ABR INFORMATION SERVICES INC, 10-K, 1997-10-28

ABR INFORMATION SERVICES INC
10-K, 1997-10-28
COMPUTER PROCESSING & DATA PREPARATION

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<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------

FORM 10-K
---------

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1997
---------------------

Commission File Number 0-24132

ABR INFORMATION SERVICES, INC.
(Exact name of registrant as specified in its charter)

FLORIDA 59-3228107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

34125 U.S. HIGHWAY 19 NORTH
PALM HARBOR, FLORIDA
(Address of registrant's principal executive offices)

34684-2116
(Zip Code)

(813) 785-2819
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

TITLE OF EACH CLASS
-------------------
Voting Common Stock $.0l Par Value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of October 17, 1997, there were outstanding 27,385,734 shares of
Common Stock. The aggregate market value of the voting stock held by
non-affiliates of the registrant based on the last sale price reported on the
Nasdaq National Market as of October 17, 1997 was $638,158,282.

DOCUMENTS INCORPORATED BY REFERENCE:

<TABLE>
<CAPTION>
DOCUMENTS FORM 10-K REFERENCE
- --------- -------------------
<S> <C>
1997 Annual Report to Shareholders......................................................Part II Items 5, 6, 7 and 8
Proxy Statement dated November 6, 1997.........................................................Part III Items 10-12
</TABLE>

<PAGE> 2

ABR INFORMATION SERVICES, INC.

FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I
Item 1 Business.................................................................................... 1
Item 2 Properties..................................................................................11
Item 3 Legal Proceedings...........................................................................11
Item 4 Submission of Matters to a Vote of Security Holders.........................................11

PART II
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters.......................12
Item 6 Selected Financial Data.....................................................................12
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations...............................................................................12
Item 8 Financial Statements and Supplementary Data.................................................12
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...............................................................................12

PART III
Item 10 Directors and Executive Officers of the Registrant..........................................13
Item 11 Executive Compensation......................................................................13
Item 12 Security Ownership of Certain Beneficial Owners and Management..............................13
Item 13 Certain Relationships and Related Transactions..............................................13

PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................13
</TABLE>

<PAGE> 3

PART I

ITEM 1 -- BUSINESS

ABR Information Services, Inc. (the "Company") is a leading provider of
comprehensive benefits administration, compliance and information services to
employers seeking to outsource their benefits administration functions. The
Company believes it is the leading provider of COBRA (the "Consolidated Omnibus
Budget Reconciliation Act") compliance services. COBRA is a federally mandated
law related to the portability of employee group health insurance. Additionally,
the Company provides compliance services related to the federally mandated
Health Insurance Portability and Accountability Act of 1996 ("HIPAA").

The Company also provides benefits administration services with respect
to benefits provided to retirees and inactive employees, including retiree
healthcare, disability, surviving dependent, family leave and severance
benefits. Additionally, the Company provides benefits administration services
with respect to benefits provided to active employees, including enrollment and
eligibility verification, Qualified Domestic Relations Order ("QDRO")
administration, 401(k) administration services, Flexible Spending Account
("FSA") administration and pension services. All services are offered on either
an "a la carte" or a total outsourcing basis, allowing customers to outsource
certain benefits administration tasks which they find too costly or burdensome
to perform in-house, or to outsource the entire benefits administration
function.

TREND TOWARD OUTSOURCING

Since the late 1980s, many U.S. companies, in order to focus on core
competencies and revenue-producing activities, have sought to outsource to
specialized vendors certain functions or services that were historically
performed in-house. In addition, the trend in recent legislation and healthcare
reform proposals has been to provide employees with the ability to continue
their healthcare coverage after a change in employment status and to take
certain benefits with them to new employers, a concept known as "portability".
Based on the following factors, the Company believes that benefits
administration and compliance is often too complicated, costly and
administratively burdensome to be performed in-house:

- Extensive staff training and associated costs required to
monitor complex and frequently changing government
regulations.

- Substantial exposure to liability for noncompliance with
federal laws concerning benefits, such as COBRA and HIPAA.

- Employer awareness of benefit plans, including the concern
for adverse effects on employee relations and potential
litigation due to inadequate benefits administration.

- Cost of investment in specialized data processing systems
requiring periodic maintenance, updates and reinvestment.

- Disproportionate expenditures of management time and
attention to a function that is not directly related to the
generation of revenues.

The Company believes that its market position, proprietary software and
compliance systems and experience in benefits administration should enable the
Company to capitalize on trends favoring portability and outsourcing. The
Company believes it is strategically positioned to capitalize on the benefits
administration outsourcing trend because of its proven ability to deliver (i)
economies of location by performing administrative functions in low-cost areas,
(ii) economies of scale by spreading fixed costs over a large number of
customers, and (iii) economies of technology by utilizing its sophisticated
information systems and proprietary databases.

<PAGE> 4

STRATEGY

The Company's objective is to strengthen its market position by
becoming the leading provider of benefits administration services relating to
portability compliance, retiree/inactive employee benefits and benefits provided
to active employees. To achieve this objective, the Company has developed a
strategy that includes the following key components:

- Increase Portability Compliance Market Share. This market
consists of approximately 650,000 employers that are required
under federal law to comply with COBRA and 5.5 million
employers required to comply with HIPAA. The Company believes
that, based on the number of current and former employees
covered by its customers' healthcare benefit plans, it is the
largest COBRA compliance service provider in the United
States. The Company provides portability compliance services
for more than 25,000 employers, which represents approximately
4% of the potential COBRA compliance market. The Company
intends to increase its market share by expanding its
marketing efforts and geographic presence, and by marketing
its services directly through its sales force and indirectly
through the Company's agreements with insurance companies and
other distribution channels.

- Increase Retiree/Inactive Employee Benefits Administration
Market Share. In response to demand from customers for
services beyond portability compliance, the Company provides
administration services to large employers for benefits
provided to their retirees and inactive employees. The Company
is marketing these services to its current customer base as
well as to other prospects. The Company believes that this
market is significant due to the large number of retirees and
inactive employees who make periodic payments for healthcare
and other benefits coverage, and the complexity and cost of
efficiently administering such arrangements.

- Expand Active Employee Benefits Administration Services. The
Company has invested significant resources in proprietary
information systems. The Company's databases include customer
healthcare benefit plan information, such as premium rates,
healthcare provider data and other employee and plan data that
may be readily stored, sorted and manipulated to support
additional benefit services. This data can be used to provide
other services for active employees (e.g., enrollment and
eligibility, QDRO administration, FSA plan administration, and
pension services), thereby leveraging the Company's investment
in proprietary information systems and databases. The
Company's active employee benefits administration services are
offered on either an "a la carte" basis or a total outsourcing
basis. This flexibility allows customers to outsource certain
benefits administration tasks that they find too costly or
burdensome, or to outsource the total benefits administration
function. The Company believes that customers who outsource
certain benefits administration tasks will take advantage of
the flexibility of the "a la carte" process by outsourcing an
increasing number of tasks. The Company is marketing these
services to its current customer base as well as to other
prospects.

- Acquire Complementary Businesses. The Company intends to
acquire complementary businesses in order to increase its
market share, expand its services and expand its geographic
presence. These acquisitions will permit the Company to
cross-sell additional services to its existing customer base
and gain new customers and geographic bases to increase market
share.

- Generate Recurring Revenue. The Company's services are
structured to generate revenue based on events which occur in
the normal course of a customer's business and in a relatively
frequent manner. Furthermore, the Company develops extensive
systems and databases that are not easily duplicated,
resulting in favorable customer retention. Due to the
frequency of events that generate revenues, the Company's high
rate of customer retention, and the monthly billing
arrangements with capitation customers, the Company generates
a high level of recurring revenue.

<PAGE> 5

ACQUISITIONS

The Company intends to acquire complementary businesses in order to
increase its market share, expand its services and expand its geographic
presence. These acquisitions will permit the Company to cross-sell additional
services to its existing customer base and gain new customers to increase market
share. The Company believes that opportunities exist in the benefits
administration sector which would enable the Company to acquire complementary
businesses.

Since December 1995, the Company has made three acquisitions of
benefits administration companies, one of which was completed by a pooling of
interest. These acquisitions have enabled the Company to increase the range of
benefits administration services it provides, expand its geographic presence and
decrease the Company's reliance on revenues from portability compliance
services. During fiscal 1996 and fiscal 1997, the Company derived approximately
69.9% and 65.6%, respectively, of its revenues from portability compliance
services. Recent acquisitions are discussed below:

New Jersey Acquisition. On December 15, 1995, the Company acquired all
of the outstanding capital stock of Bullock Associates, Inc., ("Bullock") for
$12.5 million, with an additional $2.0 million payable upon the attainment of
certain revenue requirements during 1996 and 1997. As of July 1997, $863,053 of
this additional amount was paid for the attainment of these revenue
requirements, leaving a balance of $1,136,947 that could be paid in fiscal 1998.
Bullock is located in Princeton, New Jersey and provides compliance
administration, retiree insurance administration, insurance continuation billing
and collection, pension benefits administration, QDRO administration and
educational benefit administration services, as well as administration services
for other employee benefits programs such as employee discount plans, adoption
programs, program rebates and emergency loans. For the year ended December 31,
1995, Bullock had revenues of $9.3 million. Assuming the New Jersey Acquisition
had occurred on August 1, 1995, the Company's revenues and net income would have
been $34.7 million and $6.0 million, respectively, for the year ended July 31,
1996. As part of the New Jersey Acquisition, the Company entered into a
four-year contract with Bullock's largest customer, which accounted for
approximately 89.0% and 76.1% of Bullock's revenues in fiscal years 1994 and
1995, respectively. The New Jersey Acquisition expanded the Company's market
share in the compliance market, provided it with a geographic presence in the
northeast and expanded the number of active employee benefits administration
services it provides.

California Acquisition. Effective February 1, 1996, the Company
acquired all of the outstanding capital stock of Total Cobra Services ("TCS")
for 265,424 shares of the Company's Common Stock, subject to possible
adjustment. TCS is located in Irvine, California and provides COBRA
administration and retiree billing services. For the fiscal year ended December
31, 1995, TCS had revenues of less than $2.0 million. The California Acquisition
has increased the Company's market share in the COBRA compliance market and
enhanced its ability to market its services to clients on the west coast of the
United States.

Virginia Acquisition. On June 28, 1996, the Company acquired, by a
pooling of interest, all of the outstanding stock of the L.P. Baier Company
("LPB") for 286,020 shares of the Company's Common Stock. LPB is located in
Fairfax, Virginia and provides primarily COBRA administration and FSA
administration. LPB had revenues of approximately $2.4 million in calendar year
1995.

BENEFITS ADMINISTRATION SERVICES

The Company provides the following benefits administration, compliance
and information services to its customers, as described below:

Portability Compliance Services. The Company provides comprehensive
COBRA compliance services to a diverse customer base throughout the United
States. Once the Company's customer or the qualified beneficiary notifies the
Company of a qualifying event, the Company assumes responsibility for COBRA
compliance and administration.

<PAGE> 6

Under COBRA, premiums paid by continuants are generally limited to 102%
of the applicable insurance premium. Eligible participants have in most cases at
least 105 days after the occurrence of a qualifying event to elect to continue,
and pay for, insurance coverage retroactively. As a result, COBRA claims and
administration costs generally exceed premiums due primarily to adverse
selection (i.e., those who are eligible for continued insurance coverage under
COBRA, and have pending claims, are more likely to select coverage retroactively
when the cost of claims exceeds the cost of healthcare coverage, and those who
have no need for healthcare coverage typically do not elect coverage and
consequently do not pay premiums).

According to an annual survey published in 1997 by Charles D. Spencer &
Associates, Inc., COBRA continuants have higher healthcare coverage claims than
active employees. Among those survey respondents that could compare COBRA costs
with the cost of active employee claims, healthcare coverage claim costs for
COBRA continuants were 149% and 156% of active employee claim costs in 1996 and
1997, respectively. The Company believes that uniform determination of coverage
eligibility and administration of COBRA claims in accordance with applicable
requirements can in most cases reduce COBRA claim costs and, as a result, reduce
healthcare costs for employers.

The COBRA compliance process begins when the Company or the employer
sends each employee and his or her dependents a notification of COBRA rights
letter when they become eligible to participate in the employer's group
healthcare plan. Thereafter, it is the employer's or the participant's
responsibility to send the Company a qualifying event notice following any
qualifying event. After processing the qualifying event, the Company
communicates with any qualified beneficiary who elects COBRA coverage throughout
the period of coverage, which typically extends for 18 to 36 months after the
qualifying event. During this period, the Company: (i) processes and archives
all election forms and correspondence; (ii) determines whether coverage
elections have been made on a timely basis; (iii) sends premium notices to, and
collects payments from, continuants; (iv) generates daily and monthly reports
for customers; and (v) maintains automated and customer representative telephone
services for continuant and customer inquiries.

As a provider of COBRA compliance and administration services, the
Company is subject to excise taxes for noncompliance with certain provisions of
COBRA. Under current federal laws, the maximum amount of such taxes that may be
imposed on the Company in any year for unintentional violations of COBRA is $2.0
million. In addition to the excise tax liability that may be imposed on the
Company, substantial excise taxes may be imposed under COBRA on the Company's
customers. Under the Company's service agreements with its customers, the
Company assumes financial responsibility for the payment of such taxes assessed
against its customers arising out of the Company's failure to comply with COBRA,
unless such taxes are attributable to the customer's failure to comply with
COBRA or with the terms of its agreement with the Company. In addition to
liability for excise taxes for noncompliance with COBRA, the Company accepts
financial responsibility for certain liabilities incurred by its customers that
are attributable to the Company's failure to comply with COBRA or to fulfill its
obligations to its customers under its agreements. These liabilities could, in
certain cases, be substantial. Although there can be no assurance that the
Company will not incur any material liability for noncompliance with COBRA or
for its failure to comply with its agreement with any customer, as of July 31,
1997, the Company has not incurred any such material liability. The imposition
of such liability on the Company in excess of any available insurance coverage
could have a material adverse effect on the Company. See "--Regulatory
Environment."

The Company also provides comprehensive HIPAA compliance services to a
diverse customer base throughout the United States. Once the Company's customer
or the qualified beneficiary notifies the Company of a qualifying event, the
Company assumes responsibility for HIPAA compliance and administration.

HIPAA (also known as the Kennedy-Kassebaum bill when it was passed in
1996) requires employers with two or more employees and a group health plan to
issue "Certificates of Creditable Coverage" to all persons who were covered by
their group health plan but lost coverage for any reason since October 1, 1996.
The requirement also applies to anyone losing coverage after June 1 of 1997. The
certificate will serve as proof of coverage which the individual can use to
obtain waivers of pre-existing condition limitations when seeking coverage under
another employer's plan.

<PAGE> 7

HIPAA requires employers to capture information reflecting types of
coverage and coverage periods for individuals (employees and dependents) on
their plan. Data must be captured as far back as July 1, 1996. They then must
issue certificates to these individuals documenting the coverage periods for
future insurers. Employees, covered dependents, employers and carriers may
request certificates at any time up to 24 months after the loss-of-coverage
event. The HIPAA compliance process begins when the Company sends each employee
and his or her dependents a HIPAA certificate following any qualifying event.

As a provider of HIPAA compliance and administration services, the
Company is subject to excise taxes for noncompliance with certain provisions of
HIPAA. Under the Company's service agreements with its customers, the Company
assumes financial responsibility for the payment of such taxes assessed against
its customers arising out of the Company's failure to comply with HIPAA, unless
such taxes are attributable to the customer's failure to comply with HIPAA or
with the terms of its agreement with the Company. Under the Internal Revenue
Code, employers that are subject to HIPAA are liable to excise taxes at the rate
of $100 per "qualified beneficiary" for each day during which the group
healthcare is in noncompliance. These liabilities could, in certain cases, be
substantial. Although there can be no assurance that the Company will not incur
any material liability for noncompliance with HIPAA or for its failure to comply
with its agreement with any customer, as of July 31, 1997, the Company has not
incurred any such material liability. The imposition of such liability on the
Company in excess of any available insurance coverage could have a material
adverse effect on the Company. See "--Regulatory Environment."

State Mini-COBRA Compliance. The Company provides COBRA-like services
to employers in Florida as required by state laws therein.

Retiree/Inactive Employee Benefits Administration. The Company's
experience with benefits administration and compliance services, and the
extensive databases maintained to provide these services, have enabled the
Company to expand its operations to provide for the administration of various
employer-sponsored benefits that are not mandated by law. For example, the
Company provides benefits administration services to employers who offer
healthcare benefits to their retirees. Financial accounting standards that
require the accrual of certain retiree healthcare costs have increased employer
awareness in this area. As a result, many employers have modified retiree
healthcare benefit arrangements, often requiring retirees to pay a portion of
this cost. The Company provides notification, billing, collection,
record-keeping and reporting services to larger employers where a periodic
benefit plan contribution is required to be made by retirees or their
dependents. The Company also administers benefits provided for inactive
employees, such as healthcare benefits.

Active Employee Benefits Administration. The Company also provides
services to large employers for benefits provided to their active employees.
These services are offered on either an "a la carte" basis or a total
outsourcing basis, thus allowing customers to outsource certain benefits
administration tasks that they find too costly or burdensome, or to outsource
the total benefits administration function. The menu of services the Company
offers to customers with respect to their active employees, many of which are
also provided with respect to retirees and inactive employees, includes the
following:

- Enrollment and Eligibility Services. Provide services for
employers such as disseminating enrollment materials,
processing responses, providing telephone assistance to
enrollees, determining eligibility for coverage and reporting,
all provided in conjunction with central employee data base
administration of the employer's.

- 401(k) Services. Provide active and retired employees with
administration services for IRS qualified plans, including
deferred contribution and 401(k) plans.

- Pension Services. Provide active and retired employees who
are vested in a company's pension plan with benefit
information and process retirement election forms and other
materials to begin the retirement payment process. Maintain
Retiree and Vestee Answer Centers which provide access to
benefit analysts who are proficient in client-specific plans
and procedures.

<PAGE> 8

- QDRO Services. Develop packages to assist QDRO participants
in the process of properly and accurately dividing pension
plan assets. Verify "qualification" of a domestic relations
order. Respond to telephone and written inquires regarding
QDRO benefits.

- Educational Benefits Administration Services. Administer
various educational benefit programs such as student loans,
reimbursements and scholarships. Verify eligibility and
process payments and loan forms. Monitor for compliance
against the customer's benefit plan.

- New Hire Processing Services. Process benefits administration
forms and information relating to the provision of benefits to
newly hired employees.

- FSA Administration Services. Design and support all types of
Section 125 flexible benefit formats, including plan design,
legal documents, employee education, enrollment support,
compliance testing, claims administration and the preparation
of required IRS forms.

- Other. Administer employee discount plans, adoption programs,
employee emergency loan programs, product rebate programs,
employee help desk, Qualified Medical Child Support Order
("QMCSO") administration, eligibility verification, tuition
refund, education and other loan programs, and Family Medical
Leave Act ("FMLA") insurance programs.

Summary of Functions. In connection with the performance of benefits
administration services, the Company generally provides one or more of the
following functions:

- Notification. Provide timely notifications of eligibility for
coverage and healthcare benefit plan requirements to
participants, employers and insurance companies.

- Billing and Premium Collections. Send detailed monthly
premium notice, return envelope for payment and request for
ongoing certification of eligibility to participants. Remit
collected premiums to employers on a monthly basis in
accordance with employers' instructions.

- Automated Response System. Maintain 24 hour-a-day, 365
day-a-year toll-free automated voice and facsimile response
systems for certain status information available to customers
and participants.

- Customer Service Hotline. Respond during normal business
hours to inquiries from participants or employers requiring
individual attention from trained customer service
representatives.

- Compliance Monitoring and Determination of Eligibility.
Monitor government compliance guidelines regarding
availability of healthcare coverage. Determine whether
applications and premium payments comply with applicable
regulations and established eligibility criteria.

- Reporting and Auditing. Generate daily reports for employers
to monitor elections and terminations of coverage by
participants. Generate monthly reports for employers providing
current status of all participants.

- Archive and Record-keeping Systems. Archive in an off-site
facility all electronic storage media, correspondence,
postmarked envelopes and copies of premium notices and checks
evidencing payment.

<PAGE> 9

SALES, MARKETING AND CUSTOMER SERVICE

Approximately 35.2%, 39.7% and 33.5% of the Company's revenues in
fiscal 1995, 1996 and 1997, respectively, were derived solely from agreements
with the Company's ten largest customers. Assuming the New Jersey Acquisition
had occurred on August 1, 1994, approximately 51.7% and 44.9% of the Company's
revenues in fiscal 1995 and fiscal 1996, respectively, would have been
attributable to the Company's ten largest customers, with approximately 24.6%
and 20.8% of such revenues being derived from the largest customer of the
company acquired in the New Jersey Acquisition. As part of the New Jersey
Acquisition, the Company entered into a four-year contract with this customer.
The Company's loss of any of these large customers could have a material adverse
effect on the Company.

The Company markets its services throughout the United States through a
sales, marketing and support staff consisting of 39 employees as of July 31,
1997. The Company identifies prospective customers through a combination of
direct mail, telemarketing and advertising.

Generally, the Company markets its services in one of two ways,
depending upon whether a potential customer is a large employer or insurance
company, or a small employer. When a large employer or insurance company has
been identified as a potential customer, the Company's sales strategy is to
focus its sales and marketing efforts on developing relationships with key
decision makers, such as the potential customer's chief executive officer, chief
financial officer or director of human resources or benefits. The Company's
sales executives make presentations that are designed to acquaint the potential
customer with the Company's services and the benefits associated with
outsourcing functions to the Company. A formal presentation is usually followed
by a visit to the Company's facility where the prospective customer evaluates
the Company's internal procedures, data processing capabilities and customer
support team.

With respect to potential customers who are small employers, the
Company markets its services directly to the employer via telemarketing. The
Company's telemarketing staff sells the Company's services by educating the
potential customer about the benefits of the Company's outsourcing services
without the need for face-to-face presentations.

The Company is also expanding its channels of distribution, such as
marketing its services through independent insurance agents. The agents
typically receive a one-time commission and renewal fees for 3-5 years for each
client who utilizes the Company's services.

The Company also emphasizes account development to strengthen its
relationship with existing customers. The Company disseminates information about
its services through newsletters and various periodic reports. These activities
are designed to increase existing customer awareness and understanding of the
scope of benefits administration services offered by the Company.

COMPUTER OPERATIONS, SOFTWARE DEVELOPMENT AND PROPRIETARY PRODUCT PROTECTION

The Company's central data processing and information system consists
of high-performance micro and mid-range processors linked in multiple local-area
networks through high-speed routers and intelligent hubs. Installed in the data
center located at the Company's new service center in Palm Harbor, Florida, the
network utilizes client-server technology in a DOS and Windows environment, on a
UNIX platform and Oracle database environment.

The Company meets the changing information needs of its customers by
developing, maintaining and enhancing its software. The Company provides its
services to customers using proprietary software that is owned by the Company
and is not licensed to others. The Company's computer system provides for timely
system updates and modifications because of its flexible modular design. The
Company's computer system works with on-line, real-time information, thus
allowing its service representatives to give accurate, up-to-date information to
continuants and customers. In addition, the Company believes that its ability to
upload and download information to customers and insurance carriers with minimal
development time provides the Company with a competitive advantage. The

<PAGE> 10

Company's software and systems have supported the customer base without
interruption for over eight years. As of July 31, 1997, the Company had 135
full-time equivalent employees in programming, software development,
modifications and maintenance. In addition, the Company periodically utilizes
contractors for various information systems services.

The Company's primary data center is protected by a fire extinguishing
system and by two centralized UPS (uninterruptible power supply) systems that
provide short-term battery backup in the event of a power outage, reduced
voltage or power surge, and dual phone and electric feeds from adjacent, but
separate, power grids. Further back-up power is supplied for the primary data
center by a diesel powered generator, which could continuously power the data
center for 5-7 days. In addition, the facility which houses the data center is
built to withstand 130+ mile per hour wind and is approximately 35 feet above
sea level, in Florida. Multiple layers of password and access authorization are
imposed to prevent unauthorized access, use or distribution of information. The
Company maintains log-in records of all users, restricts certain key record
fields and maintains audit trail records of all changes. Software and related
data files are backed up three times a day and stored off-site at multiple
locations.

The Company believes that the quality of its systems and the ability to
adapt to the changing business requirements of its customers have proven to be
key factors in maintaining its current customers and obtaining new customers.
The Company ensures the accuracy of data, customers' deposits and continuant
records by independent double-entry of premium payments and verification and
reconciliation of continuant records.

The Company also has purchased certain software and license agreements
from outside vendors. In conjunction with these agreements, the Company has
purchased maintenance and support agreements or provided trained in-house
expertise to support these applications. The Company believes that all such
technology is readily replaceable through other vendors should any of its
current suppliers experience any degree of business interruption.

The Company carries property insurance and business interruption
insurance covering interruptions that might occur as a result of damage to its
business See "-- Insurance." In addition, the Company believes that it has
adequate arrangements with its equipment vendors pursuant to which damaged
equipment can be replaced promptly. The Company does not believe that its system
faces a material risk of technological change. The Company relies upon a
combination of contract provisions and trade secret laws to protect its
proprietary technology. The Company attempts to protect its trade secrets and
other proprietary information through agreements with employees and consultants.
The Company does not hold any patents and does not have any patent applications
pending. There can be no assurance that the steps taken by the Company to
protect its proprietary technology will be adequate to deter misappropriation of
its proprietary rights or third party development of similar proprietary
software.

REGULATORY ENVIRONMENT

The benefit plans administered by the Company generally are subject to
various laws and regulations, including COBRA, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code"), proposed regulations of the Internal
Revenue Service and the Public Health Service Act. These laws and regulations
are administered by numerous agencies, such as the Internal Revenue Service, the
Department of Labor and the Department of Health and Human Services. The
Company's internal compliance department regularly reviews the Company's
operations to ensure compliance with applicable federal laws and regulations.

Enacted in 1986, COBRA was amended significantly by Congress in 1987
and 1989 and is the subject of proposed regulations of the Internal Revenue
Service. COBRA, which amended the Internal Revenue Code, ERISA, and the Public
Health Service Act, is subject to interpretation by the federal courts and is
administered jointly by several federal agencies, including the Internal Revenue
Service, the Department of Labor and the Department of Health and Human
Services. In addition, COBRA is affected by certain other federal legislation
and entitlement programs, such as Medicaid, Medicare, FMLA and, most recently,
the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). COBRA
applies to virtually all employers with 20 or more employees that maintain group
health insurance plans, including fully-insured, self-insured or
partially-insured plans, and union or non-union plans. Church groups and the
District of Columbia government are exempt from compliance with COBRA.

<PAGE> 11

To comply with COBRA, an employer must provide written notice to all
employees, including newly hired employees and their dependents, of their rights
under COBRA. Employees and their dependents become eligible for COBRA coverage
upon the occurrence of a qualifying event. The occurrence of a qualifying event
triggers a series of notifications and related response and payment deadlines,
including grace periods, that result in an employee's or qualified beneficiary's
ability to elect continued group healthcare plan coverage retroactively, and
often after the occurrence of an event leading to claims under the related
coverage.

The penalties for noncompliance with COBRA are substantial. As a
provider of COBRA compliance and administration services, the Company's exposure
under the Internal Revenue Code for excise taxes imposed for unintentional
violations of certain provisions of COBRA is limited to an aggregate of $2.0
million per year. Under the Internal Revenue Code, employers that are subject to
COBRA are liable for excise taxes at the rate of $100 per "qualified
beneficiary" ($200 if the qualified beneficiary has covered dependents) for each
day during which the group healthcare plan is in noncompliance, subject to an
annual maximum for unintentional violations. When such noncompliance is not
corrected before an audit by the Internal Revenue Service, the employer is
subject to certain minimum excise tax obligations, depending on whether or not
the violations are "de minimis." ERISA also imposes personal liability on the
plan administrator for the benefit of plan participants for COBRA violations in
the form of a penalty of up to $100 for each day the violation continues. In
addition to liability for COBRA violations under the Internal Revenue Code and
ERISA, improper denial of coverage under COBRA or failure to comply with COBRA's
notification requirements may result in an employer's liability for damages and
equitable remedies, including, but not limited to, healthcare coverage for a
former employee or dependent retroactive to the date of the qualifying event
which triggered the notification requirement. Depending on the terms of the
employer's group healthcare plan, such an employer may be required to provide
this type of retroactive coverage without reimbursement from its insurance
carrier.

