Computer Horizons Corp.

                              Solutions For Growth

                               1996 ANNUAL REPORT

<PAGE>
"The   process   of   transforming   our
company, a process that began four years
ago,  brought  momentous  changes during
the 12 months of 1996, changes that have
forever  altered  the  face of  Computer
Horizons.    We   have   become   widely
recognized  as  a  major  force  in  the
information  industry,  attracting  more
media    recognition    and    financial
community  coverage  than at any time in
our   25-year   history   as  a   public
company."

/s/John Cassese

                               TO OUR SHAREHOLDERS 


A number of highly creative  product and service  innovations were introduced to
the marketplace this year through our Signature 2000TM Millennium Solution. As a
result,  we have added  important new clients at a faster rate than ever before.
We  have  expanded  the  scope  and  importance  of the  assignments  we can now
undertake  on their  behalf.  We have  provided an  abundance  of  exciting  new
opportunities for our rapidly growing base of highly skilled employees. Finally,
we  increased  the  market  value of our firm by more than 50  percent,  drawing
widespread  attention from industry  participants and keen support from industry
analysts.

We view the Year 2000  marketplace as an exciting  opportunity  which,  although
still a year or two away from peaking,  begins in earnest this year. However, we
look at our own state of readiness to respond to the  opportunity as one that is
far more mature.  Our suite of  Signature  products has been tested and retested
under live  conditions  with acclaim from our clients.  Our  administrative  and
project  management  approaches  have been challenged and have met the test. Our
response to client needs, as our experience with them grows in scope, is quickly
becoming the industry model.

In another area, our dogged determination to comply with client requirements has
resulted  in  winning  the  valued  Ford Motor  Company  Q1  Quality  Award.  In
preparation for this accomplishment,  we have designed and incorporated numerous
quality standards into our everyday operations,  thereby adding to our value for
our entire array of clients. While we are pleased to have achieved this level of
quality practice,  we will continue to strive for improvement in this regard and
expect to achieve ISO 9000  certification in the months ahead. 

The past year has not been  without  difficulties.  During a  tumultuous  period
early in the year, a single large client  totally and  unexpectedly  changed its
practices with regard to employing outside  services.  This resulted in a sudden
decline in CHC-provided  resources and a serious disruption in our revenues.  We
are gratified to have quickly reversed this impact and to have finished the year
at a record-setting revenue pace.
<PAGE>
As we enter the final years of the second  millennium,  we at Computer  Horizons
look  forward to seeing our vision  become  reality.  Although  we have  already
witnessed our investments in products,  services,  people and organization  bear
fruit,  we are  developing  new  growth  areas  and are  expanding  others.  New
technology,  products and services are being  assembled and are becoming part of
our network  management and document imaging  practices.  Enhanced  services for
client/ server projects are being offered,  and our legacy maintenance  practice
is being expanded.  As the paradigm shift to outsourced  solutions  continues to
accelerate,  we will  continue  to expand  our  readiness  to accept  bigger and
broader contracts.

Our client base has grown,  with some of the most  prestigious  companies in the
country placing  confidence in our solutions and in our people.  We are prepared
for the grueling  demands of dealing  with the  anticipated  worldwide  resource
shortage.  We have begun to establish a foothold in Western Europe and recognize
the implications of becoming a global vendor.

Our industry is in the midst of perhaps its  healthiest  growth period ever, and
we are  confident  that  our past  accomplishments  have  positioned  us to take
advantage of this growth.

PHOTO ---
John  Cassese,  Chairman  and  President,  has  directed  the growth of Computer
Horizons.  His  leadership  has provided a winning  direction and has guided the
firm to a position of market leadership.
<PAGE>
During 1996,  Computer Horizons achieved a key objective by becoming  recognized
by both industry  observers and participants as a leading IT total solutions and
services  company.  A  retrospective  of all that our  company  has been able to
accomplish during this year is proof that we have kept the commitments  promised
to all our stakeholders:

o Employees--the corporation

o Customers--the marketplace

o Shareholders--the investors

A significant result of our efforts,  which set the stage for a positive outlook
throughout this decade,  has been the emergence and industry-wide  acceptance of
Computer  Horizons.  Your  company is  recognized  as the  leading  provider  of
solutions  for the  massive  problem  of  correcting  the Year  2000  millennium
software  problem  prior  to  reaching  the  next  century.  Computer  Horizons'
Signature  2000TM  solution  is the  choice  of  many  of our  nation's  largest
corporations and is widely recognized as a model approach.

In  1996,   Computer  Horizons  created  or  delivered  a  series  of  "firsts,"
representing  important marketplace  differentiators for your company.  Although
each  achievement  is  significant by itself,  these  achievements  collectively
represent a substantial foundation for future growth and marketplace expansion.

PROPRIETARY  SOFTWARE TOOLS We made several important  additions to our suite of
self-designed,  self-engineered  and self-produced  proprietary  software tools.
Leading the new additions is Computer Horizons'  Signature Time EngineerTM.  Its
approach  to the  complex  task of  converting  hundreds of millions of lines of
programming  code that cannot  function in the next century is unique.  Computer
Horizons has applied for and received patent protection.  Of major importance to
our clients is the fact that  Signature Time Engineer can  significantly  reduce
the time and effort  necessary  to convert  systems,  enabling  them to function
correctly in the next century.  This worldwide  problem,  estimated to cost $500
billion to fix, is extremely time-sensitive, especially as we move closer to the
Year  2000.  By  adding  Signature  Time  Engineer  to  our  existing  suite  of
proprietary tools, we have virtually completed our offerings.
<PAGE>
Signature  Time Engineer was conceived and developed  internally by  outstanding
Computer Horizons Solutions engineers and managers. Computer Horizons has become
a member of a highly  exclusive club of IT solution  providers.  Your company is
able to deliver a total lifecycle solution that combines  proprietary tools with
trained and experienced  resources,  tested project  managers,  facilities and a
leading project methodology.

WORLD-CLASS  METHODOLOGIES  AND  PROCESSES  Computer  Horizons  has  assembled a
world-class team of solutions  professionals,  including delivery and engagement
executives,  project  managers  and  experienced  staff.  Also  critical are the
practices,  policies,  project management and process  methodologies  which they
have  developed and which they follow.  Major clients  throughout  the world now
seek out Computer  Horizons for our leadership in order to oversee major efforts
built on a broad range of disciplines.

