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 DECEMBER 31, 1996

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM _____ TO ____

                         COMMISSION FILE NUMBER 0-28148

                             THE VINCAM GROUP, INC.
             (Exact name of registrant as specified in its charter)

  FLORIDA                                   59-2462823
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

  2850 DOUGLAS ROAD                         (305) 460-2350
  CORAL GABLES, FLORIDA 33134               (Registrant's telephone number, 
  (Address of principal executive offices)  including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

    SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK,
$.001 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. [ ]

         The aggregate market value of voting stock held by non-affiliates of
the registrant as of February 28, 1997 was approximately $124,111,404 based on
the $36 closing sale price for the Common Stock on the Nasdaq National Market
System on such date and determined by subtracting from the number of shares
outstanding on that date the number of shares held by affiliates of the
registrant.

         As of February 28, 1997, The Vincam Group, Inc. had 8,574,442 shares of
Common Stock, $.001 par value, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

PART III -- PORTIONS OF REGISTRANT'S PROXY STATEMENT RELATING TO THE 1997 ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1997.


<PAGE>

                             THE VINCAM GROUP, INC.

                                    FORM 10-K

                                TABLE OF CONTENTS

PART I                                                                     PAGE

Item 1.    Business...................................................      1

Item 2.    Properties.................................................      15

Item 3.    Legal Proceedings..........................................      16

Item 4.    Submission of Matters to a Vote of Security-Holders........      17

PART II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters........................................      18

Item 6.    Selected Financial Data....................................      19

Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations........................      20

Item 8.    Financial Statements and Supplementary Data................      30

Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure........................      56

PART III

Item 10.   Directors and Executive Officers of the Registrant.........      57

Item 11.   Executive Compensation.....................................      57

Item 12.   Security Ownership of Certain Beneficial Owners
           and Management.............................................      57

Item 13.   Certain Relationships and Related Transactions.............      57

PART IV

Item 14.   Exhibits, Financial Statement Schedules and  
           Reports on Form 8-K........................................      58

SIGNATURES        ....................................................      61


                                       


<PAGE>

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

         In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), The Vincam Group, Inc. (the
"Company") is hereby providing cautionary statements identifying important
factors that could cause the Company's actual results to differ materially from
those projected in forward-looking statements (as such term is defined in the
Reform Act) made by or on behalf of the Company herein or orally, whether in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the
use of words or phrases such as "will result," "are expected to," "will
continue," "is anticipated," "estimated," "projection" and "outlook") are not
historical facts and may be forward-looking and, accordingly, such statements
involve estimates, assumptions, and uncertainties which could cause actual
results to differ materially from those expressed in the forward-looking
statements. Such uncertainties include, among others, the following: (i)
potential for unfavorable interpretation of government regulations relating to
labor, taxes, insurance, employment matters and the provision of managed care
services; (ii) the Company's ability to obtain or maintain all required licenses
or certifications required to further expand the range of specialized managed
care services offered by the Company; (iii) potential increases in the Company's
costs, such as health care costs, that the Company may not be able to reflect
immediately in its service fees; (iv) the Company's ability to offer its
services to prospective clients in additional states where it has less or no
market penetration; (v) the level of acquisition opportunities available to the
Company and the Company's ability to efficiently price and negotiate such
acquisitions on a favorable basis; (vi) the financial condition of the Company's
clients; (vii) additional regulatory requirements affecting the Company; (viii)
the impact of competition from existing and new professional employer
organizations; (ix) the failure to properly manage growth and successfully
integrate acquired companies and operations; and (x) other factors which are
described in further detail in the Company's filings with the Securities and
Exchange Commission.

         The Company cautions that the factors described above could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors. Further, management
cannot assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.

ITEM 1.           BUSINESS

GENERAL

         The Vincam Group, Inc. ("Vincam" or the "Company") was incorporated in
Florida in September 1984 as "Human Power Resources, Inc.," and changed its name
to "The Vincam Group, Inc." in 1989. The Company's corporate headquarters are
located at 2850 Douglas Road, Coral Gables, Florida 33134, and its telephone
number is (305) 460-2350.

         Vincam, one of the largest professional employer organizations ("PEO")
in the industry, provides small and medium-sized businesses with an outsourcing
solution to the complexities and costs related to employment and human
resources. The Company's continuum of integrated employment-related services
consists of human resource administration, employment regulatory compliance
management, workers' compensation coverage, health care and other employee
benefits. The Company establishes a co-employer


                                       1
<PAGE>

relationship with its clients and contractually assumes substantial employer
responsibilities with respect to worksite employees. The Company believes its
services assist business owners in: (i) managing costs associated with workers'
compensation, health insurance coverage, workplace safety programs, and certain
employment-related litigation, (ii) providing employees with competitive health
care and related benefits that are more characteristic of large employers, and
(iii) reducing the time and effort required by business owners and executives to
deal with the increasingly complex legal and regulatory environment affecting
employment. As of December 31, 1996, the Company provided professional employer
services to approximately 678 client organizations with over 21,000 employees,
primarily in Florida, Georgia and Michigan. The Company was among the first PEOs
to be accredited by the Institute for the Accreditation of Professional Employer
Organizations. In addition, the Company capitalizes on its managed care
expertise by offering certain specialty managed care services on a stand-alone
basis to health and workers' compensation insurance companies, health
maintenance organizations ("HMOs"), managed care providers and large
self-insured employers.

         According to the U.S. Small Business Administration, there were
approximately 5.1 million businesses in the United States with fewer than 500
employees in 1992. Collectively, these businesses employed an estimated 49
million employees, and represented approximately $1.1 trillion in aggregate
annual payroll, implying a potential market size for PEO services of $1.3
trillion (assuming an average mark-up of approximately 20%). The PEO industry
began to evolve in the early 1980s largely in response to the burdens placed on
small to medium-sized employers by increasing employment costs, an increasingly
complex legal and regulatory environment and high benefit and workers'
compensation costs. While various service providers, such as payroll processing
firms, benefits and safety consultants and temporary services firms, are
available to assist these businesses with specific tasks, these organizations do
not typically provide a comprehensive range of employment-related services. PEOs
address this market void. PEOs enter into agreements with numerous small to
medium-sized employers, achieving economies of scale as professional employers
and performing employment-related functions at a level typically available only
to large corporations which have substantial resources to devote to human
resources management. The Company considers medium-sized businesses to be those
with 20 to 500 employees.

         The PEO industry has experienced significant growth in recent years.
Staffing Industry Analysts, Inc. estimates that gross revenues in the PEO
industry grew from $5.0 billion in 1991 to $13.8 billion in 1995,
representing a compounded annual growth rate of approximately 29%. The Company
believes that the growth in the number of small businesses in the United States,
the low market penetration of the PEO industry, and the increasing willingness
of businesses to outsource non-core activities and functions has contributed to
the growing demand for PEO services. The PEO industry is highly fragmented, with
approximately 1,100 PEOs in operation in 1995. The Company believes that
increasing industry regulatory complexity and the increasing capital
requirements associated with developing larger service delivery infrastructures
and management information systems should lead to significant consolidation
opportunities in the PEO industry.

         The Company believes that industry consolidation will be driven by
greater industry and regulatory complexity, increasing capital requirements and
the significant economies of scale available to PEOs with a regional
concentration of clients. The Company intends to expand in current markets and
to enter selected new markets by acquiring established quality PEOs to provide a
platform for future regional consolidation. The Company has identified certain
fundamental attributes which characterize attractive potential new markets such
as (i) proximity to a major metropolitan area, (ii) regulatory receptivity to
PEOs, (iii) prior successful introduction of the PEO concept, (iv) favorable
economic conditions, (v) high workers' compensation rates and health care costs,
and (vi) a high concentration of small to medium-sized businesses.

         Since the Company's initial public offering in May 1996, the Company,
as part of its acquisition strategy, has increased its presence in the Atlanta,
Georgia PEO market through its acquisition in August 1996 of substantially all
of the assets and liabilities of The Stone Mountain Group, Inc. ("SMG"), a
privately held PEO headquartered in Snellville, Georgia. In addition, the
Company has established a presence in the Denver, Colorado PEO market through
the Company's January 1997 acquisition of Staff Administrators, Inc. ("SAI"), a
privately held PEO headquartered in Denver, Colorado. Unless otherwise noted
herein, data with respect to the Company do not include the effects of the SAI
acquisition. These acquisitions added approximately 367 new clients and
approximately 5,487 worksite employees to the Company's ranks. See
"Business--Recent Acquisitions" below. Although the Company has acquired two
PEOs since July 1996, there can be no assurance that other suitable acquisition


                                        2


<PAGE>

candidates will be found in the future, that the Company will have or be able to
obtain the necessary financing to consummate acquisitions, that acquisitions can
be consummated on favorable terms or that any acquired companies can be
successfully integrated into the Company's operations. There can be no assurance
that management skills, systems and resources currently in place will be
adequate to implement the Company's strategy. The failure to manage growth
effectively or to implement its strategy could have a material adverse effect on
the Company's results of operations, financial condition and liquidity.

SERVICES

         Vincam provides professional employer services through four core
activities: (i) human resource administration, (ii) employer regulatory
compliance management, (iii) workers' compensation cost containment, and (iv)
employee benefits administration. Vincam's services allow clients to concentrate
their resources on their core businesses. In addition, the Company leverages its
managed care expertise by offering certain specialty managed care services on a
stand-alone basis to health and workers' compensation insurance companies, HMOs,
managed care providers and large self-insured employers.

         HUMAN RESOURCE ADMINISTRATION. Vincam's comprehensive human resource
services reduce the employment-related administrative burdens faced by its
clients, and provide worksite employees with a wide array of benefits typically
offered by large employers. As a co-employer, the Company is responsible for
payroll and attendant record-keeping, payroll tax deposits, payroll tax
reporting, employee file maintenance, unemployment claims, and responding to
regulatory requirements. Vincam develops and administers customized personnel
policies and procedures for each of its clients, relating to, among other
things, performance appraisals, discipline and terminations. The Company also
provides temporary staffing, recruiting, orientation, training, counseling,
substance abuse awareness and outplacement services for worksite employees.

         EMPLOYER REGULATORY COMPLIANCE MANAGEMENT. Under its standard contract,
the Company assumes responsibility for complying with many employment-related
regulatory requirements. In addition, Vincam assists its clients in
understanding and complying with other employment-related requirements for which
the Company does not assume responsibility. Laws and regulations applicable to
employers include state and federal tax laws, state workers' compensation laws,
state unemployment laws, occupational safety and health laws, immigration laws,
and federal, state and local discrimination and other civil rights laws. When a
claim arises, the Company provides assistance through either its in-house legal
department or outside counsel. In order to respond to such claims in a
cost-effective manner, the Company has entered into a capitated fee arrangement
with a national law firm specializing in employment and labor issues which
provides legal representation to the Company's clients.

         WORKERS' COMPENSATION COST CONTAINMENT. Workers' compensation is a
state-mandated, comprehensive insurance program that requires employers to fund
medical expenses, lost wages and other costs that result from work-related
injuries and illnesses, regardless of fault and without any co-payment by the
employee. See "Industry Regulation." Prior to 1997, the Company maintained a
large deductible workers' compensation insurance policy and developed various
systems and policies designed to control its workers' compensation costs. These
systems and policies include comprehensive risk evaluation of prospective
clients, the prevention of workplace injuries, early intervention in each
employee injury, intensive management of the medical costs related to such
injuries and the prompt return of employees to work. The Company seeks to
prevent workplace injuries by implementing a wide variety of training, safety
and mandatory drug-free workplace programs. Specific components of the Company's
proprietary managed care system include the prompt identification and reporting
of injuries, the use of Company-designated health care providers, utilization
and fee review, telephonic claims and case management, auditing of bills and
other techniques designed to reduce medical costs. The Company's efforts to
return employees to work quickly involve both rehabilitation services and the
placement of employees in transitional, modified-duty positions until they are
able to resume their former positions. Effective for the three years commencing
January 1, 1997, the Company has entered into a low deductible plan which fixes
a substantial portion of its workers' compensation cost. The Company intends,
however, to continue its cost control programs. See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

                                        3

<PAGE>

         EMPLOYEE BENEFITS AND RELATED ADMINISTRATION. Vincam currently offers
to worksite employees an employee benefits package which includes several health
care options, such as preferred provider organizations ("PPOs"), HMOs, and
exclusive provider organizations ("EPOs"). Supplemental benefit programs offer
dental care, vision care, prescription drugs, an employee assistance plan,
mental health benefits and several life and disability insurance options. Vincam
also offers 401(k) retirement savings and cafeteria plans to its eligible
employees. The Company delivers participant benefits to worksite employees and
monitors and reviews claims for loss control purposes. The Company believes that
its ability to provide and administer a wide variety of employee benefits on
behalf of its clients tends to mitigate the competitive disadvantage small and
medium-sized businesses normally face in the areas of employee benefit cost
control and employee recruiting and retention. Certain regulatory issues,
however, may affect the ability of PEO's to offer certain benefit plans and/or
the manner in which such plans are offered and administered. See "Industry
Regulation".

         SPECIALTY MANAGED CARE SERVICES. The growth in the Company's core PEO
business provided Vincam with significant expertise and experience in managing a
wide range of employee health care and disability costs. In order to further
capitalize on that expertise, the Company offers a variety of specialty managed
care services (such as employee assistance programs, behavioral health managed
care, comprehensive workers' compensation managed care services, risk management
and loss containment services) on a stand-alone basis to health and workers'
compensation insurance companies, HMOs, managed care providers and large
self-insured employers. The Company's employee assistance program and behavioral
health managed care services provide a client company's employees (which may or
may not be worksite employees provided by the Company) with access to a network
of professionals, established and monitored by the Company, who can address
behavioral health issues and assist employees with personal problems such as
alcohol or drug abuse, financial or legal concerns and marriage or family
problems. The Company's workers' compensation managed care services, risk
management services and loss containment services include (i) claim management,
reporting and processing, (ii) coordination of all procedures for handling
injuries, (iii) development of safety programs and supervisory training in
safety techniques and self-inspection, (iv) implementation of medical provider
networks, (v) investigation of fraudulent claims, and (vi) monitoring of all
continuing claims and return-to-work programs.

         The Company believes that the continued expansion of its specialty
managed care division will (i) enhance its leverage in negotiating provider
arrangements and create greater economies of scale, (ii) increase profit margins
by using existing service delivery infrastructures to generate additional
revenue, and (iii) benefit the Company's PEO operations by making the Company's
specialty managed care services more cost-effective, innovative and competitive.
The Company believes that the continued evolution of Vincam's specialty managed
care services could require structural and organizational modifications to the
Company's traditional relationships with other participants in the health care
industry. For example, in 1994, Vincam formed a strategic alliance with a
Florida HMO as part of its strategy to establish the first workers' compensation
managed care arrangement to be certified in every county in the State of
Florida. The Company expects that its ability to expand its specialty managed
care services outside of Florida will also require licensure or a restructuring
of all or certain aspects of its Florida operating structure. See "Industry
Regulation."


                                        4


<PAGE>

CLIENT RELATIONSHIPS

         The Company and its clients are often referred to as co-employers
because each is responsible for certain specified employer-related obligations.
The division of responsibilities below is not exhaustive, but serves as an
illustration.
<TABLE>
<CAPTION>
             VINCAM                                 CLIENT                                        JOINT
---------------------------------   ---------------------------------------   -----------------------------------------------
<S>                                 <C>                                       <C>  
/bullet/ Payment of payroll, tax    /bullet/ Supervision and training of      /bullet/ Implementation of policies and 
reporting and payment (state and    job-specific activities of worksite       practices relating to the employer/employee 
federal withholding, Federal        employees                                 relationship
Insurance Contributions Act         
("FICA"), Federal Unemployment      /bullet/ Assignment to, and ownership     /bullet/ Selection of fringe benefits, including
Tax Act ("FUTA"), and state         of, all intellectual property rights      employee leave policies (other than as 
unemployment)                                                                 controlled by the Family and Medical Leave 
                                    /bullet/ Product liability                Act or state law)
                                                                              
/bullet/ Workers' compensation      /bullet/ Professional liability or        /bullet/ Employer liability under workers'
compliance, procurement,            malpractice                               compensation laws
management and reporting                                                       
                                    /bullet/ Compliance with state and        /bullet/ Compliance with Title VII of the Civil
/bullet/ Employee benefit           local government contracting              Rights Act of 1964, the Age Discrimination
procurement, administration and     provisions, professional licensing        in Employment Act, the Federal Drug Free
payment                             requirements and fidelity requirements,   Workplace Act (and any state or local
                                    and Title III of the Americans with       equivalent), the Fair Labor Standards Act
                                    Disabilities Act ("ADA") (i.e., public    and similar state legislation, ADA and any
                                    access to facilities)                     other applicable employment-related law
                                   
                                    /bullet/ Negligent or tortious conduct    /bullet/ Compliance with Internal Revenue Code
                                    of worksite employees acting under        provisions regarding benefits discrimination
                                    the direction and control of the client   
                                                                              
                                    /bullet/ Determination of salaries and    
                                    wages of worksite employees

</TABLE>

         The Company's standard PEO services agreement provides for an initial
one year term, subject to termination by the Company or the client at any time
during the first year upon 30 days' prior written notice. Thereafter, the
contract may be terminated upon 30 days' written notice given prior to the
expiration of the renewal term or immediately for cause. Revenues from
professional employer services are based on a pricing model that takes into
account the gross pay of each employee and a mark-up which includes the
estimated costs of federal and state employment taxes, workers' compensation,
employee benefits and human resource administrative services, as well as a
provision for profit. The Company includes in its revenues all amounts billed to
clients for gross payroll and wages, related employment taxes and health care
and workers' compensation coverage. The specific mark-up varies by client based
on the workers' compensation classification of the worksite employees, their
eligibility for health care benefits and the complexity of administering the
client service agreement. Accordingly, the


                                       5


<PAGE>

Company's average mark-up percentage will fluctuate based on client mix, which
cannot be predicted with any degree of certainty.

         At December 31, 1996, Vincam served approximately 678 PEO client
companies and had approximately 21,106 active worksite employees resulting in an
average of 31 worksite employees per PEO client. In addition, the acquisition of
SAI in January 1997 added approximately 230 clients and 3,500 active worksite
employees. No single client accounted for more than 5% of Vincam's revenues for
1996. However, approximately 71.5% of the Company's revenues for 1996 were
derived from the South Florida market. The Company's PEO client base is broadly
distributed throughout a wide variety of industries. As of December 31, 1996,
Vincam's approximate worksite employee and PEO client company distribution by
major Standard Industrial Classification code as a percentage of the total is
set forth below:

                                                 WORKSITE
              INDUSTRY GROUP                    EMPLOYEES      PEO CLIENTS
              --------------                    ---------      -----------
Services.....................................     35 %            33 %
Manufacturing................................     29 %            22 %
Transportation, Communication, & Utilities...     11 %            10 %
Retail Trade.................................      9 %            12 %
Wholesale Trade..............................      7 %             7 %
Agriculture (Landscaping)....................      3 %             1 %
Finance, Insurance, Real Estate..............      1 %             3 %
Construction.................................      5 %            12 %

         The number of worksite employees employed by the Company at the end of
each of 1992, 1993, 1994, 1995 and 1996, was 4,244, 6,587, 8,590, 11,391 and
21,106, respectively. There can be no assurance that the number of worksite
employees employed by the Company will continue to grow at the same rate or that
such number will not decrease.