The Company is not subject to federal or state regulations specifically
applicable to financial and insurance institutions such as banks, thrifts,
credit unions, insurance companies and third-party administrators. As a provider
of COBRA compliance services to its customers, the Company is required to comply
with various federal laws and regulations as noted above. The Company follows
changes in federal laws and regulations related to COBRA and judicial
interpretations of COBRA and promptly implements required changes to its data
processing operations.

HIPAA (also known as the Kennedy-Kassebaum bill when it was passed in
1996) requires employers with two or more employees and a group health plan to
issue "Certificates of Creditable Coverage" to all persons who were covered by
their group health plan but lost coverage for any reason since October 1, 1996.
The requirement also applies to anyone losing coverage after June 1, 1997. The
certificate will serve as proof of coverage which the individual can use to
obtain waivers of pre-existing condition limitations when seeking coverage under
another employer's plan.

HIPAA requires employers to capture information reflecting type of
coverage and coverage periods for individuals (employees and dependents) on
their plan. Data must be captured as far back as July 1, 1996. The employers
then must issue certificates to these individuals documenting the coverage
periods for future insurers. Employees, covered dependents, employers and
carriers may request certificates at any time up to 24 months after the
loss-of-coverage event. The HIPAA compliance process begins when the Company
sends each employee and his or her dependents a HIPAA certificate following any
qualifying event.

9
<PAGE> 12

any such material liability. The imposition of such liability on the Company in
excess of any available insurance coverage could have a material adverse effect
on the Company.

COMPETITION

The market for the Company's services is highly competitive. The
Company's existing competitors include insurance companies, third-party
administrators and other outsourcing service companies. Certain of these
existing competitors, as well as a number of potential competitors, possess
substantially greater resources than the Company. In addition to the Company's
competitors, services offered by the Company are often provided in-house.
Consequently, outsourcing may require the Company's potential customers to
reduce, reassign or eliminate in-house benefits administration or human resource
personnel, who often have an interest in maintaining these responsibilities
in-house.

The Company believes that the most significant competitive factors in
the sale of its services include quality, reliability of services and integrity
of data provided, flexibility in tailoring services to client needs, assumption
of certain responsibilities for compliance with complex laws and regulations,
experience, reputation, comprehensive services, integrated services and price.

EMPLOYEES

As of July 31, 1997, the Company had approximately 815 full-time
equivalent employees, including 39 in sales and marketing, 596 in customer
support services, 135 in programming, software development, modifications and
maintenance, and 45 in management, administration and finance.

The service nature of the Company's business makes its employees an
important corporate asset. While the market for qualified personnel is
competitive, the Company has not experienced difficulty in hiring or retaining
its personnel and believes its relations with its employees are good. The
Company's employees are not represented by any union.

SERVICEMARKS

CobraServ(R) is a registered servicemark of the Company. Other than
CobraServ(R), the Company does not believe that any other intellectual property
is material to its business.

INSURANCE

As a provider of portability compliance and administration services,
the Company is subject to excise taxes for noncompliance with certain provisions
of COBRA and HIPAA. In addition, the Company accepts financial responsibility
for certain liabilities incurred by its customers that are attributable to the
Company's failure to fulfill its obligations to its customers under its
agreements. The Company maintains a professional liability policy, with a
deductible of $25,000 per occurrence, and an annual per aggregate limit on
coverage of $5.0 million.

In addition to professional liability coverage, The Company maintains
the following policies: (i) a general commercial liability policy which has an
aggregate coverage of $2.0 million, with a $1.0 million limit per occurrence;
(ii) an automobile liability policy with a combined single coverage limit of
$1.0 million; (iii) an excess liability policy, which covers liabilities that
exceed the limits of the above policies, with an aggregate and a per occurrence
limit of $4.0 million; and (iv) a business interruption policy, which covers
three months of operations, with an aggregate limit of $2.0 million.

10
<PAGE> 13

ITEM 2 -- PROPERTIES

The Company leases the following facilities:

<TABLE>
<CAPTION>
SQUARE EXPIRATION RENEWAL
LOCATION FOOTAGE OF LEASE OPTION
-------- ------- ---------- -------
<S> <C> <C> <C>
Clearwater, Florida 23,000 June 1999 None

Princeton, New Jersey 20,000 May 1999 None

Glenville, New York 7,000 December 1997 4 years

Irvine, California 5,000 December 1997 None

Fairfax, Virginia 13,000 May 2005 None
</TABLE>

The Company maintains its 65,000 square foot headquarters in Palm
Harbor, Florida. The Company purchased this facility in June 1996 for $3.5
million (including the land). In May 1997, the Company also moved into its
118,000 square foot facility in Palm Harbor, Florida. Total cost for this
facility was approximately $10.7 million (including the land). In addition, the
Company owns real estate in Tarpon Springs, Florida acquired at a price of $2.5
million. Subsequent to July 31, 1997, the Company acquired a 383,000 square foot
office campus in St. Petersburg, Florida for $13.5 million. No formal designs or
commitments presently exist for this proposed expansion. The Company expects to
occupy portions of this facility starting in calendar 1998. The former owner of
the facility has signed an agreement to lease back portions of the campus, prior
to the Company occupying the entire facility in approximately 2000. The
Company's lease income on the campus is dependent upon the amount of square
footage being utilized by the former owner. The Company believes that its
facilities are adequate through 2003, at which time the Company believes it may
need to expand its facilities or develop the Tarpon Springs property.

ITEM 3 -- LEGAL PROCEEDINGS

Effective November 12, 1996, Vincent Addonisio was removed as Executive
Vice President, Chief Financial Officer and Treasurer of the Company due to
differences with the Board of Directors. On November 10, 1996, Mr. Addonisio
resigned as a Director of the Company and withdrew as a nominee for election as
a Director at the 1996 Annual Meeting of Shareholders. On November 22, 1996,
Mr. Addonisio filed a lawsuit against the Company in Florida state court,
alleging breach of his employment contract, and against the Company and James
E. MacDougald, Chairman of the Board, President and Chief Executive Officer of
the Company, alleging defamation. The Company does not believe that such
litigation will have a material adverse effect on the Company's financial
position but no assurances can be given in this regard. The Company is not a
party to any other litigation that is expected to have a material adverse
effect on the Company or its business.

The Company maintains detailed records of its services for at least
seven years, including physical return receipts of COBRA notifications to
employees upon a qualifying event, to evidence compliance with applicable rules
and regulations to reduce potential litigation and limit litigation exposure.

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

No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1997.

11
<PAGE> 14

EXECUTIVE OFFICERS OF THE REGISTRANT

As of July 31, 1997 there was one executive officer who was not also a
director of the Company. James P. O'Drobinak, age 36, has been Senior Vice
President and Chief Financial Officer since January 30, 1997. Prior to joining
the Company, Mr. O'Drobinak served as Chief Financial Officer - North America
for Danka Industries, Inc. from 1995 to 1997. From 1983 to 1995, Mr. O'Drobinak
held various positions with Deloitte & Touche, LLP, most recently as a Senior
Manager of the Tampa, Florida Office. Executive officers are elected annually by
the Board of Directors.

PART II

ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information set forth under the caption "Market Price Information"
on the inside back cover page of the 1997 Annual Report to Shareholders (the
"Annual Report") is incorporated herein by reference.

The total number of shareholders of record as of October 17, 1997 was
7,303.

The Company has neither declared nor paid any cash dividends on the
Common Stock and does not anticipate that it will pay cash dividends in fiscal
1998. Any payment of future dividends and the amounts thereof will be dependent
upon the Company's earnings, financial requirements and other factors deemed
relevant by the Board of Directors.

ITEM 6 -- SELECTED FINANCIAL DATA

The information set forth under the caption "Selected Financial Data"
on page 10 of the Company's Annual Report is incorporated herein by reference.

ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 11
through 13 of the Company's Annual Report is incorporated herein by reference.

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements of the Company and its independent
certified public accountant's Report set forth on pages 14 through 29 of the
Company's Annual Report are incorporated herein by reference:

Report of Independent Certified Public Accountants;
Consolidated Balance Sheets as of July 31, 1996 and 1997;
Consolidated Statements of Income for the Years Ended July 31,
1995, 1996, and 1997;
Consolidated Statements of Shareholders' Equity for the Years
Ended July 31, 1995, 1996 and 1997;
Consolidated Statements of Cash Flows for the Years Ended July
31, 1995, 1996 and 1997; and
Notes to Consolidated Financial Statements.

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

None.

<PAGE> 15

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth under the caption "Item 1: Election of
Directors" in the Company's Proxy Statement dated on or about November 6, 1997
for the Annual Meeting of Shareholders to be held December 5, 1997 (the "Proxy
Statement"), the information set forth in the last paragraph under the
caption "Board of Directors - General" in the Proxy Statement, and the
information set forth under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the proxy statement are incorporated herein by
reference. The information set forth under "Executive Officers of the
Registrant" in Part I hereof is also incorporated herein by reference.

ITEM 11 -- EXECUTIVE COMPENSATION

The information set forth under the caption "Executive Compensation" in
the Proxy Statement is incorporated herein by reference and the Company
specifically excludes from such incorporation by reference any information set
forth under the captions "Compensation Committee Report on Executive
Compensation" and "Stock Price Performance Graph" in the Proxy Statement.

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security ownership of certain beneficial owners and management as set
forth under the caption "Principal Shareholders" in the Proxy Statement is
incorporated herein by reference.

ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

PART IV

ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) List of documents filed as part of this report:

(1) Financial Statements.

Report of Independent Certified Public
Accountants.
Consolidated Balance Sheets as of July 31,
1996 and 1997.
Consolidated Statements of Income for the
Years Ended July 31, 1995, 1996, and 1997.
Consolidated Statements of Shareholders'
Equity for the Years Ended July 31, 1995,
1996 and 1997.
Consolidated Statements of Cash Flows for
the Years Ended July 31, 1995, 1996 and
1997.
Notes to Consolidated Financial Statements.

13
<PAGE> 16

(2) Financial Statement Schedule.

Report of Independent Certified Public
Accountants on The Schedule.

Schedule
Number Description
------ -----------
II -- Valuation and Qualifying Accounts

(3) Exhibits.

Exhibit
Number Description
------ -----------

3.1 -- Articles of Incorporation of ABR
Information Services, Inc.*
3.2 -- Bylaws of ABR Information Services, Inc.*
10.1 -- Employment Agreement between ABR
Information Services, Inc. and James E.
MacDougald.*
10.2 -- ABR Information Services, Inc. 1995
Non-Employee Director Stock Option
Plan.**
10.3 -- ABR Information Services, Inc. 1996
Non-Employee Director Stock Option
Plan.***
10.4 -- ABR Information Services, Inc. Amended
and Restated 1987 Stock Option Plan.****
10.5 -- ABR Information Services, Inc. Amended
and Restated 1993 Stock Option Plan (as
amended).**
10.6 -- ABR Information Services, Inc. Incentive
Bonus Plan.*
10.7 -- Revolving Line of Credit/Term Loan
Agreement dated January 30, 1996 by and
between NationsBank, N.A. (South) and ABR
Information Services, Inc.*****
10.8 -- Employment and Non-Competition Agreement
dated December 15, 1995 by and between
Bullock Associates, Inc. and W. Carl
Bullock.*****
10.9 -- Services Agreement between Corporate
Benefits Delivery of General Electric
Company and Bullock Associates, Inc. and
as amended on December 15, 1995.*****
10.10 -- Agreement and Plan of Reorganization
dated as of February 1, 1996 by and among
ABR Information Services, Inc., Total
Cobra Services and John M. Hermann.***
10.11 -- Agreement and Plan of Reorganization
dated as of June 28, 1996 by and among
ABR Information Services, Inc., The L.P.
Baier Company and L.P.Baier's
shareholders.***
10.12 -- Employment and Non-Competition Agreement
dated June 28, 1996 by and between The
L.P. Baier Company and Rick Snyder.***
10.13 -- Stock Purchase Agreement by and among ABR
Information Services, Inc., Bullock
Associates, Inc., W. Carl Bullock,
Barbara A. Biasotti and Nancy L. Clark
dated as of December 15, 1995.******
10.14 -- Agreement for Sale and Purchase of
Property, dated October 2, 1997, by and
between Florida Power Corporation
(Seller) and ABR Properties,
Inc. (Buyer), including commercial lease
as of the same date.
11.1 -- Statement regarding computation of per
share earnings.
13.1 -- 1997 Annual Report of ABR Information
Services, Inc.

14
<PAGE> 17

21.1 -- List of subsidiaries of ABR Information
Services, Inc.
23.1 -- Consent of Grant Thornton LLP.
24.1 -- Powers of Attorney (included on signature
page hereto).
27.1 -- Financial Data Schedule (for SEC use
only)
- --------------------

* Previously filed as part of the Company's Form S-1
Registration Statement (No. 33-76922) dated May 26,
1994 and incorporated herein by reference.

** Previously filed as part of the Company's Form 10-K
for the fiscal year ended July 31, 1995.

*** Previously filed as part of the Company's Form 10-K
for the fiscal year ended July 31, 1996.

**** Previously filed as part of the Company's Form 10-K
for the fiscal year ended July 31, 1994.

***** Previously filed as part of the Company's Form 10-Q
for the quarter ended January 31, 1996.

****** Previously filed as part of the Company's Form 8-K
dated as of December 26, 1995.

Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.8 and 10.12
represent management contracts and compensatory plans.

(b) Reports on Form 8-K.

The Company filed no Reports on Form 8-K during the quarter
ended July 31, 1997.

15
<PAGE> 18

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON THE SCHEDULE

Board of Directors
ABR Information Services, Inc.

In connection with our audit of the consolidated financial statements of ABR
Information Services, Inc. referred to in our report dated September 11, 1997,
which is included on page 29 of the Annual Report to Shareholders for the year
ended July 31, 1997, that is incorporated by reference in this Form 10-K for the
year ended July 31, 1997, we have also audited Schedule II for each of the three
years in the period ended July 31, 1997. In our opinion, the schedule presents
fairly, in all material respects, the information required to be set forth
therein.

Tampa, Florida
September 11, 1997

16
<PAGE> 19

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

ABR INFORMATION SERVICES, INC.

<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------ -------------------------------------------------------------------------------------
Additions
----------------------------------
Balance at Charge to Charged to Deductions Balance at
Beginning Costs and Other Accounts Describe End of
Description of Period Expenses - Describe (1) Period
- ------------------------------------ ------------ ------------ ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Year Ended July 31, 1995
Deducted from asset accounts:
Allowance for doubtful
accounts $17,553 $12,000 -- $3,351 $ 26,202

Year Ended July 31, 1996
Deducted from asset accounts:
Allowance for doubtful
accounts 26,202 20,000 -- 7,308 38,894

Year Ended July 31, 1997
Deducted from asset accounts:
Allowance for doubtful
accounts 38,894 91,500 -- 219 130,175
</TABLE>

17
<PAGE> 20

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

October 28, 1997 ABR INFORMATION SERVICES, INC.

By: /s/ James P. O'Drobinak
--------------------------
James P. O'Drobinak,
Senior Vice President and
Chief Financial Officer

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

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James E. MacDougald and James P.
O'Drobinak, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to this report, and to file the same, with all exhibits thereto,
and any other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF
1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF
THE REGISTRANT AND IN THE CAPACITIES INDICATED ON OCTOBER 28, 1997.

<TABLE>
<S> <C>
/s/ James E. MacDougald /s/ Suzanne M. MacDougald
- ---------------------------------------------- ---------------------------------------------
James E. MacDougald, Chairman of the Board, Suzanne M. MacDougald,
President and Chief Executive Officer and Senior Vice President, Secretary and Director
Director (Principal Executive Officer)

/s/ James P. O'Drobinak /s/ Thomas F. Costello
- ---------------------------------------------- ---------------------------------------------
James P. O'Drobinak, Senior Vice President and Thomas F. Costello, Director
Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Mark M. Goldman /s/ Peter A. Sullivan
- ---------------------------------------------- ---------------------------------------------
Mark M. Goldman, Director Peter A. Sullivan, Director
</TABLE>

18
<PAGE> 21

EXHIBITS TO FORM 10-K
FOR THE FISCAL YEAR ENDED JULY 31, 1997

ABR INFORMATION SERVICES, INC.
FILE NO. 0-24132

<PAGE> 22

ABR INFORMATION SERVICES, INC.

EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED JULY 31, 1997

<TABLE>
<CAPTION>
EXHIBIT FILED
NUMBER DESCRIPTION HEREWITH
------ ----------- --------
<S> <C> <C>
3.1 Articles of Incorporation of ABR Information Services, Inc.*

3.2 Bylaws of ABR Information Services, Inc.*

10.1 Form of Employment Agreement between ABR Information Services, Inc.
and each of its executive officers.*

10.2 ABR Information Services, Inc. 1995 Non-Employee Director Stock
Option Plan.*

10.3 ABR Information Services, Inc. 1996 Non-Employee Director Stock
Option Plan.*

10.4 ABR Information Services, Inc. Amended and Restated 1987 Stock
Option Plan.*

10.5 ABR Information Services, Inc. Amended and Restated 1993 Stock
Option Plan (as amended).*

10.6 ABR Information Services, Inc. Incentive Bonus Plan.*

10.7 Revolving Line of Credit/Term Loan Agreement dated January 30, 1996
by and between NationsBank, N.A. (South) and ABR Information
Services, Inc.*

10.8 Employment and Non-Competition Agreement dated December 15, 1995 by
and between Bullock Associates, Inc. and W. Carl Bullock.*

10.9 Services Agreement between Corporate Benefits Delivery of General
Electric Company and Bullock Associates, Inc. 1993-1997 and as
amended on December 15, 1995.*

10.10 Agreement and Plan of Reorganization dated as of February 1, 1996
by and among ABR Information Services, Inc., Total Cobra Services
and John M. Hermann.*

10.11 Agreement and Plan of Reorganization dated as of June 28, 1996 by
and among ABR Information Services, Inc., The L.P. Baier Company
and L.P. Baier's shareholders.*

10.12 Employment and Non-Competition Agreement dated June 28, 1996 by and
between The L.P. Baier Company and Rick Snyder.*

10.13 Stock Purchase Agreement by and among ABR Information Services,
Inc., Bullock Associates, Inc., W. Carl Bullock, Barbara A.
Biasotti and Nancy L. Clark dated as of December 15, 1995.*

10.14 Agreement for sale and purchase of property, dated October 2, 1997,
by and between Florida Power Corporation (Seller) and ABR
Properties, Inc. (Buyer) including commercial lease as of the
same date.
</TABLE>

<PAGE> 23

<TABLE>
<CAPTION>
EXHIBIT FILED
NUMBER DESCRIPTION HEREWITH
------ ----------- --------
<S> <C> <C>
11.1 Statement regarding computation of per share earnings. x

13.1 1997 Annual Report of ABR Information Services, Inc. x

21.1 List of subsidiaries of ABR Information Services, Inc. x

23.1 Consent of Grant Thornton LLP. x

24.1 Powers of Attorney (included on signature page hereto). x

27.1 Financial Data Schedule (for SEC use only). x
</TABLE>

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

* Incorporated by reference.

<PAGE> 1

EXHIBIT 10.14

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY,
DATED OCTOBER 2, 1997, BY AND BETWEEN
FLORIDA POWER CORPORATION (SELLER) AND
ABR PROPERTIES, INC. (BUYER)
INCLUDING COMMERCIAL LEASE AS OF THE SAME DATE

<PAGE> 2

AGREEMENT FOR SALE AND
PURCHASE OF PROPERTY

BETWEEN

FLORIDA POWER CORPORATION ("SELLER")

AND

ABR PROPERTIES, INC. ("BUYER")

<PAGE> 3

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

THIS AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (the "Agreement") is
made this 2nd day of October, 1997, between FLORIDA POWER CORPORATION, a
Florida corporation ("Seller"), and ABR PROPERTIES, INC., a Florida corporation
("Buyer").

1. AGREEMENT TO SELL: PURCHASE PRICE

1.1. Agreement to Sell and Convey. Subject to the terms and conditions
hereinafter set forth, Seller hereby agrees to sell and convey to Buyer and
Buyer hereby agrees to purchase from Seller, all that certain parcel of land
lying and being situated in the County of Pinellas, State of Florida, as
described on EXHIBIT "A" attached hereto and incorporated herein together with
the following:

1.1.1. Rights and Appurtenances. All and singular the rights and
appurtenances pertaining thereto, including any right,
title, and interest of Seller in and to adjacent streets,
roads, alleys, easements and rights-of-way; and including
all sewer and water infrastructure, drainageways, and other
utilities and all site improvements situated thereon; and

1.1.2. Buildings and Fixtures. The twelve buildings as currently
constructed and situated on the parcel described above,
containing in the aggregate approximately 383,000 square
feet of area, together with all fixtures permanently
incorporated therein or attached thereto, unless such item
is expressly excluded by this Agreement; and

1.1.3. Personal Property. Those items of tangible personal
property identified on EXHIBIT "B" hereto; and

1.1.4. Other Rights, Etc. Such other rights, interests and
properties as may be specified in this Agreement to be
sold, transferred, assigned, or conveyed by Seller to
Buyer.

The parcel of land and the rights, interests, improvements, personalty and other
appurtenances described above are collectively called the "Property." It is the
mutual intent of the parties that the Property includes the entire office
complex currently occupied by Seller, at 3201 34th Street South, St. Petersburg,
Florida 33711 and by Progress Energy Corporation at 3401 34th Street South, St.
Petersburg, Florida 33711.

<PAGE> 4

1.2. Purchase Price. The purchase price ("Purchase Price") to be paid
for the Property shall be THIRTEEN MILLION FIVE HUNDRED THOUSAND and 00/100 U.S.
DOLLARS ($13,500,000.00). The Purchase Price shall be paid by Buyer to Seller as
follows:

1.2.1. Earnest Money. Buyer has delivered to the Trust Account of
Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A.,
("Escrow Agent"), an earnest money deposit in the amount of
ONE MILLION DOLLARS ($1,000,000.00) to be held in escrow in
an interest bearing account pursuant to the terms of this
Agreement (the earnest money deposit is referred to as the
"Deposit"). All interest accrued on the Deposit shall
derive to the benefit of Buyer, unless Buyer defaults, in
which case the interest shall follow the Deposit.

1.2.2. Cash at Closing. At Closing (as hereafter defined), Escrow
Agent shall pay the Deposit to Seller. In addition, Buyer
shall pay or cause to be paid to Seller, by wire transfer
of funds to the account or accounts designated by Seller,
the balance of the Purchase Price, subject to closing
adjustments and prorations required herein.

2. SURVEY AND TITLE COMMITMENT: PERMITTED EXCEPTIONS

2.1. Preliminary Title Report. Attached hereto as EXHIBIT "C" and
incorporated herein by reference is Commonwealth Land Title Insurance Company
("Title Company"), Commitment for Title Insurance Number TP229157("Title
Commitment") for the real estate which is included in the Property in the amount
of the Purchase Price, accompanied by one copy of all documents affecting such
real estate and which constitute exceptions to the Title Commitment. Buyer shall
give Seller written notice within the earlier of (i) five (5) days after receipt
of the Survey (as hereinafter defined) or (ii) the date of Closing, whether such
title is or is not satisfactory, in Buyer's sole discretion. In the event that
the condition of title is not acceptable, Buyer's notice shall specify which
exceptions to the Title Commitment are not acceptable; provided, however, that
Buyer shall not object to the matters described in EXHIBIT "D" hereto. Any
matters revealed by the Title Commitment which are not cited in Buyer's notice
shall be deemed to be Permitted Exceptions. In the event Seller fails to cure or
remove the cited objections to the satisfaction of the Title Company prior to or
at Closing, then the Closing shall be extended for an additional period of ten
(10) days provided that (i) the Lease (as hereinafter defined) is modified to
reflect the new closing date and (ii) Buyer acknowledges in writing that the
Property is acceptable to Buyer pursuant to Section 4.1 hereof, the conditions
set forth in Section 6 hereof have been met, and the Deposit is non-refundable
except for failure of Seller to cure the cited objections or Seller's default.
If Seller fails to cure the objections within the ten (10) day extended period,
Buyer may, at its option, (i) accept title subject to the objections raised by
Buyer, without an adjustment in the

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<PAGE> 5

Purchase Price, in which event the objections shall be deemed to be waived for
all purposes, or (ii) cancel this Agreement, whereupon, subject to the
provisions of Section 4.1, of this Agreement, the Deposit shall be returned to
Buyer and this Agreement shall be of no further force and effect.

2.2. Current Survey. On or before September 25, 1997, Buyer shall
obtain a current survey of the Property prepared by a duly licensed land
surveyor (the "Survey"). The Survey shall:

2.2.1. Metes and Bounds. Set forth an accurate metes and bounds
description of the Property;

2.2.2. Easements and Rights-of-Way. Locate all existing easements
and rights-of-way (setting forth the book and page number
of the recorded instruments creating the same), alleys,
streets, and roads;

2.2.3. Encroachments. Show any encroachments and the location of
top of slope and the water level with relation to each
lake;

2.2.4. Improvements. Show all existing improvements (such as
buildings, parking lots, driveways, power lines, fences,
etc.);

2.2.5. Certification. Contain the surveyor's certification in
form and substance acceptable to the Title Company;

2.2.6. Access. Show all dedicated public streets providing access
to the Property and whether such access is paved to the
property line;

2.2.7. Off-Site Easements. Show the location of any easements
necessary for the furnishing of off-site improvements;

2.2.8. Flood Plain Certification. Contain a certification as to
whether the property is located in a flood plain;

2.2.9. Preparation. State that it is prepared for the Seller, the
Buyer, Johnson, Blakely, Pope, Bokor, Ruppel & Burns,
P.A., Carlton, Fields, Ward, Emmanuel, Smith & Cutler,
P.A., and the Title Company; and

2.2.10. Acreage Certification. Contain a certification as to the
acreage (to the nearest .01 acre) contained within the
Property.

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In the event the Survey shows any encroachments upon, from, or onto the
Property, or on or between any building setback line, property line, or any
easement, except those acceptable to Buyer, in Buyer's sole discretion, then,
within five (5) days following its receipt of the Survey, Buyer shall notify
Seller of the matters revealed by the Survey to which Buyer objects, and such
encroachment or survey matters cited in Buyer's notice shall be treated in the
same manner as a title defect under Section 2.1. Any matters not cited in
Buyer's notice shall be deemed to be acceptable to Buyer and shall be treated as
Permitted Exceptions to title.

If Seller removes or cures the survey exceptions, Buyer may, at Buyer's expense,
procure such additional surveying work as may be necessary or required to show
removal of matters cited in Buyer's notice to Seller in a manner satisfactory to
the Title Company so that the Title Policy can be issued without exceptions for
such matters.

2.3. Permitted Exceptions. The Property shall be conveyed to Buyer
subject to the matters acceptable to, or deemed waived by, Buyer under Sections
2.1 and 2.2 and those matters expressly set forth on EXHIBIT "D" hereto
("Permitted Exceptions").

2.4. Copies of Materials. Seller shall make such leases, surveys, site
data and information related to the Property in Seller's possession or control
available to Buyer for inspection and copying upon Buyer's written request for
such specific items as Buyer may desire to inspect, but Seller shall not be
deemed to have warranted any information so given other than that Seller
warrants and represents that it does not have knowledge that any such
information is false or misleading with respect to any material fact, or omits
to state any material fact which is known to Seller. As used in this Section,
the term "knowledge" shall mean the actual present recollection of David L.
Miller, the officer of Seller who has given substantive attention to such
matters and documents, provided, however, Buyer acknowledges that neither Seller
nor David L. Miller has made any independent inquiry or investigation relating
to such matters and documents and Buyer agrees Seller shall not be required to
conduct any such inquiry or investigation. Buyer shall verify the accuracy and
details thereof in such manner as Buyer deems appropriate. Such inspection and
copying shall be conducted during Seller's business hours, at Seller's offices,
under supervision by one or more of Seller's employees.