Having  teamed with  Texas-based  LBMS,  Inc.  (the leading  provider of process
management  products to Fortune 200  organizations),  major corporations can now
take advantage of our best practices. By accessing our methodology,  clients can
generate and track  detailed  project plans for new technology  development  and
Year 2000  conversion  projects.  This  offering  provides  highly  detailed and
accurate information on activities,  deliverables,  roles and  responsibilities,
dependencies, resources, tools and techniques, in addition to estimating metrics
for the selected type of project.  Process management is absolutely  critical to
overcoming  the  daunting  challenges  of Year 2000  conversions.  By  combining
Computer Horizons' proven  methodologies and quality processes with LBMS Process
Engineer(R)  toolset,  LBMS is now marketing the best possible Year 2000 process
solution to the Fortune 500  community  worldwide.  Established  clients and new
prospects are learning  about  Computer  Horizons'  solutions  capabilities  and
practices through this partnership arrangement.
<PAGE>
OPERATIONAL  FACILITIES  In 1996,  the Fortune 500  community  continued to pare
budgets and to concentrate their personnel on their company's core competencies,
a trend that will  continue  in the  future.  This  select  group of IT users is
seeking creative vendors to satisfy their growing needs without increasing their
budgets.  To meet this  challenge,  by  partnering  with our  clients,  Computer
Horizons  has  developed  innovative  programs  and  offerings.  Many of our new
offerings permit us "to do more for less."

This year we commenced  operations in several Millennium  Refurbishment  Centers
(MRCs). Plans are in place to add several new international MRCs during the next
eighteen months. Each one is a self-contained  outsourcing facility that permits
us to manage  complete  projects  off-site for our  customers.  This  capability
enables our clients to focus their staff and facility on asset-building projects
or to  formulate  a balance  between old tasks and new while  Computer  Horizons
delivers the necessary quality solution.  Although initially designed to provide
Year 2000 renovation services, each facility is equipped to handle virtually any
IT  challenge   presented  by  our  clients.   Projects   include   applications
development,  maintenance of legacy  applications,  production  systems support,
plus a variety of open systems or client/server engagements.

As an adjunct,  each  facility is outfitted  with a  state-of-the-art  technical
environment,  fully staffed with  experienced  delivery,  engagement and project
management  professionals.  These  teams  are  supported  by our  full  array of
proprietary  software and process  methodology.  Additionally,  clients have the
option to house some of their management and staff at our facilities  during the
project lifecycle.
<PAGE>
INTERNATIONAL EXPANSION Computer Horizons' international expansion,  which began
two  years  ago with the  formation  of our  India-based  joint  venture  (Birla
Horizons  International),  has now become  the  springboard  for  globalization.
During 1996, CHC established an international presence with operations in Canada
and the United  Kingdom.  For the first time, our company has personnel based in
international locations serving an international clientele. We also expanded our
Birla Horizons subsidiary in these markets.

From our Toronto-based team, Canadian companies can select from the same menu of
services  available  to  their  United  States  counterparts.  From  our  London
headquarters,  we offer  the  European  community  the  complete  range of total
solutions available to our domestic clients.

Large companies around the world share the same need for quality IT solutions to
solve the  complex  technical  and  business  problems of a  competitive  global
marketplace.  Computer  Horizons is  successfully  transferring  its  knowledge,
skills,  offerings  and  reputation  abroad by  offering  the same high  quality
solutions delivered domestically by Computer Horizons Solutions.

Fueling this expansion are several of our domestic  clients who have selected us
to provide  leadership,  services  and staff for  projects  with  their  foreign
subsidiaries and parent  companies.  From these early efforts and  international
outposts, we are systematically globalizing our company.

INTERNAL  INFRASTRUCTURE  Perhaps the most dramatic and significant "firsts" for
Computer  Horizons have been the investments in, additions to and changes in our
internal infrastructure. Our executive team has been invigorated by the addition
of important new  functions.  Our  Solutions  unit has created new positions and
staffed them with experienced leaders.  These  organizational  enhancements were
necessary to deliver increasingly complex services well into the next century.
<PAGE>
Faced with the challenge of housing  growing  numbers of staff in our facilities
or on large  projects  for  prolonged  periods of time,  a  formalized  and much
strengthened Human Resource  Department has been added. With leadership from the
corporate  level, the Vice President of Human Resources has HR staff assigned to
the  Millennium  Refurbishment  Centers and in our  Solutions  units.  The newly
created Corporate Resource Center commands a globally based corporate recruiting
team deployed to meet the staffing challenges facing our industry.  Tackling the
complex  issues  of  staff  retention,   turnover,   competitive   benefits  and
international staffing, our HR group has already made a significant contribution
to meeting our obligations to all our stakeholders.

Computer Horizons has succeeded in building marketplace awareness and assuming a
position  of  leadership.  Through  a bold  plan that  combined  conference  and
exhibition  participation,  public relations,  new collateral material,  unified
corporate image and capability  presentations,  the recently  created  Corporate
Marketing  Department  has spread the  knowledge of our  successes to a vast new
audience.  Supported by a team of marketing professionals in each business unit,
the Corporate Vice  President of Marketing  keeps our name and reputation in the
general  and  trade  media,  and  before  the  executives  who make  the  buying
decisions.

Within Computer Horizons  Solutions,  we have added delivery  executives charged
with  examining,  closing  and the  eventual  completion  of  complex  technical
projects.  Supported by an equally  talented group of engagement  executives and
project  managers  working  in  concert  with our field  organization,  Computer
Horizons is now routinely  engaged in larger and larger  projects that were once
out of our reach. Our software development team has been able to turn the vision
of our solutions  executives into new software  tools.  Each innovative tool has
been  conceived  and  created  by our team of  industry  professionals.  Working
together,  our  solutions  professionals  have  created the  project  management
process and  methodology  used  internally and which are now sought after in the
marketplace.  Their  successes have added to the reputation and  capabilities of
Computer Horizons.
<PAGE>
OUR  FIRSTS  ARE  DIFFERENTIATORS  FOR THE  FUTURE  The same  determination  and
creativity   that  existed  for  the  past  27  years  will  continue  to  forge
opportunities and successes for Computer  Horizons.  The creative talents of our
people have energized our company. Many of our recent achievements can be traced
to the skillful  blending of our tenured staff with the many  newcomers who have
joined our ranks.