         Vincam has benefited from a high level of client retention, resulting
in a significant recurring revenue stream. During 1994, Vincam retained 191 of
the 239 clients with which it began the year. During 1995, it retained 243 of
285 clients with which it began the year. During 1996, it retained 293 of the
339 clients with which it began the year. This resulted in client retention
rates for 1994, 1995 and 1996 of 80%, 85% and 86%, respectively. The client
retention rate is calculated by determining the percentage of clients which
remained with the Company from the beginning of the year into the following
year, including clients which may have completed the first year of their
agreements with the Company during the year, but excluding clients which
terminated their engagement of the Company within the same year as such
engagement commenced. Of the 104 and 106 new clients which engaged the Company
during 1994 and 1995, respectively, ten of such clients in each year terminated
their engagement of the Company within the same year as such engagement
commenced. Of the 223 new clients which engaged the Company during 1996, 15 of
such clients terminated their engagement of the Company in 1996. A PEO's client
retention rate for a particular year may also be calculated (according to the
National Association of Professional Employer Organizations) by dividing: (i)
the number of clients of the PEO at year end by (ii) the sum of clients at the
beginning of the year and clients added during the year. Using this method,
Vincan had client retention rates of 86%, 87% and 89% for 1994, 1995 and 1996,
respectively. Client attrition experienced by Vincam is based on a variety of
factors, including (i) client nonrenewal due to price or service
dissatisfaction, (ii) client business failure or downsizing, (iii) termination
by Vincam resulting from the client's inability to make timely payments or
breach of contract, and (iv) sale or acquisition of the client.

RECENT ACQUISITIONS

         On January 7, 1997, the Company acquired SAI, a privately held PEO
headquartered in Denver, Colorado with approximately 230 clients and 3,500
worksite employees as of December 31, 1996 (the "SAI Acquisition"). The Company
issued 520,000 shares of its common stock in a merger transaction in exchange
for all of the equity in SAI and its subsidiaries. The SAI Acquisition will be
accounted for as a pooling of interests. See Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 2 of the
Notes to Consolidated Financial Statements.


                                        6


<PAGE>

         On August 30, 1996, the Company acquired substantially all of the
assets and liabilities of SMG, a privately held PEO headquartered in Snellville,
Georgia, in exchange for approximately $5.0 million in cash and notes (the "SMG
Acquisition"). Of the approximately $5.0 million purchase price, $2.4 million
was paid in cash on August 30, 1996, $1.4 million has been paid or will be
payable in 1997, and $1.2 million was placed in escrow in connection with
potential price adjustments in the event that, among other things, client
retention fails to meet certain targets. As of August 30, 1996, SMG had
approximately 137 clients and 1,987 worksite employees. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 2 of the Notes to Consolidated Financial Statements.

SALES AND MARKETING

         The Company markets its services through a direct sales force of 26
sales executives, each of whom reports to one of the Company's four area
presidents. The Company attributes the high productivity of its sales executives
to their prior years of experience in fields related to one or more of the
Company's core services. The background of the Company's sales executives
includes experience in industries such as payroll services, health insurance,
temporary services and workers' compensation insurance. The Company's sales
materials emphasize its broad range of high quality services and the resulting
benefits to clients and worksite employees. The Company's sales and marketing
strategy is to hire additional sales executives in its existing markets and to
increase sales productivity.

         Vincam generates sales leads from several primary sources. These
sources include direct sales efforts, telemarketing and referrals. These leads
result in initial presentations to prospective clients. Vincam's sales
executives then gather information about the prospective client and its
employees, including job classification, workers' compensation claims history,
health insurance claims history, salary and the desired level of employee
benefits. These various factors are reviewed in the context of Vincam's pricing
model and client selection guidelines. A client proposal is prepared for
acceptable clients.

         This prospective client screening process plays a vital role in
controlling the Company's costs and limiting exposure to liability. Once a
prospective client accepts Vincam's proposal, the new client is quickly
incorporated into the Company's system. A Company human resources manager then
assumes responsibility for administering the client's personnel and benefits,
coordinating the Company's response to the client's needs for administrative
support and responding to any questions or problems encountered by the client.

INFORMATION TECHNOLOGY

         The Company's integrated information systems provide a competitive
advantage in managing costs and delivering comprehensive high quality services.
The Company's proprietary systems allow real time reporting of worksite
accidents and injuries, enabling Vincam to implement promptly its managed care
techniques and thereby better control workers' compensation and other health
care costs. In addition, the Company has developed a proprietary software
product installed on PEO clients' computers which enables the clients to enter
payroll and other human resource management data directly, via modem dial-in,
and provides clients with other local reporting capabilities.

COMPETITION

         The Company's competitors include (i) traditional in-house human
resource departments, (ii) other PEOs, and (iii) providers of unbundled
employment-related services such as payroll processing firms, temporary
employment firms, commercial insurance brokers, human resource consultants,
workers' compensation insurers, HMOs and other specialty managed care providers.
Certain of such companies, many of which have greater financial and other
resources than the Company, are seeking to enter the professional employer
services market.

         Competition in the highly fragmented PEO industry is generally on a
local or regional basis. Management believes that the primary elements of
competition are quality of service, choice and quality of benefits, reputation
and price. The


                                        7


<PAGE>

Company believes that name recognition, regulatory expertise, financial
resources, risk management and data processing capability distinguish leading
PEOs from the rest of the industry.

         The Company believes that barriers to entry into the PEO industry are
increasing, including the following: (i) the complexity of the PEO business and
the need for expertise in multiple disciplines; (ii) the three to five years of
experience required to establish experience ratings in key cost areas of
workers' compensation, health insurance and unemployment; and (iii) the need for
sophisticated management information systems to track all aspects of business in
a high-growth environment.

EMPLOYEES

         As of December 31, 1996, the Company had 273 corporate employees. Of
its corporate employees, 144 were employed in the Company's PEO operations, 96
were employed in the Company's specialty managed care operations and 33 were
employed in administration. For information with respect to the Company's
worksite employees, see "Business--Client Relationships."

                               INDUSTRY REGULATION

OVERVIEW

         The Company's professional employer and specialty managed care
operations are subject to extensive state and federal regulations that include
operating, fiscal, licensing and certification requirements. Adding complexity
to the Company's regulatory environment are (i) uncertainties resulting from the
non-traditional employment relationships created by PEOs, (ii) variations in
state regulatory schemes, and (iii) the ongoing evolution of regulations
regarding health care and workers' compensation.

         Many of the federal and state laws and regulations relating to labor,
tax and employment matters applicable to employers were enacted prior to the
development of non-traditional employment relationships and, accordingly, do not
specifically address the obligations and responsibilities of PEOs. Moreover,
both the Company's PEO and specialty managed care services are regulated
primarily at the state level. Regulatory requirements regarding the Company's
business therefore vary from state to state, and as the Company enters new
states, it will be faced with new regulatory and licensing environments. There
can be no assurance that the Company will be able to satisfy the licensing
requirements or other applicable regulations of any particular state in which it
is not currently operating, that it will be able to provide the full range of
services currently offered in Florida, or that it will be able to operate
profitably within the regulatory environment of any state in which it does not
obtain regulatory approval. The absence of required licenses would require the
Company to restrict the services it offers. In addition, many states have not
yet promulgated definitive interpretations of existing statutes and regulations
or new statutes and regulations with respect to emerging specialty managed care
services such as those provided by the Company. As a result, as such
interpretations or new statutes and regulations emerge, the Company may be
required to obtain licenses with respect to its specialty managed care services
or alter the manner in which it currently markets and provides such services.
There can be no assurance that the Company will be able to satisfy any such
additional licensing requirements imposed upon its specialty managed care
services.

         The application of many laws to the Company's PEO services will depend
on whether the Company is considered an employer under the relevant statutes and
regulations. For example, the common law test of the employment relationship is
generally used to determine employer status for benefit plan purposes under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Internal Revenue Code of 1986, as amended (the "Code"), the workers'
compensation laws of many states and various state unemployment laws. However,
management believes that such common law test, originally created to distinguish
an employee from an independent contractor, is not well suited to evaluating the
application of ERISA and the Code to co-employers in a PEO relationship. The
Internal Revenue Service (the "IRS") is examining this issue in connection with
a study of the PEO industry, focusing on selected PEOs (not including Vincam).
See "PEO Services--Employee Benefit Plans." In addition, from time to time there
have been proposals to enact a statutory definition of employer for certain
purposes of the Code.


                                        8


<PAGE>

         Regulation in the health care and workers' compensation fields
continues to evolve. Sweeping reforms have been the subject of debate at both
the federal and state government levels. New legislation or interpretations of
current licensing and regulatory requirements could impose operating or
licensing requirements on the Company which it may not be able to satisfy or
which could have a material adverse effect on the Company's financial condition
and results of operations. Additionally, interpretation of such legislation or
regulation by regulatory agencies with broad discretionary powers could require
the Company to modify its existing operations materially in order to comply with
applicable regulations. In addition, although health care reform at the state
and federal level seeks solutions to contain health care costs, there can be no
assurance that such proposals will be successful. The Company cannot predict
what effect any such proposed reform will have on its business. If new
legislation results in increased health care costs, which comprise a significant
portion of the Company's direct costs, and if the Company is not able to reflect
promptly such increased costs in its service fees, the legislation could have a
material adverse impact on the Company's future operations and liquidity.

         While the Company cannot predict with certainty the development of
federal and state regulations, management will continue to pursue a proactive
strategy of educating administrative authorities as to the advantages of PEOs
and assisting in the development of regulation which appropriately accommodates
their legitimate business function.

         There can be no assurance, however, that existing laws and regulations
which are not currently applicable to the Company will not be interpreted more
broadly in the future so as to apply to the Company's existing activities or
that new laws and regulations will not be enacted with respect to the Company's
activities, either of which could have a material adverse effect on the
Company's business, financial condition, results of operations and liquidity.

PEO SERVICES

         PEO LICENSING REQUIREMENTS. A critical aspect of the growth of the PEO
industry has been increasing recognition and acceptance of PEOs by state
authorities. As the concept of PEO services became understood by regulatory
authorities, the regulatory environment began to shift from one of hostility and
skepticism to one of regulatory recognition of the industry. During the middle
to late 1980s, legitimate industry participants were challenged to overcome well
publicized failures of financially unsound and, in some cases, unscrupulous
operators. Given this environment, Vincam and other industry leaders, in
conjunction with the National Association of Professional Employer
Organizations, worked with relevant government entities to establish a
regulatory framework designed to protect clients and employees and discourage
unscrupulous and financially unsound operators, thereby promoting the legitimacy
and further development of the industry.

         While many states do not explicitly regulate PEOs, approximately
one-third of the states, including Florida, have laws with licensing or
registration requirements for PEOs. Several additional states, including Georgia
and Michigan, have considered such regulation. Such laws vary from state to
state but generally provide for monitoring the fiscal responsibility of PEOs.
State regulation assists in screening insufficiently capitalized PEO operations
and, in the Company's view, has the effect of legitimizing the PEO industry
generally by resolving interpretative issues concerning employee status for
specific purposes under applicable state law. Limited interpretative or
enforcement guidance is available for recently enacted PEO regulations. The
development of additional regulations and interpretation of existing regulations
can be expected to evolve over time. The Company supports actively such
regulatory efforts.

         In Florida, the Company's PEO operations are licensed under the Florida
Employee Leasing Licensing Act of 1991 (the "Florida Licensing Act"). The
Florida Licensing Act requires PEOs and their controlling persons to be
licensed, mandates reporting requirements and allocates several employer
responsibilities. The Florida Licensing Act also requires licensed PEOs to
submit annual financial statements to the Florida Board of Employee Leasing
Companies and maintain a tangible accounting net worth and positive working
capital. The Florida Licensing Act also requires PEOs to, among other things:
(i) reserve the right of direction and control over worksite employees (which
the statute refers to as leased employees), (ii) enter into a written agreement
with the client company, (iii) pay wages to the worksite employees, (iv) pay and
collect payroll taxes, (v) maintain authority to hire, terminate, discipline and


                                        9


<PAGE>

reassign employees, (vi) reserve a right to direct and control the management of
safety, risk and hazard control at the worksite, (vii) promulgate and administer
employment and safety policies, and (viii) manage workers' compensation claims.

         FEDERAL AND STATE EMPLOYMENT TAXES. The Company assumes the sole
responsibility and liability for the payment of federal and state employment
taxes with respect to wages and salaries paid to its employees, including
worksite employees. There are essentially three types of federal employment tax
obligations: (i) income tax withholding requirements, (ii) social security
obligations under FICA, and (iii) unemployment obligations under FUTA. Pursuant
to these obligations, the employer has the obligation to withhold and remit the
employer portion and, where applicable, the employee portion of these taxes.

         To date the IRS has relied extensively on the common law test of
employment in determining employer status and the resulting liability for
failure to withhold. However, the IRS has formed an Employee Leasing Market
Segment Group (the "Market Segment Group") for the stated purpose of examining
whether PEOs, such as the Company, are the employers of the worksite employees
under the Code provisions applicable to federal employment taxes and,
consequently, whether they are exclusively responsible for payment of employment
taxes on wages and salaries paid to such employees. Another stated purpose of
the Market Segment Group is to determine whether owners of client companies can
be employees of PEOs under the federal employment tax laws. See "PEO
Services--Employee Benefit Plans."

         The interpretative uncertainties raised by the Market Segment Group may
impact the Company's ability to report employment taxes on its own account
rather than for the accounts of its clients and would increase administrative
burdens on the Company's payroll service function. In addition, while the
Company believes that it can contractually assume the client company's
withholding obligations, if the Company fails to meet these obligations, the
client company may be held jointly and severally liable therefor. The Company's
management believes that the economic strength and reputation of the Company
have prevented this potential liability from discouraging prospective clients.

         EMPLOYEE BENEFIT PLANS. The Company offers various employee benefit
plans to its worksite employees, including a 401(k) plan, a cafeteria plan, a
group health plan, a group life insurance plan, a group disability insurance
plan and an employee assistance plan. Generally, employee benefit plans are
subject to provisions of both the Code and ERISA. In order to qualify for
favorable tax treatment under the Code, the 401(k) plan must be established and
maintained by an employer for the exclusive benefit of its employees. Most of
these benefit plans are also offered to Vincam's corporate employees.

         The IRS has established the Market Segment Group for the purpose of
identifying specific compliance issues prevalent in certain segments of the PEO
industry. Approximately 70 PEOs, not including Vincam, have been randomly
selected by the IRS for audit pursuant to this program. One issue that has
arisen from these audits is whether PEOs, such as the Company, are the employers
of worksite employees under Code provisions applicable to employee benefit plans
and consequently able to offer to worksite employees benefit plans that qualify
for favorable tax treatment. The Market Segment Group is also examining whether
client company owners are employees of PEOs under Code provisions applicable to
employee benefit plans. The Company understands that these issues have been
referred to the IRS National Office. In addition, the Company understands that
the IRS Houston District has, with respect to one of the Company's competitors,
determined that the 401(k) plan of such PEO should be disqualified because,
among other things, it covers worksite employees who are not employees of such
PEO. The Company is unable to predict the timing or nature of the findings of
the Market Segment Group or the ultimate outcome of such findings. If the IRS
study were to conclude that a PEO is not an employer of its worksite employees
for plan purposes, worksite employees could not continue to participate in the
Company's 401(k) plan or cafeteria plan or continue to participate in certain
other employee benefit plans of the Company. If such conclusion were applied
retroactively, employees' vested account balances would become taxable
immediately, the Company would lose its tax deduction to the extent the
contributions were not vested, the plan trust would become a taxable trust and
penalties and additional taxes for prior periods could be assessed. In such a
scenario, the Company would face the risk of client dissatisfaction as well as
potential litigation. A retroactive application by the IRS of an adverse
conclusion could


                                       10


<PAGE>

have a material adverse effect on the Company's financial position and results
of operations. While Vincam believes that a retroactive disqualification is
unlikely, there can be no assurance as to the ultimate resolution of these
issues. The Company believes that, although unfavorable to the Company, a
prospective application by the IRS of an adverse conclusion would not have a
material adverse effect on its financial position and results of operations, as
the Company could help its clients obtain comparable benefit programs at
comparable cost, although there can be no assurance with respect thereto.

         On August 12, 1996, the Company received a favorable determination
letter from the IRS regarding the qualified status of its 401(k) plan. In its
application to the IRS, the Company informed the IRS that the Company is
involved in the business of leasing employees to client companies and that the
401(k) plan covered worksite or leased employees who satisfied the plan's
eligibility requirements. The favorable determination does not necessarily
resolve the issue of employer status for 401(k) plan purposes, which may be
affected by the conclusions or findings of the Market Segment Group. As
discussed above, an adverse finding by the Market Segment Group could have a
material adverse effect on the Company's financial condition and results of
operations.

         In addition to the employer/employee relationship requirement described
above, pension and profit-sharing plans, including the Company's 401(k) plan,
must satisfy certain other requirements under the Code. These other requirements
are generally designed to prevent discrimination in favor of highly compensated
employees to the detriment of non-highly compensated employees with respect to
both the availability of, and the benefits, rights and features offered in,
qualified employee benefit plans. The Company applies the nondiscrimination
requirements of the Code at the client company level to ensure that its 401(k)
plan is in compliance with the requirements of the Code.

         Employee pension and welfare benefit plans are also governed by ERISA.
ERISA defines an employer as "any person acting directly as an employer, or
indirectly in the interest of an employer, in relation to an employee benefit
plan." ERISA defines the term employee as "any individual employed by an
employer." The United States Supreme Court has held that the common law test of
employment must be applied to determine whether an individual is an employee or
an independent contractor under ERISA.

         With respect to ERISA, a definitive judicial interpretation of employer
in the context of a PEO or employee leasing arrangement has not been
established. If the Company were found not to be an employer for ERISA purposes,
its plans would not comply with ERISA and the level of services the Company
could offer may be materially adversely affected. Further, as a result of such
finding, the Company and its plans would not enjoy the preemption of state laws
provided by ERISA and could be subject to varying state laws and regulations, as
well as to claims based upon state common laws.

         The U.S. Department of Labor issued an advisory opinion in December
1995 to a staff leasing company advising that particular company that its health
plan, which covered worksite employees, was a multiple employer plan, rather
than a single employer plan. The Company believes it is a co-employer of
worksite employees, and as such the Company views its group health plan, which
also covers worksite employees, to be a single employer plan. If this Department
of Labor opinion were applied to the Company's health plan, or to the Company's
other employee benefit plans, the Department of Labor could assess penalties
against the Company for having incorrectly filed annual reports treating such
plan(s) as a single employer plan. The Department of Labor could also assess
penalties against the Company's clients for failure to file annual reports. In
such a scenario, the Company would face the risk of client dissatisfaction as
well as potential litigation, and its financial condition, results of operations
and liquidity could be materially adversely affected.

         WORKERS' COMPENSATION. Workers' compensation is a state mandated,
comprehensive insurance program that requires employers to fund medical
expenses, lost wages and other costs resulting from work-related injuries and
illnesses. In exchange for providing workers' compensation coverage for
employees, the liability of the employer under the workers' compensation statute
is exclusive. In most states, the extensive benefits coverage (for both medical
costs and lost wages) is available through the purchase of commercial insurance
from private insurance companies, participation in state-run insurance funds or
employer


                                       11


<PAGE>

self-insurance. Workers' compensation benefits and arrangements vary on a
state-by-state basis and are often highly complex. These laws establish the
rights of workers to receive benefits and to appeal benefit denials. Workers'
compensation laws also regulate the methods and procedures which the Company may
employ in its workers' compensation managed care programs. For example, workers'
compensation laws prohibit medical co-payment and deductible payment by
employees. In addition, certain states restrict employers' rights to select
health care providers and establish maximum fee levels for treatment of injured
workers.