3. PROVISIONS WITH RESPECT TO CLOSING.

3.1. Closing Date: Delivery of Possession. The consummation of the
conveyance and purchase of the Property contemplated by this Agreement
("Closing") shall take place at the offices of Buyer's attorneys in Clearwater,
Florida (or such other place as may be agreed by Seller and Buyer), on or before
10:00 a.m. local time September 30, 1997.

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3.2. Seller's Obligations at Closing. At Closing, simultaneously with
Buyer's payment of the Purchase Price in current funds, Seller shall do the
following:

3.2.1. Special Warranty Deed. Execute, acknowledge, and deliver to
Buyer a special warranty deed conveying the Property to
Buyer, which deed shall be in form for recording. The legal
description of the Property contained in such deed shall be
identical to the legal description of the Property
contained in the Survey and the Title Commitment.

3.2.2. Bill of Sale. Execute and deliver to Buyer an absolute bill
of sale with warranties of title and free of liens
conveying title to the personal property described in
EXHIBIT B.

3.2.3. Title Commitment. The Title Commitment shall be marked down
at Closing and the standard owner's exceptions shall be
deleted, where appropriate, and permitted. The Title Policy
shall be delivered to Buyer promptly after Closing.

3.2.4. Lease. Subject to the provisions of Sections 9.12 and 9.13,
execute and deliver the Lease attached hereto as EXHIBIT
"E."

3.2.5. Affidavit of No Liens. Execute and deliver to Buyer and
Title Company an affidavit in the form attached as EXHIBIT
"F" to enable the Title Company to remove the construction
lien, parties in possession (subject only to the lease-back
arrangement set forth in Section 3.1 above), and gap
standard exceptions (to the extent such exceptions relate
to matters caused by persons other than Buyer and persons
and parties claiming by, through or under Buyer) from the
Title Commitment.

3.2.6. FIRPTA Certificate. Execute and deliver an Internal Revenue
Service FIRPTA Certificate in the form attached as EXHIBIT
"G."

3.2.7. Assignment of Warranties. Execute and deliver to Buyer a
general assignment without recourse of all transferable
warranties from third parties for improvements on the
Property as well as the personal property described on
EXHIBIT "B."

3.2.8. Release of Mortgage, Etc. Deliver such documents and
payments as may be necessary to obtain a release of any

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existing mortgages or liens created by Seller which
encumber the Property.

3.2.9. CERCLA Affidavit. Execute and deliver to Buyer a CERCLA
(hazardous waste) affidavit in the form attached as EXHIBIT
"H."

3.3. Buyer's Obligations at Closing. At Closing, contemporaneously with
the performance by Seller of its obligations set forth in Section 3.2 above,
Buyer shall do the following:

3.3.1. Payment. Deliver to Seller the payment required by Section
1.2 above.

3.3.2. Lease. Subject to the provisions of Sections 9.12 and 9.13,
execute and deliver the Lease attached hereto as EXHIBIT
"E."

3.3.3. Other Documents. Execute and deliver to the Title Company
such other documents as the Title Company may require from
or on behalf of Buyer to issue the Title Policy pursuant to
the requirements in Schedule B-1 of the Commitment.

3.4. Closing Costs.

3.4.1. Seller's Costs. Seller shall pay the following costs and
expenses in connection with the Closing:

3.4.1.1. Seller's attorney's fees;

3.4.1.2. The promulgated rate premium and search expense
fees payable for the Title Commitment and owners
Title Policy issued pursuant thereto;

3.4.1.3. Documentary stamp tax on the deed, if applicable.

3.4.1.4. Costs required to cure title defects described in
Sections 2.1 and 2.2.

3.4.2. Buyer's Costs. Buyer shall pay the following closing costs:

3.4.2.1. Buyer's attorneys' fees;

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3.4.2.2. Recording fee for the deed;

3.4.2.3. The expense for preparation of the certified
survey and any update or recertification thereof.

3.4.2.4. All costs for inspections and financing of the
Purchase Price, if any.

3.5. Payment of Taxes. Taxes for the year of Closing shall be prorated
to the date of Closing utilizing the maximum discount available for early
payment. If the Closing shall occur before the tax rate is fixed for the then
current year, the apportionment of taxes shall be upon the basis of the tax rate
for the preceding year applied to the latest assessed valuation. Subsequent to
the Closing, when the tax rate is fixed for the year in which the Closing
occurs, Seller and Buyer agree to adjust the proration of taxes and, if
necessary, to refund or pay, as the case may be, on or before January 1 of the
year following the Closing, an amount necessary to effect such adjustments. This
Section 3.5 shall survive closing.

3.6. Special Assessments. Any special assessment liens for improvements
completed prior to Closing which are certified or pending against the Property
prior to or as of the Closing Date shall be paid by Seller; provided, however,
if the assessment is payable in installments, Seller shall be required only to
pay those installments which are due and payable prior to Closing and if at the
date of Closing the Property or any part thereof shall be or shall have been
affected by an assessment or assessments which are payable in annual
installments, of which any such annual installment covers a fiscal period which
commenced less than (1) year prior to the date of Closing, such annual
installment shall be apportioned pro-rata between Seller and Buyer as of the
date of Closing of this transaction.

4. AFFIRMATIVE COVENANTS OF SELLER AND BUYER.

4.1. Inspection. Buyer or Buyer's agents, at Buyer's expense, shall
have the right at times which will not unreasonably interfere with Seller's
business operation and upon reasonable notice to enter the Property for
inspection, tests, examination and architectural planning prior to Closing to
determine whether, in Buyer's sole discretion, (i) the Property is suitable for
Buyer's intended use thereof and (ii) whether job credits and other tax
incentives and government sponsored grant programs are available and that
Buyer's eligibility for such programs will not be adversely affected in
connection with the proposed occupancy of the Property by Buyer's parent
corporation, ABR Information Services, Inc., and any of its subsidiaries. Such
inspection may include but shall not be limited to studies, investigations, and
analyses regarding soil conditions, drainage, zoning, site plan, sewer, water,
environmental, transportation, budget financing, architectural revisions and the
projected cost thereof, and other items deemed relevant or prudent by Buyer.
If the Property is determined to

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be unsuitable, Buyer may cancel this Agreement by giving written notice to
Seller of such cancellation at any time prior to Closing. Buyer shall,
simultaneously with such notice, deliver to Seller all copies of all reports,
surveys, and other matters relating to the Property obtained by or for the
benefit of Buyer, together with such evidence of payment of all such work and
reports done at Buyer's request as to entitle Seller to protection from the
imposition of a construction lien upon the Property as a result of Buyer's
actions. Upon delivery by Buyer of such notice and items, Escrow Agent shall
return to Buyer the Deposit. Thereafter, except for the indemnity stated in this
Section and in the provisions of Section 9.15, Buyer and Seller shall be
released from all further liability under this Agreement. The matters set forth
in Section 4.1 (ii) above shall survive Closing; provided, however, in the event
the credits, incentives, or programs described therein are not available to
Buyer after Closing, then Buyer shall have no recourse or remedy whatsoever
against Seller, including, without limitation, any right of rescission or claim
for damages.

Buyer covenants and agrees that in exercising its rights of entry and
inspection under this Section Buyer shall not cause or permit any material
damage to the Property. Buyer shall repair any damage to the Property caused by
such entry or entries and work and shall restore the Property to substantially
the condition existing prior to such entry. In no event shall Buyer permit its
employees or agents to dispose of or permit any hazardous or toxic substances on
the Property or to damage the asbestos materials on the Property. Buyer further
covenants and agrees that Buyer will hold in strict confidence all documents,
data and information obtained by Buyer concerning the Property except that
during the Inspection Period Buyer may disclose information concerning the
Property in connection with its inspection and investigation of the Property to
those persons and firms performing inspections and studies of the Property on
behalf of Buyer or to Buyer's purchase money lenders.

Buyer shall, as a condition to its right to enter the Property, cause
to be acquired and maintained adequate liability insurance (naming Seller as an
additional insured party) to protect Seller fully from any claims arising in
connection with Buyer's exercise of its rights of entry, investigation and
inspection of the Property. A copy of such policy shall be delivered to Seller's
attorneys prior to Buyer's exercise of its right of entry.

4.2. Possession and Maintenance Pending Closing. Seller shall remain in
possession of the Property pending Closing. Seller covenants and agrees prior
to Closing to maintain the Property, and all buildings, equipment, and other
improvements situated thereon, in substantially the same condition and repair as
existed on the effective date hereof, normal wear and tear, damage by casualty
or the negligent or willful act of Buyer or its agents, employees or contractors
and other matters beyond Seller's reasonable control as described in this
Agreement excepted.

4.3. Environmental Monitoring and Remediation. Buyer acknowledges the
presence of asbestos-containing products in the buildings and improvements on
the Property.

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4.4. Further Assurances. In addition to the obligations required to be
performed hereunder by Seller at the Closing, Seller agrees to perform such
other acts, and to execute, acknowledge, and/or deliver subsequent to the
Closing such other instruments, documents and other materials as Buyer may
reasonably request in order to effectuate the consummation of the transaction
contemplated herein and to vest title to the Property in Buyer.

5. REPRESENTATIONS WITH RESPECT TO PROPERTY.

5.1. Seller's Representations. Except as hereinafter specifically set
forth, the sale and purchase of the Property shall be "AS IS, WHERE IS, WITH ALL
FAULTS." Notwithstanding the foregoing, Seller represents and warrants to Buyer
as follows:

5.1.1. Compliance with Agreements. Performance of this Agreement
will not result in any breach of, or constitute any default
under, or result in the imposition of, any lien or
encumbrance upon the Property under any agreement or other
instrument to which Seller is a party or by which Seller or
the Property might be bound.

5.1.2. Pending Litigation. Seller has no knowledge that there are
any legal actions, suits or other legal or administrative
proceedings pending against the Property. As used in this
subsection, the term "knowledge" shall mean the actual
present recollection of Kenneth E. Armstrong, the officer
of Seller who has given substantive attention to the
subject matter of this representation and warranty.

5.1.3. No Condemnation Pending or Threatened. To Seller's
knowledge, there is no pending or threatened condemnation
or similar proceeding affecting the Property or any portion
thereof, nor has Seller knowledge that any such action is
presently contemplated. As used in this subsection, the
term "knowledge" shall mean the actual present recollection
of Joseph H. Richardson and Kenneth E. Armstrong, the
officers of Seller who have given substantive attention to
the subject matter of this representation and warranty;
provided, however, Buyer acknowledges that such officers
have made no independent inquiry or investigation
concerning such matters and Buyer agrees that no such
independent inquiry or investigation is required by Seller
or its officers for this representation.

5.1.4. Adverse Information. Except as may be disclosed in the
Title Commitment, Seller has no information or knowledge

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of any action by adjacent landowners, or natural or
artificial conditions upon the Property which would
prevent, limit, impede, or render more costly the use of
the Property consistent with current land use and zoning
designations, other than those items disclosed in Section
4.3 above. As used in this subsection, the term "knowledge"
shall mean the actual present recollection of Joseph H.
Richardson and Kenneth E. Armstrong, the officers of Seller
who have given substantive attention to the subject matter
of this representation and warranty; provided, however,
Buyer acknowledges that such officers have made no
independent inquiry or investigation concerning such
matters and Buyer agrees that no such independent inquiry
or investigation is required by Seller or its officers for
this representation.

5.1.5. Intentionally Omitted.

5.1.6. Third-Party Commitments. Except as may be disclosed in the
Title Commitment, Seller has no knowledge commitments have
been made to any governmental authority, utility company,
school board, church or other religious body, or any
property owners association, or to any other organization,
group, or individual, relating to the Property which would
impose an obligation upon Buyer or its successors or
assigns to make any contribution or dedications of any
portion of the Property or to construct, install, or
maintain any improvements of a public or private nature on
the Property. As used in this subsection, the term
"knowledge" shall mean the actual present recollection of
Joseph H. Richardson and Kenneth E. Armstrong, the officers
of Seller who have given substantive attention to the
subject matter of this representation and warranty;
provided, however, Buyer acknowledges that such officers
have made no independent inquiry or investigation
concerning such matters and Buyer agrees that no such
independent inquiry or investigation is required by Seller
or its officers for this representation.

5.1.7. Hazardous Waste/Refuse. Except as identified in Section 4.3
or as disclosed to Buyer's engineer, Law Engineering,
Seller has no knowledge of (i) the existence of Hazardous
Materials in excess of lawful limits on the Property that
would subject Buyer to liability under federal, state, or
local laws or (ii) any excavation, dumping or burial of any
refuse on the Property. The term "Hazardous Materials" as
used herein includes, without limitation, gasoline,
petroleum

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products, explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances,
polychlorinated biphenyls or related or similar materials,
asbestos or any material containing asbestos, or any other
substance or material as is now defined as a hazardous or
toxic substance by any Federal, state or local
environmental law, ordinance, rule, or regulation
including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (42
U.S.C. Section 1801, et seq.) the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Section 1251, et seq.),
the Clean Air Act, as amended (42 U.S.C. Section 7401, et
seq.) and in the regulations promulgated pursuant thereto.
As used in this subsection, the term "knowledge" shall mean
the actual present recollection of David L. Miller, the
officer of Seller who has given substantive attention to
the subject matter of this representation and warranty;
provided, however, Buyer acknowledges that such officer has
made no independent inquiry or investigation concerning
such matters and Buyer agrees that no such independent
inquiry or investigation is required by Seller or its
officers for this representation.

5.1.8. Survival of Representations and Warranties. The
representations and warranties set forth in this Article 5
shall be continuing and shall be true and correct on and as
of the Closing Date with the same force and effect as if
made at that time. All representations and warranties set
forth herein shall survive Closing for a period of two (2)
years.

5.2. Buyer's Representations. Buyer represents and warrants to Seller
as follows:

5.2.1. Ability to Perform. Buyer is a solvent corporation and has
the financial resources and ability to perform Buyer's
obligations under this Agreement.

5.2.2. Compliance with Agreements. Performance of this Agreement
will not result in any breach of, or constitute any default
under, or result in the imposition of, any lien or
encumbrance upon the Property under any agreement or other
instrument to which Buyer is a party or by which Buyer or
the Property might be bound.

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6. CONDITIONS TO CLOSING.

6.1. Conditions to Buyer's Obligations. The obligation of Buyer
hereunder to consummate the Closing contemplated hereby is subject to the
satisfaction of each of the following conditions (any of which may be waived in
whole or in part in writing by Buyer at or prior to the Closing):

6.1.1. Correctness of Representations and Warranties. The
representations and warranties of Seller set forth herein
shall be true on and as of the Closing Date with the same
force and effect as if such representations and warranties
had been made on and as of the Closing Date.

6.1.2. Compliance by Seller. Seller shall have performed, observed
and complied with all of the covenants, agreements and
conditions required by this Agreement to be performed,
observed and complied with by Seller prior to or as of the
Closing.

If any contingency is not satisfied, or waived in writing, the Deposit
hereunder, and all interest thereon, shall be returned to Buyer, and, except for
the provisions of Sections 4.1 and 9.15 hereof, this Agreement shall be of no
further force and effect.

7. PROVISIONS WITH RESPECT TO DEFAULT AND DEPOSIT.

7.1. Default by Seller. If this Agreement is not canceled by Buyer
pursuant to the provisions permitting Buyer to cancel, then in the event that
Seller is able, but refuses to perform its obligations under this Agreement,
Buyer as its sole remedies: (i) may enforce specific performance of this
Agreement or (ii) Buyer may elect to cancel this Agreement, whereby Buyer shall
not be required to purchase and Seller shall not be required to convey the
Property and the Deposit made hereunder shall be returned to Buyer.

7.2. Default by Buyer. In the event this transaction does not close on
account of Buyer's default, the Deposit paid or required to be paid by Buyer
under the provisions of this Agreement and all interest earned thereon shall be
paid to Seller as Seller's sole remedy and as agreed and liquidated damages on
account of Buyer's failure to purchase the Property pursuant to the terms of
this Agreement. In that event, except as hereafter expressly provided, both
parties shall be released from all further obligations to each other under this
Agreement. Buyer acknowledges that payment of the earnest money deposit is
reasonable as liquidated damages for withdrawal of the Property from the real
estate market because the precise amount of the damages to be suffered by Seller
as a result of the withdrawal of the property from the real estate market for
the term of this Agreement is impossible to ascertain on the effective date.
Anything herein to the contrary notwithstanding, the parties

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acknowledge that such liquidated damages relate only to any loss to Seller
occurring as a result of withdrawal of the Property from the real estate market
and do not relate to nor approximate damages to be suffered by Seller as a
result of Buyer's failure to perform its obligations described in Section 4.1 or
Section 9.15 in the manner prescribed therein or to pay for all tests and
inspections of the Property (or damage or contamination to or of the Property)
made pursuant to the provisions of Section 4.1 of this Agreement. The parties
further acknowledge that Buyer's indemnities under Sections 4.1 and 9.15 are the
subject of separate and distinct consideration, and nothing herein shall be
deemed to supersede nor limit Seller's ability to enforce all of Seller's rights
under the indemnity provisions of Sections 4.1 and 9.15 nor to release or cancel
Buyer's indemnity obligations under the provisions of Sections 4.1 and 9.15.

7.3. Mutuality of Remedies. Each of the parties acknowledges that the
remedies stated herein have been negotiated and provide mutual, satisfactory and
adequate and proper compensation and consideration to each of the parties and
that such remedies take into account the peculiar risks of each of the parties.

8. COMMISSIONS.

Seller warrants and represents to Buyer, and Buyer warrants and
represents to Seller, that no brokers are involved in this transaction except
for Echelon Real Estate Services, Inc., whose commission shall be the sole
responsibility of Seller pursuant to the provisions of a separate agreement
between such broker and Seller. Seller agrees that if any claims for brokerage
commissions or fees are made against Buyer by such broker in connection with
this transaction, all such claims shall be paid by Seller. Seller and Buyer
further agree to indemnify and hold each other harmless from and against any and
all other claims or demands with respect to any brokerage fees or agents'
commissions or other compensation asserted against the other party by any
person, firm or corporation claiming through the indemnifying party in
connection with this Agreement or the transaction contemplated hereby. This
Section shall survive the Closing.

9. OTHER CONTRACTUAL PROVISIONS.

9.1. Assignability. Buyer may not assign its rights under this
Agreement except as follows: (i) the party to whom such assignment is made shall
be a subsidiary of Buyer (as that term is defined under United States Securities
Exchange Commission Rule 1-02 under Regulation S-X, 17 CFR Part 210.1-02); (ii)
the party to whom such assignment is made shall be a parent of Buyer (as that
term is defined under United States Securities Exchange Commission Rule 1-02
under Regulation S-X, 17 CFR Part 210.1-02); (iii) the party to whom such
assignment is made shall furnish evidence satisfactory to Seller of its ability
to pay the Purchase Price; (iv) no such assignment shall delay closing nor shall
it increase Seller's costs and expense, nor impair Seller's ability to perform
its obligations under this Agreement; (v) an executed copy of such assignment is
furnished to Seller within twenty-four (24) hours following

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the assignment, and (vi) any such assignee shall, in such written assignment,
assume and agree to perform all of Buyer's obligations under this Agreement.

9.2. Notices. Any notice to be given or to be served upon any party
hereto in connection with this Agreement must be in writing, and may be given by
certified mail, hand delivery, or overnight receipt delivery service, and shall
be deemed to have been given and received when delivered to and received by the
party to whom it is addressed. Such notices shall be given to the parties hereto
at the following addresses:

FOR BUYER: FOR SELLER:

ABR Properties, Inc. Florida Power Corporation
34125 U.S. Highway 19 North 3201 34th Street South
Palm Harbor, FL 34684-2116 St. Petersburg, FL 33711

Attn: Mr. Joseph C. Lukason, Attn: Kenneth E. Armstrong, Esq.
President

WITH A COPY TO: WITH A COPY TO:

Timothy A. Johnson, Jr. Ruth Barnes Kinsolving
Johnson, Blakely, et al Carlton Fields
P. 0. Box 1368 P. O. Box 3239
Clearwater, FL 33757 Tampa, FL 33601-3239

Any party hereto may, at any time by giving five (5) days' written notice to the
other party hereto, designate any other address in substitution of the foregoing
address to which such notice shall be given and other parties to whom copies of
all notices hereunder shall be sent.

9.3. Entire Agreement: Modification. This Agreement embodies and
constitutes the entire understanding between the parties with respect to the
transaction contemplated herein. All prior or contemporaneous agreements,
understandings, representations, and statements, oral or written, are merged
into this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged, or canceled except by an instrument in
writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.

9.4. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida. Venue shall lie
exclusively in Pinellas County, Florida.

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9.5. Binding Affect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns.

9.6. Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

9.7. Time for Acceptance: Date of Contract. This Agreement shall be
null and void and of no effect unless signed by Seller and Buyer on or before
5:00 p.m. local time on October 2, 1997.

9.8. Effective Date of Agreement. For all purposes herein, the "date"
or "effective date" of this Agreement shall be the date it is executed by the
latter of Seller and Buyer.

9.9. Earnest Money Deposit and Provisions Relating to Escrow.

9.9.1. Disbursement of Earnest Money Deposit. If Buyer shall not
elect to cancel this Agreement prior to Closing, then at
Closing, Escrow Agent shall disburse the Deposit to the
Seller. If Buyer shall elect to cancel this Agreement prior
to Closing, then, subject to Section 4.1, the Deposit shall
be returned to Buyer.

9.9.2. Duties. The Escrow Agent agrees to hold and disburse all
monies paid in escrow in accordance with the terms and
conditions of this Agreement. All such escrowed funds paid
by Buyer shall be invested in an interest bearing account.
Wherever the terms of this Agreement require the Escrow
Agent to disburse the escrowed funds, the Escrow Agent
shall also simultaneously pay all accrued interest earned
thereon to the party to whom such escrowed funds are
payable under this Agreement. The parties acknowledge and
agree that if the sale and purchase of the Property is
closed pursuant to the terms of this Agreement, then
interest earned on the Deposit shall be credited against
the cash due from Buyer at closing.

9.9.3. Dispute. If there is any dispute as to whether Escrow Agent
is obligated to deliver the Deposit, or as to whom the
Deposit is to be delivered, Escrow Agent will not be
obligated to make any delivery of the Deposit, but in such
event may hold the Deposit until receipt by Escrow Agent of
an authorization in writing signed by all of the persons

-15-

<PAGE> 18

having an interest in such dispute, directing the
disposition of the sum, or in the absence of such
authorization, Escrow Agent may hold the Deposit until a
court of competent jurisdiction shall determine the rights
of the parties in an appropriate proceeding. If such
written authorization is not given, or proceedings for such
determination are not begun and diligently continued,
Escrow Agent may, but is not required, to hold the Deposit
until (i) the parties mutually agree to the disbursement
thereof, or (ii) a judgment of court of competent
jurisdiction shall determine the rights of the parties, or
Escrow Agent may deposit same into the registry of the
court, and interplead the parties, and upon notifying all
parties concerned of such action, all liability on the part
of the Escrow Agent shall cancel, except to the extent of
accounting for the money delivered out of escrow. Once
Escrow Agent has tendered into the registry or custody of
any court of competent jurisdiction all money and/or
property in its possession under this Agreement, Escrow
Agent shall be discharged from all duties arising and shall
have no further liability hereunder as Escrow Agent. Seller
acknowledges that Escrow Agent is the law firm which
represents Buyer in connection with the transaction
contemplated by this Agreement and consents to such law
firm representing Buyer or in the event of any dispute with
respect to the Deposit on this Agreement.

9.9.4. Confirmation of Deposit. Escrow Agent confirms that Escrow
Agent is holding the Deposit pursuant hereto.

9.10. Gender. Whenever the context permits, the singular shall include
the plural and one gender shall include all.

9.11. Radon. Radon is a naturally occurring radioactive gas that, when
it has accumulated in a buildings in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida. Additional
information regarding radon testing may be obtained from your county public
health unit.

9.12. Risk of Loss by Condemnation. If after the date hereof and prior
to Closing, all or a part of the Property is subjected to a bona fide threat of
condemnation by a body other than Seller having the power of eminent domain or
is taken other than by Seller by eminent domain or condemnation (or sale in lieu
thereof), Buyer may, by written notice to Seller, elect to cancel this Agreement
within five (5) days of Buyer's receipt of notice of such taking or the Closing
(whichever is earlier), in which event both parties shall be relieved and
released of and from any further liability hereunder, and the Deposit made by
Buyer hereunder shall forthwith be returned to

-16-

<PAGE> 19

Buyer, whereupon this Agreement shall become null and void and be considered
canceled, except for Section 9.15 hereof. If no such election to cancel is made,
this Agreement shall remain in full force and effect and the purchase
contemplated herein, less any interest taken by eminent domain or condemnation,
shall be effected with no adjustment in Purchase Price, and at Closing Seller
shall assign, transfer, and set over to Buyer all of the right, title and
interest of Seller in and to any awards that have been or that may thereafter be
made for the fee simple title to the Property so taken; provided, however,
Seller shall not assign nor release any awards made for the taking of Seller's
post-closing leasehold estate, if any, nor for Seller's business relocation and
moving expenses. Seller covenants that it will not exercise any right of eminent
domain it may have with respect to the Property.

9.13. Risk of Loss by Casualty. The risk of loss or damage to the
Premises by casualty up to the date of Closing is assumed by Seller. If the
Property is damaged by fire or other casualty before Closing and the cost
thereof exceeds five percent (5%) of the Purchase Price, Seller may elect either
to pay the cost of repair and restoration to substantially the same condition as
existed prior to such casualty or to advise Buyer that Seller does not elect to
make such repairs. If Seller does not elect to make such repairs, Buyer shall
have the option of either taking the Property "as is" together with all
insurance proceeds (including self insurance) that may be payable or credited to
Seller as a result of such damage to the Property or Buyer may cancel this
Agreement and receive a return of the Deposit, subject to the provisions of
Sections 4.1 and 9.15. If Buyer does not elect to cancel as a result of such
damage within five (5) days of Buyer's receipt of Seller's notice that Seller
will not pay the costs or make the repairs, Buyer shall be deemed to have waived
Buyer's right to cancel and the parties shall close the sale and purchase of the
Property in the manner described in this Agreement; provided, however, if the
Property is damaged to the extent that Seller does not desire to occupy the
Property after Closing, then if Buyer does not elect to cancel this Agreement,
Seller may elect to decline to leaseback the Property. If Seller elects to
decline to leaseback the Property, then, at Buyer's option, Buyer may (i) close
and Seller shall deliver possession of the Property to Buyer at Closing or (ii)
elect to cancel this Agreement, in which event, subject to the provisions of
Section 4.1 hereof, the Deposit shall be returned to the Buyer. At Closing,
Seller shall pay or assign to Buyer the insurance proceeds (including self
insurance) paid or payable to Seller as a result of the damage to the Property.

9.14. Executed Counterparts. This Agreement may be executed in several
counterparts, each constituting a duplicate original, but all such counterparts
constituting one and the same Agreement.

9.15. Confidentiality. Buyer and Seller acknowledge to one another that
that the agreement of each not to divulge to any third party certain information
is a material inducement to each party to execute and perform its obligations
under this Agreement.

-17-

<PAGE> 20

9.15.1. Buyer's Failure to Close. If Buyer should fail to
consummate the purchase of the Property for any reason,
then anything in this Agreement to the contrary
notwithstanding, neither Buyer nor Seller (i) shall
disclose the reason or reasons the transaction was not
closed to any third party, and (ii) Buyer and Seller shall
keep the contents of this Agreement and the results of all
studies and inspections obtained by Buyer in connection
with the Property strictly confidential except as required
to enforce the parties' rights under this Agreement.

9.15.2. Public Disclosure. Except as otherwise required by law or
the rules of any applicable national securities exchange
or as mutually agreed, neither Buyer nor Seller shall
make, or cause to be made, any public disclosure or other
formal announcement to the press or any media with respect
to the transactions contemplated hereby without the prior
consent and approval (oral or written) of the other party.
In the event either party is advised by its counsel that
public disclosure is so required, such party shall provide
the other party with a reasonable opportunity to comment
on the text of the proposed disclosure prior to its
release.

