COMPUTER HORIZONS CORP, 424A, 1995-05-18

COMPUTER HORIZONS CORP
424A, 1995-05-18
COMPUTER PROGRAMMING SERVICES

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PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 17, 1995

1,100,000 SHARES

[LOGO] COMPUTER HORIZONS CORP.
COMMON STOCK
-------------------

Except as otherwise indicated, all information in this Prospectus has been
adjusted to reflect the three-for-two Common Stock split effected as a dividend
to be paid on May 30, 1995 to holders of record on May 9, 1995.

Of the 1,100,000 shares of Common Stock offered hereby, 1,025,000 are being
offered by the Company and 75,000 are being offered by the Selling Shareholder.
The Common Stock is traded on the Nasdaq National Market under the symbol
"CHRZ." On an unadjusted basis, the closing sales price for the Common Stock on
May 16, 1995 as reported on the Nasdaq National Market was $18.25 per share, or
$12.17 per share as adjusted.

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

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

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

(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $ .

(3) The Company and the Selling Shareholder have granted the Underwriters a
30-day option to purchase up to 165,000 additional shares of Common Stock on
the same terms and conditions as set forth above, solely to cover
over-allotments, if any. If the Underwriters exercise the option in whole or
in part, the shares of Common Stock purchased thereunder will be sold by the
Selling Shareholder to the extent that he, in his discretion, so elects, and
the Company will sell the balance, if any, of the shares thereunder. If the
option is exercised in full, the total Price to Public and Underwriting
Discounts and Commissions will be $ and $ , respectively. If
all of the shares covered by the option are sold by the Selling Shareholder,
the proceeds to the Selling Shareholder will be $ ; if all of the
shares covered by the option are sold by the Company, the total Proceeds to
the Company will be $ . See "Selling Shareholder" and
"Underwriting."

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

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
certain other conditions, including the right of the Underwriters to withdraw,
cancel, modify or reject any order in whole or in part. It is expected that
delivery of the shares will be made on or about , 1995, at the
offices of Janney Montgomery Scott Inc., 26 Broadway, New York, New York.

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

JANNEY MONTGOMERY SCOTT INC. ROBERT W. BAIRD & CO.
INCORPORATED

The date of this Prospectus is May , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE
10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "PLAN OF DISTRIBUTION."

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

AVAILABLE INFORMATION

The Prospectus omits certain of the information contained in the
Registration Statement relating to the securities offered hereby which is on
file with the Securities and Exchange Commission (the "Commission"). The Company
is subject to the informational requirements of the Securities Exchange Act of
1934 (the "Exchange Act"), and in accordance therewith, files periodic reports,
proxy statements, and other information with the Commission. Such Registration
Statement, periodic reports, proxy statements, and other information can be
inspected, without charge, and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at its regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60061. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549.

DOCUMENTS INCORPORATED BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31,
1994, and the Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1995, which have been filed with the Commission by the Company
pursuant to the Exchange Act, are incorporated by reference into this Prospectus
and made a part hereof.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies, supersedes, or replaces such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. Any person receiving a copy of this
Prospectus may obtain without charge, upon written or oral request, a copy of
any of the documents incorporated by reference herein, except for exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into documents which this Prospectus incorporates). Requests should be directed
to: Corporate Secretary, Computer Horizons Corp., 49 Old Bloomfield Avenue,
Mountain Lakes, New Jersey 07046, telephone number (201) 402-7400.

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

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in or incorporated by reference into this Prospectus.

Except as otherwise indicated, all information in this Prospectus (i)
assumes no exercise of the Underwriters' over-allotment option and (ii) has been
adjusted to reflect the three-for-two Common Stock splits effected as dividends
paid on April 13, 1993 and March 22, 1994 and the three-for-two Common Stock
split effected as a dividend to be paid on May 30, 1995 to holders of record on
May 9, 1995. Unless the context otherwise requires, all references in this
Prospectus to the Company refer to Computer Horizons Corp. and its subsidiaries.

THE COMPANY

The Company provides a wide range of information technology services and
solutions to major corporations. Historically, a professional services staffing
firm, the Company has, over the past four years, developed the technological and
managerial infrastructure to offer its clients value added services including
client/server systems development and migration, network and facility management
and administration, systems and business process re-engineering and outsourcing
("solutions"). The Company markets solutions to both existing and potential
clients with the objective of becoming one of such clients' preferred providers
of comprehensive information technology services and solutions. Solutions
engagements, which represented less than five percent of the Company's
consolidated revenues in 1992, accounted for approximately 25% of its
consolidated revenues in 1994. The Company believes that the range of services
and solutions that it offers, combined with its national network of branch
offices, provides it with significant competitive advantages in the information
technology marketplace.

The Company's clients primarily are Fortune 1,000 companies with significant
information technology budgets and recurring staffing or software development
needs. In 1994, the Company provided information technology services to 455
clients, including 55 to which it provided solutions. Among the Company's
solutions clients were American Telephone & Telegraph Company ("AT&T"),
BellSouth Corporation, Citicorp, The Dow Chemical Company, Florida Power & Light
Co., Ford Motor Company, International Business Machines Corporation ("IBM"),
Merrill Lynch & Co., Inc., NYNEX Corporation and The Prudential Insurance
Company of America. The Company believes that its large client base presents
excellent opportunities for further marketing of its solutions capabilities. See
"Business--Strategies."

The Gartner Group, an industry research firm, estimates that the worldwide
commercial and governmental information technology services market was
approximately $11.8 billion in 1994, and projects that such market will grow to
approximately $25.1 billion by 1999. The commercial information technology
services industry is highly fragmented and without a dominant company.
Competitors vary by market segment and geographic area, and range from national
accounting firms, the professional service groups of computer equipment
companies and large scale independent firms to small regional and niche firms.

The Company believes that a number of factors will cause the demand for
information technology services to continue to grow. These factors include
global competition, businesses' focus on "core competencies," accelerating
technological change and the need for enterprise-wide system integration arising
from the rapid growth in the number of software applications and end-users
throughout organizations. The principal technology-driven change is the
continuing movement by large corporations to open, distributed computer networks
using client/server architecture. These technological changes are making it
increasingly difficult and expensive for businesses to maintain in-house the
necessary technical and management capabilities to handle all of their
information technology needs.

3
<PAGE>
Information technology service providers such as the Company allow clients to
maximize their information technology resources.

The Company has 29 branch offices in 22 states across the United States and
a staff of approximately 2,200, including approximately 1,900 software
professionals. Its solutions engagements are supported, developed and managed by
specialized groups thereby assuring that each solutions engagement is performed
with the same state-of-the-art methodologies and processes and proven management
techniques.

The Company's strategy is to continue its growth and further establish its
position as a comprehensive provider of information technology services and
solutions by (i) increased marketing of solutions to existing clients; (ii)
enhancing its solutions capabilities; (iii) acquiring entities that may provide
the Company with further competitive advantages and enhanced profitability; and
(iv) developing off-shore facilities that give more cost effective alternatives
to clients. See "Business--Strategies."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 1,025,000 shares.

Common Stock offered by the Selling
Shareholder.................................. 75,000 shares.

Common Stock to be outstanding after the
offering..................................... 10,018,937 shares(1).

Use of Proceeds.............................. Repayment of short-term debt, working capital
and other general corporate purposes,
including possible acquisitions. See "Use of
Proceeds."

Nasdaq National Market Symbol................ CHRZ
</TABLE>

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

(1) Does not include 1,072,535 shares subject to outstanding options granted
under the Company's stock option and appreciation plans with a weighted
average exercise price of $5.40. See Note 4 to Notes to Consolidated
Financial Statements.

(Prospectus Summary continues on following page.)

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 30,
-------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------- ------- -------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................... $99,432 $94,543 $102,206 $121,550 $152,192 $33,171 $43,867
Income from operations........... 6,754 4,777 4,470 7,494 11,011 2,235 3,207
Income before income taxes....... 5,868 4,084 3,892 6,910 10,373 2,085 3,032
Net income....................... $ 3,334 $ 2,266 $ 2,026 $ 3,704 $ 5,686 $ 1,114 $ 1,682
Net income per share of Common
Stock............................ $ .38 $ .26 $ .22 $ .37 $ .60 $ .12 $ .18
Weighted average number of shares
of Common Stock outstanding...... 8,676 8,802 9,083 9,996 9,506 9,520 9,502
</TABLE>

<TABLE>
<CAPTION>
MARCH 30, 1995
DECEMBER 31, ---------------------------
1994 ACTUAL AS ADJUSTED(1)
------------ ------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $ 20,484 $21,826 $
Total assets.......................................... 49,150 51,461
Notes payable--banks(2)............................... 3,200 3,950 --
Long-term debt, including current portion............. 5,844 5,716 5,716
Shareholders' equity.................................. 29,917 31,723
</TABLE>

- ------------
(1) Adjusted to give effect to the receipt by the Company of the net proceeds
from the offering at an assumed public offering price of $ per
share, after deducting estimated offering expenses of $ , and the
application of such proceeds. See "Use of Proceeds."

(2) Represents amounts outstanding under the Company's lines of credit. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

5
<PAGE>
USE OF PROCEEDS

The net proceeds from the sale of the 1,025,000 shares of Common Stock
offered by the Company, assuming an offering price of $ per share and
after deducting underwriting discounts and commissions and other expenses of the
offering estimated at $ ($ if the Underwriters' over-allotment
option is exercised in full and the shares are sold by the Company), will be
approximately $ ($ if the Underwriters' over-allotment option is
exercised in full and the shares are sold by the Company). The Company will not
receive any of the proceeds from the sale of the 75,000 shares of Common Stock
being offered by the Selling Shareholder.

The Company intends to use approximately $6,000,000 of the net proceeds to
repay the outstanding indebtedness under its lines of credit with two banks. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." During 1994, the weighted average
interest rate under these lines of credit was 6.71%. The Company does not intend
to use any of the net proceeds to prepay the Company's outstanding principal
amount of long-term debt of $4,300,000 at May 16, 1995 because such prepayment
would trigger certain penalties.

The Company intends to use the balance of the net proceeds for working
capital and other general corporate purposes, including the expansion of its
business. The Company may use a portion of the net proceeds to acquire other
information technology businesses, although there can be no assurance that any
such acquisition will be made. While the Company regularly evaluates acquisition
and merger candidates, conducts preliminary discussions and intends to pursue
acquisition and merger opportunities available to it, the Company has no present
commitments or agreements with respect to any such acquisition or merger.
Pending its use, the Company intends to invest the net proceeds in short-term,
investment grade securities.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded in the over-the-counter market and is quoted on
the Nasdaq National Market under the symbol CHRZ. The following table sets forth
for each period indicated the high and low closing sales prices for the Common
Stock as reported on the Nasdaq National Market. Such prices do not include
retail markups, markdowns or commissions. The following information has been
adjusted to reflect the three-for-two Common Stock split effected as a dividend
to be paid on May 30, 1995 to holders of record of Common Stock on May 9, 1995.

HIGH LOW
----- -----
1993
First Quarter....................................... $3.55 $2.74
Second Quarter...................................... 3.67 3.03
Third Quarter....................................... 4.95 3.22
Fourth Quarter...................................... 5.95 4.33

1994
First Quarter....................................... 8.33 5.17
Second Quarter...................................... 8.17 5.50
Third Quarter....................................... 8.00 5.50
Fourth Quarter...................................... 10.50 7.67

1995
First Quarter....................................... 12.67 8.83
Second Quarter (through May 16, 1995)............... 14.00 11.00

On May 16, 1995, the last reported sale price of the Common Stock was $12.17
per share. As of May 16, 1995, the Company had approximately 1,142 stockholders
of record.