Our  innovative  tools  and  approaches  for  solving  the  complex  needs  of a
competitive  market have brought us many new customers.  Teams are spreading out
within this new client base to establish lasting  relationships.  Our philosophy
of  establishing a partnership  type  relationship  with each of our clients has
rewarded Computer Horizons with a loyal following.

Our people's ability to recognize the future needs of the business community and
translate  them into new  offerings is a key  component to future  growth.  With
leadership  from the  executive  core,  we will  continue  to develop new tools,
improved  methodologies  and  processes.  We will reach out and  attract  future
leaders to join us. We will  continue to challenge  our people to reach into new
markets with solutions  superior to those of our competitors.  Computer Horizons
will continue to distinguish itself with differentiating  "firsts" well into the
future.
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries

SELECTED FINANCIAL DATA

                                                         Year Ended December 31,
                                      1996          1995          1994          1993          1992
------------------------------------------------------------------------------------------------------
                                              (dollars in thousands, except per share data)
<S>                                <C>          <C>            <C>           <C>          <C>
Summary Income Statements
Revenues                             $233,858     $200,050       $152,192      $121,550     $102,206
  Direct costs                        163,272      140,344        108,189        87,800       74,200
  Selling, general and
    administrative                     52,146       42,131         32,992        26,256       23,536
Income from operations                 18,440       17,575         11,011         7,494        4,470
  Interest expense--net                  (163)        (365)          (638)         (584)        (578)
  Equity in net earnings of
    joint venture                         885          361
Income before income taxes             19,162       17,571         10,373         6,910        3,892
   Income taxes                         7,930        7,664          4,687         3,206        1,866
------------------------------------------------------------------------------------------------------

Net Income                           $ 11,232      $ 9,907        $ 5,686       $ 3,704      $ 2,026
======================================================================================================

Earnings per share
  Primary                                $.66         $.64           $.40          $.25         $.15
======================================================================================================

Weighted average number of
  shares outstanding
  Primary                          16,974,000   15,576,000     14,258,000    14,994,000   13,624,000
======================================================================================================

<PAGE>

<CAPTION>
Computer
Horizons Corp. and
Subsidiaries

SELECTED FINANCIAL DATA (continued)

                                                         Year Ended December 31,
                                       1996          1995          1994          1993          1992
------------------------------------------------------------------------------------------------------
                                              (dollars in thousands, except per share data)
<S>                                  <C>          <C>            <C>           <C>          <C>
Analysis (%)
Revenues                                100.0%       100.0%         100.0%        100.0%       100.0%
  Gross margin                           30.2%        29.8%          28.9%         27.8%        27.4%
  Selling, general and
    administrative                       22.3%        21.1%          21.7%         21.6%        23.0%
Income from operations                    7.9%         8.8%           7.2%          6.2%         4.4%
  Interest expense--net                   -0.1%        -0.2%          -0.4%         -0.5%        -0.6%
  Equity in net earnings of
    joint venture                         0.4%         0.2%
Income before income taxes                8.2%         8.8%           6.8%          5.7%         3.8%
  Income taxes                            3.4%         3.8%           3.1%          2.6%         1.8%

Net Income                                4.8%         5.0%           3.7%          3.0%         2.0%

Revenue growth YOY                       16.9%        31.4%          25.2%         18.9%         8.1%
Net income growth YOY                    13.4%        74.2%          53.5%         82.8%       -10.6%
Return on equity, average                18.3%        23.5%          20.5%         14.1%         8.3%
Effective tax rate                       41.4%        43.6%          45.2%         46.4%        47.9%

At year-end
Total assets                         $ 88,412     $ 76,037       $ 49,150      $ 40,600     $ 41,249
Working capital                        50,562       39,224         20,484        17,531       20,317
Long-term debt                          1,432        3,299          4,288         5,843        7,144
Shareholders' equity                   68,814       54,267         29,917        25,689       26,856

Stock price                            $38.50       $25.33          $6.00         $3.48        $1.96
P/E multiple                               58           39             15            14           13

Employees*                              2,916        2,511          2,150         1,603        1,414
Clients (during year)*                    453          462            455           458          402
Offices (worldwide)                        43           39             33            30           29
======================================================================================================
*Does not include Birla Horizons International.
</TABLE>
<PAGE>
Computer
Horizons Corp. and
Subsidiaries

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS


Results of Operations

The following table sets forth (i) certain income and expense items expressed as
a percentage of the Company's  consolidated  revenues and (ii) the percentage of
dollar increase in the amount of such items in 1996 compared to 1995:
<TABLE>
<CAPTION>
                                                                                             Percentage
                                                                                             of Dollar
                                                         Year Ended December 31,              Increase
-------------------------------------------------------------------------------------------------------
                                                    1996         1995          1994           1996/1995
------------------------------------------------------------------------------------------------------- 
<S>                                                <C>          <C>           <C>              <C> 
Revenues                                           100.0%       100.0%        100.0%            16.9%
Direct costs                                        69.8%        70.2%         71.1%            16.3%
Selling, general and administrative                 22.3%        21.1%         21.7%            23.8%
Income from operations                               7.9%         8.8%          7.2%             4.9%
Interest expense--net                                -0.1%        -0.2%         -0.4%           -55.3%
Equity in net earnings of joint venture              0.4%         0.2%                         145.2%
Income before income taxes                           8.2%         8.8%          6.8%             9.1%
Income taxes                                         3.4%         3.8%          3.1%             3.5%
Net income                                           4.8%         5.0%          3.7%            13.4%
</TABLE>

Revenues

Consolidated  revenues in 1996  increased by 17%  compared to 1995,  and in 1995
consolidated  revenues  increased  by 31%  compared to 1994.  In dollars,  these
amounts  were  $233.9,  $200.1  and  $152.2  million  in 1996,  1995  and  1994,
respectively.  The  increase  in 1996 was  primarily  the  result  of  increased
staffing business ($171.1 million compared to $140.6 million in 1995), which was
partially offset by the decline in solutions  revenues.  1996 solutions revenues
were  negatively  impacted by the  unexpected  termination by one large customer
during the second  quarter of 1996,  which had the effect of reducing  solutions
revenues by  approximately  $6.0 million when compared to 1995.  The increase in
1995  revenues was  attributable  to increased  solutions  business and improved
pricing applicable thereto.