9.15.3. Confidentiality. Buyer agrees that it will treat in
confidence (i) all documents, materials and other
information which it shall have obtained regarding the
Property during the course of the negotiations leading to
the consummation of the transactions contemplated hereby
(whether obtained before or after the effective date) (the
"Confidential Information") and, in the event the
transactions contemplated hereby shall not be consummated,
Buyer will return to Seller all copies of all documents
and materials which have been furnished in connection
therewith. Such Confidential Information shall not be
communicated to any third person (other than Buyer's
design representatives and advisors, including without
limitation, Buyer's lenders, officers, attorneys,
consultants, and contractors ("Buyer's Representatives"),
all of whom shall likewise be bound by this requirement
for confidentiality. A breach of such requirement by such
representatives shall be deemed a breach by Buyer). Buyer
shall not use any Confidential Information in any manner
whatsoever except solely for the purpose of evaluating the
proposed purchase of the Property. The obligation of Buyer
to treat such Confidential Information in confidence shall
not apply to any information which (i) is on the date
hereof or hereafter is a public

-18-

<PAGE> 21

record, or (ii) which becomes generally available to the
public other than as a result of a disclosure, directly or
indirectly, by the Buyer or Buyer's Representatives of
such Confidential Information after the date hereof or
(iii) becomes available on a nonconfidential basis from a
source other than the Seller or its representatives which
source was not itself bound by a confidentiality agreement
with the disclosing party or its representatives.

9.15.4. Breach. In the event of either party's breach of the
foregoing confidentiality requirement, (1) the
non-breaching party shall be entitled without prejudice to
the rights and remedies otherwise available to the
non-breaching party at law or in equity, to equitable
relief by way of injunction if the breaching party or its
representatives breach or threaten to breach the
provisions of this Section; and (2) the breaching party
shall indemnify the other party in respect of any and all
claims, losses, costs, liabilities, and expenses
recoverable at law (excluding attorneys' fees) , resulting
directly or indirectly from or arising out of any breach
of the provisions of this Section by the breaching party
or its representatives.

9.16. Time of Essence. Time is of the essence in the performance of and
compliance with each of the provisions and conditions of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

SELLER:

WITNESSES: FLORIDA POWER CORPORATION,
a Florida corporation

/s/ Kenneth E. Armstrong By: /s/ David L. Miller
- ---------------------------- ---------------------------------
David L. Miller
/s/ Title: Vice President
- ----------------------------
Date: October 2nd, 1997

-19-
<PAGE> 22

BUYER:

ABR PROPERTIES, INC.,
a Florida corporation

/s/ John W. Popron By: /s/ Joseph C. Lukason
- ---------------------------- ---------------------------------
Mr. Joseph C. Lukason
/s/ Title: President
- ----------------------------
Date: October 2, 1997

ESCROW AGENT:

JOHNSON, BLAKELY, POPE, BOKOR,
RUPPEL & BURNS, P.A.

By: /s/ Timothy A. Johnson, Jr.
---------------------------------
Name: Timothy A. Johnson, Jr.
Title: President

-20-

<PAGE> 23
EXHIBIT "A"

LEGAL DESCRIPTION

PARCEL 1:

Lot 1, Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION, according to the
Plat thereof on file in the Office of the Clerk of the Circuit Court in and for
Pinellas County, Florida recorded in Plat Book 67, page 59 and 60, said lands
situate, lying and being in Pinellas County, Florida.

PARCEL 2:

Lot 1, Block "A" FLORIDA POWER HEADQUARTERS SUBDIVISION FIRST ADDITION,
according to the Plat thereof on file in the Office of the Clerk of the Circuit
Court in and for Pinellas County, Florida recorded in Plat Book 94, page 3, said
lands situate, lying and being in Pinellas County, Florida.

PARCEL 3:

The West 710.00 feet of the SE 1/4 of the SE 1/4 of Section 34, Township 31
South, Range 16 East, Pinellas County, Florida, less the South 450.00 feet
thereof, and less the West 50.00 feet thereof for road right-of-way; together
with that part of the North 267.72 feet of said SE 1/4 of the SE 1/4, less the
West 710.00 feet thereof, lying west of Broadwater Plaza, as recorded in Plat
Book 75, Page 63 Public Records of Pinellas County, Florida, being more
particularly described as follows:

Commence at the SE corner of the SE 1/4 of Section 34, Township 31 South, Range
16 East, Pinellas County, Florida; thence N 89 degrees 54'56" W., along the
South boundary of said SE 1/4, a distance of 1323.05 feet to the SW corner of
the SE 1/4 of said SE 1/4; thence N 0 degrees 15'08" E., along the West boundary
of said SE 1/4 of the SE 1/4, a distance of 450.00 feet; thence S 89 degrees
54'56" E., 450.00 feet from and parallel with said South boundary, a distance of
50.00 feet to a point on the last right-of-way line of 37th Street South and the
point of beginning; thence continue S 89 degrees 54'56" E., 450.00 feet from and
parallel with said South boundary, a distance of 660.00 feet; thence N 0 degrees
15'08" E., 710.00 feet from and parallel with said West boundary, a distance of
609.45 feet to a point on an extension of the South boundary of Lot 1, Block 1,
BROADWATER PLAZA, as recorded I Plat Book 75, Page 63, of the Public Records of
Pinellas County, Florida; thence S 89 degrees 52'40" E., along said extension,
23.00 feet to the SW corner of said Lot 1; thence N 0 degrees 15'08" E., along
the West boundary of said Lot 1, a distance of 267.72 feet to the NW corner of
said Lot 1, thence N 89 degrees 52'40" W., along the South boundary of Lot 1,
Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION, as recorded in Plat Book 67,
Pages 59 and 60, Public Records of Pinellas County, Florida, a distance of
683.00 feet to the SW corner of said Lot 1; thence S 0 degrees 15'08" W., along
the East right-of-way line of said 37th Street South, 50.00 feet from and
parallel with the West boundary of said SE 1/4 of the SE 1/4, a distance of
877.61 feet to the point of beginning. All being in the SE 1/4 of Section 34,
Township 31 South , Range 16 East, Pinellas County, Florida.

LESS THAT PORTION THEREOF DESCRIBED AS:

Lot 1, Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION FIRST ADDITION,
according to the Plat thereof on file in the Office of the Clerk of the Circuit
Court in and for Pinellas County, Florida recorded in Plat Book 94, page 3, said
lands situate, lying and being in Pinellas County, Florida.

2
<PAGE> 24

PARCEL 4:

Lot 1, Block 2, BROADWATER PLAZA, according to the Plat thereof on file in the
office of the Clerk of the Circuit Court in and for Pinellas County, Florida
recorded in Plat Book 75, page 63, said lands situate, lying and being in
Pinellas County, Florida.

PARCEL 5:

Lot 1, Block A, PERRY'S SKYVIEW SUBDIVISION, according to the Plat thereof on
file in the Office of the Clerk of the Circuit Court in and for Pinellas County,
Florida recorded in Plat Book 36, page 4, said lands situate, lying and being in
Pinellas County, Florida.

END OF LEGAL DESCRIPTION

<PAGE> 25

EXHIBIT "B"

SCHEDULE OF SELLER'S
TANGIBLE PERSONAL PROPERTY
(except where expressly excluded below)

1. SECURITY SYSTEM

a. All Westinghouse Proximity Readers
b. All Panasonic Cameras, Recorders, Switches & Controllers which
pertain only to the G.O.C. Site
c. On site processing computer using Westinghouse 5850 Software
d. Two (2) Security Golf Carts

The following items shall be excluded from this sale and conveyance:
All Wide Area Network System components, software and auxiliary
equipment, including but not limited to , Video and Remote Site Alarm
monitoring, which shall be retained by Seller.

2. UNINTERRUPTED POWER SUPPLY

Emerson UPS system, 600 kva with 300 kva redundant, expandable to 1200
kva total. Two string 450 kw battery with 2000 amp switchgear

3. ALL CAFETERIA SUPPLIES, EQUIPMENT AND UTENSILS

(1) 55" x 33" Refrigerator
(2) 28" x 27" Refrigerator
(6) Side by Side Refrigerators
(2) Grills
(2) Deep Freezers
(1) Bun Warmer
(1) General Warmer
(1) Oven
(1) 28' x 38" Mixer
(6) Refrigerated Units
(2) 5' Round Tables
(2) 6' Round Tables
(25) 3' Round Tables
(100) Chairs
(1) Sandwich Bar
(1) Salad Bar
(1) Soup Bar
(1) Steam Table
(1) Cold Table

<PAGE> 26

The following items are owned by vendors and will be excluded from
this sale and conveyance:

(2) Ice Machines
(1) Juice Dispenser
(1) Soft Drink Dispenser
(1) Coffee Maker
(1) Yogurt Dispenser

4. MAINTENANCE SUPPLIES, EQUIPMENT AND VEHICLES

a. Four (4) Golf Carts
b. 50% of the on site Service Carts
c. All items in the Maintenance Store Room and in the Electrical
Shed except for all tools which are the property of third party
Vendors
d. The Upright UL-24 Electrical Lift

5. GENERATING EQUIPMENT & SWITCH GEAR

a. Onan/Cummins 300kw emergency power generator and transfer
scheme
b. Caterpillar 1000kw emergency power generator
c. Fuel System, 3 @ 2,000 gallon Convault tanks with Omron
automated pumping and leak detection system - 200 gallon day
tanks on both gensets

6. ALL ROOF ANTENNAS AND AUXILIARY COMMUNICATION EQUIPMENT USED FOR INTER
G.O.C. COMMUNICATION

The following items will be excluded:

a. All equipment related to intra G.O.C. communication
b. The Microwave Dish which is Property of USF

7. AUDITORIUM EQUIPMENT

a. All built-in Audio & Video equipment used exclusively to
support Auditorium operations shall become property of the
buyer, which includes:

(1) Projector-Optical Radiation Corporation
(1) Screen
(2) Speakers JBL
(1) Sony Reel to Reel Tape Recorder
(1) York Controls Decoder
(1) JBL Amplifier
(1) Podium and Controls
(2) 8' Folding Tables

<PAGE> 27
All Black and Chrome Chairs
All PA Equipment

The Seller shall use good faith efforts to label all
disconnected wires

b. All Video Production Equipment which does not support the
operation of the Auditorium shall remain as Personal Property
of the Seller

c. All portable Audio & Video equipment shall remain as personal
property of the Seller

<PAGE> 28

EXHIBIT "C"

COMMONWEALTH LAND TITLE INSURANCE COMPANY

COMMITMENT FOR TITLE INSURANCE
SCHEDULE A

Commitment No.
Company File No. TP229157
Agent File No. FLORIDA POWER CO
Effective Date: August 29, 1997 at 8:00 A.M.

Policy or Policies to be issued:

OWNER'S: $ (TO BE DETERMINED)
ALTA Owners Policy (10/17/92) with Florida modifications

Proposed Insured:

TO BE DETERMINED

LOAN:

Proposed Insured:

NONE

The estate or interest in the land described or referred to in this Commitment
and covered herein is a fee simple, and title thereto is at the effective date
hereof vested in:

FLORIDA POWER CORPORATION, a Florida corporation

The land referred to in this Commitment is described as follows:

LEGAL DESCRIPTION IS ATTACHED HERETO AND MADE A PART HEREOF

Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.
One Harbor Place
P.O. Box 3239
Tampa, FL 33601
(813) 223-7000

Countersigned: ________________________________
Authorized Officer or Agent

VALID ONLY IF FACE PAGE, SCHEDULE B AND COVER ARE ATTACHED

1
<PAGE> 29
Commitment No.
Company File No. TP229157
Agent File No. FLORIDA POWER CO

LEGAL DESCRIPTION

PARCEL 1:

Lot 1, Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION, according to the Plat
thereof on file in the Office of the Clerk of the Circuit Court in and for
Pinellas County, Florida recorded in Plat Book 67, page 59 and 60, said lands
situate, lying and being in Pinellas County, Florida.

PARCEL 2:

Lot 1, Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION FIRST ADDITION,
according to the Plat thereof on file in the Office of the Clerk of the Circuit
Court in and for Pinellas County, Florida recorded in Plat Book 94, page 3,
said lands situate, lying and being in Pinellas County, Florida.

PARCEL 3:

The West 710.00 feet of the SE 1/4 of the SE 1/4 of Section 34, Township 31
South, Range 16 East, Pinellas County, Florida, less the South 450.00 feet
thereof, and less the West 50.00 feet thereof for road right-of-way; together
with that part of the North 267.72 feet of said SE 1/4 of the SE 1/4, less the
West 710.00 feet thereof, lying west of Broadwater Plaza, as recorded in Plat
Book 75, Page 63, Public Records of Pinellas County, Florida, being more
particularly described as follows:

Commence at the SE corner of the SE 1/4 of Section 34, Township 31 South, Range
16 East, Pinellas County, Florida; thence N 89 degrees 54'56" W., along the
South boundary of said SE 1/4, a distance of 1323.05 feet to the SW corner of
the SE 1/4 of said SE 1/4; thence N 0 degrees 15'08" E., along the West
boundary of said SE 1/4 of the SE 1/4, a distance of 450.00 feet; thence S 89
degrees 54'56" E., 450.00 feet from and parallel with said South boundary, a
distance of 50.00 feet to a point on the East right-of-way line of 37th Street
South and the point of beginning; thence continue S 89 degrees 54'56" E.,
450.00 feet from and parallel with said South boundary, a distance of 660.00
feet; thence N 0 degrees 15'08" E., 710.00 feet from and parallel with said
West boundary, a distance of 609.45 feet to a point on an extension of the
South boundary of Lot 1, Block 1, BROADWATER PLAZA, as recorded in Plat Book
75, Page 63, of the Public Records of Pinellas County, Florida; thence S 89
degrees 52'40" E., along said extension, 23.00 feet to the SW corner of said
Lot 1, thence N 0 degrees 15'08" E., along the West boundary of said Lot 1, a
distance of 267.72 feet to the NW corner of said Lot 1; thence N 89 degrees
52'40" W., along the South boundary of Lot 1, Block "A", FLORIDA POWER
HEADQUARTERS SUBDIVISION, as recorded in Plat Book 67, Pages 59 and 60, Public
Records of Pinellas County, Florida, a distance of 683.00 feet to the SW corner
of said Lot 1; thence S 0 degrees 15'08" W., along the East right-of-way line
of said 37th Street South, 50.00 feet from and parallel with the West boundary
of said SE 1/4 of the SE 1/4, a distance of 877.61 feet to the point of
beginning. All being in the SE 1/4 of Section 34, Township 31 South, Range 16
East, Pinellas County, Florida.

LESS THAT PORTION THEREOF DESCRIBED AS:

Lot 1, Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION FIRST ADDITION,
according to the Plat thereof on file in the Office of the Clerk of the Circuit
Court in and for Pinellas County, Florida recorded in Plat Book 94, page 3,
said lands situate, lying and being in Pinellas County, Florida.

2
<PAGE> 30
Commitment No.
Company File No. TP229157
Agent File No. FLORIDA POWER CO

PARCEL 4:

Lot 1, Block 1, BROADWATER PLAZA, according to the Plat thereof on file in the
Office of the Clerk of the Circuit Court in and for Pinellas County, Florida
recorded in Plat Book 75, page 63, said lands situate, lying and being in
Pinellas County, Florida.

PARCEL 5:

Lot 1, Block A, PERRY'S SKYVIEW SUBDIVISION, according to the Plat thereof on
file in the Office of the Clerk of the Circuit Court in and for Pinellas
County, Florida recorded in Plat Book 36, page 4, said lands situate, lying and
being in Pinellas County, Florida.

END OF LEGAL DESCRIPTION

<PAGE> 31

Commitment No.
Company File No. TP229157
Agent File No. FLORIDA POWER CO

SCHEDULE B-SECTION 1

The following are the requirements to be complied with:

1. Payment of the full consideration to or for the account of the grantors
or mortgagors.

2. Instrument(s) creating the estate or interest to be insured must be
approved, executed and filed for record:

a) Warranty Deed from FLORIDA POWER CORPORATION, a Florida corporation
to TO BE DETERMINED.

3. Payment of all taxes, charges, assessments, levied and assessed against
subject premises, which are due and payable.

4. Submit proof from the City of St. Petersburg, that any outstanding
municipal assessments due, have been paid.

5. Partial release of the insured land from that certain Indenture by and
between FLORIDA POWER CORPORATION AND MORGAN GUARANTEE TRUST COMPANY OF
NEW YORK, dated January 1, 1944 and recorded in Mortgage Book 566, page
1, as amended by 38 Supplemental Indentures, the most recent recorded
July 25, 1994 in Official Records Book 8734, page 1574, of the Public
Records of Pinellas County, Florida, whereby FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Trustee, has succeeded to the interest of Trustee under
the Indenture and all Supplemental Indentures.

6. No liability is incurred by this Commitment until the nominee of, and/or
the Proposed Insured is disclosed and approved by this Company, or the
issuing agent herein.

7. Upon receipt of this Commitment, you must obtain written authorization
from the Company to issue the commitment if the amount of the policy or
policies to be issued exceeds your agency limits.

END OF SCHEDULE B-SECTION 1

4
<PAGE> 32
Commitment No. Company File No. TP229157
Agent File No. FLORIDA POWER CO

SCHEDULE B-SECTION 2

Schedule B of the policy or policies to be issued will contain exceptions to
the following matters unless the same are disposed of to the satisfaction of
the company:

1. Defects, liens, encumbrances, adverse claims or other matters, if any,
created, first appearing in the public records or attaching subsequent to
the effective date hereof but prior to the date the proposed Insured
acquires for value of record the estate or interest or mortgage thereon
covered by this Commitment.

2. Rights or claims of parties in possession not shown by the public records.

3. Easements or claims of easements not shown by the public records.

4. Encroachments, overlaps, boundary line disputes, and any other matters
which would be disclosed by an accurate survey or inspection of the
premises.

5. Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public records.

6. Any claim that any part of said land is owned by the State of Florida by
right of sovereignty, and riparian rights, if any.

7. Taxes for the year of the effective date of this Commitment and taxes or
assessments which are not shown as existing liens by the public records or
which may be levied or assessed subsequent to the date hereof. Said taxes
become a lien as of January 1 of each year, but are not due and payable
until November 1 of that same year, pursuant to section 197.333 F.S.

8. Taxes or assessments for the year 1997 and subsequent years, and taxes or
assessments which are not shown as existing liens by the public records.

9. Restrictions, covenants and conditions as contained in the Warranty Deeds
recorded June 9, 1970 and June 10, 1970, respectively in Official Records
Book 3339, page 710 and in Official Records Book 3340, page 443, of the
Public Records of Pinellas County, Florida. (Affects Parcels 2 and 4)

10. Terms and conditions of Sidewalk Covenant recorded October 18, 1971 in
Official Records Book 3644, page 217, of the Public Records of Pinellas
County, Florida. (Affects Parcels 1 and 4)

11. Easement in favor of THE CITY OF ST. PETERSBURG contained in instrument
recorded October 25, 1976 in Official Records Book 4470, page 1286, and
Resolution Accepting Grant of Easement recorded October 25, 1976 in
Official Records Book 4470, page 1285, of the Public Records of Pinellas
County, Florida. (Affects Parcel 2)

12. Restrictions, covenants, conditions and easements as shown on the Plat of
FLORIDA POWER HEADQUARTERS SUBDIVISION FIRST ADDITION, recorded in Plat
Book 94, page 3 of the Public Records of Pinellas County, Florida, which
shows an easement of 20 feet along the NORTH property line for SANITARY
SEWER purposes, as set out and reserved on said Plat. (Affects Parcel 2)

13. Easement in favor of FLORIDA POWER CORPORATION contained in instrument
recorded October 8, 1976 in Official Records Book 4465, page 367, of the
Public Records of Pinellas County, Florida. (Affects Parcel 4)

5
<PAGE> 33
Commitment No. Company File No. TP229157
Agent File No. FLORIDA POWER CO.

14. Restrictions, covenants, conditions and easements as shown on the Plat of
BROADWATER PLAZA, recorded in Plat Book 75, page 63 of the Public Records
of Pinellas County, Florida, which shows an easement of 10 feet along the
West property line for utility purposes, as set out and reserved on said
Plat. (Affects Parcel 4)

15. Easement over the West 5 feet of Parcel 5 herein for public utilities, as
shown and noted upon the plat of PERRY'S SKYVIEW SUBDIVISION, recorded in
Plat Book 36, page 4, Public Records of Pinellas County, Florida. (Affects
Parcel 5)

16. Easement in favor of FLORIDA POWER CORPORATION contained in instrument
recorded February 5, 1969 in Official Records Book 3008, page 431, of the
Public Records of Pinellas County, Florida. (Affects Parcel 5)

17. Easement in favor of the CITY OF ST. PETERSBURG contained in instrument
recorded February 10, 1969 in Official Records Book 3011, page 344, of the
Public Records of Pinellas County, Florida. (Affects Parcel 5)

18. Easement in favor of COMMUNITY BANKS OF FLORIDA, INC. contained in
instrument recorded November 10, 1977 in Official Records Book 4621, page
919, of the Public Records of Pinellas County, Florida. (Affects Parcel 5)

19. Easement in favor of COMMUNITY BANKS OF FLORIDA, INC. contained in
instrument recorded March 22, 1978 in Official Records Book 4673, page
593, of the Public Records of Pinellas County, Florida. (Affects Parcel 5)

20. Title to any portion of the premises lying within the bounds of State Road
No. 55, as shown by plat recorded in Deed Book 1172, page 521, Public
Records of Pinellas County, Florida. (Affects Parcel 5)

21. Terms and conditions of unrecorded leases, if any.

Note: Item 7 above is hereby deleted.

END OF SCHEDULE B-SECTION 2

6
<PAGE> 34
EXHIBIT "D"

Permitted Exceptions

1. 1997 ad valorem real estate taxes.

2. Restrictions, covenants, and conditions and easements as shown on the Plat
of Florida Power Headquarters Subdivision First Addition, recorded in Plat
Book 94, page 3 of the Public Records of Pinellas County, Florida.
<PAGE> 35

EXHIBIT "E"

LEASE

COMMERCIAL LEASE

THIS COMMERCIAL LEASE ("Lease") is made and entered into as of the 2nd
day of October, 1997, by and between ABR PROPERTIES, INC., a Florida
corporation, having its offices at 34125 U.S. Highway 19 North, Palm Harbor,
Florida, as landlord ("Landlord"), and FLORIDA POWER CORPORATION, a Florida
corporation, having its offices at 3201 34th Street South, St. Petersburg,
Florida, as tenant ("Tenant").

W I T N E S S E T H:

1. LEASED PREMISES. Landlord hereby leases to Tenant, for the Term (as
defined in Paragraph 2), at the Rent (as defined in Paragraph 3), and upon the
other terms and conditions hereinafter set forth, that certain office complex
consisting of that certain real property located in the County of Pinellas,
State of Florida, and being more particularly described on EXHIBIT "A" TO LEASE
attached hereto and incorporated herein by reference, containing 51.47 acres,
more or less ("Property"), together with the following:

a. All and singular the rights and appurtenances pertaining thereto,
including any right, title and interest of Landlord in and to adjacent streets,
roads, alleys, easements and rights of way, and including all sewer and water
infrastructure, drainageways and other utilities, and all site improvements
situated thereon; and

b. The twelve (12) buildings ("Buildings") as currently constructed
and situated on the Property, together with all fixtures, equipment and other
improvements attendant thereto; and

c. Those items of tangible personal property ("Personalty")
identified on EXHIBIT "B" TO LEASE attached to this Lease and incorporated
herein by this reference. Any security system and uninterrupted power supply
systems constituting a portion of the Personalty, may sometimes be collectively
referred to in this Lease as the "Systems."

The Property, Buildings, rights, interests, improvements, and other
appurtenances described above (other than the Personalty) are collectively
called the "Leased Premises."

It is the mutual intent of the parties that the Leased Premises initially shall
include the entire office complex and grounds situated at 3201 34th Street
South, St. Petersburg, Florida, and at 3401 34th Street South, St. Petersburg,
Florida, together with the

<PAGE> 36
Personalty (the "Entire Complex"). tenant shall vacate and release to Landlord
(and such area and associated Personalty shall thereupon be released and
excluded from the Leased Premises covered by this Lease) that portion of the
Leased Premises comprised of all of the third floor and the portion of the
first floor known as the PBX room of Building B, on March 31, 1998. This
portion of the Property and term shall be referred to herein as "Phase IA."
Tenant shall vacate and release to Landlord (and such area and associated
Personalty shall thereupon be released and excluded from the Leased Premises)
that portion of the Leased Premises comprised of the balance of Building B and
the area fifteen (15) feet from the front of such building and twenty-five
(25) feet from the sides and back of such building, on May 31, 1998. This
portion of the Property and term shall be referred to herein as "Phase IB."
Phase IA and Phase IB may hereinafter collectively be referred to as Phase I.
Tenant shall vacate and release to Landlord (and such area and associated
Personalty shall thereupon be released and excluded from the leased Premises)
that portion of the Leased Premises comprised of Buildings C, D (and the
expansions/additions to Buildings C and D), F and K and the area fifteen (15)
feet from the front of such buildings and twenty-five (25) feet from the sides
and backs of such buildings, on September 30, 1998. This portion of the
Property and term shall be referred to herein as "Phase II." The remaining
Leased Premises, and associated Personalty, and term shall be referred to
herein as "Phase III." Prior to vacation by Tenant of Phase I and Phase II,
Tenant, at Tenant's sole cost, shall install electric meters for the buildings
(individually or in the aggregate) comprising the vacated Phase.

2. TERM. The term of this Lease ("Term") shall be for a period of
approximately eighteen (18) months, commencing on October 2, 1997, and ending
on March 31, 1999. In no event shall Tenant have the right to extend the Term
or occupy the Leased Premises beyond March 31, 1999.

3. RENT. Subject to the other provisions of this Lease, Tenant
covenants and agrees to pay Landlord rent ("Rent") for the Leased Premises and
the Personalty during the Term in the amount of Five Million Seven Hundred
Fourteen Thousand Eighteen and no/100 Dollars ($5,714,018.00). Tenant shall
pay Rent to Landlord as follows:

a. Five equal monthly installments, exclusive of applicable sales
tax, of Four hundred Fifty-Seven Thousand Nine Hundred Fifty-Eight and 33/100
Dollars ($457,958.33) shall be payable in advance on the first day of each
calendar month during the period November 1, 1997, through March 31, 1998.

b. Six equal monthly installments, exclusive of applicable sales
tax, of Three Hundred Eight Thousand Six Hundred Twenty and 83/100 Dollars
($308,620.83) shall be payable in advance on the first day or each calendar
month during the period April 1, 1998, through September 30, 1998.

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<PAGE> 37

c. Six equal monthly installments, exclusive of applicable sales
tax, of One Hundred Eighty-Five Thousand Seven Hundred Fifty-Seven and 16/100
Dollars ($185,757.16) shall be payable in advance on the first day of each
calendar month during the period October 1, 1998, through March 31, 1999.

In addition to the foregoing, concurrently with Landlord's execution and
delivery of this Lease, Tenant shall deliver to Landlord the payment of Rent for
the month of October, 1997, in the amount of Four Hundred Fifty-Seven Thousand
Nine Hundred Fifty-Eight and 33/100 Dollars ($457,958.33).

All Rent shall be paid in the form of a wire transfer to Landlord's designated
account. A late charge of five percent (5%) shall be immediately due and owing
with respect to each installment of rent not received by Landlord's bank within
five (5) days after its due date.

Except as may hereinafter specifically be set forth, no adjustment shall be made
in the Rent on account of the unavailability to Tenant of any Personalty as a
result of Tenant's election not to repair or replace such Personalty during the
Term.

4. SALES TAX. Along with and in addition to each monthly payment of
Rent under this Lease, Tenant shall pay to Landlord, as additional rent under
this Lease, sales or privilege tax required by Section 212.031, Florida
Statutes, and any amendments or replacements thereof, to the extent applicable
to this Lease. Such tax is presently payable at the rate of seven percent (7%)
of the total Rent.

5. USE. Tenant agrees that Tenant will use the Leased Premises in the
manner consistent with Tenant's use of the Premises prior to the Landlord's
acquisition of title to the Leased Premises.