6
<PAGE>
DIVIDEND POLICY

The Company has never paid cash dividends on the Common Stock and does not
contemplate paying cash dividends on the Common Stock in the foreseeable future.
Earnings, if any, will be used to finance the development and expansion of the
Company's business. Future dividend policy will depend upon the Company's
earnings, capital requirements, financial condition and other factors considered
relevant by the Company's Board of Directors. The amount of cash dividends the
Company may pay on the Common Stock is limited by the agreement governing its
long-term debt.

CAPITALIZATION

The following table sets forth the Company's short-term and long-term debt,
shareholders' equity and total capitalization as of March 30, 1995 and as
adjusted to reflect the sale of the 1,025,000 shares of Common Stock offered by
the Company at an assumed public offering price of $ per share and the
application of the net proceeds therefrom.
<TABLE>
<CAPTION>
MARCH 30, 1995
-------------------------
ACTUAL AS ADJUSTED(1)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
Notes payable--banks (2)............................................. $ 3,950 $--
Long-term debt, including current portion............................ 5,716 5,716
Shareholders' equity:
Preferred Stock, $.10 par value; authorized and unissued, 200,000
shares, including, 50,000 shares of Series A......................... -- --
Common Stock, $.10 par value; authorized, 30,000,000 shares;
issued, 10,758,320 and 11,783,320 shares, as adjusted(1)......... 1,076 1,178
Additional paid-in capital......................................... 13,762
Retained earnings.................................................. 31,533 31,533
------- --------------
46,371
Less shares held in treasury, at cost, 1,786,883 shares............ 14,648 14,648
------- --------------
Total shareholders' equity..................................... 31,723
------- --------------
Total capitalization................................................. $41,389 $
------- --------------
------- --------------
</TABLE>

- ------------
(1) Does not include 1,072,535 shares subject to outstanding options granted
under the Company's stock option and appreciation plans with a weighted
average exercise price of $5.40. See Note 4 to Notes to Consolidated
Financial Statements.

(2) Represents amounts outstanding under the Company's lines of credit.

7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The selected financial data as of March 30, 1995 and for the three months
ended March 30, 1994 and 1995 have been derived from the unaudited consolidated
financial statements of the Company and notes thereto included elsewhere in this
Prospectus and should be read in conjunction with those unaudited consolidated
financial statements and notes and reflect all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary to
present fairly the data as of such date and for such periods. The results for
interim periods are not necessarily indicative of results to be expected for the
year. The selected financial data as of and for the five-year period ended
December 31, 1994 have been derived from the audited consolidated financial
statements of the Company. The income statement data for the years ended
December 31, 1992, December 31, 1993 and December 31, 1994, and the balance
sheet data at December 31, 1993 and December 31, 1994, are derived from, and are
qualified by reference to, the audited consolidated financial statements and
notes thereto included elsewhere in this Prospectus and should be read in
conjunction with those consolidated financial statements and notes. The income
statement data for the years ended December 31, 1990 and December 31, 1991, and
the balance sheet data at December 31, 1990, December 31, 1991 and December 31,
1992 are derived from audited consolidated financial statements not included or
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 30,
-------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------- ------- -------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues........................... $99,432 $94,543 $102,206 $121,550 $152,192 $33,171 $43,867
Costs and expenses:
Direct costs...................... 71,563 68,098 74,200 87,800 108,189 23,655 31,366
Selling, administrative and
general............................ 21,115 21,668 22,651 26,256 32,992 7,281 9,294
Merger and related expenses (1)... -- -- 885 -- -- -- --
Income from operations............. 6,754 4,777 4,470 7,494 11,011 2,235 3,207
Other income (expense):
Interest income................... 156 312 312 235 53 35 37
Interest expense.................. (1,042) (1,005) (890) (819) (691) (185) (212)
------- ------- -------- -------- -------- ------- -------
Income before income taxes......... 5,868 4,084 3,892 6,910 10,373 2,085 3,032
Income taxes....................... 2,534 1,818 1,866 3,206 4,687 971 1,350
------- ------- -------- -------- -------- ------- -------
Net income......................... $ 3,334 $ 2,266 $ 2,026 $ 3,704 $ 5,686 $ 1,114 $ 1,682
------- ------- -------- -------- -------- ------- -------
------- ------- -------- -------- -------- ------- -------
Net income per share:
Primary........................... $ .38 $ .26 $ .22 $ .37 $ .60 $ .12 $ .18
Fully diluted..................... $ .38 $ .26 $ .22 $ .36 $ .60 $ .12 $ .18
Weighted average number of shares
outstanding:
Primary........................... 8,676 8,802 9,083 9,996 9,506 9,520 9,502
Fully diluted..................... 8,775 8,828 9,230 10,331 9,534 9,558 9,562
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------- MARCH 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital............................. $17,573 $18,972 $20,317 $17,531 $20,484 $21,826
Total assets................................ 36,683 37,220 41,249 40,600 49,150 51,461
Notes payable--banks (2).................... -- -- -- -- 3,200 3,950
Long-term debt, including current portion... 10,325 10,000 8,572 7,399 5,844 5,716
Shareholders' equity........................ 19,010 21,711 26,856 25,689 29,917 31,723
Operating Data:
Employees................................... 1,258 1,251 1,414 1,603 2,150 2,202
Branch offices.............................. 24 24 27 27 29 29

- ------------
(1) In 1992, the Company recorded a non-recurring charge of $885,000 resulting
from the acquisition of Worldwide Computer Services Inc. The charge
consisted of redundant facility and personnel expenses. See Note 2 of Notes
to Consolidated Financial Statements.

(2) Represents amounts outstanding under the Company's lines of credit.

8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with,
and is qualified in its entirety by, the Consolidated Financial Statements,
including the Notes thereto, and Selected Consolidated Financial and Operating
Data included elsewhere in this Prospectus. Historical results are not
necessarily indicative of trends in operating results for any future period.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated (i) certain income
and expense items expressed as a percentage of the Company's consolidated
revenues and (ii) the percentage increase in the amount of such items in 1994
compared to 1993 and the first quarter of 1995 compared to the first quarter of
1994, respectively:

</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, PERCENTAGE ENDED MARCH 30, PERCENTAGE
-------------------------- INCREASE ---------------- INCREASE
1992 1993 1994 1993/1994 1994 1995 1994/1995
------ ------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............ 100.0% 100.0% 100.0% 25.2% 100.0% 100.0% 32.2%
Direct costs........ 72.6 72.2 71.1 23.2 71.3 71.5 32.6
Selling,
administrative and
general............. 22.2 21.6 21.7 25.7 21.9 21.2 27.6
Income from
operations.......... 4.4(1) 6.2 7.2 46.9 6.7 7.3 43.5
Interest expense,
net................. 0.6 0.5 0.4 9.2 0.5 0.4 16.7
Income before income
taxes............... 3.8 5.7 6.8 50.1 6.3 6.9 45.4
Net income.......... 2.0 3.0 3.7 53.5 3.4 3.8 51.0
</TABLE>

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

(1) Reflects a non-recurring charge of $885,000 resulting from the acquisition
of Worldwide Computer Services Inc. This charge consisted of redundant
facility and personnel expenses. (See Note 2 of Notes to Consolidated
Financial Statements.)

REVENUES

Consolidated revenues for the first quarter of 1995 increased 32% compared
to the first quarter of 1994. The increase was the result of both the further
development of the Company's solutions business and the continued expansion in
its core business of providing professional software personnel services.

Consolidated revenues in 1994 increased by 25% compared to 1993, and in 1993
consolidated revenues increased by 19% compared to 1992. The increase in 1994
was attributable equally to the expansion of the Company's professional software
personnel services business and the continued development of its solutions
business. See "Business--Overview." The increase in consolidated revenues in
1993 was attributable to the acquisition in August 1992 of Worldwide Computer
Services Inc. (see Note 2 of Notes to Consolidated Financial Statements) and
internal expansion. The Company began the development of its solutions business
in 1991.

The Company provides its services primarily to businesses in five principal
Standard Industrial Classification Code sectors. The largest portion of the
Company's consolidated revenues in each of 1994, 1993 and in 1992 was derived
from manufacturing sector clients, 28% in each of 1994 and 1993 and 24% in 1992.
In dollars, these amounts were $42.9, $34.1 and $24.6 million in 1994, 1993 and
1992, respectively. Revenues were broad-based within this sector, with
particular emphasis in transportation, petroleum refining and chemical/allied
products manufacturing.

9
<PAGE>
Consolidated revenues derived from financial services clients were 26% of
Company revenues in each of 1994 and 1993 and 23% in 1992. In dollars, such
revenues were $39.9, $31.5 and $23.1 million in 1994, 1993 and 1992,
respectively. The increase in consolidated revenues from 1992 to 1994 was
experienced across all subsectors, including insurance, brokerage, banking and
non-depository credit institutions.

Telecommunications/utilities clients represented 23% of the Company's
consolidated revenues in 1994, 24% in 1993, and 26% in 1992. In dollars, the
1994, 1993 and 1992 amounts were $35.0, $28.8 and $26.4 million, respectively.

The Company's services sector, which includes business services and computer
processing services, recognized significantly increased revenues during the
three-year period. For 1994, 1993 and 1992, revenues from this sector were 15%,
13% and 13%, respectively, of the Company's consolidated revenues. In dollars,
the amounts were $22.5, $16.3 and $13.2 million.

Wholesale/retail trade clients contributed revenues of $11.9, $10.9 and
$14.9 million in 1994, 1993 and 1992, respectively, representing 8%, 9% and 15%
of the Company's consolidated revenues, respectively. But for a large retail
project completed in 1992, this sector has been relatively flat.

DIRECT COSTS

Direct costs as a percentage of consolidated revenues were 71.5% and 71.3%
for the first quarters of 1995 and 1994, respectively. Direct costs as a
percentage of consolidated revenues were 71.1%, 72.2% and 72.6% for 1994, 1993
and 1992, respectively. The improvements in 1994 and 1993 were attributable to
the Company's implementation of tighter controls over pricing, wages, costs and
benefits.

SELLING, ADMINISTRATIVE AND GENERAL

Selling administrative and general expenses were 21.2% of consolidated
revenues for the first quarter of 1995, compared to 21.9% for the same period in
1994. This decrease is attributable to both tighter cost controls and higher
consolidated revenues during the past year. The dollar expenditures were $9.3
million and $7.3 million for the respective periods.

Selling, administrative and general expenses have remained essentially
stable as a percentage of consolidated revenues: 21.7%, 21.6% and 22.2% for
1994, 1993 and 1992, respectively. In dollars, they were $33.0, $26.3 and $22.7
million, respectively, for these years.

PROFITABILITY

Consolidated income from operations was $3.2 million in the first quarter of
1995, compared to $2.2 million in the first quarter of 1994, representing 7.3%
and 6.7% of consolidated revenues, respectively. The gains are primarily
attributable to increased revenues and various cost containment initiatives. The
Company's business is labor intensive and, as such, is sensitive to inflationary
trends, client billing rates, as well as payroll costs.

Consolidated income from operations was $11.0 million in 1994, compared to
$7.5 million in 1993 and $4.5 million in 1992. As a percentage of consolidated
revenues, income from operations were 7.2%, 6.2% and 4.4% for 1994, 1993 and
1992, respectively. The gains are attributable to increased revenues, improved
gross margins and containment of selling, administrative and general expenses.
The Company's business is labor intensive and, as such, is sensitive to
inflationary trends. This sensitivity applies to client billing rates as well as
payroll costs.

Consolidated net income for the first quarter of 1995 was $1.7 million, or
$.18 per share, compared with $1.1 million, or $.12 per share in 1994. The
Company's effective tax rate for Federal, state and

10
<PAGE>
local income taxes was 44.5% and 46.6% for the first quarter of 1995 and 1994,
respectively. The effective rate for the first quarter of 1995 decreased due to
profits increasing more than non-tax benefited charges. After accounting for
non-tax benefited charges such as goodwill amortization and certain travel and
entertainment deduction limitations, the Company's standard marginal income tax
rate for these periods was approximately 42%.