The Company's core staffing business has increased by 22% in 1996 as compared to
1995. The solutions business, impacted by the above mentioned early termination,
declined by 11%, while the Year 2000 services  revenues,  virtually nil in 1995,
exceeded $10 million in 1996.

Direct Costs

Direct costs, as a percentage of consolidated  revenues,  were 69.8%,  70.2% and
71.1%  in 1996,  1995 and  1994,  respectively.  The  Company  is  committed  to
maintaining and improving  gross margins through cost  containment and providing
more value-added  services.  In general,  gross margins are better for Year 2000
business and solutions than for staffing.
<PAGE>
Selling, General and Administrative

Selling,  general and administrative  expenses,  as a percentage of consolidated
revenues, were 22.3%, 21.1% and 21.7% in 1996, 1995 and 1994,  respectively.  In
dollars,  these amounts were $52.1, $42.1 and $33.0 million,  respectively,  for
those  years.  The  increase  in  these  expenses  in  1996 is  almost  entirely
attributable  to  the  investments  associated  with  the  Company's  Year  2000
strategy;  investments in engagement and technical  managers and  infrastructure
necessary  to pursue  large,  high profile  opportunities,  as well as marketing
expenses  incurred to raise the Company's  visibility  through public relations,
trade shows and conferences.
<PAGE>
Profitability

Consolidated income from operations was $18.4 million in 1996, compared to $17.6
million  in 1995 and $11.0  million in 1994.  As a  percentage  of  consolidated
revenues, income from operations was 7.9%, 8.8% and 7.2% in 1996, 1995 and 1994,
respectively.  The dollar  gains are  attributable  to  increased  revenues  and
improved gross margins,  offset by the impact of the unexpected termination of a
large  contract  in the second  quarter  of 1996 and the  increase  in  selling,
general  and  administrative   expenses  in  1996.  The  Company's  business  is
labor-intensive  and,  as  such,  is  sensitive  to  inflationary  trends.  This
sensitivity applies to client billing rates, as well as to payroll costs.

In 1996,  Other Income  exceeded $700  thousand,  compared to nil in 1995 and an
expense of over $600 thousand in 1994. This area has been favorably  impacted by
reduced interest expense due to the June 1995 public offering, as well as by the
increased earnings of the Company's international joint venture--Birla Horizons.

Consolidated net income for 1996 was $11.2 million, or $.66 per share,  compared
with $9.9 million, or $.64 per share in 1995 and $5.7 million, or $.40 per share
in 1994.  The Company's  effective tax rate for Federal,  state and local income
taxes was 41.4%,  43.6% and 45.2% for 1996, 1995 and 1994,  respectively.  After
accounting  for  non-tax  benefited  charges  and  credits,   such  as  goodwill
amortization and certain travel and entertainment deduction limitations, and the
undistributed  earnings of Birla Horizons,  as well as taking into consideration
the states in which business has been conducted,  the Company's  income tax rate
approximated 41% in 1996 and 42% in 1995 and 1994.

Liquidity and Capital Resources

At December 31,  1996,  the Company had a current  ratio of 4.0 to 1,  including
cash and cash  equivalents  of $10.9  million,  and had available  bank lines of
credit of $25.0 million.  There were no borrowings  under the Company's lines of
credit  during 1996. In 1995,  The Company had a maximum  amount of $7.2 million
outstanding  under its lines of  credit  which was  repaid in June 1995 with the
cash proceeds of $13.3  million from the sale of 1,710,000  shares of its common
stock in a public offering.  During 1995, the average  outstanding  amount under
the Company's lines of credit was $1.7 million and the weighted average interest
rate approximated 7%.

The Company's long-term debt consists of notes issued to financial  institutions
in the  outstanding  principal  amount of $2.9  million as of December 31, 1996,
payable in  installments  of $1.4  million on April 15,  1997 and 1998,  bearing
interest  at the rate of 9.55% per annum;  and notes  issued to the four  former
shareholders  of Unified  Systems  Solutions in the  outstanding  amount of $0.4
million, payable on April 1, 1997, with 8.75% imputed interest.

The Company  believes that its cash,  lines of credit and  internally  generated
funds will be sufficient to meet its working capital needs through 1997.

In 1996, the Company acquired $1.4 million of capital assets. Although there are
no  material,  firm  commitments  for  capital  spending  in 1997,  the  Company
anticipates a spending level in line with that of 1996.
<PAGE>


AUDITORS' REPORT


Report of             [GRAPHIC-Logo]
Independent
Certified Public
Accountants



Board of Directors and Shareholders
Computer Horizons Corp.


We have  audited  the  accompanying  consolidated  balance  sheets  of  Computer
Horizons  Corp.  and  Subsidiaries  as of December  31,  1996 and 1995,  and the
related consolidated  statements of income,  shareholders' equity and cash flows
for each of the  three  years in the  period  ended  December  31,  1996.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of Computer Horizons
Corp.  and  Subsidiaries  as of December 31, 1996 and 1995 and the  consolidated
results of their  operations and their  consolidated  cash flows for each of the
three years in the period ended December 31, 1996, in conformity  with generally
accepted accounting principles.





