility expires on December 31, 2006. We expect the credit facility to be renewed on substantially similar terms.

~~For~~The ~~the three~~restrictive ~~months~~covenants ~~ended~~under ~~March~~the ~~31,~~credit ~~2006,~~agreement ~~approximately~~provide ~~$3.5~~for ~~million~~the ~~of cash was~~maintenance ~~provided by financing activities. We had net proceeds~~ of ~~$2.5 million from~~ ~~borrowings.~~a Asminimum ratio of ~~March~~fixed 31charges, ~~2006,~~a wemaximum ~~had~~allowable ~~restricted~~leverage ~~cash~~ratio, ofa ~~approximately $5.8~~minimum ~~million,~~amount ~~a decrease~~ of ~~$2.0~~net ~~million~~worth ~~from~~(stockholders’ ~~December 31~~equity), ~~2005,~~and ~~which~~a ~~will~~maximum beratio ~~used to~~of ~~pay~~debt ~~down the asset-backed notes issued~~ to ~~finance the acquisition of~~ ~~LongMiller~~capitalization. ~~This~~We ~~cash~~were isin ~~not~~compliance ~~available~~with ~~for~~all ~~general~~restrictive ~~corporate~~covenants ~~purposes,~~as ~~but~~of isJune ~~solely to service securitization indebtedness incurred to finance the acquisition of LongMiller. For the three months ended March 31~~30, 2006~~, we made cash dividend payments of approximately $1~~.~~0 million.~~

On August 31, 2005, we added a participant bank to our senior credit facility ($10 million) and one of the existing participants increased their commitment ($7 million). As a result, the current amount available under this facility is $89 million. As of March 31, 2006, there was $12.5 million outstanding on the facility. Our assets are pledged to the bank group as part of the credit facility except for cash flows from commissions to be received upon the renewals of specified inforce policies acquired in connection with the acquisition of LongMiller. In September 2004, we amended our credit agreement to allow for potential stock repurchases and dividend payments. The remaining provisions of the agreement remained substantively the same. Our credit facility expires on December 31, 2006. We expect the credit facility to be renewed on substantially similar terms.

The restrictive covenants under the credit agreement provide for the maintenance of a minimum ratio of fixed charges, a maximum allowable leverage ratio, a minimum amount of net worth (stockholders’ equity), and a maximum ratio of debt to capitalization. We were in compliance with all restrictive covenants as of March 31, 2006.

We believe that our cash flow from operating activities will continue to provide sufficient funds to service our debt obligations. However, as our business grows, our working capital and capital expenditure requirements will also continue to increase. There can be no assurance that the net cash flow from operations will be sufficient to meet our anticipated cash flow requirements or that we will not require additional debt or equity financing in the future. We may issue stock to finance future acquisitions.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~25

At March 31, 2006, we had total outstanding indebtedness of $307.8 million, or approximately 148.7% of total market capitalization. Our outstanding debt consists of the following:

Type of Debt	Outstanding Amount as of March 31, 2006		Weighted Average Interest Rate as of March 31, 2006
Non-recourse bonds	$	247.2 million		Fixed - 6.6	%
Note to prior owner		3.1 million		Fixed - 10.0	%
Trust preferred		45.0 million		Variable - 8.8	%
Credit facility		12.5 million		Variable - 6.8	%

On November 15, 2005, we entered into an interest rate swap with an initial notional amount of $4.8 million and an effective date of January 1, 2006, which increases $1.4 million each calendar quarter until December 31, 2007, and then remains at $16 million. The quarterly increase in the notional amount of this interest rate swap exactly offsets the amortizing notional amount of the January 7, 2003 interest rate swap. The purpose of this swap is to hedge our remaining trust preferred LIBOR-based variable rate debt. The terms of the interest rate swaps as of March 31, 2006 are as follows:

Effective Date	Maturity Date		Notional Amount at March 31, 2006		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of March 31, 2006
January 1, 2006		December 31, 2015	$	6.2 million		5.26	%		LIBOR	$	27
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR		475
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		300
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		142
January 7, 2003		December 31, 2007	$	9.8 million		2.85	%		LIBOR		220
Total			$	45.0 million						$	1,164