6. SERVICES AND OPERATION. Tenant shall be responsible for, at Tenant's
sole cost and expense, any and all utilities and services required for those
portions of the Leased Premises with respect to which Tenant is required to pay
Rent hereunder, and the associated Personalty and/or necessary for the routine
maintenance, upkeep and operation of the Leased Premises and the Systems, or
applicable portions thereof, in the manner in which the Leased Premises and the
Systems were maintained, kept and operated prior to the commencement of the
Term. Tenant shall provide general security, utilities, and other services for
the Leased Premises in the manner in which such services are provided prior to
the Landlord's acquisition of title to the Leased Premises. Tenant acknowledges
that all services for the Leased Premises covered by this Lease from time to
time during the Term, including, without limitation, electricity, gas,
telephone, water and sewer, are, as of the commencement date of this Lease, in
Tenant's name and shall remain in Tenant's name for the Term, provided, however,
that the services for portions of the Leased Premises released to Landlord shall
be transferred to Landlord's name, if practical, upon the commencement of Phase
II and Phase III, respectively. In the event that

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<PAGE> 38

charges with respect to such utilities or services which are thus transferred
are not readily ascertainable, then Landlord shall pay to Tenant the Landlord's
proportionate share of services within ten (10) days of Tenant's notice of the
amount due from Landlord. Landlord's proportionate share shall be the ratio
which the Building area released to Landlord at the time the expense was
incurred bears to 383,000 square feet. Such payments shall be reconciled on a
quarterly basis. Tenant shall pay any and all amounts due for such utilities
or services which are not separately metered applicable to the Entire Complex
before they are delinquent, and shall keep the Entire Complex free and clear
of any and all liens arising from Tenant's contracts for, and use of such
utilities or services. Except as hereinafter provided in this Paragraph and
Paragraph 9, in no event shall Tenant be relieved of its obligation to timely
pay the Rent on account of any interruption or cessation of utilities or
services, nor shall any such interruption or cessation place Landlord in
default or alter in any way the obligations of Tenant under this Lease. If
such an interruption or cessation (i) is caused by the negligent act or
omission of Landlord or Landlord's agents, employees, or contractors and
continues for more than five (5) days or (ii) Landlord fails with the exercise
of due diligence to complete a repair or replacement required by this Lease to
be made by Landlord within the later of (x) five (5) days after receiving
notice that the need therefor exists or (y) the period after receipt of such
notice within which Tenant could reasonably have completed the repair or
replacement itself had it commenced to undertake to do so on the date Landlord
receives such notice, then Tenant's obligation to pay the Rent shall be
reduced proportionately to reflect the area of the Leased Premises affected by
the interruption or cessation and the length of such interruption or cessation
following the applicable allowable repair period.

7. REAL ESTATE TAXES. Landlord shall pay all real estate taxes and
general and special fees or assessments, foreseen or unforeseen, attributable to
the Leased Premises for all of calendar year 1997 (taxes having been prorated
upon the purchase of the Leased Premises from Tenant by Landlord) and any period
of time included within the Term.

8. QUIET ENJOYMENT. Landlord covenants that so long as Tenant is not in
material default hereunder (beyond the expiration of any applicable cure
period), Tenant shall, and may peaceably and quietly have, hold and enjoy the
rights conferred by this Lease and exclusive possession of those portions of the
Leased Premises entitled to be occupied by Tenant from time to time during the
Term. Notwithstanding the foregoing, during Tenant's business hours, Tenant
shall allow Landlord access to an area of Building B during Tenant's occupancy
for the installation of communications and data equipment. Such access shall be
provided and utilized only through areas designated by Tenant.

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<PAGE> 39

9. MAINTENANCE AND REPAIR.

a. The parties acknowledge that Tenant has occupied the Leased
Premises prior to the commencement of this Lease and Tenant is familiar with the
Leased Premises. Tenant accepts the Leased Premises and the Personalty in their
condition at the beginning of the Term, and acknowledges that the Leased
Premises and the Personalty are in satisfactory condition and assumes
responsibility throughout the Term, at Tenant's sole cost and expense, to
perform such ordinary and routine maintenance as may be required to maintain the
Leased Premises and the Personalty in a manner consistent with the condition of
the Leased Premises and the Personalty at the beginning of the Term (normal wear
and tear, damage by casualty, design defect or obsolescence excepted). Tenant
shall use reasonable precautions to prevent waste, damage or injury thereto.
Tenant's maintenance obligations under this Paragraph shall include, without
limitation, customary maintenance of the Personalty, the Buildings, all
generators, heating and air conditioning systems, elevators, electrical systems,
plumbing systems, other mechanical equipment, and the site and grounds,
including, without limitation, driveways, parking areas, drainage and other
utility structures, walkways, canopies, patios, common areas and landscaped
areas. Anything in the foregoing provisions to the contrary notwithstanding,
Tenant shall not be required to replace any Personalty or portions of the Leased
Premises if the cost of such item is a capital expenditure which may be
depreciated for purposes of federal income taxes, nor shall Tenant be required
to replace, repair or restore structural portions of the Leased Premises or the
roof, floors and major equipment on the Leased Premises. Notwithstanding any of
the foregoing to the contrary Tenant shall not be responsible for, and Landlord
shall repair at its sole cost and expense, any damage to the Leased Premises
caused by Landlord or its servants, agents, employees or contractors and shall
make and perform all repairs (except as to any items listed on EXHIBIT "B," as
to which Landlord has no repair or replacement responsibility) which are not the
Tenant's responsibility. Tenant shall have no obligation for any portions of the
Entire Complex released to Landlord except for continued provision of
maintenance services for the grounds, landscaping, and common areas until the
end of Phase II (September 30, 1998) and general security services through the
Term of this Lease. No less than twenty (20) days prior to the end of the Term,
Tenant shall make available to Landlord at reasonable times Tenant's maintenance
staff for the purpose of educating Landlord with respect to maintenance of the
Leased Premises.

b. Tenant agrees that Landlord or Landlord's representative(s) shall
have the right upon reasonable notice and during customary business hours to
enter upon and to inspect the Leased Premises and Personalty to ascertain that
Tenant is carrying out the terms, conditions and provisions of this Lease and to
make repairs for which the Landlord is responsible, provided no such entry or
access shall disturb or interfere with Tenant's lease operations on the
Premises. If such inspections identify any failure of the condition of the
Leased Premises or the Personalty to comply with Tenant's obligations under this
Lease, then Landlord shall so notify Tenant in writing, and Tenant shall
immediately effect such repairs and/or replacements as are necessary

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<PAGE> 40

to insure compliance by Tenant with Tenant's obligations under this Lease. In
the event that Tenant fails to effect any such repairs and/or replacements,
curing Tenant's default, then Landlord shall be entitled (but not required) to
effect such repairs and/or replacements, at Tenant's sole cost and expense, and
Tenant shall reimburse Landlord for such cost and expense immediately upon
demand therefor.

c. If Landlord has failed to comply with Landlord's repair or
replacement obligations under this Lease, then Tenant shall so notify Landlord
in writing, and Landlord shall immediately effect such repairs and/or
replacements as are necessary to insure compliance by Landlord with Landlord's
obligations under this Lease. In the event that Landlord fails to effect any
such repairs and/or replacements, curing Landlord's default, then Tenant shall
be entitled (but not required) to effect such repairs and/or replacements, at
Landlord's sole cost and expense, and Landlord shall reimburse Tenant for such
cost and expense immediately upon demand therefor.

10. HAZARDOUS MATERIALS.

a. Hazardous Materials.

(1) Tenant and Tenant's Affiliates shall not (i) excavate, dump,
or bury any refuse on the Leased Premises or (ii) use, handle, store, display or
generate Hazardous Materials in, on, around or under the Leased Premises in a
manner that violates applicable laws. For purposes of this Lease, the term
"Hazardous Materials" shall mean those substances defined as "hazardous
substances," "hazardous materials," "hazardous waste," or "toxic substances" in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. ss.9601, et seq.); the Hazardous Materials
Transportation Act (49 U.S.C. ss.1801, et seq.); the Resource Conservation and
Recovery Act (42 U.S.C. ss.6901, et seq.); and in any regulations adopted and
promulgated pursuant to the foregoing, and any state, county or local laws,
regulations and ordinances enacted with respect to any of such materials or
substances. Tenant hereby agrees to defend, indemnify and hold Landlord harmless
from and against any and all claims, lawsuits, liabilities, losses, damages and
expenses (including, without limitation, clean up costs and reasonable
attorneys' fees arising by reason of Tenant's unlawful use, handling, storage,
display, generation, removal, release, or discharge of Hazardous Materials
during the Term) arising from, out of, or by reason of any breach of this
Paragraph 10.a., occurring during the Term.

(2) In addition to any other inspection and access rights that
Landlord may have under the terms of this Lease, Landlord shall have the right
to have third party professionals inspect and monitor those portions of the
Leased Premises which may contain asbestos-containing materials to determine
whether such materials exist, the extent and scope of their presence, and the
projected cost of removal and/or containment thereof; provided that Landlord
will not perform any remediation activities except as to the portions of the
Entire Complex then released to Landlord,

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<PAGE> 41

and, further, that Landlord shall exercise its inspection and access rights in a
manner that does not cause a release of Hazardous Materials or unreasonably
interfere with Tenant's business. Tenant agrees to cooperate with Landlord in
Landlord's investigation. Landlord's access shall be made across and through
areas reasonably designated by Tenant. Tenant acknowledges that Landlord will be
conducting asbestos removal and construction activities with respect to those
portions of the Entire Complex which have been vacated by Tenant as provided
herein; PROVIDED, HOWEVER, (i) LANDLORD MAY NOT CONDUCT ASBESTOS OR OTHER
HAZARDOUS MATERIALS REMOVAL ACTIVITIES IN BUILDING B SO LONG AS TENANT REMAINS
IN OCCUPANCY OF ANY PORTION THEREOF AND (ii) LANDLORD'S OTHER ACTIVITIES IN
BUILDING B PRIOR TO TENANT'S VACATION THEREOF SHALL NOT INTERFERE WITH TENANT'S
BUSINESS OPERATIONS. Such activities shall be conducted in a commercially
reasonable manner and in compliance with all laws, rules regulations and
ordinances of all agencies and authorities having jurisdiction. Tenant will take
all reasonable precautions to exclude its officers, directors, employees, guests
and invitees from those areas where such activities are being conducted. To the
extent feasible, Landlord shall utilize the portions of the Entire Complex
vacated by Tenant for staging of equipment and personnel and parking for the
forces performing such removal and construction activities. Tenant shall
authorize Landlord to utilize portions of the Entire Complex still in the
possession of Tenant and reasonably designated by Tenant for the staging of
equipment which cannot feasibly be accommodated on the portions of the Entire
Complex vacated by Tenant.

(3) Landlord and Landlord's Affiliates shall not use, handle,
store, display, generate, remove, release, or discharge Hazardous Materials in,
on, around or under the Entire Complex in a manner that violates applicable laws
rules regulations and ordinances of all agencies and authorities having
jurisdiction. Landlord hereby agrees to defend, indemnify and hold Tenant
harmless from and against any and all claims, lawsuits, liabilities, losses,
damages and expenses (including, without limitation, clean up costs and
reasonable attorneys' fees arising by reason of Landlord's activities relating
to Hazardous Materials during the Term) arising from, out of, or by reason of
any breach of this Paragraph 10.a., occurring during the Term.

b. Tenant, for itself and Tenant's Affiliates, hereby releases
Landlord, and its officers, directors, employees, agents and representatives
from, and waives any rights of indemnification or contribution that Tenant, or
Tenant's Affiliates, may have against Landlord, its officers, employees, agents
or representatives with respect to the presence or release of Hazardous
Materials at, on, under or about the Leased Premises, except to the extent that
Landlord, or its servants, agents, employees or contractors cause or permit such
presence or release to occur in connection with their activities at the Leased
Premises or in the Entire Complex.

11. INTENTIONALLY OMITTED.

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12. ACCESS TO PREMISES. Landlord or Landlord's agents and designees
shall have the right, but not the obligation, to enter upon the Leased Premises
at reasonable times and after reasonable notice, in a manner that will not
unreasonably interfere with Tenant's business, to examine the Leased Premises
for any and all purposes necessary to carry out the terms and provisions of this
Lease, including, without limitation, for planning for any architectural
alterations to be made by Landlord in anticipation of the expiration of each
Phase or the Term, and for any and all other purposes relative to Landlord's
exercise of Landlord's rights and remedies under the terms of this Lease.

13. LIABILITY. Except as provided in Paragraph 15 below, Tenant agrees
to and shall indemnify, defend and hold Landlord and its officers, directors,
agents, servants and employees harmless from and against all causes of action,
claims, damages, losses and expenses, excluding attorneys' fees, resulting from
or arising out of bodily injury, sickness, disease or death, or injury to or
destruction of tangible property, occurring at, on, in or about the those
portions of the Leased Premises occupied by Tenant from time to time hereunder,
except to the extent caused by Landlord or Landlord's servants, employees,
agents or contractors. Landlord shall not be liable for any damage or injury to
the Leased Premises, the Personalty, Tenant's property, Tenant, or Tenant's
Affiliates arising from any use or condition of the Leased Premises or the
Personalty, including, without limitation, any sidewalk or entranceway, or any
damage or injury resulting from the presence or release of Hazardous Materials
at, on, under or about the Leased Premises, or the malfunction of any equipment
or apparatus serving the Leased Premises, including, without limitation, the
Personalty, except to the extent caused by Landlord or Landlord's servants,
employees, agents or contractors. In addition to the indemnities provided in
Paragraphs 10(a)(3) and 15, Landlord agrees to and shall indemnify, defend and
hold Tenant and its officers, directors, agents, servants and employees harmless
from and against all causes of action, claims, damages, losses, and expenses,
except attorneys' fees, resulting from or arising out of bodily injury,
sickness, disease or death, or injury to or destruction of tangible property,
resulting from or arising out of the acts of Landlord or Landlord's servants,
employees, agents or contractors

14. LIABILITY INSURANCE. Tenant shall, at its sole cost and expense, at
all times during the Term, maintain in full force and effect a policy or
policies of general commercial liability insurance, including property damage,
written by one or more responsible insurance companies licensed to do business
in the State of Florida, insuring Tenant, and naming Landlord as an additional
insured, against claims for loss of life, bodily injury and property damage
occurring in, on or about the Leased Premises or with respect to the business
operated by Tenant in the Leased Premises. The limit on public liability
coverage shall not be less than Five Million and no/100 Dollars ($5,000,000.00)
for combined single-limit bodily injury, death, and property damage liability. A
copy of a certificate of such insurance shall be delivered to Landlord
concurrently with Tenant's execution of this Lease, and copies or certificates
with respect to all renewals, extensions or replacements thereof shall be
thereafter

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furnished to Landlord at least ten (10) days prior to the expiration or
cancellation of any policies which they replace.

15. TENANT AND LANDLORD RISK. Tenant agrees that all personal property
brought into the Leased Premises by Tenant or Tenant's Affiliates shall be at
the sole risk of Tenant and Tenant's Affiliates. Landlord shall not be liable
for theft thereof or of any money deposited therein or for any damages thereto
unless such loss or damage is caused by the willful or negligent act of Landlord
or Landlord's employees, contractors or agents. Tenant hereby assumes all risk
of personal injury arising on, or in connection with the Leased Premises
suffered by Tenant or Tenant's Affiliates, and indemnifies, defends and holds
Landlord harmless from and against any and all damages and liabilities that may
arise in connection with any such injury, except to the extent caused by
Landlord or its servants, employees, agents or contractors. Landlord hereby
assumes all risk of personal injury arising on, or in connection with the Leased
Premises suffered by Landlord or Landlord's Affiliates, and indemnifies, defends
and holds Tenant harmless from and against any and all damages and liabilities
that may arise in connection with any such injury, except to the extent caused
by the willful or negligent act of Tenant or its servants, employees, agents or
contractors.

16. FIRE OR OTHER CASUALTY: CASUALTY INSURANCE.

a. In case of fire or other casualty to the Leased Premises, or any
portion thereof, Tenant shall immediately give notice thereof to Landlord.

b. If any of the Buildings shall be partially or totally destroyed
by fire or other casualty so as to render the Leased Premises or portions
thereof untenantable, Tenant may elect, by delivering written notice to Landlord
within thirty (30) days of the occurrence of such destruction, to either (i)
require Landlord to repair, restore and rebuild the Leased Premises (but not the
Personalty) at Landlord's cost and expense); or (ii) cancel this Lease or the
portion thereof attributable to any or all Buildings(s) or the Personalty
suffering damage, effective as of the date of such damage; provided, however,
that (i) in the event the repairs required to be made by the Landlord cannot be
completed within six (6) months and the Leased Premises will be inadequate for
Tenant's business purposes as a result of the casualty (as reasonably determined
by Tenant), or (ii) in the event any material damage occurs within the final six
(6) months of the Term, then this Lease shall cancel on the date of such damage
as to the Building(s) and the Personalty are so damaged and Tenant shall not
have the option to require the Landlord to rebuild. If Tenant fails to timely
notify Landlord of any election available to Tenant hereunder, then Tenant shall
be deemed to have elected to require the Landlord to repair and restore the
Leased Premises, taking into consideration Landlord's future plans for the
Leased Premises. Anything herein to the contrary notwithstanding, during the
period any such portion of the Leased Premises shall be untenantable or if this
Lease is canceled as a result of such damage or destruction, then rent for the
Premises shall be reduced by an amount

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equal to the ratio of untenantable area to the entire Leased Premises together
with an equitable adjustment for any remaining portion for which Tenant's
continued use or access is impaired as a result of such damage or destruction.
Any unearned prepaid rent shall be refunded to Tenant within ten (10) days after
the casualty.

c. Landlord shall keep the Leased Premises fully insured against
such contingencies as are normally covered by fire and extended coverage
insurance with "all risk" or "all perils" coverage for the full cost of
replacement of the Leased Premises and the Personalty, together with an
inflation endorsement. Tenant agrees that it also will be responsible for and
will maintain such insurance covering its own property located at the Leased
Premises as Tenant deems appropriate, and will not hold Landlord responsible for
any such loss or damage. All insurance proceeds from casualty damage to the
Leased Premises and/or Personalty shall be deemed the property of Landlord, and
Tenant shall have no claim thereto.

17. WAIVER OF SUBROGATION. All insurance policies carried by Landlord
covering the Leased Premises, as required by the provisions of this Lease, shall
expressly waive any right on the part of the insurer to make any claim against
the Tenant. Landlord and Tenant each hereby waive all claims, causes of action
and rights of recovery against the other and their respective agents, officers
and employees, for any damage to, or destruction of, persons, property or
business which shall occur on or about the Leased Premises and the Personalty
and shall result from any of the perils insured under any and all policies of
insurance maintained by Landlord and Tenant, regardless of cause, including the
negligence and intentional wrongdoing of either party and their respective
agents, officers and employees, but only to the extent of recovery, if any,
under such policy or policies of insurance; provided, however, that this waiver
shall be null and void to the extent that any such insurance shall be
invalidated by reason of this waiver.

18. EMINENT DOMAIN.

a. If all or any material portion of the Leased Premises is taken
by any condemning authority (other than Tenant) by statute or right of eminent
domain, Tenant may elect to either (i) cancel this Lease either totally or for
that portion of the Leased Premises so taken, and in the event of a partial
termination, this Lease shall be amended to reflect the release of the canceled
portion and a reduction in Rent equal to the proportion of the Buildings
released (based upon the square footage of the portion of the Building so taken
relative to the total square footage of all of the Buildings), or (ii) continue
the Lease in full with a proportionate reduction in Rent for the period the
portion of the Leased Premises is not useable by Tenant, and during such period,
the taken portion shall be released from the terms of this Lease. Such election
shall be made in writing within thirty (30) days of the date possession is
required by the condemning authority. In the event Tenant elects to continue
this Lease, either totally or partially, then Landlord and Tenant shall
cooperate in good faith to prepare plans and specifications for repairs
reasonably necessary to restore the remaining portion of

-10-

<PAGE> 45

the Leased Premises to a tenantable condition, considering Landlord's future
plans for the Leased Premises. Landlord shall make available to Tenant that
portion of the condemnation proceeds allocable (in the reasonable judgment of
the parties) to the Buildings to be repaired up to the full costs of repairs. If
the parties cannot reach agreement on the scope and nature of the necessary
repairs, the plans and specifications for such repairs or the use of the
condemnation proceeds in connection with such repairs, then Tenant may cancel
this Lease upon written notice to Landlord, and any unearned prepaid rent shall
be refunded to Tenant.

b. All awards and proceeds payable on account of any taking,
whether whole or partial, shall be paid to Landlord and Tenant as their
interests may appear. Nothing herein shall limit Tenant's right to seek damages
from the condemning authority for business loss or interruption or relocation
expense.

c. Tenant agrees that Tenant shall not exercise any right or power
it may have to condemn the Leased Premises, or the Personalty, or any portion
thereof, during the Term.

19. DEFAULT.

a. In case of (i) failure by Tenant to pay any installment of Rent,
additional rent, or other charges within five (5) days after such payment is
due, or (ii) failure of Tenant to commence to cure any non-monetary default
within twenty (20) days after written notice of such default from Landlord to
Tenant (or Tenant's failure to pursue such cure to completion within a
reasonable time thereafter), then Landlord shall have the following rights under
the provisions of this Lease or by law, and at Landlord's option:

(1) Landlord may cancel this Lease by written notice to Tenant,
without, however, waiving Landlord's right to collect all installments of Rent
and other payments due or owing for the period up to the time Landlord regains
occupancy.

(2) As Tenant's agent, without canceling this Lease, Landlord
may enter upon and rent the Leased Premises at the best price obtainable by
reasonable effort and by private negotiations and for any term Landlord deems
proper. Tenant shall be liable to Landlord for the deficiency, if any, between
the Rent due under this Lease and the total rental applicable to the lease
obtained by Landlord on re-letting, after deducting Landlord's expenses in
restoring the Leased Premises and all costs incident to such re-letting,
including, without limitation, brokerage commissions. The total rental
applicable to the term obtained by Landlord on such re-letting shall be the
property of the Landlord, and Landlord shall not be liable to Tenant for any
excess thereof over the rental reserved hereunder, the rights to any such
excess, if any, being hereby waived by Tenant.

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<PAGE> 46

(3) If Landlord shall pay any charge or expense or make any
expenditures for which Tenant is responsible under this Lease, or if Tenant
should fail to make any payment, including, without limitation, Rent and
additional rent, which Tenant is obligated to make under the terms and
provisions of the Lease, or if Tenant should fail to perform any maintenance or
make any repairs which Tenant is obligated to perform or make under the terms
and provisions of this Lease, then Tenant shall reimburse Landlord for such
charge or expense, including, without limitation, the cost and expense of
performing any maintenance or making any repair, and such reimbursement shall be
due and payable upon demand by Landlord and shall bear interest at the lesser of
18% annually or the highest lawful rate from the time of demand until paid.

(4) All rights and remedies of Landlord set forth above shall be
cumulative and shall not exclude any other right or remedy allowed by this
Lease, at law or in equity, including, without limitation, Landlord's rights to
enjoin any default or breach of Tenant, and to invoke or pursue any summary
proceedings.

b. If Landlord fails to perform any covenant or agreement required
of it in this Lease to be performed, then, if such default continues for twenty
(20) days after written notice of such default from Tenant to Landlord, Tenant
may (but shall not be required to) cure such default on behalf of and at the
expense of Landlord, and Landlord shall reimburse Tenant the amount so paid by
Tenant together with interest at the lesser of 18% annually or the highest
lawful rate from the time of demand until paid. If the default cannot be cured
within twenty (20) days, then unless Tenant's business operations shall be
interrupted or its property damaged or threatened, Landlord shall not be in
default if Landlord shall have commenced within such period to correct the
default and if Landlord shall complete the cure of such default within the
period after receipt of such notice within which Tenant could reasonably have
completed the repair or replacement itself had it commenced to undertake to do
so on the date Landlord receives such notice. All rights and remedies of Tenant
set forth above shall be cumulative and shall not exclude any other right or
remedy allowed by this Lease, at law or in equity, including, without
limitation, Tenant's rights to enjoin any default or breach of Landlord, and to
invoke or pursue any summary proceedings.

20. FAILURE TO INSIST ON STRICT PERFORMANCE. The failure of either
party to insist, in any one or more instances, upon strict performance of any
covenant of this Lease shall not be construed as a waiver or relinquishment
thereof, but the same shall continue and remain in full force and effect. The
receipt by Landlord of Rent with knowledge of the breach of any covenant of
Tenant hereunder, or the payment by Tenant of Rent with the knowledge of the
breach of any covenant of Landlord hereunder, shall not be deemed a waiver of
the rights of either party with respect to such breach, and no waiver by either
party of any provision hereof shall be deemed to have been made unless expressed
in writing and signed by the party benefited by such provision.

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<PAGE> 47

21. SURRENDER OF LEASED PREMISES.

a. Surrender. Tenant shall, upon the termination of each Phase and
of this Lease, by lapse of time, default of Tenant and exercise by Landlord of
Landlord's remedies, or otherwise, return the Leased Premises and the Personalty
to Landlord in substantially as good condition as when received, ordinary wear,
excepted, and damage by casualty, condemnation or the acts of Landlord and
Landlord's agents, employees, contractors, and licensees, and matters for which
Tenant is not responsible under this Lease, excepted.

b. Alterations, Improvements and Remodeling. During the term of
this Lease, Tenant shall have the right to make any alterations, changes and
improvements to the Leased Premises, at its own expense, provided Tenant obtains
all governmental permits and approvals required in connection with such work and
the approval of Landlord, which approval will not be unreasonably withheld or
delayed. Tenant shall also have the right to make other on-site improvements and
alterations to the existing Buildings provided Tenant obtains all governmental
permits and approvals required in connection with such work and the approval of
Landlord, which approval will not be unreasonably withheld or delayed. Tenant is
hereby authorized to make non-structural changes to the interior of the
Buildings which do not include the movement of any walls. Tenant agrees to
remove its signs from the Leased Premises at the expiration of this Lease and to
repair any damage caused by such removal. Tenant shall have the right, at its
sole expense, to remove any and all alterations, improvements, and equipment
installed by Tenant on the Leased Premises during the term of this Lease as long
as Tenant repairs any damage caused to the Leased Premises by such removal. Any
and all alterations and improvements made by Tenant during the term of this
Lease and not so removed shall become the property of Landlord following
expiration of the Lease term.

c. Equipment. Tenant may install in, and remove from, the Leased
Premises, such furniture, equipment, and machinery as may be necessary or
appropriate to its business on the Leased Premises. If Tenant shall remove such
property from the Leased Premises, it shall repair any damage done by such
installation and removal. Any items of personal property including those owned
by Tenant that are not removed from the Leased Premises within thirty (30) days
after the expiration or earlier termination with respect to each Phase of this
Lease shall be deemed abandoned by Tenant and shall become the property of
Landlord.

22. HOLDING OVER. If Tenant occupies any Phase or the Leased Premises
after the termination of such Phase or of this Lease without Landlord's prior
written consent, which consent may be withheld in Landlord's sole and absolute
discretion, as applicable, then Tenant shall be a tenant-at-sufferance only,
subject to all of the terms and provisions of this Lease at twice the
then-effective Rent. Such a holding over shall not constitute an extension or
renewal of this Lease.

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<PAGE> 48

23. INTENTIONALLY OMITTED.

24. SUBORDINATION: ATTORNMENT. This Lease shall be subject and
subordinate to any mortgage or other financing which now or hereafter encumbers
or affects the Leased Premises, or any portion thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof, provided any
such mortgagee will agree that as long as Tenant is not in default under any of
its obligations hereunder and shall fulfill such obligations within applicable
grace periods, then Tenant's rights and possession under this Lease shall not be
disturbed by such mortgagee. This clause shall be self-operative and no further
instrument of subordination need be required by any mortgagee or Landlord. In
confirmation of such subordination, however, Tenant shall, within ten (10)
business days after Landlord's request therefor, execute an instrument which
confirms the terms of this Section. In the event of the enforcement by the
holder of any such instrument of the remedies provided for by law or by such
mortgage, then, so long as the Landlord's obligations shall be performed, (i)
Tenant shall automatically become the tenant of such successor in interest
without change in the terms or other provision of this Lease, and attorn to such
successor in interest under this Lease, and (ii) such successor in interest
shall attorn to Tenant under this Lease, each party being bound by all of the
terms and provisions of this Lease. The attornment provided for in this
Paragraph shall be self-operative, however, upon request by either party, the
other party shall execute and deliver an instrument or instruments confirming
the attornment provided for herein.