/s/GRANT THORNTON LLP
---------------------
GRANT THORNTON LLP


Parsippany, New Jersey
January 27, 1997
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

                                                                     Year Ended December 31,
                                                             1996              1995             1994
-------------------------------------------------------------------------------------------------------
                                                             (in thousands, except per share data)
<S>                                                       <C>              <C>              <C>
Revenues (Notes 1 and 9)                                    $233,858         $200,050         $152,192
-------------------------------------------------------------------------------------------------------
Costs and expenses:
  Direct costs                                               163,272          140,344          108,189
  Selling, general and administrative                         52,146           42,131           32,992
-------------------------------------------------------------------------------------------------------
                                                             215,418          182,475          141,181
-------------------------------------------------------------------------------------------------------
Income from operations                                        18,440           17,575           11,011
-------------------------------------------------------------------------------------------------------
Other income (expense):
  Interest income                                                307              266               53
  Interest expense                                              (470)            (631)            (691)
  Equity in net earnings of joint venture (Note 3)               885              361
-------------------------------------------------------------------------------------------------------
                                                                 722               (4)            (638)
-------------------------------------------------------------------------------------------------------
Income before income taxes                                    19,162           17,571           10,373
-------------------------------------------------------------------------------------------------------
Income taxes (Notes 1 and 6):
  Current                                                      8,292            8,138            5,044
  Deferred                                                      (362)            (474)            (357)
-------------------------------------------------------------------------------------------------------
                                                               7,930            7,664            4,687
-------------------------------------------------------------------------------------------------------
Net Income                                                  $ 11,232          $ 9,907          $ 5,686
=======================================================================================================

Earnings per share                                              $.66             $.64             $.40
=======================================================================================================

Weighted average number of shares outstanding             16,974,000       15,576,000       14,258,000
=======================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries

CONSOLIDATED BALANCE SHEETS

                                                                                                             December 31,
                                                                                                          1996          1995
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            (in thousands)
<S>                     <C>                                                                              <C>           <C>
Assets                  Current assets:
                           Cash and cash equivalents                                                     $10,937       $ 9,166
                           Accounts receivable, net of allowance for doubtful
                             accounts of $1,203,000 and $840,000 at December 31, 1996
                             and 1995, respectively                                                       54,280        44,729
                           Deferred income tax benefit (Note 6)                                            1,024         1,122
                           Other                                                                             962         1,618
------------------------------------------------------------------------------------------------------------------------------------
                                 Total current assets                                                     67,203        56,635
------------------------------------------------------------------------------------------------------------------------------------








                        Property and equipment:
                           Furniture, equipment and other                                                  9,449         7,454
                           Less accumulated depreciation                                                   5,228         4,031
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           4,221         3,423
------------------------------------------------------------------------------------------------------------------------------------








                        Other assets - net:
                           Goodwill (Note 1)                                                              13,322        13,526
                           Deferred income tax benefit (Note 6)                                              583           123
                           Other (Note 3)                                                                  3,083         2,330
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          16,988        15,979
------------------------------------------------------------------------------------------------------------------------------------
                                 Total Assets                                                            $88,412       $76,037
====================================================================================================================================
                     
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                                                                              December 31,
                                                                                                          1996          1995
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            (in thousands)
<S>                     <C>                                                                              <C>           <C>
Liabilities and         Current liabilities:
Shareholders'              Current portion of long-term debt (Note 4)                                    $ 1,867       $ 2,385
Equity                     Accrued payroll, payroll taxes and benefits                                    11,963        10,359
                           Accounts payable                                                                1,122         1,746
                           Income taxes payable                                                              940         1,535
                           Other accrued expenses                                                            749         1,386
------------------------------------------------------------------------------------------------------------------------------------
                                 Total current liabilities                                                16,641        17,411
------------------------------------------------------------------------------------------------------------------------------------
                        Long-term debt (Note 4)                                                            1,432         3,299
------------------------------------------------------------------------------------------------------------------------------------
                        Other liabilities (Note 7)                                                         1,525         1,060
------------------------------------------------------------------------------------------------------------------------------------
                        Commitments (Note 8)
------------------------------------------------------------------------------------------------------------------------------------





                        Shareholders' equity:
                           Preferred stock,  $.10 par;  authorized and unissued,
                             200,000 shares, including 50,000 Series A
                           Common stock, $.10 par; authorized, 30,000,000
                             shares; issued 17,874,536 shares and 17,407,514
                             shares at December 31, 1996 and 1995, respectively                            1,787         1,741
                           Additional paid-in capital                                                     30,685        27,416
                           Retained earnings                                                              50,990        39,758
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          83,462        68,915
                           Less shares held in treasury, at cost; 1,786,883 shares
                             at December 31, 1996 and 1995                                                14,648        14,648
------------------------------------------------------------------------------------------------------------------------------------
                                 Total shareholders' equity                                               68,814        54,267
------------------------------------------------------------------------------------------------------------------------------------
                                 Total Liabilities and Shareholders' Equity                              $88,412       $76,037
====================================================================================================================================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries


CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                                                    Additional                                          Notes
                                                 Common stock         paid-in    Retained       Treasury stock       receivable,
                                              Shares       Amount     capital    earnings      Shares      Amount     officers
------------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1996, 1995 and 1994                              (dollars in thousands)
<S>                                          <C>           <C>        <C>         <C>         <C>           <C>         <C>
 Balance, January 1, 1994                     5,366,272      $ 537    $12,155     $24,165     1,437,278     $10,539     $ 629
   Three-for-two stock split declared
     February 1994                            1,964,497        196       (196)
   Stock options exercised                      408,807         41      1,981
   Purchases of treasury stock                                                                  349,605       4,109
   Repayment of notes receivable, officers                                                                               (629)
   Net income for the year                                                          5,686
------------------------------------------------------------------------------------------------------------------------------------
 Balance, December 31, 1994                   7,739,576        774     13,940      29,851     1,786,883      14,648        --
   Three-for-two stock split declared:
     April 1995                               3,002,998        300       (300)
     December 1995                            5,206,877        521       (521)
   Stock options exercised                      318,063         32      1,138
   Sale of common  stock,
     net of expenses                          1,140,000        114     13,159
   Net income for the year                                                          9,907
------------------------------------------------------------------------------------------------------------------------------------
 Balance, December 31, 1995                  17,407,514      1,741     27,416      39,758     1,786,883      14,648        --
   Stock options exercised                      467,022         46      1,680
   Tax benefits related to
     stock option plans                                                 1,589
   Net income for the year                                                         11,232
------------------------------------------------------------------------------------------------------------------------------------
 Balance, December 31, 1996                  17,874,536     $1,787    $30,685     $50,990     1,786,883     $14,648      $ --
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                         Year Ended December 31,
                                                                     1996            1995        1994
--------------------------------------------------------------------------------------------------------
                                                                             (in thousands)
<S>                                                                <C>           <C>           <C>
Cash flows from operating activities
   Net income                                                      $11,232       $  9,907      $ 5,686
   Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Deferred taxes                                                 (362)          (474)        (357)
       Depreciation                                                  1,192            683          754
       Amortization of intangibles                                     587            505          568
   Changes in assets and liabilities, net of acquisitions:
     Accounts receivable                                            (9,551)       (14,093)      (9,770)
     Other current assets                                                9           (510)        (433)
     Accrued payroll, payroll taxes and benefits                     1,604          3,054        1,287
     Accounts payable                                                 (624)         1,186          273
     Income taxes payable                                              994            655          705
     Accrued expenses                                                 (637)           578           11
     Other liabilities                                                 465            424          341
--------------------------------------------------------------------------------------------------------
         Net cash provided by (used in) operating activities         4,909          1,915         (935)
--------------------------------------------------------------------------------------------------------
Cash flows from investing activities
   Purchases of furniture and equipment                             (1,364)        (1,471)      (1,353)
   Acquisitions                                                       (363)        (2,966)        (245)
   Change in other assets                                             (753)        (1,673)         254
   Loans to officers, net                                                                          629
--------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                      (2,480)        (6,110)        (715)
--------------------------------------------------------------------------------------------------------
Cash flows from financing activities
   Notes payable - banks, net                                                      (3,200)       3,200  
   Long-term debt, net                                              (2,385)          (160)      (1,555)
   Stock options exercised                                           1,727          1,170        2,022
   Proceeds from issuance of stock                                                 13,273
   Purchases of treasury stock                                                                  (4,109)
--------------------------------------------------------------------------------------------------------
         Net cash (used in) provided by financing activities          (658)        11,083         (442)
--------------------------------------------------------------------------------------------------------
         Net increase (decrease) in cash and cash equivalents        1,771          6,888       (2,092)
Cash and cash equivalents at beginning of year                       9,166          2,278        4,370
--------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                           $10,937       $  9,166      $ 2,278
========================================================================================================
Cash paid during the year for:
   Interest                                                         $  433          $ 597        $ 713
   Income taxes                                                      7,112          6,514        4,269
========================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Computer
Horizons Corp. and
Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1                  December 31, 1996, 1995 and 1994
Summary of
Significant             Description of Business
Accounting              The  Company   provides  a  wide  range  of  information
                        technology services and solutions to major corporations.
                        In  addition  to  professional  services  staffing,  the
                        Company has developed the  technological  and managerial
                        infrastructure to offer its clients Year 2000 conversion
                        services,   as  well  as  other   value-added   services
                        including    client/server   systems   development   and
                        migration,   network   and   facility   management   and
                        administration,    systems    and    business    process
                        re-engineering and outsourcing solutions.


                        Principles of Consolidation

                        The  consolidated   financial   statements  include  the
                        accounts of Computer Horizons Corp. and its wholly-owned
                        subsidiaries (the "Company").  The Company's  investment
                        in a joint  venture  (Note 3) is accounted for under the
                        equity method of accounting.  All material  intercompany
                        accounts and transactions have been eliminated.


                        Revenue Recognition

                        The Company recognizes revenues as professional services
                        are  performed.  On fixed fee  engagements,  revenue and
                        gross profit  adjustments are made to reflect  revisions
                        in estimated total costs and contract values.  Estimated
                        losses are recorded when identified.


                        Recruitment Costs

                        Recruitment costs are charged to operations as incurred.
<PAGE>
                        Cash and Cash Equivalents

                        Cash and cash  equivalents  include  all  highly  liquid
                        instruments  with a maturity of three  months or less at
                        the time of  purchase  and consist of the  following  at
                        December 31:
<TABLE>
<CAPTION>
                                                              1996         1995
-------------------------------------------------------------------------------- 
                                                               (in thousands)
<S>                                                         <C>           <C>
                        Cash                                $   997       $2,017
                        Money market funds                    5,926        3,549
                        Demand obligations                    2,767        1,500
                        Commercial paper                      1,247
                        Repurchase agreements                              2,100
-------------------------------------------------------------------------------- 
                                                            $10,937       $9,166
================================================================================ 
</TABLE>
                        Concentrations of Credit Risk

                        Financial  instruments,  which  potentially  subject the
                        Company to concentrations of credit risk,  regardless of
                        the degree of such risk, consist principally of cash and
                        cash  equivalents  and trade  accounts  receivable.  The
                        Company invests the majority of its excess cash in money
                        market funds, demand  obligations,  commercial paper and
                        repurchase   agreements  of  high-credit,   high-quality
                        financial   institutions  or  companies,   with  certain
                        limitations as to the amount that can be invested in any
                        one entity.

                        The Company  maintains its cash balances  principally in
                        two financial  institutions  located in New York and New
                        Jersey.  These  balances  are  insured  by  the  Federal
                        Deposit  Insurance  Corporation  up to $100,000 for each
                        entity  at  each  institution.  At  December  31,  1996,
                        uninsured  amounts held at these financial  institutions
                        total approximately $2,306,000.

                        The  Company's   customers  are  generally  very  large,
                        Fortune 500 companies in many  industries  and with wide
                        geographic  dispersion.  The Company's  largest customer
                        accounts for approximately 12% of accounts receivable at
                        December 31, 1996. The Company  establishes an allowance
                        for doubtful accounts based upon factors surrounding the
                        credit risk of specific  customers,  historical  trends,
                        and other information.
<PAGE>
                        Fair Value of Financial Instruments

                        The carrying value of financial instruments (principally
                        consisting  of  cash  and  cash  equivalents,   accounts
                        receivable and payable and long-term debt)  approximates
                        fair  value  because of the short  maturities  or, as to
                        long-term  debt,  the  rates  currently  offered  to the
                        Company.