         Provider reimbursement methods also vary from state to state. A
majority of states, including Florida, have adopted fee schedules pursuant to
which all health care providers are uniformly reimbursed. In states without fee
schedules, health care providers are reimbursed based on usual, customary and
reasonable fees charged in the particular state in which the services are
provided.

         As a creation of state law, workers' compensation is subject to change
by the state legislature and is influenced by the political processes in each
state. Several states have mandated that employers receive coverage only from
state-operated funds. Florida and other states have adopted legislation
requiring that all workers' compensation injuries be treated through a managed
care program. Florida's legislation became effective January 1, 1997. While such
legislation may increase the market for the Company's workers' compensation
managed care services, it may also intensify the competition faced by the
Company for such services. In addition, as a result of the impact of managed
care arrangements on the cost of workers' compensation health care costs, the
Florida Department of Insurance has recently reduced rates which insurers can
charge for such insurance. The Company cannot predict the effect that such
reduced rates may have on its financial condition and results of operations. In
addition, recent federal health care reform proposals have included a proposal
that may require 24-hour health coverage, in which the coverage of traditional
employer-sponsored health plans is combined with workers' compensation coverage
to provide a single insurance plan for health problems, whether or not related
to work. If such a proposal were enacted into law, the incorporation of workers'
compensation coverage into conventional health plans may adversely affect the
market for the Company's services and may intensify the competition faced by the
Company from HMOs and other health care providers. Moreover, because workers'
compensation benefits are mandated by law and are subject to extensive
regulation, payors and employers do not have the same flexibility to alter
benefits as they have with other health benefit programs. It is difficult for
payors and multi-state employers to adopt uniform policies to administer, manage
and control the costs of benefits because workers' compensation programs vary
from state to state.

         The Company's ability to use comprehensive workers' compensation
managed care techniques in its PEO operations depends in part on its ability to
contract with or create networks of health care providers. The Company requires
that injured workers use the Company's network of providers. Laws regulating the
operation of managed care provider networks have been adopted by a number of
states. These laws may apply to managed care provider networks having contracts
with the Company or to provider networks which the Company may organize. To the
extent the Company is governed by these regulations, it may be subject to
additional licensing requirements, financial oversight and procedural standards
for beneficiaries and providers. Such laws may limit the ability of the Company
to establish such networks in states that the Company enters through
acquisitions. As a result, the Company's ability to control workers'
compensation costs may be limited as compared to those areas in which networks
exist.

         OTHER EMPLOYER-RELATED REQUIREMENTS. As an employer, the Company is
subject to a wide variety of federal and state laws and regulations governing
employer-employee relationships, including the Immigration Reform and Control
Act, the ADA, the Family and Medical Leave Act, the Occupational Safety and
Health Act, wage and hour regulations, and comprehensive state and federal civil
rights laws and regulations, including those prohibiting discrimination. The
definition of employer may be broadly interpreted under these laws.

         Responsibility for complying with various state and federal laws and
regulations is allocated by agreement between Vincam and its clients, or in some
cases is the responsibility of both. See "Business--Client Relationships."
Vincam may incur liability for violations of laws even though Vincam is not
contractually or otherwise responsible for the conduct giving rise to such
liability because the Company acts as a co-employer with the client company. The
Company's standard client agreement generally provides that the client will
indemnify the Company for liability incurred as a result of an act of negligence
of a worksite employee under the direction and control of the client or to the
extent the liability is attributable


                                       12


<PAGE>

to the client's failure to comply with any law or regulation for which it has
specified contractual responsibility. However, there can be no assurance that
Vincam will be able to enforce such indemnification, and the Company may
therefore be ultimately responsible for satisfying the liability in question.

SPECIALTY MANAGED CARE SERVICES

         The Company currently offers managed behavioral health and workers'
compensation managed care services on a stand-alone basis to health and workers'
compensation insurance companies, HMOs, managed care providers and large
self-insured employers. Under certain of these arrangements, the Company offers
these services on a capitated, risk-bearing basis. Laws in all states regulate
the business of insurance and the establishment and operation of health
maintenance organizations and other networks of health care providers. The
Company's use or establishment of provider networks in the provision of managed
mental health care services or workers' compensation managed care services could
subject the Company to regulation under state statutes regarding managed care
provider networks. To the extent that the Company operates or is deemed to
operate in one or more states as a prepaid limited health services organization,
HMO, prepaid health plan or other similar entity, it will be required to comply
with certain statutes and regulations that, among other things, may require it
to maintain minimum levels of deposits, capital, surplus, reserves or net worth,
and also may limit the ability of the Company and its subsidiaries to pay
dividends. In addition, many of these regulations vary on a state-by-state
basis, and there can be no assurance that, as the Company's operations expand,
it will be able to satisfy the various requirements of other states or be able
to offer the same services covered in Florida.

         The Florida Department of Insurance (the "DOI") recently implemented
rules pursuant to a prepaid limited health services organization statute enacted
in 1993. This statute provides for the regulation of limited service prepaid
health plans in a manner similar to the regulation of HMOs. The Company has
obtained a written determination from the staff of the DOI to the effect that
its provision of capitated managed behavioral health care services does not
currently subject the Company to regulation under this statute. However, there
can be no assurance that the DOI will not take a contrary position in the
future. The DOI had contemplated issuing administrative rules regulating
the financial solvency and operation of entities that contract with HMOs and
other regulated insurers to arrange for the provision of health services to HMO
members or insureds on a prepaid basis. DOI may again consider such
rules which, if promulgated, may have a material adverse effect upon the
Company's business, financial condition or results of operations.

         Certain of the Company's specialty managed care services, including its
managed behavioral health care services and certain of its workers' compensation
managed care services, involve review of requests for medical care or therapy.
Approximately half of the states, including Florida, have enacted laws that
require licensing of businesses that provide medical review services. These laws
typically establish minimum standards for qualification of personnel, as well as
confidentiality, internal quality control and dispute resolution procedures.
Such regulatory programs may require additional licensure or increase the
Company's operating costs, which may in turn have an adverse impact upon the
Company's competitive position.

         Psych/Care, Inc. ("Psych/Care"), the Company's subsidiary that provides
managed behavioral health care services, is licensed under Florida law as a
private review agent. Psych/Care arranges for the provision of managed
behavioral health services through its own network of independent providers and,
in connection therewith, also provides medical review services. The Company is
responsible for credentialing its providers and has adopted a plan that complies
with the Standards for Accreditation of Managed Care Organizations established
by the National Committee for Quality Assurance, a private accrediting body.

         In Florida, and in cooperation with a Florida HMO, the Company has
developed the first workers' compensation managed care arrangement to be
certified in every county in the State of Florida. There can be no assurance
that future interpretations of insurance and health care network laws by the
regulatory authorities of states in which the Company


                                       13


<PAGE>

does business (or in states into which the Company may expand such business)
will not require licensure or a restructuring of all or some of the Company's
operations.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Pursuant to General Instruction G(3), the information regarding
executive officers of the Company called for by Item 401(b) of Regulation S-K is
hereby included in Part I of this Form 10-K.

         The following table sets forth information, as of February 24, 1997,
with respect to each person who is an executive officer of the Company, as
indicated below.
<TABLE>
<CAPTION>
NAME                                AGE                                POSITION
----                                ---                                --------
<S>                                 <C>              <C>    
Carlos A.  Saladrigas               48               Chairman of the Board, President and
                                                              Chief Executive Officer

Jose M.  Sanchez                    45               Vice Chairman and Area President--South Florida

Stephen L.  Waechter                46               Chief Financial Officer, Senior Vice President--
                                                              Finance and Administration

Andrea L.  Velasquez                36               President--Managed Care Division

Jeffrey D.  Lamb                    39               Senior Vice President--Marketing and
                                                              Business Development

Elizabeth J.  Keeler, Esq.          42               Vice President--Legal and Regulatory Affairs,
                                                              General Counsel

Miguel A.  Maseda                   32               Vice President--Operational Processes

Jacquelyn L. Miller                 46               Vice President--Human Resource Services

Martiniano J.  Perez                34               Vice President and Controller

</TABLE>

         CARLOS A. SALADRIGAS co-founded the Company in 1984, and is its
Chairman, President and Chief Executive Officer. Before co-founding Vincam, Mr.
Saladrigas was Executive Vice President of CAC (now owned by CAC--United
Healthcare Plans of Florida), Florida's oldest HMO, and previously held several
positions at PepsiCo, Inc., including that of Director of Corporate Planning and
Vice President of Finance & Administration for PepsiCo's subsidiary located in
Mexico. Mr. Saladrigas holds an M.B.A. with honors from the Harvard Business
School. He is highly active in PEO industry efforts, having served as President
of NAPEO and of its Florida chapter. In addition, Mr. Saladrigas was appointed
by Florida's governor to serve a four-year term as a member of the Florida Board
of Employee Leasing Companies (the industry's regulatory authority), which he
chaired during its first year of operation. Currently, Mr. Saladrigas serves as
Vice Chairman of the Institute for the Accreditation of Professional Employer
Organizations, the industry's independent accrediting organization.

         JOSE M. SANCHEZ co-founded the Company in 1984, and is the Vice
Chairman of the Board and Area President--South Florida. Before co-founding
Vincam, he held the position of vice president of sales at PepsiCo, Inc.'s
subsidiary in Mexico,


                                       14


<PAGE>

where he was responsible for over 1,800 employees in 35 distribution centers
throughout the country, which served in excess of 63,000 customers, as well as
other management positions with PepsiCo.

         STEPHEN L. WAECHTER has served as Chief Financial Officer and Senior
Vice President--Finance and Administration of the Company since October 1996.
From September 1993 to September 1996, Mr. Waechter served as Chief Financial
Officer and Treasurer of Applied Biosciences International, Inc. From 1974 until
1993, Mr. Waechter held a number of positions with General Electric Company, the
last of which was Vice President for Finance in the GE Information Services
division of General Electric. Mr. Waechter received his M.B.A. from Xavier
University.

         ANDREA VELASQUEZ has served as the Company's President--Managed Care
Division since November 1994. From November 1993 to November 1994, Ms. Velasquez
served as the Company's Senior Vice President--Marketing and Sales. From January
to November 1993, she served as Psych/Care's Vice President--Development and
Administration. From September 1992 to January 1993, she served as Psych Care's
Director of Business Development and Administration. From August 1989 to
September 1992, she was employed by American Biodyne, Inc., holding a number of
key positions including Regional Market Manager.

         JEFFREY D. LAMB has served as the Company's Senior Vice
President--Marketing and Business Development since August 1995. From October
1990 to August 1995, Mr. Lamb was with Automatic Data Processing, Inc., serving
as a Division Vice President, Strategic Planning and Business Development, and
since 1992 as Vice President of Automatic Data Processing's Heartland business
line. Mr. Lamb also served with McKinsey & Company after having received an
M.B.A. from the Harvard Business School.

         ELIZABETH J. KEELER, ESQ. has served the Company as Vice
President--Legal & Regulatory Affairs and General Counsel since July 1996.
Before joining the Company, Ms. Keeler was a shareholder in the law firm of
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., where her practice
included employment and immigration law matters.

         MIGUEL A. MASEDA has served the Company as Vice President--Operational
Processes since March 1996. From July 1992 until he joined the Company, Mr.
Maseda was employed by KPMG Peat Marwick in the fields of strategy, operations
and technology consulting. From June 1986 to July 1990, Mr. Maseda served as a
member of the technical staff of AT&T Bell Laboratories, where he was
responsible for software development and project management. Mr. Maseda received
his M.B.A. from Harvard Business School.

         JACQUELYN L. MILLER joined the Company as Vice President--Human
Resource Services in January 1997. From April 1991 to January 1997, Ms.
Miller was self-employed as a human resources consultant. In that capacity, she
provided her clients with training in management, leadership and occupational
effectiveness. From 1980 to 1991, Ms. Miller served in a variety of human
resource positions with General Electric Company. Ms. Miller holds a law degree
from the University of Bridgeport.

         MARTINIANO J. PEREZ has served as Vincam's Controller since February
1993 and as Vice President and Controller since February 1994. He is responsible
for supervising all financial operations and managing Vincam's accounting
department. From July 1991 to January 1993, Mr. Perez was a Vice President with
Consolidated Bank in charge of financial reporting. Prior to that time, Mr.
Perez was an auditor with KPMG Peat Marwick in Miami, Florida.

ITEM 2.           PROPERTIES

         The Company maintains 14 facilities. The Company's headquarters
are located in Coral Gables, Florida, in a Company-owned building that houses
the Company's executive offices, South Florida PEO unit and specialty managed
care


                                       15


<PAGE>

operations. The Company's PEO operations utilize three other Florida offices
located in Ft. Lauderdale, West Palm Beach and Orlando, as well as offices in
Atlanta and Snellville, Georgia, Denver and Grand Junction, Colorado, Green Bay,
Wisconsin, Anaheim, California, Chicago, Illinois and Detroit and Grand Rapids,
Michigan. All of the Company's offices other than its headquarters are leased.
See Notes 1, 8 and 14 to the Company's Consolidated Financial Statements for
information regarding the Company's leases and the mortgage on its headquarters
facility. The Company believes that it requires additional space to support its
growth and is evaluating alternatives to relocate its corporate headquarters.
Although there is no current commitment to do so, a decision by the Company to
relocate its corporate headquarters could result in a significant capital
expenditure by the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation."

ITEM 3.           LEGAL PROCEEDINGS

         In December 1995, Angela Isabel Sanchez and her minor children filed a
wrongful death suit in the 11th Judicial Circuit in Dade County, Florida against
the Company, Miami Free Zone Corporation (one of the Company's PEO clients), and
certain officers of the Company and such client. The complaint alleged that the
defendants improperly assigned certain maintenance duties to an employee of the
Company assigned to the client, who was fatally injured in the course of such
duties. The plaintiff's original complaint sought damages in excess of $10
million; however, such complaint was dismissed in part and amended to seek
damages in excess of $15,000. The court has sustained plaintiff's amended
complaint alleging premises liability against both the Company and its client as
a result of a worksite accident on the client's premises. The Company is
asserting that its liability under this claim, if any, should be limited to
$100,000 due to the immunity provisions of the Florida workers' compensation
statute involving worksite accidents. Discovery in the proceeding continues.
While there can be no assurance that the ultimate outcome of this lawsuit will
not have a material adverse effect on the Company's financial condition and
results of operations, management believes, based on consultations with the
Company's counsel, that the ultimate outcome of this lawsuit should not have
such an effect.

         The Company is a defendant in a lawsuit brought in Dade County Circuit
Court by James Byrnes in November 1995. Mr. Byrnes alleges that he was injured
by a worksite employee of the Company assigned to work for Atlantic View
Partners, Ltd. Atlantic View Partners, Ltd., a client of the Company, owns and
operates a Days Inn hotel and is a co-defendant in the litigation, together with
Atlantic View, Inc. and Days Inn of America, Inc. The plaintiff alleges that the
employee, while he was working as a valet parking attendant, was negligent in a
motor vehicle collision and severely and permanently injured the plaintiff. Mr.
Byrnes has alleged damages in excess of $50,000 in his amended complaint for,
among other things, bodily injury, medical costs, pain and suffering, and lost
ability to earn income. Based on consultations with the Company's counsel,
management of the Company believes that it has meritorious defenses to the
plaintiff's claims and that if the lawsuit is adversely determined, the Company
may be entitled to indemnification from its client and/or the Company's
liability insurance carrier. Although management believes that the Company's
ultimate liability in this matter should not be material, there can be no
assurance that the Company will prevail in the litigation, in a related claim
for indemnification, or that the liability of the Company, if any, would not
have a material adverse effect on the Company's financial condition and results
of operations.

         In October 1996, the Company received a notice of assessment in the
discounted amount of approximately $53,500 from the Treasurer of the State of
Florida Department of Insurance as Receiver of United States Employer Consumer
Self Insurance Fund of Florida, a workers' compensation insurance fund which was
declared insolvent (the "Fund"). The Company paid the assessment in January
1997. The Company had certain worksite employees covered by the Fund during the
fiscal years ended December 31, 1992, 1993 and 1994. The court order authorizing
the assessment provides that the Company, by paying the discounted assessment,
is deemed to have paid its assessment in full and is not subject to any further
liability for assessment for policyholder loss claims. The Company may be
subject to additional liability for the assessments of other fund members. The
Company believes that there are approximately 700 members of the Fund which have
been assessed $37.0 million in the aggregate. Although the amount of the
potential exposure, if any, for such additional liability is not yet
determinable, management believes that the Company has meritorious defenses to
the assessment and that its ultimate liability


                                       16


<PAGE>

in this matter will not have a material adverse effect on the Company's
financial condition or results of operations. There can be no assurance,
however, that any such liability will not have such material adverse effect.

         The Company is also involved in other legal and administrative
proceedings arising in the ordinary course of business. The outcomes of these
actions are not expected to have a material effect on the Company's financial
condition or results of operation.

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

         None.

                                       17


<PAGE>

PART II

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

         MARKET INFORMATION. The Common Stock is traded on the Nasdaq National
Market under the symbol "VCAM." The following table sets forth, for the quarters
indicated, the high and low sale prices of the Common Stock as reported on the
Nasdaq National Market.

                                                        HIGH            LOW
                                                        ----            ---
FISCAL YEAR ENDED DECEMBER 31, 1996:
------------------------------------
Second Quarter (from May 10, 1996)................    $  30.125        $15.00
Third Quarter.....................................    $  39.50         $21.00
Fourth Quarter ...................................    $  45.00         $28.50

FISCAL YEAR ENDING DECEMBER 31, 1997:
-------------------------------------
First Quarter (through February 28, 1997).........    $  45.50         $34.25

         HOLDERS. As of February 28, 1997 there were approximately 34
shareholders of record of the Common Stock. This number does not include
unofficial owners of the Common Stock whose shares are held in the names of
various dealers, clearing agencies, banks brokers and other fiduciaries.

         DIVIDENDS. The Company has not declared cash dividends since its
inception and does not anticipate paying any cash dividends in the foreseeable
future, but intends instead to retain any future earnings for reinvestment in
its business. Any future determination as to the payment of dividends will be
made at the discretion of the Board of Directors of the Company and will depend
upon the Company's operating results, financial condition, capital requirements,
general business conditions and such other factors as the Board of Directors
deems relevant. In addition, the Company's credit agreement prohibits the
Company from paying dividends or making other distributions on the Common Stock
without the prior written consent of the lender. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations-- Funding
Sources."