25. ESTOPPEL CERTIFICATE. Each party shall, from time to time, upon not
less than ten (10) days' prior written request by the other party, execute,
acknowledge and deliver to such other party a written estoppel certificate in
such form and in favor of such parties as such other party may reasonably
require, certifying that this Lease is unmodified and in full force and effect
(or, if there have been modifications, that the Lease is in full force and
effect as modified and stating the modifications), the dates to which the Rent
and other charges have been paid, whether or not to the best of the certifying
party's knowledge the other party is in default hereunder (and, if so,
specifying the nature of the default), and such other matters as may be required
by the requesting party, or the holder of any mortgage to which the Leased
Premises are or may hereafter be subject, it being intended that any such
statement delivered pursuant to this Paragraph 25 may be relied upon by a
mortgagee of Landlord's interest or assignee of any mortgage upon Landlord's
interest in the Leased Premises.

26. NO ASSIGNMENT OR SUBLETTING. Tenant shall not assign, sublease,
mortgage or encumber this Lease, the Leased Premises, the Systems or any part of
the Leased Premises without Landlord's prior written consent, except (1)
pursuant to that certain Indenture of Tenant dated as of July 1, 1944, as
amended and supplemented from time to time and (2) to a subsidiary, parent or
other affiliated entity. Notwithstanding any assignment or subletting to such
affiliate, the Leased

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<PAGE> 49

Premises shall not be utilized for any new business or service function for
which it is not utilized at the initial commencement of the Term hereunder,
unless Landlord consents to such new use.

27. SUCCESSORS AND ASSIGNS. The covenants, agreements, stipulations and
conditions contained in this Lease shall bind and inure to the benefit of
Landlord and Tenant, as appropriate, and to their respective legal
representatives, heirs, and successors and assigns.

28. NOTICES. Any notice to be given or to be served under this Lease by
Landlord to Tenant, or by Tenant to Landlord, shall be considered as duly given
if made in writing, and may be given by certified mail, hand delivery, overnight
receipt delivery service, and shall be deemed to have been given and received
when delivered to and received by the party to whom it is addressed. Such
notices shall be given to the parties at the addresses set forth in the preamble
of this Lease or to such other address as each of the parties may from time to
time designate in writing.

29. GOVERNING LAW. This Lease shall be governed by, and interpreted and
enforced under and in accordance with, the laws of the State of Florida. Venue
for the resolution of any dispute between the parties shall lie exclusively in
Pinellas County, Florida.

30. CONSTRUCTION OF LEASE. The language in all parts of this Lease
shall in all cases be construed as a whole according to its fair meaning and not
strictly for nor against either Landlord or Tenant. Paragraph headings in this
Lease are for convenience only and are not to be construed as part of this Lease
or in any way defining, limiting or amplifying the provisions thereof. Landlord
and Tenant agree that in the event any term, covenant or condition herein
contained is held to be invalid, illegal or unenforceable for any reason, by any
court of competent jurisdiction, the invalidity or unenforceability of any such
term, covenant or condition herein contained, it being the intention of the
parties to this Lease that in lieu of each such term, condition or covenant that
is invalid or unenforceable, there be added as a part of this Lease a provision
as similar in term to such invalid or unenforceable term, condition or covenant
as may be possible and be valid and enforceable.

31. ENTIRE AGREEMENT: MODIFICATION. This Lease contains the entire
agreement of the parties hereto and no representations, inducements, promises or
agreements, oral or otherwise, between the Landlord and Tenant not embodied
herein, shall be of any force or effect. Any agreement hereafter made between
Landlord and Tenant shall be ineffective to modify, release or otherwise affect
this Lease, in whole or in part, unless such agreement is in writing and signed
by both Landlord and Tenant.

-15-

<PAGE> 50

32. CORPORATE AUTHORITY.

a. For Tenant. The person executing this Lease on behalf of Tenant
does hereby covenant and warrant that (a) Tenant is a duly authorized and
existing corporation, and is qualified to do business in Florida; (b) the
corporation has full right and authority to enter into this Lease; and (c) each
of the persons signing on behalf of the corporation are duly authorized to do
so.

b. For Landlord. The person executing this Lease on behalf of
Landlord does hereby covenant and warrant that (a) Landlord is a duly authorized
and existing corporation, and is qualified to do business in Florida; (b) the
corporation has full right and authority to enter into this Lease; and (c) each
of the persons signing on behalf of the corporation are duly authorized to do
so.

33. LANDLORD'S CONSENT. Whenever in this Lease Landlord's consent is
required, Landlord's consent shall not be unreasonably withheld or delayed.

34. TIME OF ESSENCE. Time is of the essence in the performance of and
compliance with each of the provisions and conditions of this Lease.

35. BROKER AND INDEMNITY. Landlord and Tenant warrant and represent,
each to the other, that it has not authorized or employed, or acted by
implication to authorize or to employ, any real estate broker or salesman to act
for it in connection with this Lease other than Echelon Real Estate Services,
Inc., whose commission, if any, shall be the sole obligation of Tenant. Tenant
shall indemnify, defend and hold Landlord harmless from and against any and all
claims by any other real estate broker or salesman for a commission or finder's
fee as a result of Tenant's acts. Landlord shall indemnify, defend and hold
Tenant harmless from and against any and all claims by any other real estate
broker or salesman for a commission or finder's fee as a result of Landlord's
acts.

36. RADON GAS. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a buildings in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon testing may be obtained from your county
public health unit.

37. WAIVER OF LANDLORD'S LIEN. Landlord shall not have or acquire, and
hereby waives, any lien, statutory or otherwise, on the Tenant's inventory,
goods fixtures, equipment, or property.

38. COUNTERPARTS. This Lease may be executed in one or more separate
counterparts, each constituting a duplicate original, but all such counterparts
constituting one and the same Lease.

-16-

<PAGE> 51

IN WITNESS WHEREOF, the Landlord and Tenant have executed this Lease as
of the date first above written.

WITNESS: LANDLORD:

ABR PROPERTIES, INC.,
a Florida corporation

BY:
- -------------------------------- ---------------------------------
Joseph C. Lukason
- -------------------------------- Its: President

WITNESSES: TENANT:

FLORIDA POWER CORPORATION, a Florida
corporation

By:
- -------------------------------- ---------------------------------
David L. Miller
- -------------------------------- Its: Vice President

-17-

<PAGE> 52

Exhibit A to Lease

LEGAL DESCRIPTION

PARCEL 1:

PARCEL 2:

PARCEL 3:

The West 710.00 feet of the SE 1/4 of the SE 1/4 of Section 34, Township 31
South, Range 16 East, Pinellas County, Florida, less the South 450.00 feet
thereof, and less the West 50.00 feet thereof for road right-of-way; together
with that part of the North 267.72 feet of said SE 1/4 of the SE 1/4, less the
West 710.00 feet thereof, lying west of Broadwater Plaza, as recorded in Plat
Book 75, Page 63, Public Records of Pinellas County, Florida, being more
particularly described as follows:

Commence at the SE corner of the SE 1/4 of Section 34, Township 31 South, Range
16 East, Pinellas County, Florida; thence N 89 degrees 54'56" W., along the
South boundary of said SE 1/4, a distance of 1323.05 feet to the SW corner of
the SE 1/4 of said SE 1/4; thence N 0 degrees 15'08" E., along the West boundary
of said SE 1/4 of the SE 1/4, a distance of 450.00 feet; thence S 89 degrees
54'56" E., 450.00 feet from and parallel with said South boundary, a distance of
50.00 feet to a point on the East right-of-way line of 37th Street South and the
point of beginning; thence continue S 89 degrees 54'56" E., 450.00 feet from and
parallel with said South boundary, a distance of 660.00 feet; thence N 0 degrees
15'08" E., 710.00 feet from and parallel with said West boundary, a distance of
609.45 feet to a point on an extension of the South boundary of Lot 1, Block 1,
BROADWATER PLAZA, as recorded in Plat Book 75, Page 63, of the Public Records of
Pinellas County, Florida; thence S 89 degrees 52'40" E., along said extension,
23.00 feet to the SW corner of said Lot 1; thence N 0 degrees 15'08" E., along
the West boundary of said Lot 1, a distance of 267.72 feet to the NW corner of
said Lot 1, thence N 89 degrees 52'40" W., along the South boundary of Lot 1,
Block "A", FLORIDA POWER HEADQUARTERS SUBDIVISION, as recorded in Plat Book 67,
Pages 59 and 60, Public Records of Pinellas County, Florida, a distance of
683.00 feet to the SW corner of said Lot 1; thence S 0 degrees 15'08" W., along
the East right-of-way line of said 37th Street South, 50.00 feet from and
parallel with the West boundary of said SE 1/4 of the SE 1/4, a distance of
877.61 feet to the point of beginning. All being in the SE 1/4 of Section 34,
Township 31 South, Range 16 East, Pinellas County, Florida.

LESS THAT PORTION THEREOF DESCRIBED AS:

<PAGE> 53
PARCEL 4:

Lot 1, Block 1, BROADWATER PLAZA, according to the Plat thereof on file in the
office of the Clerk of the Circuit Court in and for Pinellas County, Florida
recorded in Plat Book 75, page 63, said lands situate, lying and being in
Pinellas County, Florida.

PARCEL 5:

END OF LEGAL DESCRIPTION

<PAGE> 54

EXHIBIT "B" TO LEASE

PERSONALTY
SCHEDULE OF SELLER'S
TANGIBLE PERSONAL PROPERTY
(except where expressly excluded below)

1. SECURITY SYSTEM

a. All Westinghouse Proximity Readers
b. All Panasonic Cameras, Recorders, Switches & Controllers which pertain
only to the G.O.C. Site
c. On site processing computer using Westinghouse 5850 Software
d. Two (2) Security Golf Carts

The following items shall be excluded from this sale and conveyance: All
Wide Area Network System components, software and auxiliary equipment,
including but not limited to, Video and Remote Site Alarm monitoring,
which shall be retained by Seller.

2. UNINTERRUPTED POWER SUPPLY

Emerson UPS System, 600 kva with 300 kva redundant, expandable to 1200 kva
total. Two string 450 kw battery with 2000 amp switchgear

3. ALL CAFETERIA SUPPLIES, EQUIPMENT AND UTENSILS

(1) 55" x 33" Refrigerator
(2) 28" x 27" Refrigerator
(6) Side by Side Refrigerators
(2) Grills
(2) Deep Freezers
(1) Bun Warmer
(1) General Warmer
(1) Oven
(1) 28' x 38" Mixer
(6) Refrigerated Units
(2) 5' Round Tables
(2) 6' Round Tables
(2.5) 3' Round Tables
(100) Chairs
(1) Sandwich Bar
(1) Salad Bar
(1) Soup Bar
(1) Steam Table
(1) Cold Table

<PAGE> 55
The following items are owned by vendors and will be excluded from this
sale and conveyance:

(2) Ice Machines
(1) Juice Dispenser
(1) Soft Drink Dispenser
(1) Coffee Maker
(1) Yogurt Dispenser

4. MAINTENANCE SUPPLIES, EQUIPMENT AND VEHICLES

a. Four (4) Golf Carts
b. 50% of the one site Service Carts
c. All items in the Maintenance Store Room and in the Electrical Shed
except for all tools which are the property of third party Vendors
d. The Upright UL-24 Electrical Lift

5. GENERATING EQUIPMENT & SWITCH GEAR

a. Onan/Cummins 300kw emergency power generator and transfer scheme
b. Caterpillar 1000kw emergency power generator
c. Fuel System, 3 @ 2,000 gallon Convault tanks with Omron automated
pumping and leak detection system - 200 gallon day tanks on both gensets

6. ALL ROOF ANTENNAS AND AUXILLARY COMMUNICATION EQUIPMENT USED FOR INTER
G.O.C. COMMUNICATION

The following items will be excluded:

a. All equipment related to intra G.O.C. communication
b. The Microwave Dish which is Property of USF

7. AUDITORIUM EQUIPMENT

a. All built-in Audio & Video equipment used exclusively to support
Auditorium operations shall become property of the buyer, which
includes:

(1) Projector-Optical Radiation Corporation
(1) Screen
(2) Speakers JBL
(1) Sony Reel to Reel Tape Recorder
(1) York Controls Decoder
(1) IBL Amplifier
(1) Podium and Controls
(2) 8' Folding Tables
<PAGE> 56
All Black and Chrome Chairs
All PA Equipment

The Seller shall use good faith efforts to label all disconnected wires

b. All Video Production Equipment which does not support the operation
of the Auditorium shall remain as Personal Property of the Seller

c. All portable Audio & Video equipment shall remain as personal property
of the Seller
<PAGE> 57
EXHIBIT "C" TO LEASE

SKETCH

[DELIBERATELY OMITTED]

<PAGE> 1

EXHIBIT 11.1

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

<PAGE> 2

EXHIBIT 11.1

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

ABR INFORMATION SERVICES, INC.

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Primary:
Average shares outstanding 19,680,322 22,353,988 27,320,151
Net effect of dilutive stock options -
based on the treasury stock
method using average market price 321,168 713,066 494,643
------------- ----------- -----------
TOTAL 20,001,490 23,067,054 27,814,794

Net income per financial statements $ 2,793,679 $ 5,673,783 $12,228,652

Per share amount $.14 $.25 $.44
==== ==== ====

Fully Diluted:
Average shares outstanding 19,680,322 22,353,988 27,320,151
Net effect of dilute stock options - based
on the treasury stock method
using the year end price, higher
than average market price 435,922 804,862 609,975
------------- ----------- -----------
TOTAL 20,116,244 23,158,850 27,930,126

Net income per financial statements $ 2,793,679 $ 5,673,783 $12,228,652

Per share amount $.14 $.25 $.44
==== ==== ====
</TABLE>

<PAGE> 1

EXHIBIT 13.1

1997 ANNUAL REPORT OF ABR INFORMATION SERVICES, INC.

<PAGE> 2
1997

ANNUAL REPORT

ABR INFORMATION SERVICES, INC.

<PAGE> 3

A STRATEGY OF GROWTH

CONTENTS

1 Financial Highlights
2 Letter to Shareholders
3 1997 Accomplishments
4 Company Overview
10 Selected Financial Data
11 Management's Discussion & Analysis
14 Consolidated Statements of Income
15 Consolidated Balance Sheets
16 Consolidated Statements of
Shareholders' Equity
17 Consolidated Statements of Cash Flows
18 Notes to Consolidated Financial Statements
29 Report of Independent CPA
30 Market Price Information
31 Corporate and Shareholder Information
32 Directors and Officers

ABR Information Services, Inc. is a company that has distinguished itself in the
marketplace through a history of rapid growth.

In the field of Portability Administration Services, ABR has excelled. When a
new law called COBRA (the Consolidated Omnibus Budget Reconciliation Act) took
effect in 1986, ABR was among the first to offer comprehensive services to deal
with its requirements on behalf of employers. ABR's CobraServ operation is now
the largest independent COBRA compliance service provider in the country.
Subsequently, when another new law called HIPAA (Health Insurance Portability
and Accountability Act of 1996) began its phase-in period in 1997, ABR responded
by leveraging its existing systems to quickly provide compliance services to its
existing client base. Now, ABR believes that it is the largest independent
provider of HIPAA compliance services in the nation.

ABR's ability to quickly adapt to marketplace opportunities and client demands
defines our strategy of growth. This responsiveness has enabled us to position
ourselves favorably to benefit from one of today's largest business trends --
benefits administration outsourcing. No longer limited to a single niche of the
employee benefits administration industry (COBRA compliance), ABR's suite of
services has expanded to encompass more than 20 service lines that address the
many needs of the $10 billion potential market for full-range benefits
administration services.

In contrast to its primary competitors, consultants and insurance carriers, ABR
takes a service bureau approach to the business -- offering efficiency and value
through economies of scale, technology and location.

A final element of ABR's growth strategy is the accumulation of complementary
and supplementary resources through acquisition. To date, key acquisitions have
expanded the scope of ABR's service capabilities, significantly enhanced
revenues and opened doors to major business opportunities.

ABR continues to actively pursue major opportunities in the rapidly developing
benefits outsourcing market. We expect to continue our success through a
well-planned "Strategy of Growth."

<PAGE> 4

*FINANCIAL HIGHLIGHTS
(In Thousands Except Per Share Data)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Results of Operations - Year Ended July 31, 1996 1997 Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $31,162 $50,079 60.7%

Operating income $ 6,362 $12,135 90.7%

Net income $ 5,674 $12,229 115.5%

Net income per share $ .25 $ .44 76.0%

Weighted average shares outstanding, primary 23,067 27,815 20.6%
</TABLE>

[CHART] [CHART]

*Restated for a two-for-one stock split completed on February 19, 1997.
<PAGE> 5

TO OUR SHAREHOLDERS

[PICTURE]

James E. MacDougald
Chairman of the Board
President and Chief Executive Officer

Fiscal 1997 was a great year for ABR. Revenues were $50.1 million, an increase
of 60.7% from the prior year, and profits increased to $12.2 million, up 115.5%
from 1996. For our shareholders, these numbers translated into earnings per
share of $.44, up 76% in fiscal 1997. Further, we believe our three-plus year
track record as a public company is unparalleled in our industry. Since going
public in 1994, ABR has posted 14 consecutive quarters of revenue growth over
30% and compound annual profitability increases of 110%. To our original public
shareholders, this financial performance has translated into an 1150% increase
in the value of their ABR common stock as of July 31, 1997. As we look forward
into 1998 and beyond, the strength of ABR's financial condition, including $156
million in cash and investments, zero debt, and a current ratio of 6.1 to 1,
positions us to take full advantage of the continuing trend toward outsourcing
and our enviable status as the industry leader in benefits outsourcing
administration.

During 1997, we added to our core services in a number of exciting ways. First,
federal legislation mandated compliance with the Health Insurance Portability
and Accountability Act of 1996 (HIPAA) for most American employers. The short-
and long-term benefits to ABR from the enactment of HIPAA are profound.
Foremost, we believe HIPAA entrenches COBRA as the driver of healthcare
portability. As the nation's leading provider of COBRA services, we were able to
leverage our technology, compliance expertise and large client base to leap to
the forefront of HIPAA outsourcing administration. Longer-term, we feel the
effect of our combined portability product (COBRA and HIPAA) will continue to be
the driving engine of ABR's industry dominance. In addition, ABR also added
401(k) and state "mini-COBRA" administrative services in 1997. The extension of
our services into these growing service areas meshes well with our existing core
compliance competencies.

Late in 1997, our vision of the benefits outsourcing operations center of the
future became reality. ABR Center, a 118,000 square foot state-of-the-art
facility, opened on-time and on-budget in May. In addition, shortly after our
fiscal year-end, we announced the acquisition of a 380,000 square foot complex
in St. Petersburg, Florida, sufficient to serve our needs for the next 3-5
years.

Subsequent to year-end, ABR consolidated its five operating subsidiaries into a
single operating unit, ABR Benefits Services, Inc. This new name better
represents our mission, to be a large, national benefits outsourcing
administrator. To our customers, this change will be seen in a merged marketing
and service presence. To our valued shareholders, this change typifies the theme
of this year's annual report, "A Strategy of Growth." Through this and other
changes, we believe that 1998 will continue our trend of being "ABR's best year
ever." We appreciate your support for this and the upcoming year.

Cordially,

/s/ James E. MacDougald

2
<PAGE> 6

1997 ACCOMPLISHMENTS

- - Fourteen consecutive record quarters of more than 30% growth in revenues.

- - Fourteen consecutive quarters of meeting or exceeding analysts' consensus
earnings estimates.

- - Increased analyst coverage to four nationally-known brokerage firms: Robert W.
Baird, Montgomery Securities, Raymond James and Salomon Brothers.

- - Stock split two-for-one on February 19, 1997.

- - Customer base increased to more than 25,000 employers.

- - Integrated operations of three subsidiaries into Florida location.

- - Opened ABR Center, believed to be the nation's largest operations center
devoted to employee benefits administration outsourcing.

- - Achieved full integration of several complementary technologies, including
OCR (Optical Character Recognition), IVR (Interactive Voice Response),
and EDI (Electronic Data Interchange).

- - Implemented internally-developed software applications to greatly increase
efficiency, including Double Data Entry (DDE), Automated Fax-Back and
Electronic Client Notification systems.

- - Named by Forbes magazine for the third year in a row as one of the "200 Best
Small Companies in America."

- - Launched new service lines to administer requirements of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), 401(k) plans and state-
mandated portability laws.

IMPROVING PROFIT MARGINS

[GRAPH]

REVENUE DIVERSIFICATION

[GRAPH]

3
<PAGE> 7

A STRATEGY OF GROWTH

MARKET LEADERSHIP

Through our growth and the breadth of our expertise and service
offerings, ABR has secured its leadership position in the benefits
administration outsourcing industry. We are one of the industry leaders in
revenues, and our client base and resources devoted exclusively to benefits
administration outsourcing are impressive. We believe such leadership can only
be achieved through years of developing systems, procedures and staff. Our
experience puts us at the leading edge of our industry.

As ABR continues to leverage its existing capabilities and grow from a starting
point that our competition is still trying to attain, we believe we can further
solidify our position of industry leadership.

ABR enjoys a competitive advantage through the realization of economies of scale
and technology. These economies are a direct result of our growth -- and, in
turn, they facilitate continued, more efficient growth. We continuously leverage
these economies when responding to a new market opportunity, such as HIPAA, by
being able to respond more quickly, offer greater value, and adapt our existing
systems to these demands. These capabilities distinguish ABR from its
competitors.

An additional distinction that sets ABR apart from its competition is that we
operate as a true service bureau. Whereas many of our competitors derive a
substantial portion of their revenues from consultation and planning services,
or often sell administration services as a non-core service accommodation to
their

MARKET POTENTIAL

Benefits Administration
Outsourcing Opportunity
$10 Billion

Existing
Business
$50 Million

[CHART]

[PICTURE]

4
<PAGE> 8
- - Providing 20 different benefits administration services, all of which are
available "a la carte."

- - Serving more than 25,000 employers and their employees, dependents and
retirees.

- - Portability prospect universe of more than 650,000 employers with more than
20 employees.

- - More than 12,000 large employer prospects who employ more than 1,000
employees each.

- - Most employers, approximately 94%, administer in-house.

- - Increasingly complex government regulations make in-house administration by
employers more difficult.

- - State-of-the-art technology in place provides competitive advantage and
barrier to entry.

- - Blue chip customer base with approximately 100 of Fortune 500 companies.

clients, ABR derives its revenue from our core competency of supplying fist-rate
administration services.

Given our commitment to benefits administration outsourcing, we offer
something far different than many of our competitors -- independence. Every
dollar invested in a relationship with ABR goes directly toward providing
administrative services -- and not proprietary insurance or consulting products.
Our goal is to sell benefits administration services. Therefore, we provide the
highest possible value by delivering the maximum amount of administrative work
for each dollar spent by our clients.

[PICTURE]

This distinction is much more significant than a simple difference in our
advertising, positioning or mission statements. The value of our service bureau
status is the advantage it provides in competitive bidding situations. In this
regard, we enjoy an extremely high success rate. As a result, we have taken on
numerous large-scale benefits administration outsourcing contracts with major
employers -- approximately 100 of the Fortune 500 companies. To date, our
commitment to administrative excellence has propelled the expansion of our
benefits administration outsourcing operations beyond even our optimistic
projections.

[PICTURE]

This year, our leadership position was clearly demonstrated following the
enactment of a new law -- the Health Insurance Portability and Accountability
Act (HIPAA) -- which imposed new benefits administration mandates on more than
5.5 million employers in the U.S. We were able to rapidly modify our systems to
fulfill the administrative requirements of the new law, then quickly communicate
with the market to offer expertise that could not be found elsewhere. By
offering rapid compliance with extremely tight deadlines, ABR established itself
as the market leader in HIPAA compliance services within months of the issuance
of the law's interim final regulations.

We believe ABR is in a strong position to further leverage its leadership
position in the area of portability administration services and to establish
itself as a market leader among each of the specialized areas of benefits
administration that we are targeting. In each, we expect to apply our
capabilities, leverage and resources to gain an immediate advantage.

<PAGE> 9
A STRATEGY OF GROWTH

INFRASTRUCTURE AND RESOURCES

Facilities -- and their location -- have always been factors critical to ABR's
success. Our headquarters location in west-central Florida provides us fixed
cost advantages that provide immediate savings over administration costs
experienced by employers elsewhere in the country.

In response to our rapid growth, ABR has embarked on a program of
rapidly-expanding physical infrastructure. In May 1997, ABR completed a major
renovation and moved into the 118,000 square foot ABR Center -- the only
facility we know of designed specifically for the purpose of employee benefits
administration. ABR Center is operated as a "hot site" and configured with a
special disaster recovery area -- literally a hardened bunker with reinforced
concrete and the ability to remain operational under virtually any
circumstances. Specially constructed features of the bunker include dual power
and telephone feeds and redundant information systems which ensure continuous
operation. Other facilities have been purchased to accommodate our rapid
expansion for the coming years, with an additional 380,000 square feet of office
space purchased in October 1997 available to meet our needs starting in late
1998.

[PICTURE]

ABR has also established a physical presence nationally with sales and service
centers on the East and West Coasts of the United States, as well as in Florida.
This geographic diversity affords ABR ready access to prospective business
regardless of the area of the country. Sales functions take place in all ABR
locations, while several back-office operations have been consolidated in
Florida for greater efficiency.

Strategic growth requires more than facilities -- it requires capabilities that
are in demand in the marketplace. ABR is a company built on capabilities and
commitment that cannot be found elsewhere. The best people. Compliance
expertise. The best information systems, refined through ten years of
operations. Our experience in the industry puts us years ahead of our
competition.

This expertise has been developed internally and acquired by recruiting the best
industry talent available. It is supported by the latest technology. Our
practices are kept current through daily online research into the industry's
most comprehensive databases of legal, legislative and industry research. Our
information systems make that research instantly accessible at the touch of a
key. Through continual training, all ABR staff members are kept current on
industry trends and compliance requirements. Also, our customer service
department is fully equipped to provide timely and accurate answers for clients
and their employees who call on us for our expertise.

Technology fuels the flow of information to and from our operations. At the
heart of our systems is one of the most powerful client-server computer
platforms available in the world. Our system can be accessed 24 hours a day via
Interactive Voice Response (IVR) technology,

6
<PAGE> 10

[PICTURE]

supplemented by automated fax-back fulfillment of information requests.
Electronic Data Interchange (EDI) systems and Optical Character Recognition
(OCR) aid in the processing of hundreds of thousands of documents on an ongoing
basis. Wherever possible, online communications is being phased in as a
replacement for paper transactions. When data is obtained, much of it is
"double-entered" and cross-verified to ensure accuracy -- especially where legal
compliance is of concern.

At the heart of ABR's operations is the new ABR Center (above)--the only
facility we know of designed and remodeled specifically for the purpose of
benefits administration. Service center facilities are also located in
Virginia, New Jersey and California.

[PICTURE] [PICTURE] [PICTURE]

7
<PAGE> 11
A STRATEGY OF GROWTH

CAPABILITIES AND SERVICES

ABR has targeted key areas of benefits administration most commonly needed by
employers of all sizes -- with the goal of providing all of those services
through a "one-stop" benefits administration outsourcing resource. Capabilities
to perform those services are being developed or acquired at a rapid pace. Some
of this development is being fueled by the needs of clients who have already
entered into multi-service benefits administration outsourcing arrangements with
ABR. Other capabilities are added as we acquire complementary businesses with
extensive experience in specialized benefits administration fields.

All of our services are available "a la carte." Delivery of our services is
transparent to our clients and to their employees and dependents, although
various ABR operations throughout the country may be involved in the
administrative activities required. Delivery of our services is enhanced through
an integrated system that takes advantage of ABR's expertise, systems, and the
efficiency of its operations.

Our services fall into three categories:

Portable Healthcare -- ABR delivers employee health benefits "portability"
administration services primarily through its CobraServ operation, the nation's
largest independent COBRA and HIPAA compliance service bureau. ABR helps
employers deal with these two complex federal portability laws by performing the
most difficult, time-consuming and risky aspects of these laws on their behalf.
We also perform administrative functions related to state-level COBRA-like
portability laws.