Consolidated net income for 1994 was $5.7 million, or $.60 per share,
compared with $3.7 million, or $.37 per share, in 1993, and $2.0 million, or
$.22 per share, in 1992. The Company's effective tax rate for Federal, state and
local income taxes was 45.2%, 46.4% and 47.9% for 1994, 1993 and 1992,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of March 30, 1995, the Company had a current ratio of 2.5 to 1. Available
bank lines of credit totaled $8.0 million at March 30, 1995 ($12.0 million less
$4.0 million outstanding). As of May 16, 1995, the outstanding borrowings under
these facilities was $6.2 million. Borrowings have been used to finance the
growth in accounts receivable resulting from increased revenues and, in the
first quarter of 1995, the effect of normal year-end purchase order expirations
and resultant payment delays. Borrowings also were used to finance the
repurchase of shares of Common Stock for approximately $2.8 million from the
Company's former Vice Chairman and Executive Vice President, who announced his
retirement in October 1994, effective February 15, 1995. During 1994, the
average outstanding amount under such lines of credit was $1.1 million and the
weighted average interest rate was 6.71%. During 1993, the Company borrowed $4.0
million at the lender's prime lending rate (6%) to finance the purchase of
treasury stock. This loan was repaid prior to December 31, 1993. See Note 4 of
Notes to Consolidated Financial Statements.

The Company's long-term debt consists primarily of notes issued to a
financial institution in the outstanding principal amount of $5.7 million as of
March 30, 1995. The notes are payable in installments of $1.4 million on April
15th of each year through 1998 and bear interest at the rate of 9.55% per annum.

The Company has certain contingent payment obligations over the next several
years and will pay an aggregate of approximately $0.5 million in 1995 pursuant
to such obligations. See Note 2 of Notes to Consolidated Financial Statements.
In April 1995, the Company contributed $0.5 million for its 50% interest in a
joint venture with the Birla Group of India, a large multi-national
conglomerate. See "Business--Recent Solutions Capability Developments."

The Company believes that the net proceeds of this offering, together with
its lines of credit and internally generated funds, will permit it to repay the
outstanding short-term debt, to continue to meet its working capital obligations
and fund the further development of its business for the next 12 months.

11
<PAGE>
BUSINESS

OVERVIEW

The Company's clients primarily are Fortune 1,000 companies with significant
information technology budgets and recurring staffing or software development
needs. In 1994, the Company provided information technology services to 455
clients, including 55 to which it provided solutions. Among the Company's
solutions clients were AT&T, BellSouth Corporation, Citicorp, The Dow Chemical
Company, Florida Power & Light Co., Ford Motor Company, IBM, Merrill Lynch &
Co., Inc., NYNEX Corporation and The Prudential Insurance Company of America.
The Company believes that its large client base presents excellent opportunities
for further marketing of its solutions capabilities. See "Business--Strategies."

The Company has 29 branch offices in 22 states across the United States and
a staff of approximately 2,200, including approximately 1,900 software
professionals. Its solutions engagements are supported, developed and managed by
specialized groups based at the Company's headquarters, thereby assuring that
each solutions engagement is performed with the same state-of-the-art
methodologies and processes and proven management techniques.

THE COMMERCIAL INFORMATION TECHNOLOGY SERVICES INDUSTRY

The Company competes in the commercial information technology services
industry. Commercial information technology services consist of the development,
operation and maintenance of computerized information systems. The Gartner
Group, an industry research firm, estimates that the worldwide commercial and
governmental information technology services market was approximately $11.8
billion in 1994, and projects that such market will grow to approximately $25.1
billion by 1999. The principal buyers of commercial information technology
services are large corporations with recurring staffing and solutions needs. The
industry is highly fragmented and without a dominant company. Competitors vary
by market segment and geographic area, and range from several of the "Big Six"
accounting firms, the professional service groups of computer equipment
companies and large scale outsourcers such as Electronic Data Systems
Corporation, to small regional and niche firms, although there has been a trend
in the past decade towards consolidation, with larger companies gaining revenue
and expertise by acquiring smaller firms.

The Company believes that a number of factors will cause the demand for
commercial information technology services to continue to grow. These factors
include global competition, businesses' focus on "core competencies,"
accelerating technological change and the need for enterprise-wide system
integration arising from the rapid growth in the number of software applications
and end-users throughout organizations. The principal technology-driven change
is the continuing movement by large corporations to open, distributed computer
networks using client/server architecture. These technological changes are
making it increasingly difficult and expensive for businesses to maintain
in-house the necessary technical and management capabilities to handle all of
their information technology needs.

12
<PAGE>
Commercial information technology service providers such as the Company allow
clients to maximize their information technology resources.

The major technological development in information services in recent years
has been the transition to distributed and open computing environments utilizing
client/server architectures. Historically, enterprise-wide computing has been
conducted on proprietary host-based systems operating on mainframes and
minicomputers typically supplied by a single vendor. These host-based systems
offered centralized data processing to a small group of users and helped
automate tasks such as financial reporting. In the 1980s, the ease-of-use and
low cost of personal computers, combined with the increased availability of
computer end-user software, such as financial spreadsheets and word processing,
led to rapid growth in the number of computer users throughout organizations.
Computing environments became increasingly varied and included personal
computers and workstations from different vendors as well as traditional
minicomputers and mainframes, all of which were interconnected by local area
networks ("LANs"). This decentralized, or distributed, computing environment
soon required organizations to seek methods of improving communication and
information processing across varying computer hardware and software
configurations. The resultant move to open, standards based computing
environments continues to accelerate today as a result of improvements in
price/performance ratios for computer systems and advances in open computing
standards and enabling technologies.

STRATEGIES

The Company's objective is to continue its growth and further establish its
position as a comprehensive provider of information technology solutions and
services. The Company's principal strategies for achieving these goals are as
follows:

* Increased Marketing of Solutions to Existing Clients. The Company has
established long-term relationships with many of its clients. During 1994, 1993
and 1992, 93.2%, 91.8% and 88.5%, respectively, of the Company's revenues were
derived from clients to which it had provided services or solutions in the
preceding year. The Company believes that the access and goodwill these client
relationships offer provide it with significant advantages in marketing
additional services and solutions to such clients. The Company believes that its
long-term client relationships and ability to work in partnership with its
clients throughout the life cycle of their information systems, from design and
development through testing and implementation to refurbishment and
re-engineering, combined with its ability to outsource or staff the operation of
such systems, distinguishes it from many of its competitors and provides it with
the opportunity to become a preferred provider for a broad range of its existing
and new clients' information technology solutions needs.

* Enhancing its Solutions Capabilities. The Company believes that it will be
able to increase the revenues that it derives from its existing clients,
increase the size of the projects that it undertakes and attract new clients by
enhancing the information technology solutions that it offers. The Company has
begun to develop proprietary "products": solutions to specific information
technology problems consisting of a package of outsourcing, project management
and professional services utilizing proprietary software tools and methodologies
acquired or developed by the Company. Such solutions products can serve to
distinguish the Company and provide it with a significant competitive advantage.
See "Business--Recent Solutions Capability Developments."

* Acquiring Entities that May Provide the Company with Further Competitive
Advantages and Enhanced Profitability. Given the highly fragmented nature of the
information technology marketplace, the Company believes that significant
acquisition opportunities exist. The Company continuously evaluates potential
acquisition candidates for expanding its branch office network, increasing its
technical expertise or providing it with other competitive advantages. The
Company, however, has no

13
<PAGE>
present agreement or commitment with respect to any such acquisition, and there
can be no assurance that any such acquisition will be consummated.

* Developing Off-shore Facilities that Give More Cost Effective Alternatives to
Clients. The Company believes that the utilization of off-shore facilities will
allow it to offer its clients services and solutions in a more cost effective
manner. Off-shore facilities take advantage of lower-cost technical personnel to
carry out legacy systems maintenance, client/server systems development and
migration, help desk activities and program design and coding. The Company has
recently entered into a joint venture with the Birla Group, a major Indian
industrial enterprise, to open its first such facility. See "Business-- Recent
Solutions Capability Developments."

SERVICES

In addition to its core professional services staffing business, the Company
offers its clients a wide range of information technology solutions, including
client/server systems development and migration, network and facilities
management and administration, and systems and business process re-engineering.
The Company can supply each of these solutions alone or together with others as
a comprehensive package. The Company augments its ability to provide solutions
utilizing state-of-the art technology by entering into arrangements with leading
hardware, software and systems vendors. Pursuant to these arrangements, the
Company is authorized to incorporate these entities' products in its offerings.
The Company can undertake full or shared project responsibility with the client
or simply provide software professionals with specified skills to augment the
client's staff on an as-needed basis. Projects can be performed at the client's
facilities or at the Company's own software facilities.

The following is a brief description of certain of the Company's principal
services:

* Professional Services Staffing. Providing highly skilled software
professionals to augment the internal information management staffs of major
corporations remains the Company's primary business, accounting for
approximately 75% of the Company's consolidated revenues in 1994. The Company
offers its clients centralized vendor management, supplying their staffing needs
from among the Company's approximately 1,900 software professionals. The Company
is committed to expanding its professional services staffing operations in
conjunction with its solutions business.

* Client/Server Systems Development and Migration. The Company has the
capability to develop and implement open computer systems using client/server
architecture and integrating servers, mini and mainframe systems, workstations,
terminals and communication gateways into complete, flexible networks. Such
services include project management, selection of viable systems platforms,
creation of migration plans, development of customized software applications,
and systems and database integration. The Company specializes in integrating
local area network ("LAN") environments into single heterogeneous networks and
unifying enterprise networks into wide area network ("WAN") environments.

* Network and Facilities Management and Administration. In addition to
client/server systems development and migration, the Company provides
comprehensive applications development and systems maintenance services for
legacy systems. It can also manage, operate and administer data center
facilities, including both large and small centralized main frame (or "glass
house") data centers, and provide help desk and network administration services.
The Company can provide (or "outsource") such services and solutions either at
the client's facilities or at state-of-the-art software facilities located at
its Mountain Lakes, New Jersey, Pompano Beach, Florida and Minneapolis,
Minnesota branch offices and, through its new joint venture with the Birla
Group, New Delhi, India. The Company's Pompano Beach facility is fully
bilingual, and currently provides data processing services for the Latin
American operations of a major United States bank.

14
<PAGE>
* Systems and Business Processing Re-engineering. The Company provides its
clients with proven methodologies, software tools, procedures and project
management practices to maximize the life span and productivity of their legacy
systems. The Company's capabilities in this area extend beyond traditional
re-engineering and involve creation of data and process models and the
extraction of imbedded business rules.

* Knowledge Transfer and Training. The Company offers both standard curricula
and custom-tailored courses for a client's particular environment and needs.
Comprehensive courses cover languages, hardware, software, tools, methodologies
and management and productivity skills. The Company's offerings include
application downsizing, graphical interfaces, open systems, Computer aided
software engineering ("CASE") and information engineering technologies,
relational technology and personal computer software and hardware. The Company
also has reseller and training rights in selected markets to certain development
tools used as an aid in building client/server applications.

RECENT SOLUTIONS CAPABILITY DEVELOPMENTS

On March 9, 1995 the Company introduced its first solutions product
utilizing an internally developed software tool, CHC's Signature 2000, pursuant
to which the Company can identify all of the date occurrences within an
application and reformat the date fields to permit the processing of dates after
December 31, 1999. Many existing computer systems run software programs
permitting only two digit entries for years (e.g., "95" for the year 1995) and,
consequently, cannot properly process dates in the next century. The Company
believes that its CHC's Signature 2000 product can update applications more
quickly and inexpensively than is otherwise possible. The Company was recently
awarded its first contract for its CHC's Signature 2000 product.