                                       18


<PAGE>

ITEM 6.           SELECTED FINANCIAL DATA

         The following selected financial data have been derived from audited
financial statements including the consolidated balance sheets at December 31,
1995 and 1996 and the related consolidated statements of income, of changes in
stockholders' equity (deficit) and of cash flows for each of the three years in
the period ended December 31, 1996 and the notes thereto, appearing elsewhere in
this Form 10-K. The following selected financial data should be read in
conjunction with such financial statements and the notes thereto, as well as
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                 -------------------------------------------------------------               
                                                  1992         1993          1994         1995         1996(1)
                                                 -------     --------      --------     --------      --------
                                                   (IN THOUSANDS, EXCEPT FOR PER SHARE AND STATISTICAL DATA)
<S>                                              <C>         <C>           <C>          <C>           <C>   
STATEMENT OF INCOME DATA:
Revenues (2)...........................          $86,029     $138,097      $191,533     $239,408      $395,620
Operating income ......................          $   864     $  2,089      $  2,752     $  1,241      $  4,802
Net income.............................          $   201     $  1,341      $  1,800     $    810      $  3,586
Net income per common and common
    equivalent share...................          $  0.03     $   0.20      $   0.27     $   0.13      $   0.46

STATISTICAL DATA:
Worksite employees at period end.......            4,244        6,587         8,590       11,391        21,106
PEO client companies at period end (3).                           239           285          339           678
Average number of worksite
     employees per PEO client
     company at period end (3).........                            28            30           34            31
Gross profit margin....................             4.20%        5.06%         5.59%        5.41%         6.47%
</TABLE>


<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                 -------------------------------------------------------------               
                                                  1992         1993          1994         1995         1996(1)
                                                 -------     --------      --------     --------      --------
                                                                        (IN THOUSANDS)
<S>                                               <C>         <C>           <C>          <C>          <C>
BALANCE SHEET DATA:
Working capital........................           $  293      $ 1,507       $ 4,003      $ 2,052      $ 23,476
Total assets...........................            4,369        9,482        14,787       17,819        57,848
Long term borrowings, including current
    portion............................              285        1,178           996        2,406           842
Other long term liabilities............              423        2,151         3,206        2,737         2,507
Mandatorily Redeemable Series A
    Preferred Stock....................               --           --            --        6,264            --
Total stockholders' equity (deficit)...              164          848         2,648       (4,751)       32,080

</TABLE>
--------------------
(1)      Includes the results of operations of the SMG business since 
         September 1, 1996. Does not reflect the results of operations of SAI
         (which was acquired January 7, 1997) for any period presented. The SAI
         Aquisition will be accounted for as a pooling of interests.
(2)      Revenues include all amounts billed to clients for gross salaries and
         wages, related employment taxes, and health care and workers'
         compensation coverage of worksite employees.
(3)      Data not available for 1992.


                                       19


<PAGE>
ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

         The following discussion contains forward-looking statements. The
Company's actual results could differ materially from those discussed in such
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below and elsewhere in this Form 10-K. See
Item 1, "Cautionary Note Regarding Forward-Looking Statements." The following
discussion and analysis should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto which appear elsewhere in this Form
10-K.

OVERVIEW

         Vincam, one of the largest PEOs in the industry, provides small and
medium-sized businesses with an outsourcing solution to the complexities and
costs related to employment and human resources. The Company's continuum of
integrated employment-related services consists of human resource
administration, employment regulatory compliance management, workers'
compensation coverage, health care and other employee benefits. The Company
establishes a co-employer relationship with its clients and contractually
assumes substantial employer responsibilities with respect to worksite
employees. In addition, the Company offers certain specialty managed care
services on a stand-alone basis to health and workers' compensation insurance
companies, HMOs, managed care providers and large, self-insured employers.

         The Company's standard PEO services agreement provides for an initial
one year term, subject to termination by the Company or the client at any time
during the first year upon 30 days' prior written notice. Thereafter, the
contract may be terminated upon 30 days' notice given prior to the expiration of
the renewal term or immediately for cause. Revenues from professional employer
services are based on a pricing model that takes into account the gross pay of
each employee and a mark-up which includes the estimated costs of federal and
state employment taxes, workers' compensation, employee benefits and the human
resource administrative services, as well as a provision for profit. The
specific mark-up varies by client based on the workers' compensation
classification of the worksite employees and their eligibility for health care
benefits. Accordingly, the Company's average mark-up percentage will fluctuate
based on client mix, which cannot be predicted with any degree of certainty.
Specialty managed care revenues are generated from a variety of risk-bearing,
capitated, and fee-based arrangements.

         The Company's revenues include all amounts billed to clients for gross
salaries and wages, related employment taxes, and health care and workers'
compensation coverage of worksite employees. The Company is obligated to pay the
gross salaries and wages, related employment taxes and health care and workers'
compensation costs of its worksite employees whether or not the Company's
clients pay the Company on a timely basis or at all. The Company believes that
including such amounts as revenues appropriately reflects the responsibility
which the Company bears for such amounts and is consistent with industry
practice. In addition, the Company's revenues are subject to fluctuations as the
result of (i) changes in the volume of worksite employees serviced by the
Company; (ii) changes in the wage base and employment tax rates of worksite
employees; and (iii) changes in the mark-up charged by the Company for its
services.

         The Company's primary direct costs are (i) salaries, wages, the
employer's portion of social security, Medicare premiums, federal unemployment
taxes and the compensation portion of the Michigan Single Business Tax, (ii)
health care and workers' compensation costs, and (iii) state unemployment taxes
and other direct costs. The Company can significantly impact its gross profit
margin by actively managing the direct costs described in clauses (ii) and
(iii).

                                       20

<PAGE>
         The Company's health care costs consist of medical insurance premiums,
payments of and reserves for claims subject to deductibles and the costs of
vision care, disability, employee assistance and other similar benefit plans.
The Company's health care benefit plans consist of a mixture of fully insured,
minimum premium arrangements, partially self-insured plans and guaranteed cost
programs. Under minimum premium arrangements and partially self-insured plans,
liabilities for health care claims are recorded based on the Company's health
care loss history. The Company maintains reserves for medical and behavioral
health claims which reserves are estimates based on periodic reviews of open
claims, past claims experience and other factors deemed relevant by management.
See Notes 1 and 7 of the Notes to Consolidated Financial Statements. While the
Company believes that such reserves are adequate, the Company cannot predict
with certainty the ultimate liability associated with health care costs and past
claims experience may not be indicative of future results. Accordingly, if
estimated reserve amounts prove to be less than the ultimate liability with
respect to such claims, the Company's financial condition, results of operations
and liquidity could be materially adversely affected.

         Workers' compensation costs include medical costs and indemnity
payments for lost wages, administrative costs and insurance premiums related to
the Company's workers' compensation coverage. Prior to 1997, the Company was
insured under a large deductible insurance plan. Under this plan the Company was
obligated to reimburse its insurance carrier for a portion of the insurance risk
related to workers' compensation claims up to a predetermined deductible per
occurrence of $500,000. Workers' compensation costs for 1994, 1995 and 1996 also
include reserves for claims which have been incurred but not reported and for
anticipated loss development. The Company has recently entered into an
arrangement with an insurance company under which substantially all of the cost
of the Company's workers' compensation coverage for the years 1997 to 1999 is
fixed. Additionally, the Company entered into agreements whereby the Company
reinsured substantially all of the remaining claims under the Company's large
deductible workers' compensation insurance policies for the years 1994, 1995,
and 1996. See "Recent Developments" below.

         State unemployment taxes are based on rates which vary from state to
state. Generally they are subject to certain minimum rates, but the aggregate
rates payable by an employer are affected by the employer's claims history. The
Company controls unemployment claims by aggressively contesting unfounded claims
and, when possible, quickly returning employees to work by reassigning them to
other worksites.

         The Company's primary operating expenses are administrative personnel
expenses, other general and administrative expenses, and sales and marketing
expenses. Administrative personnel expenses include compensation, fringe
benefits and other personnel expenses related to internal administrative
employees. Other general and administrative expenses include rent, office
supplies and expenses, legal and accounting fees, insurance and other operating
expenses. Sales and marketing expenses include compensation of sales executives
and the marketing staff, as well as marketing and advertising expenses.

         The Company's profitability is largely dependent upon its success in
managing its controllable direct costs. The Company manages its controllable
direct costs through its use of (i) its proprietary managed care system, which
includes provider networks, utilization review and case management, (ii)
educational programs designed to reduce the severity and frequency of workplace
accidents, and (iii) a variety of other techniques, including return to work
programs, drug-free workplace programs, involvement in hiring, disciplinary and
termination decisions, adjudication of unemployment claims, and reassignment of
laid off workers.

                                        21
<PAGE>

         The Company's financial condition and results of operations are subject
to several contingencies including the conclusions that may be reached by the
IRS Market Segment Group and the resolutions of certain pending legal
proceedings. For more information regarding such contingencies see Item 1,
"Industry Regulation--Federal and State Employment Taxes," "Industry
Regulation--Employee Benefit Plans," and Item 3, "Legal Proceedings."

RECENT DEVELOPMENTS

         In December 1996, the Company entered into an arrangement with Reliance
National Insurance Company ("Reliance National") to provide workers'
compensation insurance coverage for 1997 through 1999, at a substantially fixed
cost, subject to a deductible of only $2,000 per medical only claim. Management
believes that under this policy the Company's workers' compensation costs will
be at a rate which is lower than that historically incurred by the Company under
its large deductible workers' compensation insurance policy. In addition, the
policy is anticipated to enhance the predictability of the Company's workers'
compensation costs because it substantially eliminates the sensitivity of such
costs to the ongoing loss development and payment of workers' compensation
claims and related reserve adjustments beyond the $2,000 deductible per medical
only claim.

         The Company's premium for 1997 is estimated at $5.5 million without
giving effect to the SAI Acquisition, subject to adjustment depending on changes
in the Company's payroll and other factors. The premium paid by the Company in
December 1996 is reflected as pre-paid workers' compensation insurance premium
in the Company's balance sheet at December 31, 1996 and will be amortized over
the 1997 policy year. The Company intends to continue to manage its workers'
compensation costs in order to permit it to take advantage of its right to elect
to assume Reliance National's responsibility for claims up to the first
$250,000. In the event of such assumption, the Company would be paid the excess
of a loss fund, if any, which is calculated each year, over amounts paid by
Reliance National with respect to such claims. The amount of the loss fund for
1997 is currently estimated at $4.2 million. Also in December 1996, the Company
entered into an agreement with Reliance National and Commercial Risk
Re-Insurance Company to reinsure substantially all of the Company's
responsibility for remaining claims under the Company's large deductible
workers' compensation insurance policies for the years 1994, 1995, and 1996
(other than claims of SMG or SAI prior to the date of their acquisitions by the
Company) for an aggregate premium of $3.2 million. As a result, the Company has
recorded a deferred gain in the amount of approximately $600,000 which will be
recognized to income in future periods based on the proportion of cumulative
claims paid to the total estimated liability for claims. Effective January 1,
1997, the Company will record workers' compensation costs based primarily on the
fixed portion of the cost of the policy with Reliance National. See Notes 1 and
7 of the Notes to Consolidated Financial Statements.

         During 1996, the Company acquired substantially all of the assets and
liabilities of SMG in an acquisition accounted for as a purchase, and in January
1997 the Company acquired SAI by merger in an acquisition to be accounted for as
a pooling of interests. See Item 1, "Business--Recent Acquisitions," and Note 2
of Notes to Consolidated Financial Statements. The financial condition and
results of operations discussed below include the results of operations since
September 1, 1996 of the business acquired from SMG and, accordingly, affects
the comparability of the Company's 1996 results of operations to those of prior
years. The financial information discussed below in "Results of Operations" and
"Liquidity and Capital Resources" has not been retroactively adjusted to reflect
the operations of SAI for periods prior to the SAI Acquisition. It is
anticipated that once results of operations of the Company for periods
subsequent to the date of acquisition of SAI are published, prior period results
will be retroactively restated in accordance with the pooling of interest
accounting treatment of the SAI Acquisition. The Company anticipates that it
will recognize nonrecurring transaction expenses of approximately $200,000 in
the first

                                        22
<PAGE>

quarter of 1997 resulting from the SAI Acquisition. Summary financial
information for SAI on an historical basis and a combined basis with the Company
is set forth below:
<TABLE>
<CAPTION>
SAI SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA

                                                               YEAR ENDED DECEMBER 31,
                                                       ---------------------------------------
                                                         1994           1995             1996
                                                       -------        -------          -------
                                                       (IN THOUSANDS, EXCEPT STATISTICAL DATA)
<S>                                                    <C>            <C>              <C>
STATEMENT OF INCOME DATA:
Revenues..........................................     $33,310        $56,062          $78,061
Gross profit......................................     $ 1,841        $ 2,714          $ 3,212
Operating income (loss) (1).......................     $    74        $  (891)         $(1,490)
Net income (loss) (1).............................     $    54        $  (557)         $  (893)
                                                     

STATISTICAL DATA:
Worksite employees at period end..................       1,617          2,669            3,464
PEO clients at period end ........................         118            189              231
Average number of worksite employees per PEO
   client company at period end...................          14             14               15
Gross profit margin...............................        5.53%          4.84%            4.12%
</TABLE>
------------------
(1) SAI losses are primarily attributable to workers' compensation and health
    care costs and general and administrative expenses. Commencing on the date
    of acquisition, SAI worksite employees will be covered under the Company's
    fixed cost workers' compensation policy.

<TABLE>
<CAPTION>
SAI AND THE COMPANY SUMMARY COMBINED FINANCIAL AND OPERATING DATA

                                                                   YEAR ENDED DECEMBER 31,
                                                          ----------------------------------------
                                                            1994           1995             1996
                                                          --------       --------         --------
                                                             (IN THOUSANDS, EXCEPT PER SHARE AND
                                                                      STATISTICAL DATA)
<S>                                                       <C>            <C>              <C>
STATEMENT OF INCOME DATA:
Revenues..............................................    $224,843       $295,469         $473,680
Gross profit..........................................    $ 12,556       $ 15,657         $ 28,795
Operating income......................................    $  2,795       $    317         $  3,280
Net income............................................    $  1,833       $    232         $  2,672
Net income per common and common equivalent share.....    $   0.25       $   0.03         $   0.32

STATISTICAL DATA:
Worksite employees at period end......................      10,207         14,060           24,570
PEO client companies at period end....................         403            528              909
Average number of worksite employees per PEO
   client company at period end.......................          25             27               27
Gross profit margin...................................        5.58%          5.30%            6.08%
</TABLE>

                                        23


<PAGE>

RESULTS OF OPERATIONS

         The following table sets forth, for each of 1994, 1995 and 1996,
certain selected income statement data expressed as a percentage of revenues:
<TABLE>
<CAPTION>
                                                                                   AS A PERCENT OF REVENUES
                                                                                   ------------------------
                                                                                   YEAR ENDED DECEMBER 31,
                                                                                   -----------------------

                                                                             1994          1995              1996
                                                                             ----          ----              ----

<S>                                                                         <C>            <C>              <C>   
Revenues............................................................        100.0%         100.0%           100.0%
                                                                           -------        -------          -------
Direct costs:
    Salaries, wages and employment taxes of worksite employees               88.2%          88.8%            87.8%
    Health care and workers' compensation...........................          5.4%           5.2%             4.8%
    State unemployment taxes and other..............................          0.8%           0.7%             1.0%
                                                                           -------        -------          -------
       Total direct costs...........................................         94.4%          94.6%            93.5%
                                                                           -------        -------          -------
Gross profit........................................................          5.6%           5.4%             6.5%
                                                                           -------        -------          -------
Operating expenses:
    Administrative personnel........................................          2.1%           2.6%             2.9%
    Other general and administrative, including provision
       for doubtful accounts........................................          1.2%           1.4%             1.3%
    Sales and marketing.............................................          0.7%           0.7%             0.9%
    Depreciation and amortization...................................          0.1%           0.1%             0.2%
                                                                           -------        -------          -------
        Total operating expenses....................................          4.2%           4.9%             5.3%
                                                                           -------        -------          -------
Operating income....................................................          1.4%           0.5%             1.2%
Interest income (expense), net......................................            0%             0%             0.2%
                                                                           -------        -------          -------
Income before taxes.................................................          1.4%           0.5%             1.4%
Provision for income taxes..........................................          0.5%           0.2%             0.5%
                                                                           -------        -------          -------
Net income..........................................................          0.9%           0.3%             0.9%
                                                                          --------       --------         --------
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

         The Company's revenues for the year ended December 31, 1996 were $395.6
million, compared to $239.4 million for the year ended December 31, 1995,
representing an increase of $156.2 million, or 65.2%. This increase was due
primarily to an increased number of PEO clients and worksite employees. In
addition, $16.1 million of the increase is attributable to the operations of
SMG. Between December 31, 1995 and December 31, 1996, the number of PEO clients
increased by 100%, from 339 to 678, of which 137 were acquired from SMG. The
number of worksite employees increased 85.3% over the same period, from 11,391
worksite employees to 21,106, of which 1,987 were acquired from SMG. In
addition, the Company earned approximately $3.7 million of revenues from its
workers' compensation managed care services during 1996, compared to
approximately $570,000 during 1995. This increase in workers' compensation
managed care service revenues from year to year resulted from an increased
number of workers' compensation managed care clients. Of the Company's workers'
compensation managed care service revenues of $3.7 million, approximately $2.6
million resulted from services provided to one new client in 1996.

         Salaries, wages and employment taxes of worksite employees were $347.3
million for 1996, compared to $212.5 million for 1995, representing an increase
of $134.8 million, or 63.4%. Salaries, wages and employment taxes of worksite
employees were 87.8% of revenues for 1996, compared to 88.8% for 1995. The
decrease of salaries, wages and employment taxes of worksite employees as a
percentage of revenues was due mainly to incremental revenues from the Company's
specialty managed care services.

                                        24
<PAGE>

         Health care and workers' compensation costs were $18.9 million for
1996, compared to $12.3 million for 1995, representing an increase of $6.6
million, or 53.2%. This increase was due mainly to the higher volume of health
care and workers' compensation claims paid and/or reserved during 1996 which was
a direct function of the increase of PEO clients and worksite employees. Health
care and workers' compensation costs were 4.8% of revenues for 1996, compared to
5.2% for 1995. The decrease of health care and workers' compensation costs as a
percentage of revenues was due mainly to improved effectiveness in managing the
frequency and severity of workers' compensation and health care costs and
incremental revenues from the Company's specialty managed care services.

         State unemployment taxes and other direct costs were $3.9 million for
1996, compared to $1.6 million for 1995, representing an increase of $2.2
million or 135.4%. This increase was due mainly to the higher volume of salaries
and wages paid during 1996 which was a direct function of the increase of PEO
clients and worksite employees, an increased number of client companies using
other services and products (e.g., 401(k), the drug free workplace program,
etc.), as well as an increase in other direct costs related to the Company's
specialty managed care services. State unemployment taxes and other direct costs
were 1.0% of revenues for 1996, compared to 0.7% for 1995, primarily due to
increases in other direct costs.

         Gross profit was $25.6 million for 1996, compared to $12.9 million for
1995, representing an increase of $12.6 million, or 97.7%, due mainly to the
increase in revenues resulting from an increase of PEO clients and worksite
employees. Gross profit was 6.5% of revenues for 1996, compared to 5.4% for
1995. This increase was due mainly to the Company's effectiveness in managing
the frequency and severity of workers' compensation and health care costs and an
increase in revenues from the Company's specialty managed care services which
carry a higher margin than the Company's PEO services.

         Administrative personnel expenses were $11.6 million for 1996, compared
to $6.3 million for 1995, representing an increase of $5.3 million, or 84.8%.
This increase was primarily attributable to increased staffing to support the
Company's future growth, including management and senior executive personnel.
Administrative personnel expenses were 2.9% of revenues for the 1996, compared
to 2.6% for 1995. The Company anticipates that this trend in administrative
personnel expenses will continue in future periods as a result of the Company's
growth and the expansion of its service offerings.

         Other general and administrative expenses, including the provision for
doubtful accounts, were $5.1 million for 1996, compared to $3.4 million for
1995, representing an increase of $1.7 million, or 50.7%. This increase in other
general and administrative expenses was primarily attributable to the growth of
the Company's business and the addition of workers' compensation managed care
services, which the Company made available to external clients for the first
time in 1995. Other general and administrative expenses, including the provision
for doubtful accounts, were 1.3% of revenues for 1996, compared to 1.4% for
1995.