[PICTURE] [PICTURE]

Retiree and Inactive Employee Services--ABR assists employers by servicing the
benefits needs of their ex-employees and their dependents. Employers must
deliver their benefits commitments to these individuals, but must also retain a
primary focus on their active employees, dependents and operations. ABR
provides services such as retiree billing, vestee servicing, retiree services,
open enrollment administration and general billing services for non-employees.

8
<PAGE> 12

Active Employee Administration -- Represents the largest and fastest-growing
market opportunity for ABR. Presently, ABR offers services to virtually every
employer, including:

Enrollment and Eligibility --
maintaining, updating and servicing clients' central benefits eligibility
databases;

Employee Communications Services --
creating and disseminating benefits-related employee communications;

Open Enrollment Administration --
coordinating new enrollments, re-enrollments and changes of group health
benefit option selections;

Section 125 Administration --
helping employers structure their benefits programs with tax-exempt status,
with services including Premium-Only Plan and Flexible Spending Account
(FSA) administration;

FMLA Administration --
meeting benefits continuation requirements of the Family Medical Leave Act;

QDRO Administration --
administering Qualified
Domestic Relations Orders;

QMCSO Administration --
administering Qualified
Medical Child Support Orders;

Qualified Plan Services --
providing defined contribution/ 401(k) pension plan
administration;

Education and Family Services --
administering emergency loan,
tuition reimbursement and educational loan programs.

[PICTURE]

9
<PAGE> 13

Selected Financial Data

<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
----------------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- -------- --------
(In thousands except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenue $ 9,028 $13,465 $18,835 $ 31,162 $ 50,079
Cost of services 5,632 7,689 10,410 17,864 28,179
Selling, general and administrative expenses 1,878 3,250 4,448 6,575 9,765
Acquisition costs -- -- -- 361 --
------- ------- ------- -------- --------
Operating income 1,518 2,526 3,977 6,362 12,135
Interest income 4 65 572 2,872 7,081
------- ------- ------- -------- --------

Income before provision for income taxes 1,522 2,591 4,549 9,234 19,216
Income tax provision 570 981 1,755 3,560 6,987
------- ------- ------- -------- --------
Net income $ 952 $ 1,610 $ 2,794 $ 5,674 $ 12,229
======= ======= ======= ======== ========
Per share data (1):
Net income per share $ .07 $ .11 $ .14 $ .25 $ .44
======= ======= ======= ======== ========

Weighted average shares outstanding (2) 13,401 14,965 20,001 23,067 27,815
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
----------------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data (1):
Working capital $ 1,781 $13,676 $14,192 $145,825 $127,839
Total assets 11,947 27,186 33,191 202,574 222,017
Total long term debt, excluding current portion 476 -- -- -- --
Redeemable preferred stock, excluding current portion 127 -- -- -- --
Total shareholders' equity 2,753 16,113 19,213 181,150 194,096
</TABLE>

(1) Restated for two-for-one stock split completed on February 19, 1997.
(2) Includes Common Stock and Common Stock equivalents.

10
<PAGE> 14

MANAGEMENT'S DISCUSSION & ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

The Company's revenues currently are generated from three sources: portability
compliance services, administration services with respect to benefits provided
to retirees and inactive employees, and administration services with respect to
benefits provided to active employees.

The first source of the Company's revenue is providing portability compliance
services primarily through its qualifying event agreements with employers and
capitation agreements with insurance companies. Through qualifying event
agreements, the Company receives a fixed, per occurrence, fee from its customers
for each qualifying event. A qualifying event occurs when an employee or his or
her dependents experience a loss or change of coverage under a group healthcare
plan. The amount of the fixed fee varies depending on the type of qualifying
event (i.e., COBRA (the "Consolidated Omnibus Budget Reconciliation Act") or
HIPAA (the "Health Insurance Portability and Accountability Act of 1996")) and
the method of the qualifying event notification mailing, which is selected by
the customer. Through capitation agreements, insurance companies designate the
Company as the administrator of compliance for their group insurance clients
that are subject to COBRA, HIPAA or state mandated continuation coverage health
portability laws. The Company is paid a monthly fee for each employee covered by
the group plan. The revenue generated under a capitation agreement is not
dependent on the triggering of a qualifying event, but is determined based on
the number of employees covered by the group plan at the beginning of each
month. The Company also receives an administrative fee typically equal to 2% of
the monthly health insurance premium that is paid by or on behalf of each COBRA
continuant. In addition, the Company generates revenues from customers for
additional compliance and healthcare administration services, both on a one-time
and continuous basis. During fiscal 1996 and fiscal 1997, 69.9% and 65.6%,
respectively, of the Company's revenues were attributable to portability
compliance services.

The second source of the Company's revenue is providing administration services
with respect to benefits provided to retirees and inactive employees, including
retiree healthcare, disability, surviving dependent, family leave and severance
benefits. During fiscal 1996 and fiscal 1997, 15.5% and 14.4%, respectively, of
the Company's revenues were attributable to the Company's administration
services for retirees and inactive employees.

The third source of the Company's revenue is providing administration services
with respect to benefits provided to active employees, including open
enrollment, employee enrollment and eligibility, QDRO ("Qualified Domestic
Relations Order") administration, Flexible Spending Account administration,
401(k) plan administration, and other pension services. During fiscal 1996 and
fiscal 1997, 14.6% and 20%, respectively, of the Company's revenues were
attributable to benefits administration services for active employees.

The Company has experienced significant growth in recent years, with revenues
increasing from $13.5 million in fiscal 1994 to $50.1 million in fiscal 1997,
and net income increasing from $1.6 million in fiscal 1994 to $12.2 million in
fiscal 1997.

Cost of services includes direct personnel, occupancy and other costs associated
with providing services to customers, such as mailing and printing costs.
Selling, general and administrative expenses include administrative, marketing
and certain other indirect costs.

RESULTS OF OPERATIONS

The following table sets forth the percentage of revenue represented by certain
items reflected in the Company's statements of income.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
-------------------------
YEARS ENDED JULY 31,
-------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Revenue 100.0% 100.0% 100.0%
Cost of services 55.3 57.3 56.3
Selling,
general &
administrative
expenses 23.6 21.1 19.5
Acquisition costs -- 1.2 --
----- ----- -----
Operating
income 21.1 20.4 24.2
Interest
income 3.0 9.2 14.2
Income taxes 9.3 11.4 14.0
----- ----- -----
Net income 14.8% 18.2% 24.4%
===== ===== =====
</TABLE>

11
<PAGE> 15

YEAR ENDED JULY 31, 1997
COMPARED TO YEAR ENDED
JULY 31, 1996

Revenues increased $18.9 million, or 60.7%, to $50.1 million during the year
ended July 31, 1997 from $31.2 million in the year ended July 31, 1996. Of the
$18.9 million increase in revenues, $11.1 million was attributable to increased
revenues from portability compliance services, $2.4 million was attributable to
increased revenues from retiree/inactive employee benefits administration and
approximately $5.4 million was due to increased revenues from active employee
benefits administration.

The increase in portability compliance revenues was primarily attributable to
the addition of new customers and new service product offerings. New products
pertain to clients having to comply with newly passed state-mandated
continuation coverage health portability laws and the federally-mandated HIPAA
law.

The increase in retiree/inactive employee benefits administration revenues was
primarily attributable to the addition of new customers obtained by the Company
and as a result of the acquisitions during the year ended July 31, 1996 being
included for a full year in fiscal 1997.

The increase in revenues from active employee benefits administration was
primarily attributable to the addition of new customers obtained by the Company
and new service product offerings in enrollment and eligibility administration
during the year ended July 31, 1997.

Cost of services increased $10.3 million, or 57.7%, to $28.2 million during the
year ended July 31, 1997 from $17.9 million during the year ended July 31, 1996.
The increase in cost of services was attributable to the addition of data
processing, information systems and customer service personnel to support
revenue growth along with the amortization of software placed in service as
completed. As a percentage of revenues, cost of services decreased to 56.3% in
1997 from 57.3% for the prior year as a result of operating efficiencies
associated with the allocation of these expenses over a larger revenue base.

Selling, general and administrative expenses increased $3.2 million, or 48.5%,
to $9.8 million during the year ended July 31, 1997 from $6.6 million in the
year ended July 31, 1996. The increase in selling, general and administrative
expenses was primarily attributable to the addition of marketing, management and
administrative personnel to support the Company's growth, and to additional
marketing costs. As a percentage of revenues, selling, general and
administrative expenses decreased to 19.5% in 1997 from 21.1% for the prior
year. The decrease as a percentage of revenues resulted primarily from operating
efficiencies from the allocation of these expenses over a larger revenue base.

Interest income increased $4.2 million, or 146.5%, to $7.1 million during the
year ended July 31, 1997 from $2.9 million in the year ended July 31, 1996. This
increase is a result of the proceeds from the secondary stock offering completed
in March 1996 being invested for a full year in fiscal 1997.

Income taxes increased 96.3% to $7.0 million during the year ended July 31, 1997
from $3.6 million during the year ended July 31, 1996, however, the Company's
effective tax rate decreased to 36.4% for the year ended July 31, 1997 from
38.6% for the previous year. This decrease reflects the Company's move to more
tax-free investments in 1997.

As a result of the foregoing, the Company's net income increased $6.5 million,
or 115.5%, to $12.2 million during the year ended July 31, 1997 from $5.7
million in the year ended July 31, 1996. Net income per share was $.44 for the
year ended July 31, 1997 compared to $.25 for the prior year.

YEAR ENDED JULY 31, 1996
COMPARED TO YEAR ENDED
JULY 31, 1995

Revenues increased $12.3 million, or 65.5%, to $31.2 million for the year ended
July 31, 1996 from $18.8 million for the year ended July 31, 1995. Of the $12.3
million increase in revenues, $6.0 million was attributable to increased
revenues from COBRA compliance services, $3.5 million was attributable to
increased retiree/inactive employee benefits administration and approximately
$2.8 million was due to increased revenues from active employee benefits
administration.

The increase in portability compliance revenues was primarily attributable to
the addition of new customers and as a result of acquisitions during fiscal
1996.

The increase in active employee benefits administration revenues was primarily
attributable to the addition of new customers obtained by the Company and as a
result of an acquisition during fiscal 1996.

Cost of services increased $7.5 million, or 71.6%, to $17.9 million for the year
ended July 31, 1996 from $10.4 million for the year ended July 31, 1995. The
increase in cost of services was attributable to the

12
<PAGE> 16

addition of data processing, information systems and customer service personnel
to support growth as well as the result of the acquisitions. As a percentage of
revenues, cost of services increased to 57.3% from 55.3% for the same period.
This increase as a percentage of revenues resulted from increasing the operating
infrastructure to support the Company's growth.

Selling, general and administrative expenses increased $2.1 million, or 47.8%,
to $6.6 million for the year ended July 31, 1996 from $4.5 million for the year
ended July 31, 1995. The increase in selling, general and administrative
expenses was primarily attributable to the addition of marketing, management and
administrative personnel to support the Company's growth. As a percentage of
revenues, selling, general and administrative expenses decreased to 21.1% from
23.6% for the same periods. The decrease as a percentage of revenues resulted
primarily from operating efficiencies from the allocation of these expenses over
a larger revenue base.

Interest income increased $2.3 million, or 401.6%, to $2.9 million during the
year ended July 31, 1996 from $573,000 in the year ended July 31, 1995. This
increase is a result of the proceeds from the secondary stock offering completed
in March 1996 being invested.

Income taxes increased 102.9% to $3.6 million during the year ended July 31,
1996 from $1.8 million during the year ended July 31, 1995. The Company's
effective tax rate remained the same for both periods at 38.6%.

As a result of the foregoing, the Company's net income increased $2.9 million,
or 103.1%, to $5.7 million during the year ended July 31, 1996 from $2.8 million
in the year ended July 31, 1995. Net income per share was $.25 for the year
ended July 31, 1996 compared to $.14 for the prior year.

LIQUIDITY AND CAPITAL
RESOURCES

In March 1996, the Company completed a secondary stock offering which provided
net cash, after offering expenses, of $151 million. Net cash provided by
operating activities was $16.4 million for the year ended July 31, 1997 compared
to $11.5 million for the same period of 1996. As of July 31, 1997 and 1996, the
Company's working capital and current ratio were $127.8 million and 6.1-to-1 and
$145.8 million and 8.1-to-1, respectively. The Company invests excess cash
balances primarily in short-term investment grade securities, such as money
market investments, obligations of the U.S. government and its agencies and
obligations of state and local government agencies.

During the year ended July 31, 1997, the Company's capital expenditures were
$21.5 million.

In December 1995, the Company purchased a 118,000 square foot facility situated
on 12.7 acres of land in Palm Harbor, Florida. This facility became operational
in May of 1997. Total cost of the renovations and purchase was $9.2 million.

In 1996, the Company also purchased 72 acres of land in Tarpon Springs, Florida
for $2.4 million. The land is to be used for future corporate expansion,
although no formal commitments or designs presently exist for this proposed
expansion.

Subsequent to year-end, the Company purchased a complex of buildings in St.
Petersburg, Florida containing 380,000 square feet of office space for $13.5
million. No formal designs or commitments presently exist for this proposed
expansion.

Management estimates that as of July 31, 1997, approximately $9.8 million will
be required in order for the Company to purchase additional equipment, furniture
and hardware, and complete its currently defined software projects.

The Company has a five-year, $15.0 million unsecured credit facility. The
Company has agreed to maintain all of its assets free and clear of all liens,
encumbrances and pledges, except purchase money security interests in specific
equipment in an aggregate amount of less than $500,000 as long as the credit
facility remains outstanding or any indebtedness thereunder remains unpaid.
Interest on the principal balance outstanding under this line of credit accrues
at a floating interest rate equal to the prime rate or, at the Company's option,
to the 30-day London Interbank Offering Rate (LIBOR), plus an applicable
interest rate margin between 1% and 2% based on certain financial ratios. The
credit facility contains certain financial covenants requiring the maintenance
of cash and cash equivalents and investments equal to or greater than customer
account deposits, a funded debt to EBITDA ratio of a maximum of 2.25-to-1, a
debt service coverage ratio of not less than 1.35-to-1, as well as the
maintenance of a certain funded debt to tangible net worth ratio. As of July 31,
1997, the Company was in compliance with all such covenants and there were no
amounts outstanding under the credit facility.

The Company believes that its cash, investments, cash flows from operations and
the funds available from its credit facility will be adequate to meet the
Company's expected capital requirements for the foreseeable future.

13
<PAGE> 17
ABR Information Services, Inc.
Consolidated Statements of Income
Years ended July 31, 1995, 1996 and 1997

<TABLE>
<CAPTION>
Years ended July 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $18,834,636 $31,162,181 $50,078,842

Operating expenses:
Cost of services 10,410,197 17,863,588 28,178,925
Selling, general and administrative 4,448,319 6,575,390 9,765,500
Acquisition costs -- 361,198 --
----------- ----------- -----------

Operating income 3,976,120 6,362,005 12,134,417

Interest income 572,569 2,872,145 7,081,238
----------- ----------- -----------
Income before provision for income taxes 4,548,689 9,234,150 19,215,655

Income tax provision 1,755,011 3,560,366 6,987,003
----------- ----------- -----------

Net income $ 2,793,678 $ 5,673,784 $12,228,652
=========== =========== ===========

Net income per share $ .14 $ .25 $ .44
=========== =========== ===========

Weighted average shares outstanding 20,001,490 23,067,054 27,814,794
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 18

ABR Information Services, Inc.
Consolidated Balance Sheets
As of July 31, 1996 and July 31, 1997

ASSETS

<TABLE>
<CAPTION>
July 31,
---------------------------
1996 1997
------------ ------------
<S> <C> <C>
CURRENT ASSETS

Cash and cash equivalents $ 14,088,396 $ 33,322,734
Investments 147,111,102 108,499,196
Accounts receivable, net 3,870,539 8,295,884
Prepaid expenses and other 1,282,952 2,595,306
------------ ------------
Total current assets 166,352,989 152,713,120

LONG-TERM INVESTMENTS -- 14,128,644

PROPERTY AND EQUIPMENT, net 14,539,898 27,790,354

SOFTWARE DEVELOPMENT COSTS, net 6,181,973 11,767,211

GOODWILL, INTANGIBLES AND OTHER ASSETS, net 15,498,745 15,617,519
------------ ------------

TOTAL ASSETS $202,573,605 $222,016,848
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 615,663 $ 613,138
Accrued expenses 762,442 512,035
Customer accounts deposits 18,019,405 23,133,381
Unearned revenue 647,093 594,524
Income taxes payable 483,663 20,770
------------ ------------
Total current liabilities 20,528,266 24,873,848
------------ ------------
DEFERRED INCOME TAXES 895,555 3,047,243
------------ ------------

SHAREHOLDERS' EQUITY

Preferred Stock - authorized 2,000,000 shares of
$.01 par value; no shares issued -- --
Common Stock - authorized 100,250,000
shares of $.01 par value; issued and
outstanding, 13,588,194 and 27,376,356 shares,
respectively 135,882 273,763
Additional paid in capital 169,879,717 170,459,157
Retained earnings 11,134,185 23,362,837
------------ ------------

TOTAL SHAREHOLDERS' EQUITY 181,149,784 194,095,757
------------ ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $202,573,605 $222,016,848
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 19

ABR Information Services, Inc.
Consolidated Statements of Shareholders' Equity
Years ended July 31, 1995, 1996 and 1997

<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid-in Retained
Shares Amount Capital Earnings Total
---------- -------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at July 31, 1994 4,436,547 $ 44,365 $ 13,402,351 $ 2,666,723 $ 16,113,439
Common stock split 2,165,931 21,659 (22,364) -- (705)
Exercise of stock options 38,336 384 231,846 -- 232,230
Tax benefit related to exercise of
certain stock options -- -- 74,329 -- 74,329
Net income -- -- -- 2,793,678 2,793,678
---------- -------- ------------- ----------- -------------

Balance at July 31, 1995 6,640,814 66,408 13,686,162 5,460,401 19,212,971
Common stock split 3,248,882 32,489 (33,917) -- (1,428)
Exercise of stock options 145,911 1,459 666,890 -- 668,349
Tax benefit related to exercise of
certain stock options -- -- 1,426,563 -- 1,426,563
Shares issued in conjunction with
acquisitions 132,712 1,327 3,048,848 -- 3,050,175
Secondary stock offering, net of
offering costs of $381,092 3,419,875 34,199 151,085,171 -- 151,119,370
Net income -- -- -- 5,673,784 5,673,784
---------- -------- ------------- ----------- -------------

Balance at July 31, 1996 13,588,194 135,882 169,879,717 11,134,185 181,149,784
Common stock split 13,685,918 136,859 (136,859) -- --
Exercise of stock options 102,244 1,022 659,693 -- 660,715
Tax benefit related to exercise
of certain stock options -- -- 56,606 -- 56,606
Net income -- -- -- 12,228,652 12,228,652
---------- -------- ------------- ----------- -------------

Balance at July 31, 1997 27,376,356 $273,763 $ 170,459,157 $23,362,837 $ 194,095,757
========== ======== ============= =========== =============
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 20

ABR Information Services, Inc.
Consolidated Statements of Cash Flows
Years ended July 31, 1995, 1996 and 1997

<TABLE>
<CAPTION>
Years ended July 31,
----------------------------------------------
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,793,678 $ 5,673,784 $ 12,228,652
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and other amortization 569,385 1,547,343 2,807,485
Amortization of software 52,217 95,411 690,549
Deferred income taxes 362,379 328,514 2,151,688
Tax benefit related to exercise of certain stock options 74,329 1,426,563 56,606
Increase in allowance for doubtful accounts 8,649 12,692 91,281
Change in operating assets and liabilities:
Accounts receivable (918,172) (771,537) (4,516,626)
Prepaid expenses and other (173,240) (528,798) (1,312,354)
Income taxes recoverable 176,165 -- --
Other assets (61,942) (8,953) (112,693)
Accounts payable 8,660 (674,980) (2,525)
Accrued expenses 420,601 (130,668) (250,407)
Customer accounts deposits 1,704,471 4,228,527 5,113,976
Unearned revenue 271,375 23,931 (52,569)
Income taxes payable 134,573 298,695 (462,893)
------------ ------------- -------------
Net cash provided by operating activities 5,423,128 11,520,524 16,430,170
------------ ------------- -------------

Cash flows from investing activities:
Additions to investments (5,445,720) (314,607,394) (394,805,395)
Maturities of investments 17,508,872 172,470,327 419,288,657
Additions to property and equipment (1,135,622) (12,537,101) (15,192,338)
Additions to software development costs (2,366,075) (3,292,648) (6,275,787)
Acquisitions, net -- (10,656,020) (871,684)
------------ ------------- -------------

Net cash provided by (used in) investing activities 8,561,455 (168,622,836) 2,143,453
------------ ------------- -------------

Cash flows from financing activities:
Proceeds from bank borrowings -- 6,000,000 --
Principal payments under bank borrowings -- (6,000,000) --
Exercise of stock options/warrants 232,230 668,349 660,715
Public offerings, net of cost -- 151,119,370 --
Other (705) (101) --
------------ ------------- -------------
Net cash provided by financing activities 231,525 151,787,618 660,715
------------ ------------- -------------
Net increase (decrease) in cash and cash equivalents 14,216,108 (5,314,694) 19,234,338

Cash and cash equivalents at beginning of year 5,186,982 19,403,090 14,088,396
------------ ------------- -------------
Cash and cash equivalents at end of year $ 19,403,090 $ 14,088,396 $ 33,322,734
============ ============= =============
</TABLE>

Cash paid for income taxes total $913,530, $1,663,102 and $5,241,601 for 1995,
1996 and 1997 respectively.

The accompanying notes are an integral part of these statements.

<PAGE> 21

ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE A - DESCRIPTION OF ORGANIZATION AND BUSINESS

ABR Information Services, Inc. (the "Company") is a leading provider of
comprehensive benefits administration, compliance and information
services to employers seeking to outsource their benefits
administration functions. The Company believes it is the leading
provider of COBRA (the "Consolidated Omnibus Budget Reconciliation
Act") compliance services. Additionally, the Company provides
compliance services related to the federally-mandated Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"). COBRA and HIPAA
are federally-mandated laws related to the portability of employee
group health insurance.

The Company also provides benefits administration services with respect
to benefits provided to retirees and inactive employees, including
retiree healthcare, disability, surviving dependent, family leave and
severance benefits. Additionally, the Company provides benefits
administration services with respect to benefits provided to active
employees, including enrollment and eligibility verification, qualified
domestic relations order ("QDRO") administration, 401(k) administration
services, flexible spending account ("FSA") administration, and pension
services. All services are offered on either an "a la carte" basis or a
total outsourcing basis, allowing customers to outsource certain
benefits administration tasks which they find too costly or burdensome
to perform in-house, or to outsource the entire benefits administration
function.

The Company is headquartered in Palm Harbor, Florida and provides
information and support services to more than 25,000 employers,
including Fortune 500 companies, insurance companies and other
employers. The Company's operations are in a single business segment,
the information services business.

Effective September 8, 1997, the Company consolidated a number of its
subsidiaries into one operating subsidiary called ABR Benefits
Services, Inc.

The financial statements have been restated to reflect the
three-for-two stock splits completed July 1995 and February 1996, a
two-for-one stock split completed February 1997 and an acquisition (see
Note M) by a pooling of interest completed June 1996.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Principles of Consolidation

The financial statements include the accounts of ABR Information
Services, Inc. and all of its subsidiaries. All material
intercompany balances and transactions have been eliminated.

2. Revenue Recognition

Revenues are recognized when the related services have been
provided. Advance payments received from customers for services
not provided are included in unearned revenue.

3. Cost of Services

Cost of services includes personnel, occupancy and other costs
associated with providing services to customers, such as mailing
and printing costs.

4. Customer Accounts Deposits

As part of the services provided to customers, the Company bills
and collects for its customers and maintains the funds in
segregated accounts until the funds are remitted. For financial
statement purposes, the segregated funds are included in cash and
investments (as the funds are not restricted) with the
corresponding liability presented as customer accounts deposits.

5. Cash and Cash Equivalents

The Company considers all highly liquid investments, with a
maturity of 30 days or less when purchased, as cash equivalents.

<PAGE> 22

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

As of July 31, 1996 and 1997, substantially all of the Company's
cash is invested in overnight repurchase agreements of
mortgage-backed or government securities. The Company has a
security interest in the specific investment underlying the
repurchase agreements.

6. Investments

Effective August 1, 1994, the Company implemented Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for
Certain Investments in Debt and Equity Securities." The Company's
investments are classified as either "Held-to-Maturity" or
"Available-for-Sale" investment securities. "Held-to-Maturity"
investments are securities which the Company has the ability and
positive intent to hold to maturity and are stated at cost,
adjusted for amortization of premiums and accretion of discounts
which are computed by the interest method. Declines in fair value
that are other than temporary are recorded as incurred.
"Available-for-Sale" securities are measured at fair value.

7. Contract Set-Up Costs

Under contractual arrangements with certain customers, the Company
incurs set-up costs. These costs are capitalized and amortized
over the contract period, but no longer than twelve months, using
the straight-line method. As of July 31, 1996 and 1997 unamortized
set-up costs of $370,335 and $1,013,789, respectively, are
included in prepaid expenses. During 1995, 1996 and 1997,
amortization of set-up costs totalled $405,299, $569,755 and
$989,612, respectively.

8. Property and Equipment

Property and equipment is stated at cost. Depreciation expense is
computed using the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized over the
lives of the respective leases or the service lives of the
improvements, whichever is shorter. Accelerated methods are used
for income tax purposes.

9. Software Development Costs

Software development costs consist primarily of purchased
software, consulting services, salaries and certain other expenses
related to the development and modification of software
capitalized in accordance with the provisions of SFAS No. 86
"Accounting for the Costs of Computer Software to be Sold, Leased,
or Otherwise Marketed." Capitalization of such cost begins only
upon the establishment of technological feasibility as defined in
SFAS No. 86. Such capitalized costs are amortized when the
software is available to service customers using the straight-line
method over an estimated life of four to five years or based on
the ratio of current gross revenue to the anticipated gross
revenue, whichever is greater, with amortization expense of
$52,217, $95,411 and $690,549, for the years ended 1995, 1996 and
1997, respectively. Accumulated amortization of software
development costs totalled $220,535 and $911,084 at July 31, 1996
and 1997, respectively.

Software development costs that were expensed and not capitalized
under SFAS No. 86 totalled $1,138,639, $1,312,653 and $3,113,157,
for the years ended 1995, 1996 and 1997, respectively.

The Company estimates the cost to complete the current software
projects will be $6.2 million.

10. Income Taxes

Deferred income taxes principally result from expensing certain
software development costs for income tax return purposes while
capitalizing and amortizing certain of these costs for financial
statement purposes.

11. Net Income Per Share

The FASB has issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share," which is effective for financial
statements issued after December 15, 1997. Early adoption of the
new standard is not permitted. The new standard eliminates primary
and fully diluted earnings per share and requires presentation of
basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. The effect of adopting
this new standard has not been determined.

Net income per share has been computed using the weighted average
of the outstanding Common Stock plus the dilutive Common Stock
equivalents (stock options), using the treasury or the modified
treasury stock method (see Note G). Primary and fully diluted
calculations result in the same net income per share.

<PAGE> 23
ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

12. Reclassifications

Certain amounts in prior years' financials statements have been
reclassified to conform with the July 31, 1997 presentation.

13. New Accounting Pronouncements

Effective in fiscal 1997, the Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of," which required impairment
losses to be recorded on long-lived assets used in operations when
impairment indicators are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. The Company's adoption and application of
SFAS No. 121 had no effect on the Company's financial statements.

Effective in fiscal 1997, the Company adopted SFAS No. 123,
"Accounting for Stock Based Compensation," which relates to stock
options granted to employees. SFAS No. 123 permits companies to
continue using the accounting method promulgated by the Accounting
Principles Board Opinion No. 25 ("APB No. 25") "Accounting for
Stock Issued to Employees" to measure compensation or to adopt the
fair value based method prescribed by SFAS No. 123. The Company
elected to continue using the method under APB No. 25 and the
required pro forma disclosures are presented in Note G to the
financial statements. The adoption of SFAS No. 123 has no effect
on the basic financial statements, except for additional
disclosures.