Also in March, the Company announced that it had entered into a joint
venture with the Birla Group, a major Indian industrial enterprise with annual
sales of approximately $4.5 billion. In April, the Company and the Birla Group
each made initial cash contributions of $0.5 million and each received a 50%
interest in the joint venture. The Birla Group will also contribute the net
assets of its existing information technology company to the joint venture,
which will be known as Birla Horizons International, and the Company will
provide it with technological and management support. The Company has worked
successfully on solution projects with the Birla Group over the last several
years and believes that the joint venture will be able to provide clients with
solutions such as legacy systems maintenance, client/server systems development
and migration, help desk activities and program design and coding through its
software facilities in New Delhi, India more cost effectively than can be done
domestically.

ORGANIZATION

The Company's organizational structure has evolved in conjunction with the
development of its solutions capability. It is designed to provide clients
across the United States with responsive, efficient service utilizing
state-of-the art software standards, methodologies and management techniques
applied consistently from engagement to engagement.

The Company services its clients through a network of 29 branch offices
located in 22 states across the United States. Each branch office is responsible
for staffing the professional personnel needs of clients within its assigned
geographic region. In addition, the branch offices provide the professional
staff for the Company's solutions engagements in that area under the management
of the specialized solutions groups described below. The number of software
professionals attached to each branch office ranges from approximately 15 to
190, with the average being approximately 70. Twenty-seven of the Company's
branch offices are organized into three geographic regions headed by Senior Vice
Presidents who report directly to the Company's Chief Executive Officer. An
additional two offices constitute the

15
<PAGE>
Company's Communications Clients Group, and serve primarily telecommunications
companies. Set forth below is a list of the Company's branch offices:

EASTERN REGION CENTRAL STATES REGION MIDWEST/WEST REGION

Hartford, CT Atlanta, GA Phoenix, AZ
Washington, DC Indianapolis, IN Los Angeles, CA
Miami, FL Louisville, KY Colorado Springs, CO
Boston, MA Raleigh, NC Denver, CO
Mountain Lakes, NJ Cincinnati, OH Cedar Rapids, IA
New York, NY Cleveland, OH Chicago, IL
Philadelphia, PA Columbus, OH Kansas City, KS
Dayton, OH Detroit, MI
Memphis, TN Minneapolis, MN
Dallas, TX
Houston, TX

COMMUNICATIONS CLIENTS GROUP

Tampa, FL
Clark, NJ

The technical and management infrastructure for the Company's solutions
capability is provided by three specialized subsidiaries: Horizons Consulting,
Inc. ("HCI"), Unified Systems Solutions, Inc. ("USS") and Strategic Outsourcing
Services, Inc. ("SOS"). The Company established HCI in June 1992; USS was
acquired by the Company in January 1993; and SOS was acquired in June 1994. Both
USS and SOS were acquired in the development stage, and in each case the Company
had provided initial financing to the founders. See Note 2 of Notes to
Consolidated Financial Statements. Each of HCI, USS and SOS possess the
technical and management resources to manage a key area of the Company's
solutions capabilities: HCI provides applications development, systems
maintenance and systems and business process and re-engineering for legacy
systems; USS designs, develops and integrates client/server networks, effects
mainframe migrations and provides related services, including custom software
development and training; and SOS operates and administers glass house data
facilities.

For biographical information regarding the founders of HCI, USS and SOS,
each of which reports directly to the Company's Chief Executive Officer, see
"Management." Although treated as separate entities for certain internal
corporate purposes, HCI, USS and SOS operate through and with the Company's
branch office system. Depending upon the nature of each solutions engagement,
project managers from one or more of the subsidiaries will be assigned to design
and manage the project, which is staffed through the branch offices.

The Company's knowledge transfer and training services are provided through
its ComputerKnowledge division ("CKC"). CKC operates training centers in the
Company's Mountain Lakes, Cincinnati, Detroit and Minneapolis offices, and
provides training at client facilities throughout the United States.

MARKETING AND CLIENTS

The Company markets through a combination of account representatives located
both at the branch offices and the solutions subsidiaries. Approximately 70
people are engaged in marketing full time. Account representatives are assigned
to a limited number of accounts, generally no more than eight, in order to
develop an in-depth understanding of each client's information technology needs
and form strong client relationships. As noted above, the cross-marketing of
multiple services is an important Company strategy. See "Business--Strategies."
Commissions constitute a significant portion of the total compensation of
account representatives, and are based upon the gross profit from business

16
<PAGE>
originated by each representative. Professional services are generally billed to
clients on an hourly or daily basis. The Company undertakes solutions
engagements on both a fixed price and best efforts basis. In fixed price
arrangements, the Company bears the risk that project costs will exceed
estimates. Consequently, the analysis of the scope and complexity of a project
and the development of a viable, competitive bid is a critical aspect of the
Company's solutions business.

The Company focuses its marketing efforts on large businesses and
institutions with significant information technology budgets and recurring
staffing or software development needs. Its clients are engaged in a broad
spectrum of industries. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The following is a selected list of
clients for which the Company provided services in 1994:

<TABLE>
<CAPTION>
<S> <C> <C>
American Express Company Florida Power & Light Co. MCI Communications Corp.
AT&T Ford Motor Company Merrill Lynch & Co., Inc.
BellSouth Corporation GTE Corporation NYNEX Corporation
British Petroleum Company P.L.C. General Electric Company The Prudential Insurance
CIGNA Corporation IBM Company of America
Citicorp Lehman Brothers, Inc. Time Warner Inc.
Eli Lilly and Company
</TABLE>

The Company has historically derived, and expects in the future to derive, a
significant percentage of its total revenue from a relatively small number of
clients. In 1994, the Company's two largest clients, AT&T and IBM, accounted for
9% and 6%, respectively, of consolidated revenues, but the Company provided
services through various engagements for a number of different divisions of each
of these clients.

In accordance with industry practice, most of the Company's contracts are
terminable by either the client or the Company on short notice. The Company does
not believe that backlog is material to its business.

PROFESSIONAL STAFF AND RECRUITMENT

The Company has a staff of approximately 2,200, including approximately
1,900 software professionals. As of March 30, 1995, approximately 350 of the
Company's software professionals were working on solutions engagements.

The Company's success is dependent upon its ability to attract and retain
qualified professional computer personnel. In particular, competition for the
limited number of qualified project managers and professionals with certain
"niche" skills, such as a working knowledge of certain sophisticated computer
software, is intense. Although the Company generally has been successful in
attracting employees with the skills needed to fulfill customer engagements,
demand for qualified professionals conversant with certain technologies may
outstrip supply as new and additional skills are required to keep pace with
evolving computer technology. Accordingly, the Company devotes significant
resources to recruitment, maintaining over 50 recruiters at the branch, regional
and corporate levels. Each potential applicant is interviewed, tested and graded
by the Company's recruiting personnel, and the applicant's file is scanned into
the Company's imaged-based centralized repository. This data base, which may be
accessed by appropriate personnel throughout the Company, can be searched by a
number of different criteria, including specific skills or qualifications.

COMPETITION

The commercial information technology services market is highly competitive
and served by numerous firms, many of which serve only their respective local
markets. The market includes participants in a variety of market segments,
including systems consulting and integration firms,

17
<PAGE>
professional services companies, application software firms, temporary
employment agencies, the professional service groups of computer equipment
companies such as Hewlett-Packard Company, Unisys Corporation and Digital
Equipment Corporation, facilities management and management information systems
("MIS") outsourcing companies, certain "Big Six" accounting firms, and general
management consulting firms. The Company's competitors also include companies
such as Andersen Consulting, Technology Solutions Corporation, Cambridge
Technology Partners, Inc., SHL Systemhouse Inc., Cap Gemini America, Business
System Group, the consulting division of Computer Sciences Corporation, Computer
Task Group, Inc., Analysts International Corp. and Keane, Inc.

Many participants in the information technology consulting and software
solutions market have significantly greater financial, technical and marketing
resources and generate greater revenues than the Company. The Company believes
that the principal competitive factors in the commercial information technology
services industry include responsiveness to client needs, speed of application
software development, quality of service, price, project management capability
and technical expertise. Pricing has its greatest importance as a competitive
factor in the area of professional service staffing. The Company believes that
its ability to compete also depends in part on a number of competitive factors
outside its control, including the ability of its competitors to hire, retain
and motivate skilled technical and management personnel, the ownership by
competitors of software used by potential clients, the price at which others
offer comparable services and the extent of its competitors' responsiveness to
customer needs.

INTELLECTUAL PROPERTY RIGHTS

The Company's success is dependent in part upon its software development
methodology and other proprietary intellectual property rights. The Company
relies upon a combination of trade secret, nondisclosure and other contractual
arrangements, technical measures and copyright and trademark laws to protect its
proprietary rights. The Company holds no patents or registered copyrights. The
Company generally enters into confidentiality agreements with its employees,
consultants, clients and potential clients and limits access to and distribution
of its proprietary information. There can be no assurance that the steps taken
by the Company in this regard will be adequate to deter misappropriation of its
proprietary information or that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights.

The Company's business includes the development of custom software
applications in connection with specific client engagements. Ownership of such
software is generally assigned to the client. In addition, the Company also
develops object-oriented software components that can be reused in software
application development and certain foundation and application software
products, or software "tools," most of which remain the property of the Company.

Although the Company believes that its services and products do not infringe
on the intellectual property rights of others, there can be no assurance that
such a claim will not be asserted against the Company in the future.

FACILITIES

The Company's principal executive offices, the headquarters of HCI, USS, SOS
and CKC, one of its three software/outsourcing facilities are located in two
facilities with an aggregate of approximately 56,000 square-feet and are leased
at an aggregate current annual rent of approximately $800,000 for terms expiring
on December 31, 1999. The Company's remaining 28 offices, including two
additional software facilities, aggregate approximately 83,000 square feet and
are leased at aggregate current annual rents of approximately $1,146,000 for
various terms, with no lease commitment extending past May 15, 2000.

18
<PAGE>
MANAGEMENT

The following table sets forth certain information with respect to the
Company's directors and senior management.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- ---------------------------------------------------
<S> <C> <C>
John J. Cassese 50 Chairman of the Board and President
Thomas J. Berry 70 Director
Wilfred R. Plugge 71 Director
Bernhard Hubert 50 Executive Vice President
Michael Shea, CPA 35 Chief Accounting Officer and Controller
Barry D. Olson 46 Senior Vice President
Robert J. Palmieri 43 Senior Vice President
Terry C. Quinn 38 Senior Vice President
David W. Bialick, CPA 52 Vice President and Treasurer
Charles J. McCourt 51 Vice President
David M. Reingold 47 Vice President--Marketing and Strategic Services
Carl T. Bergeman 57 President, ComputerKnowledge Division
John A. Sisto 60 President, Horizons Consulting, Inc.
Edward D. Williams 62 President, Strategic Outsourcing Services, Inc.
Michael Fitton 37 President, Unified Systems Solutions, Inc.
</TABLE>

John J. Cassese, a co-founder of the Company, has been its Chairman of the
Board and President since 1982.

Thomas J. Berry, a director of the Company since 1989, was Executive Advisor
and Executive Assistant to the Postmaster General, U.S. Postal Services, from
1986 to 1993. Prior thereto, he was a Vice President of AT&T until his
retirement in 1986.

Wilfred R. Plugge, a director of the Company since 1983, retired in 1987 as
Vice President-- International Operations of SRI International, a private
research institute.

Bernhard Hubert became the Company's Executive Vice President in 1995. Prior
thereto, he had been the Company's Senior Vice President and Chief Financial
Officer since 1982.