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WeITEM ~~have exposure to changing interest rates and will engage in hedging activities, from time to time, to mitigate this risk~~3. QUANTITATIVE ~~The~~AND ~~interest~~QUALITATIVE ~~rate~~DISCLOSURES ~~swaps~~ABOUT ~~we have entered~~MARKET into are used to hedge our interest rate exposure on the LIBOR based variable rate debt outstanding at March 31, 2006. Interest on the remaining $12.5 million of unhedged debt at March 31, 2006, bears interest at 30-day LIBOR plus a spread, prime and the bank’s overnight rate plus a spread. At our current borrowing level, a 1% change in the interest rate will have an annual effect of approximately $125 thousand.RISK

At June 30, 2006, we had total outstanding indebtedness of $297.6 million. Our outstanding debt consists of the following:

Type of Debt	Outstanding Amount as of June 30, 2006		Weighted Average Interest Rate as of June 30, 2006
Non-recourse bonds	$	245.8 million		Fixed - 6.6	%
Note to prior owner		2.7 million		Fixed - 10.0	%
Trust preferred		45.0 million		Variable - 9.1	%
Credit facility		4.1 million		Variable - 7.3	%

On November 15, 2005, we entered into an interest rate swap with an initial notional amount of $4.8 million and an effective date of January 1, 2006. The notional amount of this interest rate swap increases $1.4 million each calendar quarter until December 31, 2007, and then remains at $16 million. The quarterly increase in the notional amount of this interest rate swap exactly offsets the amortizing notional amount of the January 7, 2003 interest rate swap. The purpose of this swap is to hedge our remaining trust preferred LIBOR-based variable rate debt. The terms of the interest rate swaps as of June 30, 2006 are as follows:

Effective Date	Maturity Date		Notional Amount at June 30, 2006		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of June 30, 2006
January 1, 2006		December 31, 2015	$	7.6 million		5.26	%		LIBOR	$	385
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR		588
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		400
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		191
January 7, 2003		December 31, 2007	$	8.4 million		2.85	%		LIBOR		193
Total			$	45.0 million						$	1,757

We have exposure to changing interest rates and will engage in hedging activities, from time to time, to mitigate this risk. The interest rate swaps we have entered into are used to hedge our interest rate exposure on the LIBOR based variable rate debt outstanding at June 30, 2006. Interest on the remaining $4.1 million of unhedged variable debt at June 30, 2006, bears interest at 30-day LIBOR plus a spread, prime and the bank’s overnight rate plus a spread. At our current borrowing level, a 1% change in the interest rate will have an effect of approximately $41 thousand.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and lawsuits incidental to our business, including claims and lawsuits alleging breaches of contractual obligations under agreements with our employee consultants and independent producers. The following is a summary of the current material legal proceedings pending against us.

epicRealm Licensing

On August 8, 2005, an action was commenced by epicRealm in the U.S. District Court, Marshall, Texas, in which epicRealm claims that Clark Consulting and ~~five other~~several other unrelated entities have infringed two epicRealm patents relating to online generation of dynamic web pages. The Plaintiff seeks unspecified actual and enhanced (based on asserted willful infringement) damages, attorneys fees and costs, and injunctive relief. We have filed our Answer and Counterclaim. We have denied any infringement or liability and challenge the validity and enforceability of epicRealm’s patents. Management believes that we have meritorious defenses and we intend to vigorously defend all allegations.

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ITEM 1A. RISK FACTORS

No changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2005.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On May 1, 2006, we issued 76,336 shares of our common stock to the owners of ValMark Insurance Agency LLC. in connection with our purchase of a minority interest in ValMark Insurance Agency LLC. The issue was exempt from registration under Section 4(2) of the Securities Act of 1933. The total value of the shares issued was $1 million on May 1, 2006.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

~~None~~(a) The Company’s Annual Meeting of Stockholders was held on April 25, 2006.

(b) At the Annual Meeting, three uncontested nominees to the Board of Directors of the Company were elected Class II directors for three-year terms expiring at the 2009 Annual Meeting. The votes for the director nominees were as follows:

Director Nominee	For		Withheld
L. William Seidman		16,049,170		161,325
Robert E. Long Jr.		15,862,746		347,749
Thomas M. Pyra		13,621,878		2,588,617

In addition, Tom Wamberg, Randolph A. Pohlman, James M. Benson, George D. Dalton, Kenneth A. Guenther, and Richard C. Lappin continue to serve as directors of the Company after the Annual Meeting.