                        Property and Equipment and Depreciation

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


                        Goodwill

                        Goodwill,  the  cost  in  excess  of the net  assets  of
                        acquired   businesses,   is  being   amortized   by  the
                        straight-line  method,   primarily  over  thirty  years.
                        Accumulated amortization is $3,921,000 and $3,333,000 at
                        December 31, 1996 and 1995, respectively.  On an ongoing
                        basis, management reviews the valuation and amortization
                        of  goodwill.  As  part  of  this  review,  the  Company
                        estimates  the  value  and  future  benefits  of  income
                        generated, to determine that no impairment has occurred.


                        Income Taxes

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

                        Tax  benefits  from  early  disposition  of the stock by
                        optionees   under   incentive  stock  options  and  from
                        exercise  of  non-qualified   options  are  credited  to
                        additional paid-in capital.

                        The Company intends to permanently reinvest the earnings
                        from  its   foreign   corporate   joint   venture   and,
                        accordingly,  is not  providing  deferred  taxes  on its
                        share of undistributed earnings.


                        Earnings Per Share

                        Earnings  per share are  based on the  weighted  average
                        number   of  common   and   common   equivalent   shares
                        outstanding.  The  calculation  takes into  account  the
                        shares  that  may  be  issued  upon  exercise  of  stock
                        options,  reduced by the shares that may be  repurchased
                        with the funds received from the exercise,  based on the
                        average price during the year.
<PAGE>
                        Use of Estimates in Financial Statements

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


                        Reclassifications

                        Certain  amounts in the 1995 financial  statements  were
                        reclassified   to   conform   to  the   current   year's
                        presentation.


                        New Accounting Pronouncements

                        SFAS  No.  121,   "Accounting   for  the  Impairment  of
                        Long-Lived  Assets  and  for  Long-Lived  Assets  to  Be
                        Disposed  Of,"   implemented  in  1996,   requires  that
                        long-lived assets and certain  identifiable  intangibles
                        held and used by the entity be reviewed  for  impairment
                        whenever  events or  changes in  circumstances  indicate
                        that  the  carrying  amount  of  an  asset  may  not  be
                        recoverable.  If the  sum of the  expected  future  cash
                        flows  (undiscounted  and without interest) is less than
                        the carrying  amount of the asset, an impairment loss is
                        recognized.  Measurement  of that loss would be based on
                        the fair  value  of the  asset.  Implementation  of this
                        statement  has had no material  effect on the  Company's
                        financial position.
<PAGE>
                        SFAS No. 123, "Accounting for Stock-Based  Compensation"
                        ("SFAS No.  123"),  implemented  in 1996,  introduces  a
                        choice of the method of accounting  used for stock-based
                        compensation.  Entities  may use the  "intrinsic  value"
                        method currently based on APB No. 25 or the "fair value"
                        method   contained   in  SFAS  No.   123.   The  Company
                        implemented  SFAS  No.  123 in  1996  by  continuing  to
                        measure  stock-based  compensation  under APB No. 25. As
                        required by SFAS No. 123,  the pro forma  effects on net
                        income and earnings per share have been determined as if
                        the fair value  based  method had been  applied  and are
                        disclosed  in Note 5 of the  notes  to the  consolidated
                        financial statements.




                        
--------------------------------------------------------------------------------
Note 2                  In June 1994,  the  Company  acquired  the net assets of
Acquisitions            Strategic  Outsourcing  Services,  Inc.  ("SOS"),  a New
                        Jersey-based  provider of data processing services,  for
                        approximately  $250,000.  The acquisition agreement also
                        provides  for  contingent  consideration  based  on  the
                        future performance of SOS, through 1998. The acquisition
                        was accounted for as a purchase.  In 1996 and 1995,  the
                        Company  recorded  contingent  consideration,   totaling
                        approximately   $137,000  and  $202,000,  as  additional
                        goodwill,   with  certain   additional  amounts  payable
                        subject   to  future   performance.   These   contingent
                        consideration   payments  are  not  dependent  upon  the
                        continued employment of the former shareholder.

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

                        In January 1993, the Company  acquired  Unified  Systems
                        Solutions,  Inc. ("USS"), a New Jersey-based provider of
                        systems   and   network   integration   services,    for
                        approximately  $750,000.  The acquisition agreement also
                        provides  for  contingent  consideration  based  on  the
                        future  performance of USS through 1996. The acquisition
                        was accounted for as a purchase. The excess of cash over
                        the   fair   value   of   assets   acquired,    totaling
                        approximately  $509,000,  was  recorded  as  goodwill in
                        1994. In 1995 and 1994, the Company recorded  contingent
                        consideration,   totaling   approximately  $390,000  and
                        $245,000,  as  additional  goodwill.   These  contingent
                        consideration   payments  are  not  dependent  upon  the
                        continued employment of the former shareholders. Also in
                        1995,  the Company  entered into an  agreement  with the
                        former   shareholders   of  USS  to  pay   approximately
                        $2,396,000,  plus interest,  in lieu of any amounts that
                        may have been due for the  remaining  contingent  period
                        ending March 31, 1996.  The $2,396,000 was also recorded
                        as goodwill in 1995.
<PAGE>
--------------------------------------------------------------------------------
Note 3                  In 1995, the Company entered into a software development
Investment in           and services joint venture with the Birla Group, a large
Joint Venture           multinational conglomerate located in India. The foreign
                        joint  venture,  known as Birla  Horizons  International
                        ("BHI"),  is  headquartered  in  New  Delhi,  India  and
                        currently has  operations in India,  the United  States,
                        the United Kingdom and Canada.

                        The   Company   and  the  Birla  Group  each  made  cash
                        contributions  of  $500,000  and  each  received  a  50%
                        interest in the joint venture.  The Birla Group has also
                        contributed   the  net  assets  of  its  then   existing
                        information  technology company to the joint venture and
                        the Company is providing  technological  and  management
                        support.

                        The Company's total  investment in BHI is $1,746,000 and
                        $861,000  at December  31, 1996 and 1995,  respectively,
                        representing   the  initial  cost  plus  equity  in  the
                        undistributed  net  earnings  since  formation,  and  is
                        included in other non-current assets.