Michael Shea became the Company's Controller in March 1995. Prior thereto,
he was the Director of Internal Audit, from September 1992 to February 1995, and
the Manager of Financial Reporting, from January 1989 to August 1992, at Booz,
Allen & Hamilton, Inc., a management consulting company.

Barry D. Olson, who became a Senior Vice President of the Company in
November 1994, has been in charge of the Company's Midwest/West Region since
1989. Mr. Olson joined the Company in 1984.

Robert J. Palmieri became a Senior Vice President of the Company in November
1994. He has directed the Company's Eastern Region since 1992, and for a number
of years prior thereto was responsible for other regions of the Company's
business. Mr. Palmieri joined the Company in 1972.

Terry C. Quinn became a Senior Vice President of the Company in charge of
the Central Region in November 1994, a responsibility he had held as Regional
Vice President since 1987. Prior thereto, Mr. Quinn, who joined the Company in
1983, had been a branch manager.

David W. Bialick, CPA has been a Vice President since 1980 and the Treasurer
since 1976. He also served as Controller from 1971 to March 1995.

19
<PAGE>
Charles J. McCourt has been a Regional Vice President in charge of the
Communications Clients Group since 1992. Mr. McCourt held a number of project
manager and marketing positions after joining the Company in 1988.

David M. Reingold became Vice President--Marketing and Strategic Services in
December 1994. He also serves as Vice Chairman of Birla Horizons International.
Mr. Reingold, who joined the Company in 1978, served as the Company's Vice
President responsible for corporate staffing and recruitment from 1983 to 1994.

Carl T. Bergeman has been President of the Company's ComputerKnowledge
Division since 1990. After joining the Company in 1984, he served as a Vice
President of the Company responsible for consulting and professional services in
the Company's then Mid-Atlantic Region.

John A. Sisto has been President of Horizons Consulting, Inc. since its
inception in 1992. He joined the Company in October 1991 and served in a sales
management capacity until 1992. Prior thereto, Mr. Sisto was the Northeast
Regional Manager of IBM's Professional Services Division from 1985 to 1991.

Edward D. Williams, the founder of Strategic Outsourcing Services, Inc.'s
business, has been its President since 1990.

Michael Fitton, the founder of Unified Systems Solutions, Inc., has been its
President since 1992. From 1991 to 1992, Mr. Fitton was a Vice President of
General Logistics, Inc., an information technology services company. Prior
thereto, he was a Director of Technical Services for the Company from 1986 to
1991.

The Board of Directors, currently consisting of three members, intends to
expand its size by two directors, with one of the newly created directorships to
be filled by an outsider. Although no specific date can be given, the Board of
Directors anticipates effecting such expansion during 1995.

20
<PAGE>
SELLING SHAREHOLDER

The following table sets forth certain information with respect to Common
Stock beneficially owned by John J. Cassese, the Chairman of the Board and
President and a co-founder of the Company (the "Selling Shareholder"), as of the
date of this Prospectus and as adjusted to reflect the sale by the Selling
Shareholder of 75,000 shares of Common Stock in the offering. The Selling
Shareholder may sell up to an additional 165,000 shares of Common Stock in
connection with the exercise of the Underwriting over-allotment option. See
"Underwriting." Included in the aggregate shares of Common Stock beneficially
owned by the Selling Shareholder are 193,125 shares that may be acquired upon
the exercise of options granted under the Company's stock option and
appreciation plans that either are currently exercisable or will become
exercisable within 60 days of the date of this Prospectus.

<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OF OWNERSHIP OF
COMMON STOCK COMMON STOCK
PRIOR TO THE OFFERING AFTER THE OFFERING
----------------------- SHARES TO -----------------------
NUMBER BE SOLD IN THE NUMBER
NAME OF SHARES PERCENT(1) OFFERING OF SHARES PERCENT(1)
- ------------------------------------- --------- ---------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
John J. Cassese...................... 1,271,559 13.8% 75,000 1,196,559 11.7%
Chairman of the Board and President
</TABLE>

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

(1) The 193,125 shares subject to options were deemed outstanding for purposes
of this calculation.

DESCRIPTION OF SECURITIES

GENERAL

The Company is authorized to issue 30,000,000 shares of Common Stock and
200,000 shares of preferred stock, $.10 par value (the "Preferred Stock"). As of
May 1, 1995, 8,993,937 shares of Common Stock and no shares of Preferred Stock
were outstanding. In addition, as of such date 4,414,685 shares of Common Stock
were reserved for issuance under the Company's stock option plans, of which
1,072,535 shares were subject to outstanding options.

COMMON STOCK

Each outstanding share of Common Stock entitles the holder to one vote on
all matters requiring a vote of shareholders. Since the Common Stock does not
have cumulative voting rights, the holders of shares having more than 50% of the
voting power, if they choose to do so, may elect all the directors of the
Company and the holders of the remaining shares would not be able to elect any
directors. Under New York law, the approval of the holders of two-thirds of all
outstanding stock is required to effect a merger of the Company or disposition
of all or substantially all of the Company's assets.

Subject to the rights of holders of any series of Preferred Stock that may
be issued in the future, the holders of the Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. See "Dividend Policy." In the event of a voluntary
or involuntary liquidation of the Company, all shareholders are entitled to a
pro rata distribution of the assets of the Company remaining after payment of
claims of creditors and liquidation preferences of any preferred stock.

The transfer agent for the Common Stock is Registrar & Transfer Company, 10
Commerce Drive, Cranford, New Jersey 07016.

21
<PAGE>
PREFERRED STOCK

The Company is authorized to issue 200,000 shares of Preferred Stock in one
or more series, the terms of which may be fixed by the Board of Directors.
Except as described below under "Preferred Stock Purchase Rights," the Board of
Directors has not created any series of Preferred Stock, and it is not possible
to state the actual effect of any issuance of one or more series of preferred
stock upon the rights of holders of Common Stock until the Board of Directors of
the Company determines the rights of the holders of such series of preferred
stock. Such effects might, however, include: (a) reduction of the amount of
funds otherwise available for payment of cash dividends on Common Stock; (b)
restrictions on the payment of cash dividends on Common Stock; (c) dilution of
the voting power of the Common Stock, to the extent that any series of issued
preferred stock has voting rights or is convertible into Common Stock; and (d)
the holders of Common Stock not being entitled to share in the assets of the
Company upon liquidation until satisfaction of liquidation preferences, if any,
in respect of any outstanding series of preferred stock.

PREFERRED STOCK PURCHASE RIGHTS

Pursuant to a Rights Agreement dated as of July 6, 1989, as amended ("Rights
Agreement"), between the Company and Chemical Bank, as Rights Agent, each
outstanding share of Common Stock has attached to it one Right which entitles
the registered holder of such Share to purchase from the Company 0.0030% of a
share of Series A Preferred Stock, par value $.10 per share (the "Series A
Preferred"), at a price of $30.00 per one one-hundredth (1/100) of a share (the
"Purchase Price"), subject to certain adjustments.

The Rights are attached to all certificates representing shares of Common
Stock and no separate Right certificates are distributed nor will be distributed
until the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire beneficial ownership of 20% or more of the outstanding
Common Stock (an "Acquiring Person"), or (ii) 10 business days (or such later
day as may be determined by action of the Board of Directors prior to such time
as any person or group becomes an Acquiring Person) following the commencement
of a tender offer or exchange offer if, upon consummation thereof, any person or
group would be the beneficial owner of 20% or more of the outstanding Common
Stock (the earlier of such dates being called the "Distribution Date"). The date
of announcement of the existence of an Acquiring Person referred to in clause
(i) above is hereinafter referred to as the "Share Acquisition Date."

The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption, exchange or expiration of the Rights), all new
Common Stock certificates issued upon the transfer or new issuance of shares of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights (the "Rights Certificates") will be mailed to holders of record of
the Common Stock on the Distribution Date and, thereafter, such separate Rights
Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date and will expire
at the close of business on July 16, 1999, unless earlier redeemed or exchanged
by the Company as described below.

In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, the Rights Agreement provides that proper
provisions shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, shares of
Common Stock (or, in the Company's option, Common Stock Equivalents, as such
term is defined in the

22
<PAGE>
Rights Agreement) having a value equal to two times the exercise price of the
Right. Upon the occurrence of the event described in the first sentence of this
paragraph, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate (as such terms are defined in the Rights Agreement) of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has a primary purpose or effect the avoidance of the Rights Agreement,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of the Rights Agreement or otherwise.

In the event that, following the earlier of the Distribution Date and the
Share Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
with another person in which the company is the surviving corporation, but in
which the Common Stock are changed or exchanged, or (iii) more than 50% of the
Company's assets or earning power is sold or transferred, the Rights Agreement
provides that proper provision shall be made so that each holder of a Right
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise thereof at the then current
exercise price of the Right, common stock of the acquiring company having a
value equal to two times the exercise price of the Right.

The Purchase Price payable, and the number of shares of Series A Preferred
or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series A
Preferred, (ii) upon the grant to holders of the Series A Preferred of certain
rights, options or warrants to subscribe for shares of Series A Preferred or
convertible securities at less than the current market price of the Series A
Preferred, or (iii) upon the distribution to holders of Series A Preferred of
evidences of indebtedness, shares of Preferred Stock, assets or cash (excluding
a regular semiannual cash dividend) or of subscription rights, options or
warrants (other than those referred to above).

The number of outstanding Rights and the number of shares of Series A
Preferred issuable upon exercise of each Right are also subject to adjustment in
the event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a share of Series A
Preferred, which may, at the election of the Company, be evidenced by depository
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Series A Preferred on the last trading date prior to the
date of exercise.

At any time prior to the Share Acquisition Date, the Board of Directors of
the Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Before the redemption period expires, it may
be extended by the Board. Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, the Rights will terminate
and the only right to the holders of Rights will be to receive the Redemption
Price. At any time after the

23
<PAGE>
time that any person or group of affiliated or associated persons becomes an
Acquiring Person, the Board of Directors of the Company may exchange the Rights
(except Rights which previously have been voided as described above), in whole,
but not in part, at an exchange ratio of one share of Common Stock (or one
Common Stock Equivalent) per Right.

Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends. The terms of the Rights may be amended by the
Company and the Rights Agent, provided, that, following the earlier of the Share
Acquisition Date and the Distribution Date, the amendment does not adversely
affect the interests of holders of Rights (other than an Acquiring Person) and
provided that no amendment shall be made which decreases the Redemption Price.

The Rights have certain anti-takeover effects. The Rights would cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors of the Company, except pursuant
to an offer conditioned on a substantial number of Rights being acquired. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors of the Company at a time when the Rights are
redeemable.

CERTAIN PROVISIONS OF NEW YORK LAW

New York law regulates "business combinations," a term covering a broad
range of transactions, between "resident domestic corporations" (as defined,
which term includes the Company) and an "interested shareholder", which is
defined as any person beneficially owning 20% or more of the outstanding voting
stock of the resident domestic corporation or any affiliate or associate of such
owner. However, if the interested shareholder has owned at least 5% of such
outstanding voting stock at all times from October 30, 1985 to the date on which
the interested shareholder first attains 20% ownership (the "Stock Acquisition
Date"), the proposed business combination is exempt from this statute. Under the
statute, a resident domestic corporation may not engage in any business
combination with any interested shareholder unless (a) if the business
combination is to occur within five years of the date the shareholder acquired
20% or more ownership, either the business combination or the stock acquisition
was previously approved by the board of directors, or (b) the business
combination is approved by a majority of outstanding voting shares (not
including those shares owned by the interested shareholder) which approval may
not be effectively given until approximately five years after the interested
shareholder's Stock Acquisition Date, or (c) the business combination occurs
after five years after the interested shareholder's Stock Acquisition Date and
the consideration paid to the non-interested shareholders meets certain
stringent conditions imposed by the statute. The restrictions imposed by the
statute will not apply to a corporation which amends its by-laws by the
affirmative vote of a majority of its outstanding voting stock (not including
those shares held by an interested shareholder) to "opt out" of the statute;
provided that such amendment will not be effective for 18 months after such vote
and will not apply to any business combination where the Stock Acquisition Date
is on or prior to the date of the amendment. The Company has not opted out of
the statute and the Board of Directors does not anticipate seeking shareholder
approval therefor.