         Sales and marketing costs were $3.4 million for 1996, compared to $1.7
million for 1995, representing an increase of $1.7 million, or 95.5%. The
increase reflects the addition of sales executives and marketing personnel,
consistent with the Company's strategy to increase its client base in its
existing markets. Sales and marketing costs were 0.9% of revenues for 1996,
compared to 0.7% for 1995.

         Net income was $3.6 million for 1996, compared to $0.8 million for
1995, representing an increase of $2.8 million, or 342.8%. Earnings per share
were $0.46 for 1996, compared to $0.13 for 1995, representing an increase of
$0.33, or 253.9%.

                                        25


<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

         The Company's revenues were $239.4 million for the year ended December
31, 1995, compared to $191.5 million for the year ended December 31, 1994,
representing an increase of $47.9 million, or 25.0%. This increase was due
primarily to an increased number of PEO clients and worksite employees. Between
December 31, 1994 and December 31, 1995, the number of PEO clients increased
18.9%, from 285 to 339. The number of worksite employees increased 32.6% over
the same period, from 8,590 worksite employees to 11,391. In addition, the
Company earned approximately $570,000 of revenues from its workers' compensation
managed care services in 1995, the first year such services were offered.

         Salaries, wages and employment taxes of worksite employees were $212.5
million for 1995, compared to $168.9 million for 1994, representing an increase
of $43.6 million, or 25.8%. Salaries, wages and employment taxes of worksite
employees were 88.8% of revenues for 1995, compared to 88.2% for 1994. Salaries,
wages and employment taxes of worksite employees increased as a percentage of
revenues as a result of a change in the Company's client mix towards clients
having more favorable workers' compensation risk profiles which allows the
Company to charge a lower markup.

         Health care and workers' compensation costs were $12.3 million for
1995, compared to $10.3 million for 1994, representing an increase of $2.0
million, or 19.2%. Health care and workers' compensation costs were 5.2% of
revenues for 1995, compared to 5.4% for 1994. This decrease was due primarily to
improved efficiency in managing the frequency and severity of workers'
compensation claims.

         State unemployment taxes and other direct costs were relatively
unchanged from 1994 to 1995. State unemployment taxes and other direct costs
were 0.7% of revenues for 1995, compared to 0.8% for 1994. This decrease is due
primarily to improved efficiency in managing state unemployment insurance
claims.

         Gross profit was $12.9 million for 1995, compared to $10.7 million for
1994, representing an increase of $2.2 million, or 20.8%. Gross profit was 5.4%
of revenues for 1995, compared to 5.6% for 1994. This decrease was due primarily
to the loss of a high margin contract with a significant behavioral health
client in the third quarter of 1994 as a result of that client's acquisition by
a third party. This contract represented approximately $0.8 million in gross
profit during 1994.

         Administrative personnel expenses were $6.3 million for 1995, compared
to $4.0 million for 1994, representing an increase of $2.3 million, or 56.8%. Of
this increase, approximately $1.4 million was primarily attributable to
increased staffing for the Company's workers' compensation managed care
services, which were made available to external clients for the first time in
1995. The balance was primarily attributable to an increase in corporate
management personnel and other general and administrative expenses related to
the growth described above. Administrative personnel expenses were 2.6% of
revenues for 1995, compared to 2.1% for 1994.

         Other general and administrative expenses, including provision for
doubtful accounts, were $3.4 million for 1995, compared to $2.4 million for
1994, representing an increase of $1.0 million, or 41.5%. Other general and
administrative expenses were 1.4% of revenues for 1995, compared to 1.2% for
1994.

         Sales and marketing costs were $1.7 million for 1995, compared to $1.4
million for 1994, representing an increase of $0.3 million, or 25.3%, but as a
percentage of revenue remained at 0.7%. The increase reflects the addition of
sales executives and a senior vice president of sales and marketing.

                                        26
<PAGE>
         Net income was $0.8 million for 1995, compared to $1.8 million for
1994, representing a decrease of $1.0 million, or 55.6%. Earnings per share were
$0.13 for 1995, compared to $0.27 for 1994, representing a decrease of $0.14, or
51.9%. 

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1996, the Company had working capital of $23.5 million,
compared to $2.1 million at December 31, 1995. The increase was primarily due to
the Company's initial public offering in May 1996 of 2,000,000 shares of Common
Stock from which the Company received proceeds of $26.9 million, net of $3.1
million of underwriting discounts, commissions and offering expenses. The
Company had $17.3 million in cash at December 31, 1996. Of this amount, $1.3
million is in escrow in connection with the acquisition of SMG.

         The Company's Amended and Restated Credit Agreement with Fleet National
Bank ("Fleet Bank") provides for a $13.0 million revolving line of credit of
which (i) an aggregate of $8.0 million is available for standby letters of
credit and revolving credit loans for working capital purposes (which working
capital loans are limited to the lesser of $2.0 million or the "borrowing base,"
an amount equal to 85% of current accounts receivable from unrelated parties),
and (ii) $5.0 million is available to finance acquisitions. The Company uses
letters of credit primarily to secure its obligations to reimburse its former
workers' compensation insurance carrier for workers' compensation payments
subject to the policy deductible. Borrowings bear interest at rates based on
Fleet Bank's Prime Rate plus a margin of as much as 0.25% or its Eurodollar Rate
(as defined in the Amended and Restated Credit Agreement) plus a margin of 1.50%
to 2.00%, depending on certain financial covenants, at the Company's option. The
facility is secured by substantially all of the Company's assets other than the
Company's headquarters building. Revolving credit loans and standby letters of
credit mature December 31, 1997 and acquisition loans are repayable in 36 equal
monthly installments commencing June 5, 1998. Draws against the acquisition line
of credit can be made through June 5, 1998 and mature not later than June 5,
2001. The credit facility contains covenants that, among other things, limit the
amount of total consolidated debt and liens, require the maintenance of certain
consolidated financial ratios, prohibit dividends and similar payments, and
restrict capital expenditures, mergers, dispositions of assets and certain
business acquisitions. The Company is required to pay an unused facility fee
ranging from .25% to .375% per annum on the facilities. See Note 8 of Notes to
Consolidated Financial Statements. Under the revolving credit facility, the
Company had outstanding approximately $6.3 million in standby letters of credit
at December 31, 1996 which guarantee the payment of claims to the Company's
previous workers' compensation insurance carrier. As of that date there were no
amounts outstanding for working capital advances or under the acquisition loan
facility, and all amounts under these facilities were available at December 31,
1996.

         In connection with the reinsurance of the Company's responsibility for
remaining claims under the Company's large deductible workers' compensation
insurance policies for 1994, 1995 and 1996 as described in "Recent Developments"
above (the "Remaining Claims"), the Company is required to provide its former
insurance carrier with a $6.0 million letter of credit, which has been issued by
Fleet Bank. Commercial Risk Re-Insurance Company has provided a $4.1 million
letter of credit in favor of Fleet Bank to secure the Company's repayment
obligations with respect to such $6.0 million letter of credit. As a result, the
Company has obtained a release of $4.0 million in restricted cash previously
held by Fleet Bank as collateral.

                                        27
<PAGE>
         The Company's primary short-term liquidity requirements relate to the
Company's insurance premium requirements under its workers' compensation policy,
software development, acquisition of office and computer equipment to support
its growth, and the payment of current tax obligations and other expenditures
related to the Company's growth. The Company currently has no significant
capital commitments for 1997, except for the amounts due to SMG shareholders in
connection with the SMG Acquisition; however, the Company currently anticipates
capital expenditures for 1997 of approximately $7.0 million, primarily for
software development and computer and office equipment, and approximately $9.0
million for the prepayment of the workers' compensation insurance premium for
1998. The Company's long-term liquidity needs are currently limited to debt
service on the Company's outstanding long-term obligations and income taxes. See
Notes 8 and 12 of Notes to the Consolidated Financial Statements. The Company
continually evaluates potential acquisitions and the entrance into new markets,
and is considering the possible relocation of its corporate headquarters, any of
which, if undertaken, could require significant capital expenditures by the
Company.

         The Company anticipates that available cash, cash flows from operations
and borrowing availability under the Amended and Restated Credit Agreement will
be sufficient to satisfy the Company's liquidity and working capital
requirements for the foreseeable future; however, to the extent that the Company
should desire to increase its financial flexibility and capital resources or
require or choose to fund future capital commitments from sources other than
operating cash or from borrowings under its revolving line of credit or its
acquisition loan facility, the Company may consider raising capital through the
offering of equity and/or debt securities in the public or private markets, as
well as from banks.

         Net cash used in operating activities was $4.1 million for 1996
compared to cash provided by operating activities of $1.5 million for 1995. The
difference between the Company's 1996 net income of $3.6 million and its
negative operating cash flow was due primarily to an $11.0 million increase in
accounts receivable, a $5.5 million increase in prepaid workers' compensation
insurance premium, an increase in reinsurance recoverable of $3.2 million, and
an increase in prepaid expenses and other current assets of $360,000, partially
reduced by an increase in accrued salaries, wages, and payroll taxes of $5.1
million, a decrease in restricted cash of $4.0 million, and an increase in
reserve for claims of $1.8 million. The increase in accounts receivable resulted
from both a higher number of PEO clients and worksite employees served during
1996 and the timing of the payroll cycle. The Company's accounts receivable and
accrued salaries, wages, and payroll taxes are subject to fluctuations depending
on the proximity of the closing date of the reporting period to that of the
payroll cycle. The increase in reinsurance recoverable was due mainly to the
transfer of substantially all of the Company's responsibility for remaining
claims under its large deductible workers' compensation policies for 1994, 1995
and 1996. See "Recent Developments" above.

         Net cash used in investing activities was $5.5 million for 1996
compared to $400,000 in 1995. This reflects $2.2 million of the SMG purchase
price paid in cash and $1.2 million placed in escrow in accordance with an
escrow agreement for potential purchase price adjustments, as well as $2.0
million in expenditures for property and equipment to support the Company's
growth.

         Net cash provided by financing activities was $24.7 million for 1996
compared to $900,000 used in financing activities in 1995. The 1996 cash flow
reflects the Company's initial public offering which generated net offering
proceeds of $26.9 million, partially offset by retirement of a subordinated
promissory note in the amount of $1.2 million (see Note 8 of the Notes to
Consolidated Financial Statements) and the funding of a $700,000 distribution
payable related to the Company's repurchase of an option to purchase the
Company's headquarters.

                                        28
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

         In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS No. 121"). SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used, and for long-lived assets and
certain identifiable intangibles to be disposed of. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles, held and used by an
entity, be reviewed for impairment whenever events or changes in circumstance
indicate that the carrying amounts of an asset may not be recoverable. SFAS No.
121 has been adopted by the Company for the year ended December 31, 1996. The
adoption of SFAS No. 121 has not had, and is not expected to have, a material
impact on the Company's financial position or results of operations. The Company
reviews the carrying value of its long-lived and intangible assets on an ongoing
basis. If such review indicates that these values may not be recoverable, the
carrying value will be reduced to estimated fair value.

         The FASB has also issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). This
statement defines a fair value based method of accounting for employee stock
options. This statement also permits a company to continue to measure
compensation costs for their stock option plans using the intrinsic value based
method of accounting prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." SFAS No. 123 requires
disclosure of the pro forma net income and earnings per share that would be
recorded if the fair value method was utilized. The Company has adopted the
disclosure provisions of SFAS No. 123, and retained the intrinsic value method
of accounting for stock based compensation. See Note 11 of the Notes to
Consolidated Financial Statements.

INFLATION

         The Company believes the effects of inflation have not had a
significant impact on its results of operations or financial condition.

                                       29
<PAGE>
ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES
                                                                            PAGE
                                                                            ----
THE VINCAM GROUP, INC.

Report of Independent Certified Public Accountants........................   31

Balance Sheets as of December 31, 1995 and 1996...........................   32

Consolidated Statements of Income for the Years Ended December 31, 
1994, 1995 and 1996.......................................................   33

Consolidated Statement of Changes in Stockholders' (Deficit) Equity
for the Years Ended December 31, 1994, 1995 and 1996......................   34

Consolidated Statements of Cash Flows for the Years Ended December 31, 
1994, 1995 and 1996.......................................................   35

Notes to Consolidated Financial Statements................................   37

Financial Statement Schedule - Valuation and Qualifying Accounts..........   55

                                       30


<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
The Vincam Group, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of The
Vincam Group, Inc. and its subsidiaries at December 31, 1995 and 1996 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Miami, Florida
February 21, 1997


                                       31


<PAGE>
<TABLE>
<CAPTION>
                             THE VINCAM GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                                                     DECEMBER 31,
                                                             ----------------------------
                                                                 1995             1996
                                                             -----------      -----------
                      ASSETS
<S>                                                          <C>              <C>   
CURRENT ASSETS:
    Cash and cash equivalents.............................   $   912,272      $16,021,548
    Restricted cash.......................................     4,064,040        1,314,040
    Accounts receivable...................................     8,289,556       19,823,352
    Due from affiliates...................................       101,095          109,565
    Deferred taxes........................................       774,783          553,280
    Reinsurance recoverable...............................            --        1,728,000
    Prepaid workers' compensation insurance premium.......            --        5,483,972
    Prepaid expenses and other current assets.............       378,686          740,166
                                                             -----------      -----------
           Total current assets...........................    14,520,432       45,773,923

    Property and equipment, net...........................     2,507,025        3,916,411
    Deferred taxes........................................       451,529          105,391
    Reinsurance recoverable...............................            --        1,472,000
    Client contracts and other assets, net of accumulated
       amortization of $59,183 for 1996...................       339,805        1,616,881
    Goodwill, net of accumulated amortization of $64,228..            --        4,791,836
                                                             -----------      -----------
                                                             $17,818,791      $57,676,442
                                                             ===========      ===========
       LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES:
    Accounts payable and accrued expenses.................    $1,302,665       $1,856,715
    Accrued salaries, wages and payroll taxes.............     6,618,291       12,939,969
    Amounts due under acquisition agreement...............            --        2,623,437
    Reserve for claims....................................     2,137,149        3,309,631
    Income taxes payable..................................       141,987          953,426
    Current portion of long term borrowings...............     1,305,362           50,004
    Distribution payable..................................       700,000               --
    Deferred compensation, due principally to stockholders       263,000          242,013
    Deferred gain ........................................            --          323,157
                                                             -----------        ---------
           Total current liabilities......................    12,468,454       22,298,352

Long term borrowings, less current portion................     1,100,972          791,557
Reserve for claims........................................     1,010,792        1,472,000
Income taxes payable......................................     1,386,323          672,818
Deferred compensation, due principally to stockholders....       294,300           41,200
Deferred gain.............................................            --          275,275
Other liabilities ........................................        45,338           45,338
                                                             -----------      -----------
           Total liabilities..............................    16,306,179       25,596,540
                                                             -----------      -----------
Commitments and contingencies (Note 14)...................            --               --
                                                             -----------      -----------
Preferred stock, $.01 par value, 20,000,000 shares
    authorized, 165.376 shares mandatorily redeemable 
    Series A Preferred Stock issued and outstanding
    in 1995...............................................     6,263,610               --
                                                             -----------      -----------
Stockholders' (deficit) equity:
    Common stock, $.001 par value, 60,000,000 shares 
       authorized, 4,956,066 and 8,013,332 shares issued 
       and outstanding in 1995 and 1996, respectively.....         4,956            8,013
    Additional paid in capital............................            --       33,241,867
    Accumulated deficit...................................    (4,755,954)      (1,169,978)
                                                             -----------      -----------
           Total stockholders' (deficit) equity...........    (4,750,998)      32,079,902
                                                             -----------      -----------
                                                             $17,818,791      $57,676,442
                                                             ===========      ===========
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       32
<PAGE>
<TABLE>
<CAPTION>

                             THE VINCAM GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME

                                                                         YEAR ENDED DECEMBER 31,
                                                      -----------------------------------------------------------
                                                          1994                    1995                   1996
                                                      ------------            ------------           ------------
<S>                                                   <C>                     <C>                    <C> 
Revenues.........................................     $191,532,568            $239,407,710           $395,619,538
                                                      ------------            ------------           ------------

Direct costs:
  Salaries, wages and employment
   taxes of worksite employees...................      168,873,997             212,478,971            347,253,311

  Health care and workers'
   compensation..................................       10,348,787              12,339,677             18,909,125

  State unemployment taxes and
   other.........................................        1,594,831               1,646,250              3,873,906
                                                      ------------            ------------           ------------

Total direct costs...............................      180,817,615             226,464,898            370,036,342
                                                      ------------            ------------           ------------

Gross profit.....................................       10,714,953              12,942,812             25,583,196
                                                      ------------            ------------           ------------

Operating expenses:

     Administrative personnel....................        3,998,504               6,267,921             11,580,072

     Other general and administrative............        2,343,131               3,207,004              4,748,231

     Sales and marketing.........................        1,376,383               1,724,361              3,370,773

     Provision for doubtful accounts.............           40,000                 165,000                334,300

     Depreciation and amortization...............          204,911                 337,837                747,389
                                                      ------------            ------------           ------------

         Total operating expenses................        7,962,929              11,702,123             20,780,765
                                                      ------------            ------------           ------------

Operating income.................................        2,752,024               1,240,689              4,802,431

Interest (expense) income, net...................          (19,025)                 38,371                618,045
                                                      ------------            ------------           ------------

Income before taxes..............................        2,732,999               1,279,060              5,420,476

Provision for income taxes.......................         (933,049)               (469,223)            (1,834,500)
                                                      ------------            ------------           ------------

Net income.......................................     $  1,799,950            $    809,837           $  3,585,976
                                                      ============            ============           ============

Net income per common and common
     equivalent share............................     $       0.27            $       0.13           $       0.46
                                                      ============            ============           ============
Weighted average number of shares
     outstanding used in earnings per
     share calculation...........................        6,709,657               6,474,018              7,810,811
                                                      ============            ============           ============

</TABLE>

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

                                       33

<PAGE>
<TABLE>
<CAPTION>

                             THE VINCAM GROUP, INC.
                   CONSOLIDATED STATEMENT OF CHANGES IN COMMON
                 STOCK AND OTHER STOCKHOLDERS' (DEFICIT) EQUITY

                                                                                                    RETAINED
                                                          COMMON STOCK             ADDITIONAL       EARNINGS
                                                    -----------------------         PAID IN       (ACCUMULATED
                                                      SHARES     PAR VALUE          CAPITAL         DEFICIT)              TOTAL
                                                    ----------   ----------       -----------     ------------         -----------
<S>                                                  <C>         <C>              <C>             <C>                  <C>
Balance at January 1, 1994..............             6,249,341   $    6,249       $    42,156     $   799,570          $   847,975

Net income..............................                    --           --                --       1,799,950            1,799,950
                                                    ----------   ----------       -----------     -----------          -----------

Balance at December 31, 1994............             6,249,341        6,249            42,156       2,599,520            2,647,925

Acquisition of shares..................               (249,342)        (249)          (42,156)     (1,457,595)          (1,500,000)

Recapitalization, including
transaction costs of $445,150 charged
to retained earnings....................            (1,043,933)      (1,044)               --      (6,707,716)          (6,708,760)

Net income..............................                    --           --                --         809,837              809,837
                                                    ----------   ----------       -----------     -----------          -----------

Balance at December 31, 1995............             4,956,066        4,956                --      (4,755,954)          (4,750,998)

Issuance of common stock, net of
   transaction costs of $3,058,685
   charged to paid in capital...........             2,000,000        2,000        26,939,315              --           26,941,315

Conversion of preferred stock into
   common stock.........................             1,043,933        1,044         6,262,566              --            6,263,610

Issuance of common stock to employees
   under stock option plans.............                13,333           13            39,986              --               39,999