(c) The results of stockholder voting on ratification of the appointment of Ernst and Young LLP as independent registered public accounting firm for the year ending December 31, 2006, were as follows:

For	Against	Abstain
15,968,881	239,467	2,147

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

See accompanying Exhibit Index included after the signature page of this report for a list of the exhibits filed, furnished, or incorporated by reference in this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CLARK, INC.

Date:	~~May~~August 31, 2006	/s/ Tom Wamberg
		Tom Wamberg
		Chairman of the Board and Chief Executive Officer
Date:	~~May~~August 31, 2006	/s/ Jeffrey W. Lemajeur
		Jeffrey W. Lemajeur
		Chief Financial Officer

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EXHIBIT INDEX

3.1	Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.1 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 15, 1998).	~~Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.1 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on June 15, 1998).~~
3.2	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.3 to Amendment No.1 to our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.3 to Amendment No.1 to our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).
3.3	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 5 of our Registration Statement on Form 8-A, filed with the SEC on February 28, 2002).	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 5 of our Registration Statement on Form 8-A, filed with the SEC on February 28, 2002).
3.4	Certification of Amendment of Certification of Incorporation (Incorporated herein by reference to Exhibit 3.6 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on August 14, 2002).	Certification of Amendment of Certification of Incorporation (Incorporated herein by reference to Exhibit 3.6 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on August 14, 2002).
3.5	Certificate of Amendment of Certificate of Incorporation (Incorporated herein by reference to Exhibit 4.5 of our Registration Statement on Form S-8, File No. 333-106538, filed with the SEC on June 26, 2003).	Certificate of Amendment of Certificate of Incorporation (Incorporated herein by reference to Exhibit 4.5 of our Registration Statement on Form S-8, File No. 333-106538, filed with the SEC on June 26, 2003).
3.6	Bylaws of Clark, Inc. (Incorporated herein by reference to Exhibit 4.6 of our Registration Statement on Form S-8, File No. 333-106538, filed with the SEC on June 26, 2003).	~~Bylaws of Clark, Inc. (Incorporated herein by reference to Exhibit 4.6 of our Registration Statement on Form S-8, File No. 333-106538, filed with the SEC on June 26, 2003).~~
3.7	Certificate of Designation of Series A Junior Participating Preferred Stock (Incorporated herein by reference to Exhibit 3.4 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-56799 filed with the SEC on August 11, 1998).	Certificate of Designation of Series A Junior Participating Preferred Stock (Incorporated herein by reference to Exhibit 3.4 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-56799 filed with the SEC on August 11, 1998).
4.1	Specimen Certificate for shares of Common Stock, par value $.01 per share, of Clark Holdings, Inc. (Incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).	Specimen Certificate for shares of Common Stock, par value $.01 per share, of Clark Holdings, Inc. (Incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).
4.2	Rights Agreement, dated as of July 10, 1998, by and between Clark Holdings, Inc. and The Bank of New York (Incorporated herein by reference to Exhibit 4.4 of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with the SEC on November 16, 1998).	Rights Agreement, dated as of July 10, 1998, by and between Clark Holdings, Inc. and The Bank of New York (Incorporated herein by reference to Exhibit 4.4 of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with the SEC on November 16, 1998).
10.1	Employment Agreement, entered into on April 12, 2006, between Clark Consulting, Inc. and Leslie N. Brockhurst (incorporated by reference to Exhibit 10.1 to our Form 8-K, File No. 001-31256, filed with the SEC on April 18, 2006).	Form of Restricted Stock Agreement - Clark, Inc. Incentive Compensation Plan.*
10.2	Amendment to Employment Agreement, dated April 17, 2006, between Clark Consulting, Inc. and Leslie N. Brockhurst (incorporated by reference to Exhibit 10.2 to our Form 8-K, File No. 001-31256, filed with the SEC on April 18, 2006).	Form of Incentive Stock Option Agreement - Clark, Inc. Incentive Compensation Plan.*
31.1		Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.*
10.3	Description of revised compensation arrangements for non-employee members of the Clark, Inc. Board of Directors (incorporated by reference to Item 1.01 of our Form 8-K, File No. 001-31256, filed with the SEC on May 1, 2006).
31.2		Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.*
10.4	Form of Non-Qualified Stock Option Agreement - Clark, Inc. Incentive Compensation Plan.*
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.*
31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.*

~~______~~_______________

* filed herewith

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Filing Compare · CLARK INC