24
<PAGE>
UNDERWRITING

The Underwriters named below, acting through their representatives, Janney
Montgomery Scott Inc. and Robert W. Baird & Co. Incorporated (together, the
"Representatives"), have severally agreed, subject to the terms and conditions
of the underwriting agreement by and among the Company, the Selling Shareholder
and the Underwriters (the "Underwriting Agreement"), to purchase from Company
the number of shares of Common Stock set forth below opposite each such
Underwriter's name, at the offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:

UNDERWRITER NUMBER OF SHARES
- --------------------------------------------------------- ----------------
Janney Montgomery Scott Inc..............................
Robert W. Baird & Co. Incorporated.......................
----------------

Total................................................
----------------
----------------

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will
purchase the total number of shares of Common Stock shown above if any of such
shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose initially to offer the shares of Common Stock directly to the public at
the offering price set forth on the cover page of this Prospectus and to certain
dealers, including the Underwriters, at such price less concession not in excess
of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers.

The Company and the Selling Shareholder have granted the Underwriters an
over-allotment option, exercisable not later than 30 days after the date of this
Prospectus, to purchase up to 165,000 additional shares of Common Stock at the
offering price, less the underwriting discounts and commissions set forth on the
cover page of this Prospectus. The Underwriting Agreement provides that any
shares acquired by the Underwriters pursuant to the over-allotment option will
be purchased from the Selling Shareholder to the extent that the Selling
Shareholder, in his discretion, so elects, and the balance of the shares, if
any, will be purchased from the Company. To the extent that the Underwriters
exercise such option, each Underwriter will be committed, subject to certain
conditions, to purchase a number of the additional shares of Common Stock
proportionate to such Underwriter's initial commitment as indicated in the
preceding table. The over-allotment option may be exercised for fewer than all
of the shares subject to such option. The Underwriters may exercise this option
only to cover over-allotments, if any, made in connection with the sale of the
shares of Common Stock offered hereby. If purchased, the Underwriters will sell
such additional shares on the same terms as those on which the shares are being
offered.

The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against, or to contribute to losses arising out of, certain
liabilities in connection with this offering, including liabilities under the
Securities Act of 1933.

The Company and each of its directors and executive officers have agreed not
to sell, contract to sell or otherwise dispose of any shares of Common Stock
(except, in the case of the Company, pursuant to the exercise of currently
outstanding options granted under the Company's stock option and appreciation
plans) for a period of 180 days from the date of this Prospectus without the
prior written consent of Janney Montgomery Scott Inc. ("JMS").

25
<PAGE>
JMS has provided financial advisory services to the Company, including
advice on capital raising strategies. The Company will pay JMS $75,000 upon
completion of this offering for such services.

The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement that is on file as an exhibit to the Registration
Statement of which this Prospectus is a part.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company and the Selling Shareholder by Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York 10036. Certain legal matters
in connection with this Offering will be passed upon for the Representatives by
Baer Marks & Upham, a partnership including a professional corporation, 805
Third Avenue, New York, New York 10022.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1993
and 1994, and for each of the three years in the period ended December 31, 1994
appearing elsewhere in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, and have been included herein in
reliance upon their authority as experts in accounting and auditing.

26
<PAGE>
COMPUTER HORIZONS CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
Independent Auditors' Report......................................................... F-2

Financial Statements:

Consolidated Balance Sheets at December 31, 1993 and
1994 and March 30, 1995 (unaudited)................................................ F-3

Consolidated Statements of Income for the years ended
December 31, 1992, 1993 and 1994 and for the three
months ended March 30, 1994 and March 30, 1995
(unaudited)........................................................................ F-4

Consolidated Statement of Shareholders' Equity for the
years ended December 31, 1992, 1993 and 1994 and
for the three months ended March 30, 1995
(unaudited)........................................................................ F-5

Consolidated Statements of Cash Flows for the years
ended December 31, 1992, 1993 and 1994 and for the
three months ended March 30, 1994 and March 30, 1995
(unaudited)........................................................................ F-6

Notes to Consolidated Financial Statements........................................... F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Computer Horizons Corp.

We have audited the accompanying consolidated balance sheets of Computer
Horizons Corp. and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Computer
Horizons Corp. and Subsidiaries as of December 31, 1994 and 1993 and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.

As discussed in Note 1, the Company changed its method of accounting for
income taxes in 1993.

We have also audited Schedule II of Computer Horizons Corp. and Subsidiaries
for each of the three years in the period ended December 31, 1994. In our
opinion, this schedule presents fairly, in all material respects, the
information required to be set forth therein.

GRANT THORNTON LLP

Parsippany, New Jersey
January 31, 1995

F-2
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- MARCH 30,
1993 1994 1995
------- ------- ------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 4,370 $ 2,278 $ 234
Accounts receivable, net of allowance for doubtful accounts of
$462,000, $566,000 and $542,000 at December 31, 1993, 1994, and
March 30, 1995, respectively................................... 20,601 30,636 34,525
Deferred income tax benefit...................................... 414 771 516
Other............................................................ 919 1,108 1,380
------- ------- ------------
Total current assets.............................................. 26,304 34,793 36,655
------- ------- ------------
Property and equipment:
Furniture, equipment and other................................... 4,675 5,983 6,268
Less accumulated depreciation.................................... 2,639 3,348 3,577
------- ------- ------------
2,036 2,635 2,691
------- ------- ------------
Other assets--net:
Goodwill (Note 1)................................................ 11,286 11,065 11,337
Other............................................................ 974 657 778
------- ------- ------------
12,260 11,722 12,115
------- ------- ------------
Total Assets...................................................... $40,600 $49,150 $ 51,461
------- ------- ------------
------- ------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable--banks............................................. $ -- $ 3,200 $ 3,950
Current portion of long-term debt (Note 3)....................... 1,556 1,556 1,428
Accrued payroll, payroll taxes and benefits...................... 6,017 7,305 6,441
Accounts payable................................................. 287 560 731
Income taxes payable............................................. 175 880 1,422
Other accrued expenses........................................... 738 808 857
------- ------- ------------
Total current liabilities......................................... 8,773 14,309 14,829
------- ------- ------------
Long-term debt (Note 3)........................................... 5,843 4,288 4,288
------- ------- ------------
Other liabilities................................................. 295 636 621
------- ------- ------------
Commitments (Note 7)..............................................
Shareholders' equity:
Preferred stock, $.10 par; authorized and unissued, 200,000
shares,
including 50,000 Series A......................................
Common stock, $.10 par; authorized, 30,000,000 shares; issued
10,277,514 shares, 10,715,922 shares and 10,758,320 shares at
December 31, 1993, 1994 and March 30, 1995, respectively....... 1,028 1,072 1,076
Additional paid-in capital....................................... 11,664 13,642 13,762
Retained earnings................................................ 24,165 29,851 31,533
------- ------- ------------
36,857 44,565 46,371
------- ------- ------------
Less Shares:
Shares held in treasury, at cost; 1,437,278 shares at December
31, 1993 and 1,786,883 shares at December 31, 1994 and March
30, 1995.......................................................... 10,539 14,648 14,648
Notes receivable, officers..................................... 629 -- --
------- ------- ------------
11,168 14,648 14,648
------- ------- ------------
Total shareholders' equity........................................ 25,689 29,917 31,723
------- ------- ------------
Total Liabilities and Shareholders' Equity........................ $40,600 $49,150 $ 51,461
------- ------- ------------
------- ------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 30,
---------------------------------- ------------------
1992 1993 1994 1994 1995
-------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues (Note 8)........................ $102,206 $121,550 $152,192 $33,171 $43,867
-------- ---------- -------- ------- -------
Costs and expenses:
Direct costs........................... 74,200 87,800 108,189 23,655 31,366
Selling, administrative and general.... 22,651 26,256 32,992 7,281 9,294
Merger and related expenses (Note 2)... 885
-------- ---------- -------- ------- -------
97,736 114,056 141,181 30,936 40,660
-------- ---------- -------- ------- -------
Income from operations................... 4,470 7,494 11,011 2,235 3,207
-------- ---------- -------- ------- -------
Other income (expense):
Interest income........................ 312 235 53 35 37
Interest expense....................... (890) (819) (691) (185) (212)
-------- ---------- -------- ------- -------
(578) (584) (638) (150) (175)
-------- ---------- -------- ------- -------
Income before income taxes............... 3,892 6,910 10,373 2,085 3,032
-------- ---------- -------- ------- -------
Income taxes (Notes 1 and 5):
Current................................ 1,809 3,116 5,044 915 1,095
Deferred............................... 57 90 (357) 56 255
-------- ---------- -------- ------- -------
1,866 3,206 4,687 971 1,350
-------- ---------- -------- ------- -------
Net Income............................... $ 2,026 $ 3,704 $ 5,686 $ 1,114 $ 1,682
-------- ---------- -------- ------- -------
-------- ---------- -------- ------- -------
Earnings per share:
Primary................................ $ .22 $ .37 $ .60 $ .12 $ .18
-------- ---------- -------- ------- -------
-------- ---------- -------- ------- -------
Fully diluted.......................... $ .22 $ .36 $ .60 $ .12 $ .18
-------- ---------- -------- ------- -------
-------- ---------- -------- ------- -------
Weighted average number of shares
outstanding:
Primary................................ 9,083 9,996 9,506 9,520 9,502
-------- ---------- -------- ------- -------
-------- ---------- -------- ------- -------
Fully diluted.......................... 9,230 10,331 9,534 9,558 9,562
-------- ---------- -------- ------- -------
-------- ---------- -------- ------- -------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 AND
THE THREE MONTHS ENDED MARCH 30, 1995

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK NOTES
------------------ PAID-IN RETAINED ------------------ RECEIVABLE,
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT OFFICERS
---------- ------ ---------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>

Balance, January 1, 1992........ 3,378,274 $ 338 $ 8,167 $ 18,435 837,578 $ 4,621 $ 608
Shares issued in connection with
acquisition..................... 330,000 33 3,019
Stock options exercised......... 12,100 1 87 21
Net income for the year......... 2,026
---------- ------ ---------- -------- --------- ------- -----
Balance, December 31, 1992...... 3,720,374 372 11,273 20,461 837,578 4,621 629

Three-for-two stock split
declared March 1993........... 1,441,398 144 (144)
Stock options exercised......... 204,500 21 1,026
Purchases of treasury stock .... 599,700 5,918
Net income for the year......... 3,704
---------- ------ ---------- -------- --------- ------- -----
Balance, December 31, 1993...... 5,366,272 537 12,155 24,165 1,437,278 10,539 629

Three-for-two stock split
declared February 1994........ 1,964,497 196 (196)
Stock options exercised......... 408,807 41 1,981
Purchases of treasury stock .... 349,605 4,109
Repayment of notes receivable,
officers........................ (629)
Net income for the year......... 5,686
---------- ------ ---------- -------- --------- ------- -----
Balance, December 31, 1994...... 7,739,576 774 13,940 29,851 1,786,883 14,648 --