Net income..............................                    --           --                --       3,585,976            3,585,976
                                                    ----------   ----------       -----------     -----------          -----------

Balance at December 31, 1996............             8,013,332   $    8,013       $33,241,867     $(1,169,978)         $32,079,902
                                                    ==========   ==========       ===========     ===========          ===========

</TABLE>

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


                                       34


<PAGE>
<TABLE>
<CAPTION>
                             THE VINCAM GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                              YEAR ENDED DECEMBER 31,
                                                                            -------------------------------------------------------
                                                                                1994                 1995                  1996
                                                                            -----------          ------------          ------------
<S>                                                                        <C>                   <C>                   <C>   
Cash flows from operating activities:
 Net income ......................................................         $  1,799,950          $    809,837          $  3,585,976
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
    Depreciation and amortization ................................              204,911               337,837               747,389
    Provision for doubtful accounts ..............................               40,000               165,000               334,300
    Deferred income tax (benefit) expense.........................             (280,864)              (18,777)              567,641
    Changes in assets and liabilities:
     (Increase) decrease in restricted cash ......................           (2,279,752)              186,918             4,000,000
     Increase in accounts receivable..............................           (1,720,670)           (2,528,866)          (10,984,909)
     (Increase) decrease in due from affiliates ..................              (68,504)                9,440                (8,470)
     Increase in reinsurance recoverable..........................                 --                    --              (3,200,000)
     Increase in prepaid workers' compensation insurance premium..                 --                    --              (5,483,972)
     Decrease (increase) in prepaid expenses and
         other current assets ....................................                5,346              (226,201)             (359,524)
     Increase in other assets.....................................              (81,658)              (30,981)             (230,095)
     (Decrease) increase in accounts payable and
         accrued expenses ........................................             (536,590)              456,577               191,829
     Increase in accrued salaries, wages and
       payroll taxes .............................................            1,792,881             1,839,197             5,096,890
     Increase in reserve for claims ..............................            1,448,411               481,296             1,801,652
     Increase in income taxes payable.............................              191,103                19,353                97,934
     Increase (decrease) in other liabilities ....................               25,104               (40,000)             (274,087)
                                                                           ------------          ------------          ------------
Net cash provided by (used in) operating activities ..............              539,668             1,460,629            (4,117,446)
                                                                           ------------          ------------          ------------
Cash flows from investing activities:
   Purchases of property and equipment ...........................             (736,645)             (421,809)           (1,990,958)
   Contract acquisition costs ....................................                 --                (117,440)              (29,295)
   (Issuance) collection of notes receivable from
     stockholders ................................................             (123,078)              123,078                  --
   Cash placed in escrow in connection with acquisition of SMG.....                --                    --              (1,250,000)
   Cash paid in acquisition of SMG, net of cash
     acquired of $137,348 .........................................                --                    --              (2,219,566)
                                                                           ------------          ------------          ------------
Net cash used in investing activities ............................             (859,723)             (416,171)           (5,489,819)
                                                                           ------------          ------------          ------------
Cash flows from financing activities:  ...........................                 --                    --
   Principal payments on borrowings ..............................             (182,966)             (123,456)           (1,564,773)
   Recapitalization costs ........................................                 --                (445,150)                 --
   Cash paid in connection with acquisition
     of stock ....................................................                 --                (300,000)                 --
   Issuance of common stock, net of transaction
     costs of  $3,058,685 ........................................                 --                    --              26,941,315
   Payment of distribution payable ...............................                 --                    --                (700,000)
   Issuance of common stock to employees under stock
     plans .......................................................                 --                    --                  39,999
                                                                           ------------          ------------          ------------
Net cash (used in) provided by financing
   activities ....................................................             (182,966)             (868,606)           24,716,541
                                                                           ------------          ------------          ------------
Net (decrease) increase in cash and cash
   equivalents ...................................................             (503,021)              175,852            15,109,276
Cash and cash equivalents, beginning of year.. ...................            1,239,441               736,420               912,272
                                                                           ------------          ------------          ------------
Cash and cash equivalents, end of year............................         $    736,420          $    912,272          $ 16,021,548
                                                                           ============          ============          ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:

   Interest ......................................................         $     91,766          $    183,242          $    135,658
                                                                           ============          ============          ============
   Income taxes ..................................................         $  1,017,438          $    470,000          $  1,021,292
                                                                           ============          ============          ============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       35
<PAGE>

SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING ACTIVITIES:

ACQUISITION OF ASSETS AND LIABILITIES OF THE STONE MOUNTAIN GROUP, INC.

         On August 30, 1996, the Company acquired substantially all of the
assets and liabilities of The Stone Mountain Group, Inc. ("SMG") in a 
transaction accounted for as a purchase. The fair value of the assets acquired
and liabilities assumed, and the consideration paid or to be paid were as
follows:


Fair value of net assets acquired:
Client contracts.......................................             $1,300,000
Accounts receivable....................................                883,187
Prepaid expenses and other assets......................                 10,231
                                                                    ----------
Total non-cash assets..................................              2,193,418
                                                                    ----------

Accounts payable and accrued expenses..................                362,221
Accrued salaries, wages and payroll taxes..............              1,224,788
Reserve for claims.....................................                430,470
                                                                    ----------
Total liabilities assumed..............................              2,017,479
                                                                    ----------

Net assets acquired, excluding cash....................                175,939
Cash acquired..........................................                137,748
                                                                    ----------
Net assets acquired....................................             $  313,687
                                                                    ==========

Promissory notes payable to SMG shareholders...........             $1,373,437
Cash placed in escrow..................................              1,250,000
Cash paid for acquisition of SMG.......................              2,357,314
                                                                    ----------
Purchase price.........................................             $4,980,751
                                                                    ==========

         The following is a reconciliation of the purchase price to the excess
of costs associated with the acquisition over the estimated fair value of net
assets acquired allocated to goodwill:

Purchase price.........................................             $4,980,751
Net assets acquired....................................               (313,687)
Costs associated with the acquisition..................                189,000
                                                                    ----------

Amount allocated to goodwill...........................             $4,856,064
                                                                    ==========

         In connection with the acquisition of the assets of SMG, the Company
issued promissory notes for $1,373,437 due in 1997 and placed in escrow
$1,250,000, in accordance with an escrow agreement for potential purchase price
adjustments in the event that, among other things, client retention fails to
meet certain targets.

         In January 1995, the Company issued a subordinated note payable for
$1,200,000 as partial consideration for shares reacquired by the Company.

         During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged a portion of their shares of common stock for approximately 166 shares
of Series A Participating Convertible Preferred Stock valued at approximately
$6,264,000.

         During 1995, the Company acquired $334,054 of computer hardware and
software under a capital lease agreement.

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


                                       36


<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 1- NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The Vincam Group, Inc. and its subsidiaries (the "Company") are a
professional employer organization ("PEO") engaged primarily in the provision of
human resource management and personnel administration services. In addition,
the Company provides certain managed care services, including managed behavioral
health care, employee assistance programs, drug-free workplace programs,
utilization review services, comprehensive workers' compensation managed care,
risk management and loss containment services.

         The Company provides PEO services primarily to small and medium sized
companies in a variety of industries, including manufacturing, retail, and
hospitality. Managed care services are provided to PEO clients and to health and
workers' compensation insurance companies, health maintenance organizations,
other managed care providers and large, self insured employers.

         PEO service contracts with client companies are generally for one year
terms with automatic renewal options and subject to termination on a 30 days'
notice by either party during the first year and annually thereafter. Managed
care contracts with clients are for terms of one or more years and are subject
to cancellation by either party upon 30 to 180 days' notice depending on the
nature of the services provided.

         The Company does not have a concentration of customers in any one
industry; however, during 1994, 1995 and 1996, a significant portion of the
Company's revenues were generated in South Florida. The Company's revenues are
generated predominantly by PEO services.

         A summary of the significant accounting policies followed in the
preparation of the accompanying consolidated financial statements is presented
below:

         PRINCIPLES OF CONSOLIDATION. The accompanying financial statements
include the accounts of The Vincam Group, Inc. and its principal subsidiaries,
Vincam Human Resources, Inc. ("VHR"), Psych/Care, Inc. ("Psych/Care") and Vincam
Occupational Health Services, Inc. ("VOHS"). All material intercompany balances
and transactions have been eliminated.

         REVENUE RECOGNITION. Revenues and the related costs of wages, salaries,
and employment taxes from professional employer services related to worksite
employees are recognized in the period in which the employee performs the
service. Because the Company is at risk for all of its direct costs,
independently of whether payment is received from its clients, and consistent
with industry practice, all amounts billed to clients for gross salaries and
wages, related employment taxes, and health care and workers' compensation
coverage are recognized as revenue by the Company. The Company establishes a
reserve for doubtful accounts when it determines that collection from a client
is unlikely.

         Revenues from behavioral health services are recognized during the
period in which the Company is obligated to provide behavioral health services
to participants. Revenues from risk management, loss containment and workers'
compensation managed care services are recognized in the period in which the
services are performed.

         ACCOUNTING ESTIMATES. The preparation of financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and

                                       37

<PAGE>
                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

expenses during the reporting period. The more significant estimates relate to
the Company's reserve for claims. Actual results could differ from those
estimates.

         RESERVE FOR CLAIMS. The Company's workers' compensation benefits and
certain of its health care benefits are provided under large deductible insured
plans. The Company records reserves for workers' compensation and health care
claims costs based on actuarial calculations using the Company's loss history of
workers' compensation and health care claims, including estimates of
incurred but not reported claims. Prior to 1994, the Company's workers'
compensation insurance was under a loss-sensitive retrospectively rated plan
which provided for retroactive premium adjustments based on actual loss
experience.

         In December 1996, the Company entered into an agreement with a national
insurance company to provide guaranteed fixed cost workers' compensation
insurance coverage for 1997 through 1999, subject to a deductible of $2,000 per
medical only claim. Accordingly, effective January 1, 1997, the Company will
record workers' compensation costs based primarily on the fixed cost portion of
the premium of its workers' compensation policy.

         In addition, in December 1996, the Company entered an agreement to
reinsure its remaining claims under the Company's large deductible workers'
compensation insurance policies for the years 1994, 1995, and 1996, for an
aggregate premium of $3,200,000. As a result, the Company has recorded the
premium as a reinsurance recoverable at December 31, 1996 and a deferred gain in
the amount of approximately $600,000 which will be recognized to income in
future periods based on the proportion of cumulative claims paid to the total
estimated liability for claims.

         At December 31, 1995 and 1996, the Company has classified as current
the estimated amounts of reserves established for claims and reinsurance
recoverable expected to be paid and to be collected, respectively, within one
year, as well as the related deferred gain expected to be recognized within one
year.

         PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost.
Depreciation and amortization are computed using the straight line method over
the estimated useful lives of the respective assets. Repairs and maintenance are
charged to expense as incurred, while expenditures which extend the useful lives
of the assets are capitalized.

         GOODWILL. Assets and liabilities acquired in connection with business
combinations accounted for under the purchase method are recorded at their
respective estimated fair values. Goodwill represents the excess of the purchase
price over the fair value of net assets acquired, including the recognition of
applicable deferred taxes, and is amortized on a straight-line basis over a 25
year period. The Company reviews long-lived assets, identifiable intangibles and
goodwill and reserves for impairment whenever events or changes in circumstances
indicate the carrying amount of the assets may not be fully recoverable.

         ADVERTISING COSTS. Advertising expenditures are charged to operations
as incurred. Advertising expense amounted to $333,600, $386,123 and $547,698 in
1994, 1995 and 1996, respectively.

                                       38

<PAGE>
                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         CLIENT CONTRACTS. Costs incurred in connection with the acquisition of
client contracts from other professional employer organizations, as well as the
fair market value of contracts acquired in connection with purchase business
combinations, are capitalized and amortized using the straight line method over
a period of 5 to 15 years, based on the term of the client contracts and/or the
previous professional employer organization client retention rate. The Company
periodically assesses the status of contracts acquired to determine the future
realizability of the capitalized costs. At December 31, 1995 and 1996, the
Company had recorded client contracts of $117,440 and $1,430,951, respectively
(net of accumulated amortization of $0 in 1995 and $59,183 in 1996).

         CASH AND CASH EQUIVALENTS. Cash equivalents include investments with
original maturities of three months or less and are stated at cost which
approximates market value.

         INCOME TAXES. The Company records income tax expense using the
liability method of accounting for deferred income taxes. Under the liability
method, deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial statement
and income tax bases of the Company's assets and liabilities. An allowance is
recorded when it is more likely than not that any or all of a deferred tax asset
will not be realized. The provision for income taxes includes taxes currently
payable plus the net change during the year in deferred tax assets and
liabilities recorded by the Company.

         The Company is subject to certain state taxes based on gross receipts,
payroll and taxable income within that state. Taxes based on gross receipts and
payroll are classified as salaries, wages and employment taxes of worksite
employees in the accompanying consolidated statements of income, while taxes
based on income are included in the provision for income taxes.

         NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE. Net income per
common and common equivalent share has been computed based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during each of the three years ended December 31, 1996. The Company
has considered as outstanding common stock equivalents during each of the three
years ended December 31, 1996, options awarded to employees and directors of the
Company (see Notes 10 and 11). For purposes of the calculation of net income per
common and common equivalent share, the mandatorily redeemable preferred stock
is also considered a common stock equivalent.

         Net income per common and common equivalent share amounts for each of
the years presented have been calculated giving retroactive effect to an
approximate 8,417 to 1 stock split effected by the Company in June 1995 and a 3
for 4 split effected on February 21, 1996 (jointly, the "Stock Splits," see Note
10). All common and common equivalent share amounts have also been retroactively
adjusted to reflect the Stock Splits.

         STOCK BASED COMPENSATION. Effective 1996, the Company adopted the
disclosure provisions of Statement of Financial Accounting Standard No. 123,
Accounting for Stock Based Compensation ("SFAS 123") and retained the intrinsic
value method of accounting for such stock based compensation (see Note 11).

         FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company estimates the fair
market value of financial instruments through the use of public market prices,
quotes from financial institutions and other available information. Considerable
judgement is required in interpreting data to develop estimates of market value
and, accordingly, amounts are not necessarily indicative of the amounts that the
Company could realize in a current market exchange. At December 31, 1995 and
1996, the Company's financial instruments consist primarily of instruments
without extended maturities, the fair values of which, based on management's
estimates, equaled their carrying values.

                                       39

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 2 - ACQUISITIONS

         On August 30, 1996, the Company acquired substantially all of the
assets and liabilities of The Stone Mountain Group, Inc. ("SMG"), a PEO
headquartered in Snellville, Georgia, for $4,980,751 in cash and notes (the "SMG
Acquisition"). Of the $4,980,751 purchase price, $2,357,314 was paid at closing,
$1,373,437 will be payable in 1997, and $1,250,000 was placed in escrow for
potential purchase price adjustments in the event that, among other things,
client retention fails to meet certain targets. The SMG Acquisition was
accounted for by the Company using the purchase method of accounting. Excess of
costs over the estimated fair value of net assets acquired of $4,856,064
associated with the SMG Acquisition was allocated to goodwill, and is being
amortized over a period of 25 years. The most significant adjustments to the
balance sheet resulting from the SMG Acquisition are disclosed in the
supplemental disclosure of non-cash investing and financing activities in the
accompanying statement of cash flows.

         On January 7, 1997, the Company acquired Staff Administrators, Inc.
("SAI"), a privately held PEO headquartered in Denver, Colorado (the "SAI
Acquisition"). The Company issued 520,000 shares of its common stock in exchange
for all of the equity in SAI and its subsidiaries. The transaction will be
accounted for as a pooling and is not reflected in the accompanying financial
statements or notes except as set forth below.

         The following information presents the unaudited pro forma consolidated
results of operations for the years ended December 31, 1994, 1995 and 1996 of
the Company as if the SAI Acquisition had occurred at the beginning of the
periods presented and as if the SMG Acquisition had occurred on January 1, 1995,
after giving effect to certain adjustments.

<TABLE>
<CAPTION>
                                              DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                  1994               1995               1996  
                                              ------------       ------------       ------------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
    <S>                                       <C>                <C>                <C>    
    Revenues                                  $224,843,043       $337,386,313       $505,567,360
                                              ============       ============       ============
    Net Income                                $  1,854,036       $    710,498       $  2,508,064
                                              ============       ============       ============
    Net income per common and
        common equivalent share               $       0.26       $       0.06       $       0.30
                                              ============       ============       ============

</TABLE>

         These results are presented for informational purposes only and are not
necessarily indicative of the future results of operations or financial position
of the Company or the results of operations or financial position of the Company
that would have been achieved had the acquisitions actually occurred at the
beginning of each of the periods presented.

                                       40

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 3 - INITIAL PUBLIC OFFERING

         In May 1996, the Company completed its initial public offering and
received proceeds of approximately $27,900,000, net of $2,100,000 underwriting
discounts and commissions, from the sale of 2,000,000 shares of common stock of
the Company. The Company used a portion of the proceeds to retire a subordinated
promissory note in the amount of $1,200,000 (see Note 8) and to pay a $700,000
distribution payable related to the Company's repurchase of an option to
purchase the Company's headquarters. In addition, the Company incurred
approximately $960,000 in other costs in connection with the offering.
Simultaneously with the completion of the initial public offering, the Company's
mandatorily redeemable Series A Participating Convertible Preferred Stock (the
"Series A Preferred Stock") was converted into 1,043,933 shares of the Company's
common stock (see Note 9).

         Also in connection with the completion of the Company's initial public
offering, the Company amended and restated its Articles of Incorporation to
increase the authorized number of shares of the Company's common stock from
39,500,000 to 60,000,000, and to increase the authorized number of shares of
preferred stock from 500,000 to 20,000,000.

NOTE 4 - RESTRICTED CASH

         The Company had cash deposits at December 31, 1995 of $4,000,000, which
served as collateral on certain standby letters of credit issued in connection
with the Company's workers' compensation insurance plan (see Note 7). At
December 31, 1996, the $4,000,000 cash collateral was released.

         In connection with the SMG Acquisition, the Company has in escrow
$1,250,000. At December 31, 1996, the escrow funds have been classified as
restricted cash in the accompanying consolidated balance sheet (see Note 2).

NOTE 5 - ACCOUNTS RECEIVABLE

         At December 31, 1995 and 1996, accounts receivable consisted of the
following: 

                                          1995             1996
                                       ----------      -----------
Billed to clients .................... $3,145,887      $ 7,643,225
Unbilled revenues ....................  5,328,260       12,656,777
                                       ----------      -----------
                                        8,474,147       20,300,002
Less:  allowance for
       doubtful account ..............   (184,591)        (476,650)
                                       ----------      -----------
                                       $8,289,556      $19,823,352
                                       ==========      ===========

                                       41

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 6 - PROPERTY AND EQUIPMENT

         Property and equipment consist of the following as of December 31:

                                                                      ESTIMATED
                                                                    USEFUL LIVES
                                         1995             1996       (IN YEARS)
                                       ---------        --------    ------------

Land.................................   $284,374        $284,374
Building.............................    775,158         775,158         30
Building improvements................    510,232         510,232          7
Furniture and fixtures...............    308,924         661,347          5
Office and computer equipment........  1,353,926       2,992,197        3-5
Vehicles.............................     20,249          20,249          3
                                       ---------       ---------
                                       3,252,863       5,243,557
Less: accumulated depreciation and
 amortization                           (745,838)     (1,327,146)
                                       ---------       --------- 

                                      $2,507,025      $3,916,411
                                       =========       =========

         At December 31, 1995 and 1996, gross fixed assets included $346,690 and
$0 of office and computer equipment under capital lease obligations. The Company
purchased these assets during 1996. See Notes 8, 10 and 14.