14. Goodwill and Other Intangibles

Amortization is based upon the allocation of the total purchase
price (see Note M) and amortization periods, using the
straight-line method, as follows:

<TABLE>
<CAPTION>
Estimated
Useful
Allocation Lives
-------------- ---------
<S> <C> <C>
Non-competition agreements $ 600,000 5 years
Contracts 2,000,000 10 years
Goodwill 14,060,600 25 years
</TABLE>

Amortization expense totaled $0, $482,708 and $865,603 for the
years ended July 31, 1995, 1996 and 1997, respectively. The
accumulated amortization totalled $482,708 and $1,348,310 at July
31, 1996 and 1997, respectively of which $237,953 and $843,311
relate to goodwill.

15. Use of Estimates in Financial Statements

In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements, as well as the reported
amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

16. Fair Value of Financial Instruments

At July 31, 1996 and 1997, the carrying amount of cash, accounts
receivable, accounts payable, accrued expenses and customer
account deposits approximate fair value because of the short-term
maturities of these items.

<PAGE> 24

NOTE C - INVESTMENTS

The Company classifies debt and equity securities in two categories:
Available-for-Sale securities and Held-to-Maturity securities.
Available-for-Sale securities are measured at fair value, with net unrealized
gains and losses reported in equity. There were no net unrealized holding
losses at July 31, 1997 and 1996. Held-to-Maturity securities are carried at
amortized cost.

The amortized cost, unrealized gains and losses, and fair values of the
Company's Available-for-Sale and Held-to-Maturity investment securities are
summarized as follows:
<TABLE>
<CAPTION>
Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
At July 31, 1997:
Available-for-Sale Securities
Obligations of local, state and
federal governmental agencies $ 68,119,451 $ -- $ -- $ 68,119,451
Held-to-Maturity Securities
Obligations of local, state and
federal governmental agencies 54,508,389 65,363 107,178 54,466,574
------------ ------- -------- ------------
Total $122,627,840 $65,363 $107,178 $122,586,025
============ ======= ======== ============

At July 31, 1996:
Held-to-Maturity Securities
Commercial paper $146,111,102 $ -- $ 22,949 $146,088,153
Obligations of local and state
governmental agencies 1,000,000 -- -- 1,000,000
------------ ------- -------- ------------
Total $147,111,102 $ -- $ 22,949 $147,088,153
============ ======= ======== ============
</TABLE>

The following table lists the maturities of debt securities held at July 31,
1997 and 1996 classified as Available-for-Sale and Held-to-Maturity:

<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
------------------------- ---------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
At July 31, 1997:
Due in one year or less $68,119,451 $68,119,451 $ 40,379,745 $ 40,340,845
Due after one year through five years -- -- 14,128,644 14,125,729
----------- ----------- ------------ ------------
Total $68,119,451 $68,119,451 $ 54,508,389 $ 54,466,574
=========== =========== ============ ============

At July 31, 1996:

Due in one year or less $ -- $ -- $147,111,102 $147,088,153
----------- ----------- ------------ ------------
Total $ -- $ -- $147,111,102 $147,088,153
=========== =========== ============ ============
</TABLE>

There were no sales of securities classified as Available-for-Sale in 1997 and
1996. The Company uses the specific identification method to determine the cost
of securities sold.

Interest earned on investment securities and cash and cash equivalents was
$1,214,971, $3,846,102 and $8,252,011 for the years ended July 31, 1995, 1996
and 1997, respectively. A portion of these amounts is included in revenues and
the remainder is reported separately as interest income in the Consolidated
Statements of Income.

<PAGE> 25

ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE D - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
July 31,
--------------------------- Estimated
1996 1997 Life
----------- ----------- -------------
<S> <C> <C> <C>
Land and building $ 9,687,256 $17,007,404 39 Years
Equipment 6,518,977 12,908,421 5 Years
Furniture and fixtures 732,394 1,930,115 10 Years
Leasehold improvements 293,753 439,085 Life of Lease
----------- -----------
17,232,380 32,285,025
Accumulated depreciation (2,692,482) (4,494,671)
----------- -----------
Total property and equipment, net $14,539,898 $27,790,354
=========== ===========
</TABLE>

Depreciation for the years ended 1995, 1996 and 1997 was $569,386,
$1,064,635 and $1,941,882, respectively.

NOTE E - LINES OF CREDIT

On January 30, 1996, the Company entered into a five year, $15.0
million unsecured credit facility. The Company has agreed to
maintain all of its assets free and clear of all liens,
encumbrances and pledges, except purchase money security interests
in specific equipment in an aggregate amount of less than $500,000
as long as the credit facility remains outstanding or any
indebtedness thereunder remains unpaid. Interest on the principal
balance outstanding under this line of credit accrues at a
floating interest rate equal to the prime rate or, at the
Company's option, to the 30-day London Interbank Offering Rate
(LIBOR), plus an applicable interest rate margin between 1% and 2%
based on certain financial ratios. The credit facility contains
certain financial covenants requiring the maintenance of cash and
cash equivalents and investments equal to or greater than customer
account deposits, a funded debt to EBITDA ratio of a maximum of
2.25-to-1, a debt service coverage ratio of not less than
1.35-to-1, as well as the maintenance of a certain funded debt to
tangible net worth ratio. As of July 31, 1997, the Company was in
compliance with all such covenants, and there were no amounts
outstanding under the credit facility.

NOTE F - SHAREHOLDERS' EQUITY

Common Stock

The authorized Common Stock of the Company consists of 100,000,000
shares of voting Common Stock, and 250,000 shares of nonvoting
Common Stock. The shares of nonvoting Common Stock have the same
rights as the shares of voting Common Stock, except that the
holders of nonvoting Common Stock are not entitled to vote on
matters submitted to shareholders, except as required by
applicable law. As of July 31, 1997, there were no shares of
nonvoting Common Stock issued and outstanding. On July 13, 1995
and on February 19, 1996, the Company completed three-for-two
stock splits, on February 19, 1997 the Company completed a
two-for-one stock split, and on June 28, 1996 the Company
completed an acquisition by a pooling of interest. The weighted
average shares outstanding, earnings per share and stock options
have been restated to reflect the stock splits and the acquisition
by a pooling of interest.

<PAGE> 26

NOTE F - SHAREHOLDERS' EQUITY-Continued

Preferred Stock

The Board of Directors of the Company has the authority to issue
up to 2,000,000 shares of Preferred Stock (par value of $.01 per
share) in one or more series and to fix the number of shares
constituting any such series and the rights and preferences
thereof, including dividend rates, terms of redemption (including
sinking fund provision), redemption price or prices, voting
rights, conversion rights and liquidation preferences of the
shares constituting such series. As of July 31, 1997, there were
no shares of Preferred Stock issued and outstanding.

NOTE G - STOCK OPTIONS

The Company has established the 1987 and 1993 Stock Option Plans
and the 1996 Non-Employee Director Stock Option Plan. Under the
1987 and 1993 Plans, 774,000 and 1,800,000 shares of Common Stock,
respectively, have been authorized for issuance. Under the 1996
Plan (which replaces the Company's previous 1995 Non-Employee
Director Stock Option Plan), 400,000 shares of Common Stock have
been authorized for issuance. During the years ended 1995, 1996
and 1997, all option prices at date of grant equaled or exceeded
the estimated fair value of the Company's Common Stock as
determined by the terms of the stock option plans.

The Company has adopted only the disclosure provisions of
Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation," as it relates to employment awards. It applies APB
Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations in accounting for its plans and does not
recognize compensation expense for its stock-based compensation
plans. If the Company had elected to recognize compensation
expense based upon the fair value at the grant date for awards
under these plans consistent with the methodology prescribed by
SFAS No. 123, the Company's net income and earnings per share
would be reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C> <C>
Net Income As reported $ 5,673,784 $ 12,288,652
Pro forma (unaudited) $ 4,674,893 $ 9,874,324

Net Income per share As reported $ .25 $ .44
Pro forma (unaudited) $ .20 $ .36
</TABLE>

The fair value of each option grant is estimated on the date of
grant using the Binomial options-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1997,
respectively, no dividend yield for all years, expected volatility
of 45% for both years; risk-free interest rates of 5.6% and 6.2%
percent, and expected option holding periods of 3.5 and 2.6 years.

<PAGE> 27

ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE G - STOCK OPTIONS-Continued

A summary of the status of the Company's fixed stock option plans
as of July 31, 1995, 1996 and 1997, and changes during the years
ending on those dates is present below:

<TABLE>
<CAPTION>
Weighted
Shares Average
Voting Exercise Price
--------- --------------
<S> <C> <C>
Options

Options outstanding at July 31, 1994 600,124 $1.63
Options granted 545,498 5.60
Options exercised (172,626) 1.35
Options cancelled (39,394) 2.92
---------

Options outstanding at July 31, 1995 933,602 3.95
Options granted 570,376 13.37
Options exercised (291,822) 2.29
Options cancelled (44,448) 5.05
---------

Options outstanding at July 31, 1996 1,167,708 8.93
Options granted 642,300 25.75
Options exercised (199,968) 3.31
Options cancelled (236,596) 16.73
---------
Options outstanding at July 31, 1997 1,373,444 16.27
=========
</TABLE>

The following table summarizes information concerning currently
outstanding and exercisable stock options:

<TABLE>
<CAPTION>
Weighted Average
Remaining Weighted
Range of Contractual Life Average
Exercise Prices Number Outstanding (Years) Exercise Price
--------------- ------------------ ---------------- --------------
<S> <C> <C> <C>
Outstanding Shares
$ 1.55 - 4.09 112,356 1.8 $ 2.82
$ 6.49 - 6.77 356,232 8.0 6.59
$13.24 - 16.63 352,500 8.6 15.70
$20.14 - 34.33 552,356 9.2 25.60
---------
Total 1,373,444

Exercisable Shares

$ 1.55 - 4.09 112,356 N/A 2.82
$ 6.49 - 6.77 139,238 N/A 6.55
$13.24 - 16.63 86,250 N/A 15.68
$20.14 - 34.33 -- N/A --
---------
Total 337,844
</TABLE>

<PAGE> 28

NOTE H - INCOME TAXES

The following tables summarize the Company's income tax position:

<TABLE>
<CAPTION>
Years ended July 31,
------------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Currently payable
Federal $1,112,399 $1,492,683 $3,957,785
State 205,904 312,606 820,924
---------- ---------- ----------
1,318,303 1,805,289 4,778,709

Deferred 362,379 328,514 2,151,688
Tax benefit from the exercise of
certain stock options 74,329 1,426,563 56,606
---------- ---------- ----------
Total income tax provision $1,755,011 $3,560,366 $6,987,003
========== ========== ==========
</TABLE>

Reconciliation of the federal statutory income tax rate to the
Company's effective income tax rates are as follows:

<TABLE>
<CAPTION>
Years ended July 31,
----------------------
1995 1996 1997
---- ---- ----

<S> <C> <C> <C>
Federal statutory income tax rate 34.0% 34.0% 35.0%
State income taxes, net of federal income tax benefit 3.6 3.6 4.3
Tax-exempt interest (2.2) (0.4) (2.6)
Acquisition costs -- 3.4 --
Other 3.2 (2.0) (0.3)
---- ---- ----
Effective income tax rate 38.6% 38.6% 36.4%
==== ==== ====
</TABLE>

Deferred tax asset and liability components were as follows:

<TABLE>
<CAPTION>
July 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Acquired net operating loss carryforward (1) $ 428,000 $ 265,000
Reserve for doubtful accounts 35,900 60,000
Other -- 113,757
---------- ----------
463,900 438,757
---------- ----------
Deferred tax liabilities:
Depreciation 199,900 220,000
Software development costs 1,159,555 3,266,000
---------- ----------
1,359,455 3,486,000
---------- ----------
Net deferred tax liability $ 895,555 $3,047,243
========== ==========
</TABLE>

(1) Expires in 2001

<PAGE> 29

ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE I - COMMITMENTS AND CONTINGENCIES

The Company leases office space under noncancellable leases which
are accounted for as operating leases. The leases are subject to
an escalation clause using a CPI index. The leases expire between
November 1997 through May 2005.

Future minimum lease payments under noncancellable operating
leases are as follows as of July 31, 1997:

<TABLE>
<CAPTION>
July 31,
-------------------------------
<S> <C>
1998 $ 964,455
1999 780,955
2000 251,329
2001 238,523
2002 206,709
Thereafter 588,875
</TABLE>

Rent expense for all operating leases for the years ending July
31, 1995, 1996 and 1997 was $673,391, $1,129,738 and $1,083,000,
respectively.

The Company is engaged in various litigation arising from the
ordinary course of its business. In the opinion of management, the
ultimate outcome of litigation is not expected to be material to
the Company's financial position, results of operations or
liquidity.

As a provider for Portability compliance and administration
services, the Company is subject to excise taxes for noncompliance
with certain provisions of COBRA and HIPAA. In addition, the
Company accepts financial responsibility for certain liabilities
incurred by its customers that are attributable to the Company's
failure to fulfill its obligations to its customers under its
agreements. The Company maintains a professional liability policy,
with a deductible of $25,000 per occurrence, and an annual per
aggregate limit on coverage of $5.0 million. Although there can be
no assurance that the Company will not incur any material
liability for noncompliance with COBRA or HIPAA for its failure to
comply its agreement with any customer, from the Company's
inception through July 31, 1997, the Company has not incurred
material liability as a provider.

NOTE J - INCENTIVE BONUS PLAN AND SAVINGS PLAN

Effective January 1, 1992, the Company established a defined
contribution savings plan (the "Savings Plan") covering
substantially all employees. The Savings Plan consists of an
employee elective contribution and a Company matching contribution
for each eligible participant. The Company's matching contribution
is determined by the Board of Directors on a discretionary basis.
The Company's contributions under the Savings Plan in fiscal 1995,
1996 and 1997 were approximately $124,500, $167,969 and $261,944,
respectively.

Effective August 1, 1993, the Company adopted an incentive bonus
plan (the "Incentive Bonus Plan"), which provides for the
discretionary payment of annual incentive awards to key employees
from a pool equal to 10% of the Company's pre-tax profits (income
before income taxes), adjusted upward or downward based on the
attainment of pre-established goals related to the Company's
pre-tax margin (income before income taxes divided by revenues)
and its revenue growth (based on annual increases in revenues).
Payments under the Incentive Bonus Plan are discretionary, based
on the determination of the Board of Directors of the Company and
are subject to certain limitations as provided in the Incentive
Bonus Plan. In fiscal 1995, 1996 and 1997, $777,633, $790,000 and
$1,112,809, respectively, of incentive bonus was expensed.

<PAGE> 30

NOTE K - MAJOR CUSTOMER

During fiscal 1996 and 1997, one of the Company's customers accounted
for approximately 15.0% and 14.5%, respectively, of revenues. This
customer became a client of the Company as a result of the New Jersey
acquisition. In fiscal 1995, no individual customer accounted for 10%
or more of revenues.

NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for
the quarterly periods of fiscal 1995, 1996 and 1997:

<TABLE>
<CAPTION>
1995 First Second Third Fourth Total
- ----
<S> <C> <C> <C> <C> <C>
Revenue $ 4,321,754 $ 4,493,809 $ 4,734,637 $ 5,284,436 $18,834,636
Operating income 876,305 912,000 985,361 1,202,454 3,976,120
Net income 628,655 660,050 696,135 808,838 2,793,678
Net income per share $ .03 $ .03 $ .03 $ .04 $ .14

1996
- ----
Revenue $ 5,614,304 $ 6,851,136 $ 9,067,901 $ 9,628,840 $31,162,181
Operating income 1,138,977 1,597,305 1,768,907 1,856,816 6,362,005
Net income 783,436 1,047,632 1,645,273 2,197,443 5,673,784
Net income per share $ .04 $ .05 $ .07 $ .08 $ .25

1997
- ----
Revenue $10,389,193 $11,714,389 $13,188,827 $14,786,433 $50,078,842
Operating income 2,267,008 2,796,707 3,275,809 3,794,893 12,134,417
Net income 2,611,363 2,936,465 3,184,585 3,496,239 12,228,652
Net income per share $ .09 $ .11 $ .12 $ .13 $ .44
</TABLE>

NOTE M - ACQUISITIONS

New Jersey Acquisition

On December 15, 1995, the Company, in an acquisition accounted for
as a purchase, acquired all of the outstanding capital stock of
Bullock Associates, Inc. ("Bullock") for $12.5 million, with an
additional $2.0 million payable upon the attainment of certain
revenue requirements during 1996 and 1997. During fiscal 1997,
$863,053 of this additional amount was paid for the attainment of
these revenue requirements, leaving a balance of $1,136,947 that
could be paid in fiscal 1998. Bullock is located in Princeton, New
Jersey and provides COBRA administration, retiree insurance
administration, insurance continuation billing and collection,
pension benefits administration services, QDRO administration and
educational benefit administration services as well as
administration for other employee benefits programs such as
employee discount plans, adoption programs, program rebates and
emergency loans.

The following pro forma balances have been derived from the
historical financial statements of the Company and Bullock and
adjusts such information to give effect to the acquisition of
Bullock. The balances for the years ended July 31, 1995 and 1996
assume that the acquisition of Bullock occurred on August 1, 1994.
The unaudited pro forma financial information is not necessarily
indicative of the results which would actually have occurred had
the transaction been in effect on the dates and for the periods
indicated or which may result in the future.

<TABLE>
<CAPTION>
Years ended July 31,
-------------------------
1995 1996
------- -------
(in thousands except per share data)

<S> <C> <C>
Revenue $27,819 $34,740
Operating income 5,840 7,245
Net income 3,483 6,015
Net income per share $ .18 $ .26
======= =======
</TABLE>

<PAGE> 31

ABR Information Services, Inc.
Notes to Consolidated Financial Statements
July 31, 1995, 1996 and 1997

NOTE M - ACQUISITIONS-Continued

California Acquisition

Effective February 1, 1996, the Company acquired all of the
outstanding capital stock of Total Cobra Services, Inc. ("TCS")
for 265,424 shares of restricted Common Stock. This acquisition
was accounted for as a purchase. TCS is located in Irvine,
California and provides COBRA administration and retiree billing
services. For the fiscal year ended December 31, 1995, TCS had
revenues of less than $2 million. Pro forma information is not
provided for TCS due to its immateriality.

Virginia Acquisition

On June 28, 1996, the Company completed a merger of the The L.P.
Baier Company ("LPB") where 286,020 shares of the Company's
stock was exchanged for all of the outstanding stock of LPB. LPB
is located in Fairfax, Virginia and provides primarily FSA
(Flexible Spending Account) administration services and COBRA
administration. The merger was accounted for as a pooling of
interest, and accordingly, the accompanying financial statements
have been restated to include the accounts and operations of LPB
for all periods prior to the merger, including restating the
retained earnings at July 31, 1994 to reflect the difference
between the par value of the Company stock issued and the total
shareholders' equity of LPB.

Separate results of the combining entities for previously
reported periods are as follows:

<TABLE>
<CAPTION>
Years ended July 31,
-----------------------------
1995 1996
----------- -----------
<S> <C> <C>
Revenue
ABR Information Services, Inc. $16,692,376 $28,449,980
The L.P. Baier Company 2,142,260 2,712,201
----------- -----------
$18,834,636 $31,162,181
=========== ===========

Net Income
ABR Information Services, Inc. $ 2,641,788 $ 5,578,144
The L.P. Baier Company 151,890 95,640
----------- -----------
$ 2,793,678 $ 5,673,784
=========== ===========
</TABLE>

In connection with this merger, $361,198 of acquisition
costs were incurred and have been charged to expense in
the fourth quarter for 1996.

<PAGE> 32
Report of Independent Certified Public Accountants

Board of Directors
ABR Information Services, Inc.

We have audited the accompanying consolidated balance sheets of ABR Information
Services, Inc. as of July 31, 1996 and 1997 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended July 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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 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 ABR Information
Services, Inc. as of July 31, 1996 and 1997, and the consolidated results of
its operations and its consolidated cash flows for each of the three years in
the period ended July 31, 1997, in conformity with generally accepted
accounting principles.

GRANT THORNTON LLP

Tampa, Florida
September 11, 1997

<PAGE> 33
ABR Information Services, Inc.
Market Price Information*
July 31, 1995, 1996 and 1997

The following table sets forth the high and low sale price of the
Company's Common Stock since its initial public offering on May 26,
1994 as reported by Nasdaq and restated for the three-for-two stock
splits completed on July 13, 1995 and February 19, 1996, and the
two-for-one stock split completed on February 19, 1997:

<TABLE>
<CAPTION>
1997 1996 1995 1994
High Low High Low High Low High Low

<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $37 3/4 $25 1/2 $ 9 59/64 $ 6 1/2 $3 19/32 $2 29/64 $ -- $ --
Second Quarter 33 1/2 19 11/16 16 27/64 9 43/64 4 49/64 3 1/16 -- --
Third Quarter 24 3/8 16 11/16 31 1/2 16 3/32 5 5/8 4 43/64 -- --
Fourth Quarter 32 3/4 20 5/6 32 1/2 19 7 27/32 5 13/64 2 59/64 2 9/32
Year 37 3/4 16 11/16 32 1/2 6 1/2 7 27/32 2 29/64 2 59/64 2 9/32
</TABLE>

The Company has never declared nor paid any cash dividends on the
Common Stock. The Company currently anticipates that all of its
earnings will be retained for development and expansion of the
Company's business and does not anticipate paying any cash dividends
in the foreseeable future.

STOCK PRICE PERFORMANCE*

[GRAPH]

*As restated for the three-for-two stock splits completed on July 13, 1995
and February 19, 1996 and the two-for-one stock split completed
on February 19, 1997.

<PAGE> 34

CORPORATE AND SHAREHOLDER INFORMATION

CORPORATE HEADQUARTERS
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Palm Harbor, Florida 34684-2141
813-785-2819

INTERNET ADDRESS
http://www.abr.com

ANNUAL MEETING
The Annual Meeting of ABR Information
Services, Inc. will be held at 3:00 p.m.
(EST) on December 5, 1997, at the Hyatt
Regency Westshore in Tampa, Florida.

FORM 10-K
A copy of the ABR Information Services, Inc.
annual report to the Securities and Exchange
Commission on Form 10-K may be obtained
without cost by request from the Corporate
Headquarters, Attention: Investor Relations.

LISTING
The Company's Common Stock trades on
The Nasdaq Stock Market under the symbol ABRX.

TRANSFER AGENT AND REGISTRAR
First Union National Bank
Corporate Trust Client Services
1525 West W.T. Harris Boulevard, 3C3, NC1153
Charlotte, North Carolina 28288-1153
704-590-7598

LEGAL COUNSEL
Foley & Lardner
Tampa, Florida

Proskauer Rose LLP
New York, New York

INDEPENDENT AUDITORS
Grant Thornton LLP
Tampa, Florida

SHAREHOLDER INFORMATION
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Attention: Investor Relations
Palm Harbor, Florida 34684-2141
813-785-2819

<PAGE> 35

DIRECTORS AND OFFICERS

BOARD OF DIRECTORS

JAMES E. MACDOUGALD THOMAS F. COSTELLO MARK M. GOLDMAN
Chairman of the Board, Chairman and Vice Chairman
President and Chief Chief Executive Officer Phone Programs, Inc.
Executive Officer The Costello Group
ABR Information Services, Inc.

SUZANNE M. MACDOUGALD PETER A. SULLIVAN
Senior Vice President and Secretary President
ABR Information Services, Inc. Arlen Corporation

Officers of ABR Information Services, Inc.

JAMES E. MACDOUGALD JAMES P. O'DROBINAK SUZANNE M. MACDOUGALD
Chairman of the Board, Senior Vice President and Senior Vice President and
President and Chief Chief Financial Officer Secretary
Executive Officer

Officers of ABR Benefits Services, Inc.

CHIEF EXECUTIVE
James E. MacDougald - President and
Chief Executive Officer

FINANCE
James P. O'Drobinak - Senior Vice President and
Chief Financial Officer
Reva R. Maskewitz - Vice President and Controller
Robert A. Smolinski - Vice President and Treasurer

INFORMATION SERVICES

Andrew D. Swenson - Senior Vice President and
Chief Information Officer
John E. Hazuka - Vice President, Software Development

MERGERS AND ACQUISITIONS
Dennis A. Sweeney - Senior Vice President,
Mergers and Acquisitions

OPERATIONS
William R. Povilus - Senior Vice President, Operations
Lauren M. Ringuette - Managing Vice President,
Portability Administration
Robert F. Skrok - Managing Vice President,
Enrollment and Eligibility Services
Shari N. Arzate - Vice President,
Major Account Implementation
Denise A. Elko - Vice President,
Major Account Implementation

SALES AND MARKETING
Robert H. Pariseau - Senior Vice President,
Sales and Marketing
Brian R. Annis - Vice President,
Telemarketing Operations
Dagmar S. De Stefano - Vice President
John Doyle - Vice President
Karlene K. Dunkelberger - Vice President
Patrick R. Manders - Vice President,
Communications

STRATEGIC DEVELOPMENT
Randolph C. Metcalfe - Senior Vice President,
Strategic Development

HUMAN RESOURCES
Janet H. Till - Vice President,
Corporate Human Resources

CALIFORNIA SERVICE CENTER
William E. Evans - Senior Vice President,
California Service Center

NEW JERSEY SERVICE CENTER
W. Carl Bullock - Senior Vice President,
New Jersey Service Center
Barbara A. Biasotti - Managing Vice President
Nancy L. Clark - Vice President

VIRGINIA SERVICE CENTER
Rick L. Snyder - Senior Vice President,
Virginia Service Center
Tina A. McIntosh - Managing Vice President
Glen V. Armand - Vice President,
Sales and Marketing
Christine Erickson - Vice President,
Sales and Marketing
Rhonda E. Reeves - Vice President,
Section 125 Services

Officers of ABR Properties, Inc.
James E. MacDougald - Chief Executive Officer
Joseph C. Lukason - President
James P. O'Drobinak - Senior Vice President and
Chief Financial Officer
Suzanne M. MacDougald - Senior Vice President and
Secretary
Reva R. Maskewitz - Vice President, Controller and
Treasurer

<PAGE> 1

EXHIBIT 21.1

LIST OF SUBSIDIARIES OF ABR INFORMATION SERVICES, INC.

<PAGE> 2

EXHIBIT 21.1

LIST OF SUBSIDIARIES OF ABR INFORMATION SERVICES, INC.

1. ABR Properties, Inc. (A Florida Corporation)

2. ABR Benefits Services, Inc. (A Florida Corporation)

<PAGE> 1

EXHIBIT 23.1

CONSENT OF GRANT THORNTON LLP

<PAGE> 2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our reports dated September 11, 1997 accompanying the
consolidated financial statements and schedule of ABR Information Services,
Inc. that are included in or incorporated by reference in the Company's Form
10-K for the year ended July 31, 1997. We hereby consent to the incorporation
by reference of said reports in the Registration Statements of ABR Information
Services, Inc. on Forms S-8 (File No. 33-86520 and 333-17195, effective
November 18, 1994 and December 3, 1996, respectively).

/S/ GRANT THORNTON LLP
GRANT THORNTON LLP

Tampa, Florida
October 14, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ABR INFORMATION SERVICES, INC. ANNUAL 10-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<EXCHANGE-RATE> 1
<CASH> 33,322,734
<SECURITIES> 108,499,196
<RECEIVABLES> 8,426,059
<ALLOWANCES> 130,175
<INVENTORY> 0
<CURRENT-ASSETS> 152,713,120
<PP&E> 32,285,025
<DEPRECIATION> 4,494,671
<TOTAL-ASSETS> 222,016,848
<CURRENT-LIABILITIES> 24,873,848
<BONDS> 0
0
0
<COMMON> 273,763
<OTHER-SE> 193,821,994
<TOTAL-LIABILITY-AND-EQUITY> 222,016,848
<SALES> 50,078,842
<TOTAL-REVENUES> 50,078,842
<CGS> 28,178,925
<TOTAL-COSTS> 9,765,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,081,238
<INCOME-PRETAX> 19,215,655
<INCOME-TAX> 6,987,003
<INCOME-CONTINUING> 12,228,652
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,228,652
<EPS-PRIMARY> .44
<EPS-DILUTED> .44

</TABLE>