Three-for-two stock split
declared April 1995
(unaudited)..................... 2,976,346 298 (298)
Stock options exercised
(unaudited)..................... 42,398 4 120
Net income for the period
(unaudited)..................... 1,682
---------- ------ ---------- -------- --------- ------- -----
Balance, March 30, 1995
(unaudited)..................... 10,758,320 $1,076 $ 13,762 $ 31,533 1,786,883 $14,648 $ --
---------- ------ ---------- -------- --------- ------- -----
---------- ------ ---------- -------- --------- ------- -----
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 30,
--------------------------- -----------------
1992 1993 1994 1994 1995
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income......................................... $ 2,026 $ 3,704 $ 5,686 $ 1,114 $ 1,682
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred taxes................................... 57 90 (357) 56 255
Depreciation..................................... 575 693 754 174 229
Amortization of intangibles...................... 401 521 568 114 117
Changes in assets and liabilities, net of
acquisitions:
(Increase) decrease in accounts receivable....... 1,322 (3,564) (9,770) (6,081) (3,889)
(Increase) decrease in refundable income taxes... 611 321
(Increase) decrease in other current assets...... (339) 49 (433) (229) (272)
Increase (decrease) in accrued payroll, payroll
taxes and benefits............................. (224) 2,088 1,287 774 (864)
Increase (decrease) in accounts payable.......... 476 (448) 273 602 171
Increase (decrease) in income taxes payable...... 161 705 750 542
Increase (decrease) in other accrued expenses.... (697) (267) 11 353 (100)
Increase (decrease) in other liabilities......... 341 (15)
------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities........................................... 4,208 3,348 (935) (2,373) (2,144)
------- ------- ------- ------- -------
Cash flows from investing activities
Purchases of furniture and equipment............... (477) (955) (1,353) (436) (285)
Acquisitions, net.................................. (383) (388) (245) (240)
(Increase) decrease in other assets................ (185) (127) 254 11 (121)
Loans to officers, net............................. (21) 629
------- ------- ------- ------- -------
Net cash used in investing activities.......... (1,066) (1,470) (715) (425) (646)
------- ------- ------- ------- -------
Cash flows from financing activities
Increase in notes payable--banks, net.............. 3,200 200 750
Payments of long-term debt......................... (1,853) (1,427) (1,555) (127) (128)
Stock options exercised............................ 88 1,046 2,022 119 124
Purchases of treasury stock........................ (5,918) (4,109)
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities........................................... (1,765) (6,299) (442) 192 746
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents.......................................... 1,377 (4,421) (2,092) (2,606) (2,044)
Cash and cash equivalents at beginning of year or
period............................................... 7,414 8,791 4,370 4,370 2,278
------- ------- ------- ------- -------
Cash and cash equivalents at end of year or period... $ 8,791 $ 4,370 $ 2,278 $ 1,764 $ 234
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- ------------------------------------------------------------------------------------------------------
Cash paid for:
Interest........................................... $ 918 $ 828 $ 713 $ 8 $ 46
Income taxes....................................... 1,704 2,621 4,269 165 674
- ------------------------------------------------------------------------------------------------------
In 1992, the Company acquired all of the outstanding
capital stock of Worldwide Computer Services Inc.
in exchange for approximately 742,500 shares of the
Company's common stock. In connection with the
acquisition, liabilities were assumed as follows:
Fair value of assets acquired.................... $ 5,092
Stock issued and acquisition costs............... 3,533
-------
Liabilities assumed.............................. $ 1,559
-------
-------
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS AND INFORMATION APPLICABLE TO MARCH 30, 1994 AND 1995 ARE UNAUDITED)

NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Computer
Horizons Corp. and its wholly-owned subsidiaries (the "Company"). All material
intercompany accounts and transactions have been eliminated.

REVENUE RECOGNITION

The Company recognizes revenues as professional services are performed.

RECRUITMENT COSTS

Recruitment costs are charged to operations as incurred.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include highly liquid debt instruments with a
maturity of three months or less and consist of the following at:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 30,
----------------
1993 1994 1995
------ ------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Cash............................................ $1,435 $2,121 $ (96)
Commercial paper................................ 1,998
Repurchase agreements........................... 900 119 310
Certificates of deposit......................... 37 38 20
------ ------ -----
$4,370 $2,278 $ 234
------ ------ -----
------ ------ -----
</TABLE>

CONCENTRATIONS OF CREDIT RISK

Financial Accounting Standards Board Statement No. 105 ("FASB No. 105")
requires the disclosure of significant concentrations of credit risk, regardless
of the degree of such risk. Financial instruments, as defined by FASB No. 105,
which potentially subject the Company to concentrations of credit risk, consist
principally of cash and cash equivalents and trade accounts receivable. The
Company invests the majority of its excess cash in commercial paper, repurchase
agreements and certificates of deposit of high credit, high quality financial
institutions or companies, with certain limitations as to the amount that can be
invested in any one entity.

The Company maintains its cash balances in principally two financial
institutions located in New Jersey. These balances are insured by the Federal
Deposit Insurance Corporation up to $100,000 for each entity at each
institution. At December 31, 1994 and March 30, 1995, uninsured amounts held at
these financial institutions total approximately $2,010,000 and $908,000,
respectively.

F-7
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 (CONTINUED)
The Company's customers are generally very large, Fortune 500 companies in
many industries and with wide geographic dispersion. The Company's two largest
customers account for approximately 12% of accounts receivable at December 31,
1994. Two customers accounted for approximately 18% of accounts receivable at
March 30, 1995. The Company establishes an allowance for doubtful accounts based
upon factors surrounding the credit risk of specific customers, historical
trends, and other information.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.

GOODWILL

Goodwill, the cost in excess of the net assets of acquired businesses, is
being amortized by the straight-line method over thirty years. Accumulated
amortization is $2,363,000 and $2,828,000 at December 31, 1993 and 1994,
respectively, and $2,945,000 at March 30, 1995. On an ongoing basis, management
reviews the valuation and amortization of goodwill. As part of this review, the
Company estimates the value and future benefits of net income generated to
determine that no impairment has occurred.

INCOME TAXES

Deferred income taxes resulted primarily from differences between income
reported for financial and income tax purposes. These temporary differences
result primarily from restructuring charges, allowance for doubtful accounts and
other accrued expenses which are deductible only when paid.

Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for
Income Taxes." This statement amends the provisions of SFAS No. 96, "Accounting
for Income Taxes," which the Company had previously adopted. As of January 1,
1993, the effect of this change was not significant to the consolidated
financial statements.

EARNINGS PER SHARE

Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding. Primary earnings per share take into
account the shares that may be issued upon exercise of stock options, reduced by
the shares that may be repurchased with the funds received from the exercise,
based on the average price during the year. Fully diluted earnings per share use
the higher of the period-end price or the average price.

UNAUDITED INTERIM FINANCIAL DATA

The accompanying unaudited financial statements as of March 30, 1995 and
1994 have been prepared in accordance with generally accepted accounting
principles for interim financial information in accordance with Article 10 of
Regulation S-X. In the opinion of the management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been

F-8
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 (CONTINUED)
included. The results for interim periods are not necessarily indicative of
results to be expected for the year.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior year's balance sheet
to conform to the 1994 presentation.

NOTE 2-ACQUISITIONS

In June 1994, the Company acquired the net assets of Strategic Outsourcing
Services, Inc. ("SOS"), a New Jersey-based provider of data processing services,
for approximately $250,000. In addition, the acquisition agreement also provides
for contingent consideration based on the future performance of SOS, through
1998. The acquisition was accounted for as a purchase.

The results of operations of SOS are included in the consolidated financial
statements from June 1, 1994. The consolidated results of operations in 1994
would not be materially different had the acquisition taken place at the
beginning of the year.

In January 1993, the Company acquired Unified Systems Solutions, Inc.
("USS"), a New Jersey-based provider of systems and network integration
services, for approximately $750,000. The acquisition agreement also provides
for contingent consideration based on the future performance of USS through
1996. The acquisition was accounted for as a purchase. The excess of cash over
the fair value of assets acquired, totalling approximately $509,000, was
recorded as goodwill. The Company recorded contingent consideration, totalling
approximately $245,000 in 1994 and $389,000 in 1995, including $149,000 which
was paid on May 1, 1995, as additional goodwill, with certain additional amounts
payable subject to future performance.

The results of operations of USS are included in the consolidated financial
statements from January 15, 1993. The consolidated results of operations in 1993
would not be materially different had the acquisition taken place at the
beginning of the year.

In August 1992, the Company acquired all of the outstanding capital stock of
Worldwide Computer Services Inc. ("WCS"), a New Jersey-based information
management services company, in exchange for approximately 1,113,750 shares of
the Company's common stock (approximately $3,533,000, including direct
acquisition expenses). The acquisition was accounted for as a purchase. The fair
value of the assets acquired approximated $5,092,000 and the liabilities assumed
approximated $1,559,000.

The results of operations of WCS are included in the consolidated financial
statements from August 4, 1992. Subsequent to the merger, the Company assessed
and integrated the WCS operations, resulting in a charge to earnings of $885,000
in 1992 for redundant facility and personnel expenses. All costs have been
incurred and charged to the provision by December 31, 1993.

F-9
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3-LONG-TERM DEBT AND LINES OF CREDIT

Long-term debt consists of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 30,
1993 1994 1995
------ ------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
9.55% senior notes.............................. $7,144 $5,716 $ 5,716
Notes payable at prime.......................... 255 128
------ ------ -----------
7,399 5,844 5,716
Less current maturities......................... 1,556 1,556 1,428
------ ------ -----------
$5,843 $4,288 $ 4,288
------ ------ -----------
------ ------ -----------
</TABLE>

In 1988, the Company issued two senior notes aggregating $10,000,000 bearing
interest at 9.55%, payable semiannually. The notes are payable in annual
installments of $1,428,000 from April 15, 1992 through 1997 with a final payment
of $1,432,000 due April 15, 1998 and are subject to the provisions of the loan
agreement, including, among other things, restrictions on additional borrowings,
prepayments, dividends and stock purchases (which were waived in connection with
certain purchases of treasury stock), and maintenance of a minimum net worth of
$13,500,000.

The notes payable at prime consist of promissory notes to four individuals
payable on January 15, 1995. Such notes arose in connection with the USS
acquisition.

Long-term debt matures as follows at:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 30,
1994 1995
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
1995................................................ $1,556 $ 1,428
1996................................................ 1,428 1,428
1997................................................ 1,428 1,428
1998................................................ 1,432 1,432
------------ -----------
$5,844 $ 5,716
------------ -----------
------------ -----------
</TABLE>

At December 31, 1994 and March 30, 1995, the Company had two bank lines of
credit totalling $12,000,000 at rates below the banks' prime lending rates, of
which approximately $3,200,000 and $3,950,000, respectively, are outstanding.

The maximum amount outstanding during the year was $4,900,000. The average
debt outstanding and weighted average interest rate under these lines were
$1,067,000 and 6.71%, respectively.

F-10
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4-SHAREHOLDERS' EQUITY

AUTHORIZED SHARES

On June 15, 1994, the Company approved an amendment to the Company's
Certificate of Incorporation increasing the authorized number of shares of the
Company's common stock from 10,000,000 to 30,000,000.

STOCK SPLITS

On February 17, 1994, the Board of Directors declared a three-for-two common
stock split in the form of a 50% stock distribution, payable on March 22, 1994,
to shareholders of record on March 1, 1994. On March 10, 1993, the Board of
Directors declared a three-for-two common stock split in the form of a 50% stock
distribution, payable on April 13, 1993, to shareholders of record on March 23,
1993. On April 25, 1995, the Board of Directors declared a three-for-two common
stock split in the form of a 50% stock distribution, payable on May 30, 1995, to
shareholders of record on May 9, 1995. Amounts equal to the $.10 par value of
the common shares distributed have been retroactively transferred from
additional paid-in capital to common stock. All references in the financial
statements with regard to number of shares of common stock, except for treasury
stock, common stock prices and per share amounts have been restated to reflect
the stock splits.