NOTE 7 - RESERVE FOR CLAIMS

         In December 1996, the Company entered into an agreement with a national
insurance company to provide workers' compensation insurance coverage for 1997
through 1999, subject to a deductible of $2,000 per medical only claim.
Accordingly, effective January 1, 1997, the Company will record workers'
compensation costs based primarily on the fixed portion of its premium under
such policy, rather than through the previous practice of applying actuarial
estimates.

         In addition, in December 1996, the Company entered into agreements to
reinsure substantially all of the remaining claims under the Company's large
deductible workers' compensation insurance policies for the years 1994, 1995 and
1996 for an aggregate premium of $3,200,000. Since reserves for claims for these
years have been previously provided, the Company has recorded the premium as a
reinsurance recoverable at December 31, 1996 and a deferred gain in the amount
of approximately $600,000 which will be recognized to income in future periods
based on the proportion of cumulative claims paid to the total estimated
liabilities for claims.

         In connection with the reinsurance of claims exposure from 1994 to
1996, the insurance carrier has agreed to provide letters of credit in favor of
the Company's lender to guarantee outstanding letters of credit under the
Company's credit agreement (see Note 8). 

         As a consequence of the reinsurance agreement described above, at
December 31, 1996, the Company has classified as current the estimated amounts
of reserves established for claims and reinsurance recoverable expected to be
paid and to be collected, respectively, within one year, as well as the related
deferred gain expected to be recognized within one year.

                                       42

<PAGE>
                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

       At December 31, 1995 and 1996, the Company's reserves for claims costs 
are as follows:
<TABLE>
<CAPTION>
                                                               1995               1996
                                                            ----------         ----------
<S>                                                         <C>                <C> 
Accrued workers' compensation claims..................      $2,197,374         $3,327,057
Accrued health care claims............................         654,182            929,109
Reserve for behavioral health care claims.............         296,385            525,465
                                                            ----------         ----------
                                                             3,147,941          4,781,631
Less: workers' compensation claims expected
to be settled in more than one year...................      (1,010,792)        (1,472,000)
                                                            ----------         ----------

Reserve for claims--current...........................      $2,137,149         $3,309,631
                                                            ==========         ==========
</TABLE>

NOTE 8 - BORROWINGS

Borrowings at December 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
                                                                                              1995                 1996
                                                                                           ----------          ----------
<S>                                                                                        <C>                 <C>
Subordinated note payable in quarterly installments of $150,000 beginning in
March 1998, interest due quarterly at the quoted rate for 1 year U.S. Treasury
Bills (7% at December 31, 1996), paid in June 1996..............................           $1,200,000                  --

Note payable to bank, original amount of $1 million, repayable in monthly
instalments of $4,167, plus interest at 8.5% per annum, through November 1998
when a balloon payment of $750,000 is due, secured by land and building.........              895,732          $  841,561

Capital lease obligation for computer hardware and software, payable in monthly
instalments of $7,479 through May 2000, interest imputed at 12.3% per annum, 
paid in September 1996..........................................................              310,602                  --
                                                                                           ----------          ----------
                                                                                            2,406,334             841,561
Less: current portion...........................................................           (1,305,362)            (50,004)
                                                                                           ----------          ----------
                                                                                           $1,100,972          $  791,557
                                                                                           ==========          ==========

</TABLE>
  
       The Company incurred interest expense of approximately $97,000,
$205,000 and $140,000 during 1994, 1995 and 1996, respectively.

         In June 1996, the Company amended its existing credit agreement with a
bank (as amended, the "Credit Agreement") and increased the amount available
under the Credit Agreement to $13,000,000. The Credit Agreement provides for a
revolving credit facility with a sublimit of $8,000,000 to fund working capital
advances and standby letters of credit. Working capital advances under the
revolving credit facility are limited to the lesser of $2,000,000

                                       43

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

or the Borrowing Base, primarily composed of current accounts receivable from
unrelated parties. Amounts outstanding under the revolving credit facility
mature December 31, 1997.

         The Credit Agreement also has an acquisition loan facility with a
sublimit of $5,000,000. Draws under the acquisition loan facility are available
through June 5, 1998, and are repayable in 36 equal monthly instalments from
starting on June 5, 1998. The Company is charged fees of 1/2% per annum on any
unused portion of the acquisition loan facility.

         The Credit Agreement is collateralized by substantially all of the
assets of the Company and $4,100,959 in letters of credit issued by an insurance
company in connection with the Company's reinsurance of prior years' claims (see
Note 7). The Credit Agreement contains customary events of default and covenants
which prohibit, among other things, incurring additional indebtedness in excess
of a specified amount, paying dividends, creating liens and engaging in certain
mergers or combinations without the prior written consent of the lender. The
Credit Agreement also contains certain financial covenants relating to current
ratio, debt and interest coverage, net worth and other financial ratios.

         Interest under the Credit Agreement accrues at rates based on the prime
rate ("Prime") or the Eurodollar Rate (as defined in the Credit Agreement), at
the Company's option. Amounts outstanding under the revolving credit facility
bear interest at Prime plus 0.5% or the Eurodollar Rate plus 2.5%. Amounts
outstanding under the acquisition loan facility bear interest at Prime plus 1%
or the Eurodollar Rate plus 3%.

         Under the revolving credit facility, the Company had outstanding
$6,250,000 in standby letters of credit at December 31, 1996 which guarantee the
payment of claims to the Company's workers' compensation insurance carrier. As
of that date there were no amounts outstanding under the working capital advance
or under the acquisition loan facilities. All amounts under these facilities
were available at December 31, 1996.

         As of December 31, 1996, the scheduled annual maturities of the
Company's long term debt are summarized as follows:

1997               $ 50,004
1998                791,557
                  ---------
                   $841,561
                  =========

NOTE 9 - MANDATORILY REDEEMABLE PREFERRED STOCK

         The Company has authorized 20,000,000 shares of preferred stock with a
par value of $.01 per share. These shares can be issued from time to time, in
one or more series as authorized by the Company's Board of Directors.

         During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged 1,043,933 (after adjusting for the effect of the Stock Splits) shares
of common stock for 165.376 shares of Series A Participating Convertible
Preferred Stock ("Series A Preferred Stock").

                                       44

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         The Series A Preferred Stock was recorded at $6,263,610 in the
accompanying balance sheet as of December 31, 1995 based on its fair market
value on the date of issuance, as evidenced by the sale of Series A Preferred
Stock by the Company's principal stockholders to an unaffiliated party. Both the
fair market value and the costs incurred of approximately $445,000 in connection
with the recapitalization were charged to retained earnings at the time of the
transaction.

         The Series A Preferred Stock was converted upon completion of the
Company's initial public offering into 1,043,933 shares of common stock, after
adjusting retroactively for the effects of the Stock Splits (see Note 3).

NOTE 10 - STOCKHOLDERS' EQUITY

         During June 1995, the Company increased its authorized common stock
from 500,000 shares to 39,500,000 shares and simultaneously effected an
approximate 8,417 to 1 stock split. On February 21, 1996, the Company effected a
3 for 4 reverse stock split. After the completion of the Company's initial
public offering, the Company amended and restated its Articles of Incorporation
to increase the authorized number of shares of the Company's common stock from
39,500,000 to 60,000,000, and to increase the authorized number of shares of
preferred stock from 500,000 to 20,000,000. All references in the financial
statements to per share amounts have been retroactively restated to reflect the
change in the number of common shares outstanding as a result of the Stock
Splits.

         In connection with the stock split and increase in authorized shares
effected in June 1995, the Company reduced the par value of its common stock to
$.001 from $1.00.

         In June 1993, CP Investments, Inc., an entity controlled by the
Company's principal stockholders, assigned to the Company an option which CP
Investments held to purchase, from a third party for $ 1 million, the land and
building which is owned by the Company and where the Company's headquarters are
located. In October 1993, the Company exercised the option and purchased the
land and building. As part of the assignment of the option, CP Investments
retained the right to purchase the land and building from the Company for
$1,000,000 for a ten year period.

         Based on two independent appraisals of the land and building subject to
the previously described option, the Company valued the option at $700,000
(based on the difference between the market value of the building and its
November 1993 purchase price) and recorded a distribution to its principal
stockholders in June 1993. Because the transaction was entered into between
commonly controlled entities, the value of the option was not considered
additional basis in the building. Amounts due in connection with this
distribution have been recorded as distribution payable at December 31, 1995 and
paid in 1996 upon completion of the initial public offering.

         In January 1995, the Company entered into an agreement to reacquire
certain of its outstanding shares from a minority shareholder. Under the terms
of the agreement, the Company acquired and canceled 249,342 shares of its common
stock, after adjusting for the effect of the Stock Splits, for $300,000 in cash
and a subordinated note for $1,200,000 (see Note 8). Simultaneously, the
Company's principal shareholders acquired 66,281 outstanding shares of the
Company's common stock, after adjusting for the effect of the Stock Splits, for
$400,000.

                                       45

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 11 - STOCK OPTION PLAN

         In February 1996, the Company adopted the 1996 Long Term Incentive Plan
(the "1996 Plan") under which 800,000 shares of common stock, after adjusting
for the effect of the Stock Splits, were reserved for issuance upon exercise of
or in connection with stock options, stock appreciation rights, performance
awards, grants of restricted stock and other stock based or stock related
awards. The 1996 Plan provides for the grant of both incentive stock options and
nonqualified stock options, as well as other stock-based awards, to the
Company's directors, employees and consultants as determined in the discretion
of the Stock Option Committee. Under the 1996 Plan, incentive stock options and
nonqualified stock options may not be granted with an exercise price which is
less than 100% of the fair market value of the Company's shares of common stock
at the date of grant of the option.

         In May 1995, the Company adopted the 1995 Stock Option Plan (the
"1995 Plan") under which 666,665 shares of common stock, after adjusting for the
effect of the Stock Splits, were reserved for issuance upon exercise of
stock options. The 1995 Plan provides for the grant of both incentive stock
options intended to qualify as such under Section 422 of the Internal Revenue
Code ("incentive stock options") and nonqualified stock options to the
directors, officers, key employees, consultants and other individual
contributors of or to the Company and its subsidiaries, as determined in the
discretion of the Stock Option Committee. Under the 1995 Plan, incentive stock
options and nonqualified stock options may not be granted with an exercise price
which is less than 100% and 85%, respectively, of the fair market value of the
Company's shares of common stock at the date of grant of the option.

         Stock options normally have a term of ten years and generally become
exercisable 40% after the second year from the date of grant and in instalments
of 5% quarterly thereafter.

                                       46

<PAGE>
                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         The following table summarizes stock option activity:

<TABLE>
<CAPTION>
                                                                                                        WEIGHTED
                                                                                    EXERCISE            AVERAGE
                                                           STOCK OPTION               PRICE          EXERCISE PRICE
                                                           ------------          --------------      --------------
         <S>                                               <C>                   <C>                 <C>   
         Outstanding at January 1, 1995 ..............               --                      --                  --
           Granted ...................................          514,997          $ 3.00 - $3.33        $       3.05
           Canceled ..................................               --                      --                  --
           Exercised .................................               --                      --                  --
                                                           ------------          --------------        ------------

         Outstanding at December 31, 1995 ............          514,997          $ 3.00 - $3.33        $       3.05
           Granted ...................................          311,499          $4.67 - $33.13        $      20.62
           Canceled ..................................          (44,999)         $ 3.00 - $8.05        $       5.81
           Exercised .................................          (13,333)                  $3.00        $       3.00
                                                           ------------          --------------        ------------

         Outstanding at December 31, 1996                       768,164          $3.00 - $33.13        $       9.81
                                                           ============          ==============        ============

         Exercisable at:
           December 31, 1995 .........................                0                                          --
           December 31, 1996 .........................           40,000                                $       3.00

         Available for grant at:
           December 31, 1995 .........................          951,668
           December 31, 1996 .........................          702,390

</TABLE>

         The Company has adopted the disclosure provisions of SFAS 123. The
assumptions used in the calculation of the fair value of the options, using the
Black-Scholes method, issued to employees and directors of the Company during
1995 and 1996 were as follows:

                                                      1995              1996
                                                      ----              ----
Expected life (years) ............................     6.5               6.5
Interest rate ....................................    6.20%             6.20%
Volatility .......................................      55%               55%
Dividend yield ...................................       0%                0%

                                       47

<PAGE>
                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         Had compensation cost for the Company's two option plans been
determined based on fair market value at the grant date for awards in 1995 and
1996 using the straight line method to recognize such cost, the Company's net
income and net income per common equivalent share would have been reduced to the
pro forma amounts indicated below:

                                                  1995            1996
                                               ---------       ----------
Pro forma net income                           $ 688,333       $2,310,734
                                               =========       ==========
Pro forma net income per common
   and common equivalent share                 $    0.11            $0.30
                                               =========       ==========

         Weighted-average fair value of options granted during the year 1995 and
1996 was $1.86 and $14.05, respectively.

         The following table summarizes stock option average grant date fair
value, and weighted average remaining contract life for options outstanding at
December 31, 1996:
                                                WEIGHTED
                                                AVERAGE               REMAINING
    RANGE OF            NUMBER OF              GRANT DATE            CONTRACTUAL
 EXERCISE PRICE          OPTIONS               FAIR VALUE                LIFE
---------------         ---------              ----------            -----------
$ 3.00 - $ 3.33           481,665              $     1.87                    7.5
$ 4.67 - $ 8.05           103,999              $     5.46                    9.5
$21.00 - $28.50            63,500              $    16.23                    9.5
$33.13 - $37.13           119,000              $    24.17                   10.0
                          -------

Stock options
 outstanding as
 of December 31, 1996.... 768,164
                          =======

                                       48

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996


NOTE 12 - INCOME TAXES

         The provision for federal and state income taxes consists of the
following:

                                     1994              1995           1996
                                  ----------         --------      ----------
CURRENT

     Federal..................... $1,188,913         $468,000      $1,205,859
     State.......................     25,000           20,000          61,000
                                  ----------         --------      ----------
                                   1,213,913          488,000       1,266,859
                                  ----------         --------      ----------

DEFERRED

     Federal.....................   (280,864)         (18,777)        567,641
     State.......................        --                --              --
                                  ----------         --------      ----------
                                    (280,864)         (18,777)        567,641
                                  ----------         --------      ----------

Provision for income taxes....... $  933,049         $469,223      $1,834,500
                                  ==========         ========      ==========

         Subsequent to December 31, 1994, the Company requested and obtained a
change, for income tax purposes, in the method of accounting for its workers'
compensation loss reserves. As a result, the Company recorded a deferred tax
asset relating to the reserves and an increase in income taxes payable of
approximately $1,386,000. Under the provisions of the Internal Revenue Code
("IRC"), the Company can amortize over three years the payment of taxes due for
changes resulting in taxable income and can recognize currently deductions
resulting from the change in method. The Company has classified as long term
those taxes resulting from this change which it expects to pay in more than one
year.

                                       49

<PAGE>


                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         The gross amounts of deferred tax assets and liabilities recorded in
the accompanying consolidated balance sheets at December 31, 1995 and 1996 are
as follows:

                                                      1995             1996
                                                     -------         --------


Current deferred tax assets:

     Allowance for doubtful accounts.............   $ 59,361         $128,061
     Accrued health care claims..................    222,422          315,897
     Reserve for workers' compensation claims,
      net of reinsurance recoverable ............    403,580          109,322
     Deferred compensation.......................     89,420               --
                                                    --------         --------
                                                    $774,783         $553,280
                                                    ========         ========
Long term deferred tax assets and (liabilities):

     Deferred compensation.......................   $100,062            8,878
     Reserve for workers' compensation claims,
      net of reinsurance recoverable.............    343,527           93,126
     Goodwill....................................         --           (4,553)
     Other.......................................      7,940            7,940
                                                    --------         --------
                                                    $451,529         $105,391
                                                    ========         ========

         Realization of the above deferred tax assets is dependent on generating
sufficient taxable income in the future to offset the deductible temporary
differences generating the deferred tax assets. Although realization is not
assured, management believes that it is more likely than not that all of the
deferred tax asset will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced if estimates of future taxable
income are reduced.

         A reconciliation of the differences between income taxes computed at
the federal statutory tax rate and the income tax provisions reflected in the
accompanying consolidated statements of income is as follows:

                                         1994           1995            1996
                                       --------      ----------      ----------
Income taxes computed at the federal
statutory tax rate of 34%............. $929,219        $434,880      $1,842,960
State income taxes, net of federal
income tax effect.....................   16,500          13,200          40,260
Other, net............................  (12,670)         21,143         (48,720)
                                       --------      ----------      ----------

Provision for income taxes............ $933,049        $469,223      $1,834,500
                                       ========        ========      ==========

                                       50

<PAGE>


                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 13 - EMPLOYEE BENEFIT PLANS

         The Company maintains a defined contribution plan covering certain of
its worksite employees for a number of client companies. The Company
contributes, on behalf of each participating client, varying amounts based on
client company elections. Total Company contributions for the years ended
December 31, 1994, 1995 and 1996 were $416,922, $550,776 and $1,065,072,
respectively.

         In August 1996, the Company received a favorable determination letter
from the Internal Revenue Service ("IRS") regarding the qualified status of its
defined contribution plan under Section 401(k) of the IRC. In its application to
the IRS, the Company informed the IRS that the Company is involved in the
business of leasing employees to client companies and that the 401(k) plan
covered worksite or leased employees who satisfied the plan's eligibility
requirements.

         The Company sponsors an unfunded deferred compensation plan (the
"Deferred Plan"). The Deferred Plan covers a selected group of employees as
determined by the Company's Board of Directors. The amounts due under the
Deferred Plan are based on bonuses granted by the Board of Directors, at its
discretion at each year end for that year's performance by the employee. Based
on the awards granted, the Company recorded compensation expense of $41,200
during 1994. No deferred compensation expense was recognized during 1995 and
1996.

         The amount of compensation subject to the Deferred Plan and the vesting
period for individual grants, or any changes thereto, is established by the
Company's Board of Directors. Deferred compensation amounts generally vest at
the end of three years from the date of award, provided the participant is
employed by the Company on such date. At December 31, 1996 the vesting schedule
under the Plan is as follows:

1997.....................  $ 242,013
1998.....................     41,200
                           ---------

                           $ 283,213
                           =========

         The Company has included these amounts within other liabilities in the
accompanying balance sheets as short term or long term based on the applicable
vesting dates. Of the above amounts, approximately $200,000 at December 31,
1996, relate to deferred compensation to the Company s principal stockholders.
All deferred compensation is expected to be paid in cash.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

         The Company has entered into non-compete agreements with its Chairman
and Vice-Chairman, who are also the Company's principal stockholders. The
agreements are for a term to be specified by the Company, not to exceed two
years, in the event of the Chairman's or Vice-Chairman's termination. The
non-compete agreements require payment to the Chairman and Vice-Chairman of
their full salary and benefits during the term of the agreement.

                                       51

<PAGE>

                            THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

         The Company leases certain office space, automobiles and office
equipment under non-cancelable operating leases expiring on various dates
through the year 2000. Total rent expense charged to operations during the years
ended December 31, 1994, 1995 and 1996 was approximately $ 177,900, $270,900 and
$294,900 respectively.

         At December 31, 1996, the minimum annual rental commitments under the
previously described operating leases are as follows:

                  FOR THE 
                YEAR ENDING
                DECEMBER 31,
                ------------   

1997 .......... $   492,419
1998 ..........     368,230
1999 ..........     196,332
2000 ..........      62,183
2001 ..........      28,497
                ----------- 
Total ......... $ 1,147,661
                ===========


         The Company is a defendant in a lawsuit related to a wrongful death and
premises liability claim involving a worksite employee. The plaintiff's original
complaint sought damages in excess of $10,000,000; however, such complaint was
dismissed in part and amended to seek damages in excess of $15,000. The court
has sustained plaintiff's amended complaint alleging premises liability against
both the Company and its client as a result of a worksite accident at client's
premises. The Company is asserting that its liability under this claim, if any,
should be limited to $100,000 due to the immunity provisions of the Florida
workers' compensation statute involving worksite accidents. Discovery in the
proceeding continues. While there can be no assurance that the ultimate outcome
of this lawsuit will not have a material adverse effect on the Company's
financial condition or results of operations, management believes, based on
consultations with the Company's counsel, that the ultimate outcome of this
lawsuit should not have such an effect.

         The Company is a defendant in a lawsuit brought in Dade County Circuit
Court in November 1995 by an individual who alleges that he was injured by a
worksite employee of a client of the Company, which owns and operates a hotel
and is a co-defendant in the litigation. The plaintiff alleges that the
employee, while he was working as a valet parking attendant, was negligent in a
motor vehicle collision and severely and permanently injured the plaintiff. The
plaintiff alleged damages in excess of $50,000 in his amended complaint for,
among other things, bodily injury, medical costs, pain and suffering, and lost
ability to earn income. Based on consultations with the Company's counsel,
management of the Company believes that it has meritorious defenses to the
plaintiff's claims and that if the lawsuit is adversely determined, the Company
may be entitled to indemnification from its client and/or its liability
insurance carrier. Although management believes that the company's ultimate
liability in this matter should not be material, there can be no assurance that
the Company will prevail in the litigation, in a related claim for
indemnification, or that the liability of the Company, if any, would not have a
material adverse effect on the Company's financial condition and results of
operations.

         In October 1996, the Company received a notice of assessment in the
discounted amount of approximately $53,500 from The Treasurer of the State of
Florida Department of Insurance as Receiver of United States Employer Consumer
Self Insurance Fund of Florida, a workers compensation insurance fund which was
declared insolvent (the "Fund"). The Company paid the assessment in January
1997. The Company had certain worksite employees covered by the Fund during
fiscal years ended December 31, 1992, 1993 and 1994.

                                       52

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

The court order authorizing the assessment provides that the Company, by paying
the discounted assessment, is deemed to have paid its assessment in full and is
not subject to any further assessment for policyholder loss claims. The Company
may be subject to additional liability for the assessments of other Fund
members. The Company believes that there are approximately 700 members of the
Fund which have been assessed $37.0 million in the aggregate. Although the
amount of the potential exposure, if any, for such additional liability is not
yet determinable, management believes that the Company has meritorious defenses
to the assessment and that its ultimate liability in this matter will not have a
material adverse effect on the Company's financial condition or results of
operations. There cannot, however, be any assurance that any such liability will
not have such material adverse effect.

         The company is also involved in other legal and administrative
proceedings arising in the ordinary course of business. The outcomes of these
actions are not expected to have a material effect on the Company's financial
position or results of operations.


         See also Notes 1 and 7.
                                       53

<PAGE>

                             THE VINCAM GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996

NOTE 15 - QUARTERLY INFORMATION (UNAUDITED)

         The following table presents unaudited quarterly operating results for
the two years ended December 31, 1996. The Company believes that all necessary
adjustments have been included in the amounts stated below to present fairly the
quarterly results when read in conjunction with the Consolidated Financial
Statements and Notes thereto for the years ended December 31, 1995 and 1996.
Results of operations for any particular quarter are not necessarily indicative
of results of operations for a full year or predictive of future periods.
<TABLE>
<CAPTION>
                                              1995 QUARTER ENDED                          1996 QUARTER ENDED
                                   ----------------------------------------    ------------------------------------------
                                   MARCH 31    JUNE 30   SEPT. 30   DEC. 31    MARCH 31   JUNE 30   SEPT. 30      DEC. 31
                                   --------    -------   --------   -------    --------   -------   --------     --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>        <C>        <C>       <C>        <C>        <C>        <C>         <C>
STATEMENT OF INCOME DATA:
Revenues                           $ 55,311    $57,165    $58,383   $68,549    $79,890    $89,180    $99,459     $127,091
                                   --------    -------    -------   -------    -------    -------    -------     --------
Gross profit                          3,205      3,005      3,038     3,695      5,089      5,701      6,792        8,001
                                   --------    -------    -------   -------    -------    -------    -------     --------
Operating income                        500        132        173       436        931      1,109      1,249        1,513
                                   --------    -------    -------   -------    -------    -------    -------     --------
Net income                         $    322    $    84    $   116   $   288    $   593    $   816    $   989     $  1,188
                                   ========    =======    =======   =======    =======    =======    =======     ========
Net Income Per Common and
Common Equivalent Share            $   0.05    $  0.01    $  0.02   $  0.04    $  0.09    $  0.11    $  0.12     $   0.14
                                   ========    =======    =======   =======    =======    =======    =======     ========
</TABLE>
                                   * * * * * *

                                       54
<PAGE>
                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
            COLUMN A                  COLUMN B           COLUMN C             COLUMN D                COLUMN E 
--------------------------------   ---------------      -----------      -----------------        -----------------
                                                                            PAYMENTS OF
                                                         CHARGES TO          CLAIMS AND
                                      BALANCE,            COSTS AND            OTHER                   BALANCE, 
                                   JANUARY 1, 1996        EXPENSES          REDUCTIONS            DECEMBER 31, 1996 
                                   ---------------      -----------      -----------------        -----------------
<S>                                <C>                  <C>              <C>                      <C>
RESERVE FOR CLAIMS ............... $     3,149,941      $12,468,676      $    (10,836,986)        $       4,781,631 
                                   ===============      ===========      =================        =================  
ALLOWANCE FOR DOUBTFUL ACCOUNTS... $       184,591      $   334,300      $        (42,241)        $         476,650 
                                   ===============      ===========      =================        =================  
<CAPTION>
                                                                            PAYMENTS OF
                                                                         CLAIMS, WRITE OFF
                                                         CHARGES TO       OF UNCOLLECTIBLE
                                      BALANCE,            COSTS AND         ACCOUNTS AND               BALANCE, 
                                   JANUARY 1, 1995        EXPENSES        OTHER REDUCTIONS        DECEMBER 31, 1995 
                                   ---------------      -----------      -----------------        -----------------
<S>                                <C>                  <C>              <C>                      <C>
RESERVE FOR CLAIMS ..............  $     2,666,645      $ 7,072,548      $     (6,591,252)        $       3,147,941
                                   ===============      ===========      =================        =================
ALLOWANCE FOR DOUBTFUL ACCOUNT...  $        84,747      $   165,000      $        (65,156)        $         184,591 
                                   ===============      ===========      =================        ================= 
<CAPTION>
                                                                            PAYMENTS OF 
                                                         CHARGES TO          CLAIMS AND 
                                      BALANCE,            COSTS AND            OTHER                   BALANCE, 
                                   JANUARY 1, 1994        EXPENSES          REDUCTIONS            DECEMBER 31, 1994
                                   ---------------      -----------      -----------------        -----------------
<S>                                <C>                  <C>              <C>                      <C>
RESERVE FOR CLAIMS ..............  $     1,218,234      $ 4,509,945      $     (3,061,534)        $       2,666,645
                                   ===============      ===========      =================        =================
ALLOWANCE FOR DOUBTFUL ACCOUNTS..  $        44,747      $    40,000      $             --         $          84,747
                                   ===============      ===========      =================        =================
</TABLE>

                                       55

<PAGE>

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
                  AND FINANCIAL DISCLOSURE

         None.

                                       56
<PAGE>

PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information regarding the Company's executive officers is included
in Item 1 of Part I under "Executive Officers of the Registrant." Other
information required by this Item 10 will be contained in the Company's Proxy
Statement relating to the 1997 Annual Meeting of Shareholders to be held on
April 22, 1997 (the "Proxy Statement"), and is incorporated herein by reference.

ITEM 11.          EXECUTIVE COMPENSATION

         The information required by this Item 11 will be contained in the Proxy
Statement and is incorporated herein by reference, provided that the
Compensation Committee Report and Performance Graph which is contained in the
Proxy Statement shall not be deemed to be incorporated herein by reference.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN
                  BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item 12 will be contained in the Proxy
Statement and is incorporated herein by reference.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item 13 will be contained in the Proxy
Statement and is incorporated herein by reference.

                                       57
<PAGE>

PART IV

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

(a)      1.       Financial Statements - The financial statements and
                  independent auditors' report are listed in the "Index to
                  Financial Statements and Financial Schedules" on page 30 and
                  included on pages 31 through 55.

         2.       Financial Statement Schedules -- The financial statement
                  schedule required by Item 14(a)(2) is included on page 55.

         3.       Exhibits including those incorporated by reference:

EXHIBIT
   NO.                              DESCRIPTION
-------                             -----------

2.1           Agreement and Plan of Recapitalization, dated as of February 10, 
              1995, among the Registrant, Carlos A. Saladrigas, Jose M. Sanchez,
              Richard B. Light and Steven R. Light.*

2.2           Asset Purchase Agreement, dated as of August 21, 1996, by and
              among the Registrant, The Stone Mountain Group, Inc. and the
              shareholders of The Stone Mountain Group, Inc. (incorporated
              herein by reference to Exhibit 2 filed as part of the Registrant's
              Report on Form 8-K dated August 21, 1996 (Commission File No.
              0-28148)). 

2.3           Agreement and Plan of Merger, dated as of December 24, 1996, by
              and among the Registrant, Staff Administrators, Inc. and the
              shareholders of Staff Administrators, Inc., including the forms of
              Registration Agreement, Escrow Agreement and Agreement and Plan of
              Merger with respect to Staff Administrators of Western Colorado,
              Inc. which are exhibits thereto (incorporated by reference to
              Exhibit 2 filed as part of the Registrant's Report on Form 8-K
              dated December 10, 1996 (Commission file No. 0-28148)). 

3.1           Articles of Incorporation of the Registrant (incorporated
              herein by reference to Exhibit 3.1 filed as part of the
              Registrant's Report on Form 10-Q for the quarterly period ended
              September 30, 1996 (Commission File No. 0-28148)).

3.2           Bylaws of the Registrant (incorporated herein by reference to
              Exhibit 3.2 filed as part of the Registrant's Report on Form 10-Q
              for the quarterly period ended September 30, 1996 (Commission File
              No. 0-28148)).

4.1           Form of certificate for shares of the Registrant's Common
              Stock (incorporated herein by reference to Exhibit 4.1 filed as a
              part of Amendment No. 1 to the Company's Registration Statement on
              Form S-1, filed with the Commission on March 29, 1996
              (Registration Statement File No. 333-1594)). 4.2 See Exhibits 3.1
              and 3.2 for provision of the Articles of Incorporation and Bylaws
              of the Registrant defining rights of holders of Common Stock.

10.1          Series A Participating Convertible Preferred Stock Purchase
              Agreement, dated as of February 19, 1995, among the Registrant,
              Carlos A. Saladrigas, Jose M. Sanchez, Greylock Equity Limited
              Partnership, a Delaware limited partnership, and for certain
              limited purposes, Richard B. Light and Steven R. Light.*

10.2          [intentionally omitted]

10.3          Registration Rights Agreement among the Registrant, Greylock
              Equity Limited Partnership, Carlos A. Saladrigas and Jose M.
              Sanchez, dated February 10, 1995.*

10.4          Non-Competition Agreement between the Registrant and Jose M.
              Sanchez, dated February 10, 1995.*

10.5          Non-Competition Agreement between the Registrant and Carlos
              A. Saladrigas, dated February 10, 1995.*


                                       58
<PAGE>

10.6          [intentionally omitted]

10.7          [intentionally omitted]

10.8          Amended and Restated Credit Agreement, dated as of June 5, 1996
              among The Vincam Group, Inc., its Subsidiaries and Fleet National
              Bank of Massachusetts (incorporated herein by reference to Exhibit
              10.1 filed as part of the Registrant's Report on Form 10-Q for the
              quarterly period ended March 31, 1996 (Commission File No.
              0-28148))
10.9          Workers' Compensation and Employers Liability Policy No.
              WA1-65D-004109-035, issued by Liberty Mutual Insurance Company,
              policy period December 31, 1995 to December 31, 1996 incorporated
              herein by reference to Exhibit 10.9 filed as part of Amendment No.
              2 to the Company's Registration Statement on Form S-1, filed with
              the Commission on April 15, 1996 (Registration Statement File No.
              333-1594)).

10.10         Agreement for Guarantee of Deductible Reimbursement, dated
              January 4, 1996, between the Registrant and Liberty Mutual
              Insurance Company, related to Policy No. WA1-65D-004109- 035.*

10.11         Workers' Compensation and Employers Liability Policy No.
              WA1-65D-004109-034, issued by Liberty Mutual Insurance Company,
              policy period December 31, 1994 to December 31, 1995.*

10.12         Agreement for Guarantee of Deductible Reimbursement, dated
              January 23, 1995, between the Registrant and Liberty Mutual
              Insurance Company, related to Policy No. WA1-65D- 004109-034.*

10.13         Workers' Compensation and Employers Liability Policy No.
              WA1-65D-004109-014, issued by Liberty Mutual Insurance Company,
              policy period January 1, 1994 to December 31, 1994.*

10.14         Agreement for Guarantee of Deductible Reimbursement, dated
              January 4, 1996, between the Registrant and Liberty Mutual
              Insurance Company, related to Policy No. WA1-65D-004109- 014.*

10.15         [intentionally omitted]

10.16         [intentionally omitted]

10.17         Agreement between Vincam Occupational Health Systems, Inc.
              and HIP Health Plan of Florida, Inc., effective May 1, 1994.*

10.18         1995 Stock Option Plan of the Registrant (management compensation 
              plan).*

10.19         1996 Long Term Incentive Plan of the Registrant (management 
              compensation plan).*

10.20         Vincam Human Resources, Inc. Deferred Compensation Plan 
              (management compensation plan).*

10.21         Real Estate Mortgage and Security Agreement, dated as of
              November 2, 1994, between Consolidated Bank, N.A. and the
              Registrant.*

10.22         Promissory Note, dated November 2, 1994, issued by The
              Vincam Group, Inc. to Consolidated Bank, N.A. in the aggregate
              principal amount of $1,000,000.*

10.23         Amendment, entered into as of December 27, 1995, to the
              Registration Rights Agreement dated February 10, 1995, between the
              Registrant, Greylock Equity Limited Partnership, Carlos A.
              Saladrigas and Jose M. Sanchez (incorporated herein by reference
              to Exhibit 10.23 filed as part of Amendment No. 2 to the Company's
              Registration Statement on Form S-1, filed with the Commission on
              April 15, 1996 (Registration Statement File No. 333-1594)).

10.24         Deductible Payment Loss Portfolio Transfer Insurance Policy
              effective December 31, 1996 issued by Commercial Risk Re-Insurance
              Company to the Registrant. (confidential treatment has been
              requested for certain portions of Exhibit 10.24).

10.25         Deductible Indemnification Agreement effective December 31, 1996
              between the Registrant and the Reliance Insurance Company.

10.26         Deductible Liability Insurance Policy effective December 31, 1996
              issued by Reliance Insurance Company of Illinois to the
              Registrant, Policy No. NGB0133600-00 (confidential treatment has
              been requested for certain portions of Exhibit 10.26)

                                     59

<PAGE>

10.27         Deductible Liability Insurance Policy effective December 31,
              1996 issued by Reliance Insurance Company of Illinois to the
              Registrant, Policy No. NXS0133598-00.

10.28         Excess Deductible Indemnity Agreement, effective December 31, 1996
              issued by Reliance Insurance Company of Illinois.

10.29         Agreement and Amendment No. 1 to Amended and Restated Credit
              Agreement, dated as of December 31, 1996, by and among the
              Registrant, its subsidiaries and Fleet National Bank 
              (incorporated by reference to Exhibit 10 filed as part of the
              Registrant's Report on Form 8-K dated December 10, 1996
              (Commission File No. 0-28148)).

11            Statement re Computation of Per Share Earnings.

21            Subsidiaries of the registrant.

23.1          Consent of Price Waterhouse LLP.

27            Financial Data Schedule
--------------------
* Incorporated herein by reference to the exhibit of the same number filed as a
part of the Company's Registration Statement on Form S-1 filed with the
Commission on February 22, 1996 (Registration Statement File No. 333-1594).

(b)      Reports on Form 8-K:

         On November 8, 1996, the Company filed Amendment No. 1 to its Current
Report on Form 8-K dated August 30, 1996 with the Securities and Exchange
Commission reporting information under Item 7, Financial Statements, Pro Forma
Financial Information and Exhibits.

                                       60

<PAGE>
                                   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, as of the 5th day of
March, 1997.

                                           THE VINCAM GROUP, INC.

                                           By:/s/ CARLOS A. SALADRIGAS
                                           --------------------------------
                                           Carlos A. Saladrigas
                                           Chairman of the Board, President
                                           and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                                            TITLE                                                DATE
---------                                            -----                                                ----
<S>                                         <C>                                                     <C>                             
/s/ CARLOS A. SALADRIGAS
------------------------
Carlos A. Saladrigas                        Chairman of the Board, President                         March 5, 1997
                                            and Chief Executive Officer
                                            (Principal Executive Officer)
/s/ JOSE M. SANCHEZ 
------------------------
Jose M. Sanchez                             Vice Chairman of the Board                               March 5, 1997
                                            Area President - South Florida

/s/ STEPHEN L. WAECHTER
------------------------
Stephen L. Waechter                         Chief Financial Officer,                                 March 5, 1997
                                            Senior Vice President-
                                            Finance and Administration
                                            (Principal Financial Officer)
/s/ MARTINIANO J. PEREZ
------------------------
Martiniano J. Perez                         Vice President, Controller                               March 5, 1997
                                            (Principal Accounting Officer)

/s/ HOWARD E. COX, JR.
------------------------
Howard E. Cox, Jr.                          Director                                                 March 5, 1997


/s/ CHARLES M. HAZARD, JR.
--------------------------
Charles M. Hazard, Jr.                      Director                                                 March 5, 1997


/s/ JOHN H. MCARTHUR
--------------------------
John H. McArthur                            Director                                                 March 5, 1997

</TABLE>
                                       61

<PAGE>


                                  EXHIBIT INDEX

10.24         Deductible Payment Loss Portfolio Transfer Insurance Policy
              effective December 31, 1996 issued by Commercial Risk Re-Insurance
              Company to the Registrant. (confidential treatment has been
              requested for certain portions of Exhibit 10.24).

10.25         Deductible Indemnification Agreement effective December 31, 1996 
              between the Registrant and the Reliance Insurance Company.

10.26         Deductible Liability Insurance Policy effective December 31,
              1996 issued by Reliance Insurance Company of Illinois to the
              Registrant, Policy No. NGB0133600-00 (confidential treatment
              has been requested for certain portions of Exhibit 10.26).

10.27         Deductible Liability Insurance Policy effective December 31, 1996 
              issued by Reliance Insurance Company of Illinois to the 
              Registrant, Policy No. NXF0133598-00.

10.28         Excess Deductible Indemnity Agreement, effective December 31, 1996
              issued by Reliance Insurance Company of Illinois.

11            Statement re Computation of Per Share Earnings.

21            Subsidiaries of the registrant.

23.1          Consent of Price Waterhouse LLP.

27            Financial Data Schedule

                                       62