REPURCHASES OF STOCK

In 1994, the Company repurchased 350,000 shares of its common stock from
three officers of the Company for approximately $4,109,000. The repurchase of
240,000 shares for $2,792,000 was related to the retirement of the Vice Chairman
and Executive Vice President (Note 7). The remaining 110,000 shares were
repurchased for $1,317,000 from two other active officers. Approximately
$824,000 of the repurchase amount was used by these officers to repay amounts
they owed the Company, $629,000 in note repayments and $195,000 in accrued
interest.

In 1993, the Company repurchased 597,000 shares of its common stock from
Compagnie Generale d'Informatique for approximately $5,895,000, including
expenses.

STOCK OPTIONS AND NOTES RECEIVABLE, OFFICERS

In 1994, the Company adopted a stock option plan which provides for the
granting, to officers and key employees, of options for the purchase of a
maximum of 3,375,000 shares of common stock and stock appreciation rights
(SARs). The exercise price per share on all options and/or SARs granted may not
be less than the fair value at the date of the option grant. Options and SARs
generally expire five years from the date of grant and become exercisable in
specified amounts during the life of the respective options. No SARs have been
granted as of December 31, 1994. This plan, which replaces the Company's 1985
Plan, will terminate on June 15, 2004.

F-11
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 (CONTINUED)
Following is summary of option transactions for the:
<TABLE>
<CAPTION>
THREE
MONTHS
YEARS ENDED DECEMBER 31, ENDED
--------------------------- MARCH 30,
1992 1993 1994 1995
----- ----- ----- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Shares under option at beginning of period
($2.11--$9.17).................................... 1,202 1,323 1,184 896
Granted ($2.22--$10.00)............................. 266 531 326 147
Exercised ($2.11--$6.33)............................ (41) (459) (614) (42)
Cancelled ($2.11--$3.11)............................ (104) (211)
----- ----- ----- -----
Shares under option at end of period
($2.11--$10.00)..................................... 1,323 1,184 896 1,001
----- ----- ----- -----
----- ----- ----- -----
Shares available for option......................... 593 273 3,167 3,019
----- ----- ----- -----
----- ----- ----- -----
Shares exercisable.................................. 615 644 443 615
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

Certain officers have the right to borrow from the Company against the
exercise price of options exercised. These borrowings, exclusive of accrued
interest, are shown as a reduction in shareholders' equity in 1993 and 1992.
Such borrowings were repaid in 1994 in connection with the repurchase of common
stock from these officers.

In 1994, the Company amended the Directors' Stock Option Plan (i) increasing
the maximum number of shares of common stock that may be acquired pursuant to
the exercise of options granted under the Plan from 168,750 to 375,000 and (ii)
providing that each director of the Company who is not an employee of the
Company shall receive up to five annual grants to purchase 4,500 shares of its
common stock at its then current fair market value. The plan expires on March 4,
2001. There were 85,500 options outstanding at December 31, 1994.

In 1993, the Company issued warrants to purchase 10,125 shares of common
stock as part of an agreement with an outside business consulting firm. The
exercise price is the fair value at the date of grant.

SHAREHOLDER RIGHTS PLAN

In July 1989, the Board of Directors declared a dividend distribution of
eight preferred stock purchase rights on each twenty-seven outstanding shares of
common stock of the Company. The rights were amended on February 13, 1990 and
August 10, 1994. Each right will, under certain circumstances, entitle the
holder to buy one one-hundredth ( 1/100) of a share of Series A preferred stock
at an exercise price of $30.00 per one one-hundredth ( 1/100) share, subject to
adjustment. Each one one-hundredth ( 1/100) of a share of Series A preferred
stock has voting, dividend and liquidation rights and preferences substantively
equivalent to one share of common stock.

The rights will be exercisable and transferable separately from the common
stock only if a person or group acquires 15%, amended to 20% in 1994, or more,
subject to certain exceptions, of the Company's outstanding common stock or
announces a tender offer that would result in the ownership of 20% or more of
the common stock. If a person becomes the owner of at least 20% of the Company's

F-12
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 (CONTINUED)
common shares (an "Acquiring Person"), each holder of a right other than the
Acquiring Person is entitled, upon payment of the then current exercise price
per right (the "Exercise Price"), to receive shares of common stock (or common
stock equivalents) having a market value equal to twice the Exercise Price.

Additionally, if the Company subsequently engages in a merger or other
business combination with the Acquiring Person in which the Company is not the
surviving corporation, or in which the outstanding shares of the Company's
common stock are changed or exchanged, or if more than 50% of the Company's
assets or earning power is sold or transferred, a right would entitle a Computer
Horizon Corp. shareholder, other than the Acquiring Person and its affiliates,
to purchase upon payment of the Exercise Price, shares of the Acquiring Person
having a market value of twice the Exercise Price. Prior to a person becoming an
Acquiring Person, the rights may be redeemed at a redemption price of one cent
per right, subject to adjustment. The rights are subject to amendment by the
Board. No shareholder rights have become exercisable. The rights will expire on
July 16, 1999.

NOTE 5-INCOME TAXES

The provision for income taxes consists of the following for the:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
YEARS ENDED DECEMBER 31, 30,
-------------------------- --------------
1992 1993 1994 1994 1995
------ ------ ------ ---- ------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current
Federal.......................................... $1,275 $2,191 $3,518 $654 $ 782
State............................................ 534 925 1,399 261 313
Deferred
Federal.......................................... 33 63 (255) 40 182
State............................................ 24 27 (102) 16 73
------ ------ ------ ---- ------
1,866 3,206 4,560 971 1,350
Tax benefit from exercise of stock options......... 127 -- --
------ ------ ------ ---- ------
$1,866 $3,206 $4,687 $971 $1,350
------ ------ ------ ---- ------
------ ------ ------ ---- ------
</TABLE>

F-13
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 (CONTINUED)
Deferred tax assets and liabilities consist of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
------------ MARCH 30,
1993 1994 1995
---- ---- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets
Accrued insurance................................ $183 $284 $
Accrued payroll and benefits..................... 175 379 381
Deferred lease obligations....................... 124 124 118
Allowance for doubtful accounts.................. 73 103 113
Other............................................ 36 70 83
---- ---- -----
591 960 695
---- ---- -----
Deferred tax liabilities
Depreciation..................................... 145 187 177
Other............................................ 32 2 2
---- ---- -----
177 189 179
---- ---- -----
Deferred tax assets, net........................... $414 $771 $ 516
---- ---- -----
---- ---- -----
</TABLE>

Deferred taxes (benefit) for the year ended December 31, 1992, applicable to
differences between assets and liabilities for financial statement and tax
return purposes, were provided as follows:

1992
--------------
(IN THOUSANDS)
Accrued payroll and benefits................................... $(52)
Restructuring charges.......................................... 171
Allowance for doubtful accounts................................ --
Accrued insurance.............................................. (54)
Other.......................................................... (8)
-----
$ 57
-----
-----

A reconciliation of income taxes as reflected in the accompanying statements
with the statutory Federal income tax rate of 34% is as follows for the:
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 30,
-------------------------- --------------
1992 1993 1994 1994 1995
------ ------ ------ ---- ------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statutory Federal income taxes..... $1,323 $2,349 $3,527 $709 $1,031
State and local income taxes, net
of Federal tax benefit........... 311 632 858 165 254
Amortization of goodwill........... 163 155 158 39 39
Other, net......................... 69 70 144 58 26
------ ------ ------ ---- ------
$1,866 $3,206 $4,687 $971 $1,350
------ ------ ------ ---- ------
------ ------ ------ ---- ------
</TABLE>

F-14
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6-SAVINGS PLAN

The Company maintains a defined contribution savings plan covering eligible
employees. The Company makes contributions up to a specific percentage of
participants' contributions. The Company contributed approximately $175,000,
$192,000 and $204,000 in 1992, 1993 and 1994, respectively, and $48,000 and
$52,000 for the three months ended March 30, 1994 and 1995, respectively.

NOTE 7-COMMITMENTS

LEASES

The Company leases office space under long-term operating leases expiring
through 2000. Approximate minimum rental commitments were as follows at:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 MARCH 30, 1995
----------------- --------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
YEAR ENDING
1995...................................... $ 1,676 $1,433
1996...................................... 1,441 1,705
1997...................................... 1,241 1,505
1998...................................... 1,067 1,331
1999...................................... 729 993
Thereafter................................ 33 33
------- -------
$ 6,187 $7,000
------- -------
------- -------
</TABLE>

Office rentals are subject to escalations based on increases in real estate
taxes and operating expenses. Aggregate rent expense for operating leases
approximated $1,436,000, $1,595,000 and $1,796,000 for the years ended December
31, 1992, 1993 and 1994, respectively, and $449,000 and $419,000 for the three
months ended March 30, 1994 and 1995, respectively.

OTHER

In October 1994, the former Vice Chairman and Executive Vice President of
the Company announced his resignation effective February 15, 1995 to pursue
personal interests. The Company recorded approximately $400,000 of deferred
compensation in 1994 to be paid over the next several years as a result of this
resignation. The Company also agreed to retain this former officer as a
consultant for a three-year period for approximately $75,000 each year and
entered into a noncompetition agreement for that period. In connection with this
resignation, the Company repurchased approximately 240,000 shares of common
stock of the Company from this former officer for approximately $2,792,000.

NOTE 8-BUSINESS AND MAJOR CLIENTS

The Company offers to its clients a broad range of business and technical
data processing platforms that encompass the entire life cycle of contract
performance, utilizing its vast reserves of knowledge and experience in
leading-edge methodologies, tools and technologies. The Company helps its
clients with advanced technology solutions to complex problems in the areas of
outsourcing, client/server migration

F-15
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 (CONTINUED)
and development, network integration and management, data center and operations'
management, and knowledge transfer and training.

The Company's two largest clients accounted for 9% and 6%, respectively, of
the Company's consolidated revenues in 1994, 13% and 8%, respectively, in 1993,
and 11% and 15%, respectively, in 1992.

NOTE 9-SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

For the years ended December 31, 1993 and 1994, selected quarterly financial
data is as follows:
<TABLE>
<CAPTION>
QUARTERS
-----------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1993
Revenues........................... $29,413 $29,771 $ 29,498 $32,868
Income from operations............. 1,727 1,963 1,709 2,095
Net income......................... 858 988 829 1,029

Earnings per share................. $ .9 $ .10 $ .8 $ .11

1994
Revenues........................... $33,171 $36,278 $ 39,136 $43,607
Income from operations............. 2,235 2,798 2,856 3,122
Net income......................... 1,114 1,459 1,493 1,620

Earnings per share................. $ .12 $ .15 $ .16 $ .17
</TABLE>

NOTE 10-SUBSEQUENT EVENT

The Company has formed a software development and services joint venture
with a large multinational conglomerate located in India. The joint venture will
be headquartered in New Delhi, India and will have operations in the United
States and the United Kingdom.

Operations are anticipated to commence on or about April 1, 1995. The
Company is committed to invest $500,000 in this joint venture in the near
future. Such payment was made on April 4, 1995.

F-16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

-------------------
TABLE OF CONTENTS

PAGE
----
Available Information................. 2
Documents Incorporated By Reference... 2
Prospectus Summary.................... 3
Use of Proceeds....................... 6
Price Range of Common Stock........... 6
Dividend Policy....................... 7
Capitalization........................ 7
Selected Consolidated Financial and
Operating Data........................ 8
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 9
Business.............................. 12
Management............................ 19
Selling Shareholder................... 21
Description of Securities............. 21
Underwriting.......................... 25
Legal Matters......................... 26
Experts............................... 26
Consolidated Financial Statements..... F-1

1,100,000 SHARES

COMPUTER HORIZONS CORP.

COMMON STOCK

[LOGO]

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

PROSPECTUS

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

JANNEY MONTGOMERY SCOTT INC.

ROBERT W. BAIRD & CO.
INCORPORATED

, 1995

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