--------------------------------------------------------------------------------
Note 4                  Long-term debt consists of the following at December 31:
Long-Term Debt        
and Lines of Credit
<TABLE>
<CAPTION>
                                                               1996         1995
--------------------------------------------------------------------------------
                                                                (in thousands)
<S>                                                          <C>          <C>
 
                        9.55% senior notes                   $2,860       $4,288
                        Notes payable at prime                  439        1,396
--------------------------------------------------------------------------------
                                                              3,299        5,684
                        Less current maturities               1,867        2,385
--------------------------------------------------------------------------------
                                                             $1,432       $3,299
================================================================================
</TABLE>
<PAGE>
                        In 1988, the Company issued two senior notes aggregating
                        $10,000,000   bearing   interest   at   9.55%,   payable
                        semiannually.   The   notes   are   payable   in  annual
                        installments  of $1,428,000  from April 15, 1992 through
                        1997 with a final  payment of  $1,432,000  due April 15,
                        1998,  and are  subject  to the  provisions  of the loan
                        agreement,  including, among other things,  restrictions
                        on  additional  borrowings,  prepayments,  dividends and
                        stock  purchases  (which were waived in connection  with
                        certain purchases of treasury stock), and maintenance of
                        a minimum net worth of $13,500,000.

                        The notes  payable  consist of notes to the four  former
                        shareholders  of USS. In 1995,  an agreement  was signed
                        (Note 2) resulting  in $957,000  being due in April 1996
                        and $439,000 in April 1997, with 8.75% imputed interest.

                        Long-term  debt matures as follows:  $1,867,000  in 1997
                        and $1,432,000 in 1998.

                        At December  31,  1996,  the Company has two unused bank
                        lines of credit totaling  $25,000,000 at rates below the
                        banks' prime lending rates. During 1996, the Company had
                        no borrowings against either line.




--------------------------------------------------------------------------------
Note 5                  Authorized Shares

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


                        Stock Splits

                        The  Board of  Directors  of the  Company  has  declared
                        three-for-two  common  stock  splits  in the form of 50%
                        stock distributions as follows:
<TABLE>
<CAPTION>
                                                     Shareholder of
                           Date declared               record date             Date payable
-------------------------------------------------------------------------------------------- 
<S>                                                <C>                       <C>     
                        December 12, 1995          December 22, 1995         January 9, 1996
                        April 24, 1995             May 9, 1995               May 30, 1995
                        February 17, 1994          March 1, 1994             March 22, 1994
</TABLE>
                        Amounts equal to the $.10 par value of the common shares
                        distributed  have been  retroactively  transferred  from
                        additional   paid-in   capital  to  common  stock.   All
                        references  in the financial  statements  with regard to
                        number of shares of common  stock,  common  stock prices
                        and per share  amounts have been restated to reflect the
                        above-mentioned stock splits.
<PAGE>
                        Repurchases of Stock

                        In 1994, the Company  repurchased  350,000 shares of its
                        common  stock from three  officers  of the  Company  for
                        approximately  $4,109,000.  The  repurchase  of  240,000
                        shares for  $2,792,000  was related to the retirement of
                        the Vice Chairman and Executive Vice President (Note 8).
                        The  remaining   110,000  shares  were  repurchased  for
                        $1,317,000 from two other active officers. Approximately
                        $824,000  of the  repurchase  amount  was  used by these
                        officers  to  repay   amounts  they  owed  the  Company,
                        $629,000  in note  repayments  and  $195,000  in accrued
                        interest.


                        Stock Options and SFAS No. 123 Pro Forma Disclosure

                        In 1994,  the Company  adopted a stock option plan which
                        provides   for  the   granting,   to  officers  and  key
                        employees,  of options for the  purchase of a maximum of
                        5,063,000 shares of common stock and stock  appreciation
                        rights (SARs).  Options and SARs  generally  expire five
                        years from the date of grant and become  exercisable  in
                        specified  amounts  during  the  life of the  respective
                        options.  No SARs have been  granted as of December  31,
                        1996. This plan, which replaces the Company's 1985 Plan,
                        will  terminate on June 15, 2004.  There were  3,915,000
                        shares available for option at December 31, 1996.
<PAGE>
                        In  1994,   the  Company   amended   the   non-qualified
                        Directors'  Stock  Option  Plan  increasing  the maximum
                        number of shares of common  stock  that may be  acquired
                        pursuant to the  exercise of options  granted  under the
                        plan from 253,000 to 563,000,  and  providing  that each
                        new  director  of the  Company who is not an employee of
                        the Company  (i) shall  immediately  receive  options to
                        purchase  50,625  shares  of its  common  stock and (ii)
                        shall receive up to five annual grants to purchase 6,750
                        shares of its common stock. The plan expires on March 4,
                        2001.  There were 121,300 shares available for option at
                        December 31, 1996.

                        The exercise  price per share on all options and/or SARs
                        granted  may not be less than the fair value at the date
                        of the option grant.  Accordingly,  no compensation cost
                        has been recognized for the plans. Had compensation cost
                        for the plans been determined based on the fair value of
                        the  options  at the  grant  dates  consistent  with the
                        method of SFAS No.  123,  the  Company's  net income and
                        earnings  per share  would have been  reduced to the pro
                        forma amounts indicated below:
<TABLE>
<CAPTION>
                                                                             1996                1995
-------------------------------------------------------------------------------------------------------- 
<S>                                                <C>                   <C>                  <C>
                        Net income                 As reported           $11,232,000          $9,907,000
                                                   Pro forma               8,037,000           8,962,000
                        Earnings per share         As reported                  $.66                $.64
                                                   Pro forma                     .47                 .58
</TABLE>       
                        The fair value of each option  grant is estimated on the
                        date of grant  using the  Black-Scholes  options-pricing
                        model with the following  weighted  average  assumptions
                        used for grants in 1996 and 1995, respectively: expected
                        volatility of 97% and 70%;  risk-free  interest rates of
                        6.28%  and  6.27%;  and  expected  lives  of 4.9 and 4.5
                        years.
<PAGE>
                        A summary of the status of the  Company's  stock  option
                        plans  as of  December  31,  1996,  1995 and  1994,  and
                        changes  during  the  years  ending  on  those  dates is
                        presented below:
<TABLE>
<CAPTION>
                                                                           1996                1995                1994
-------------------------------------------------------------------------------------------------------------------------------
                                                                              Weighted             Weighted            Weighted
                                                                               average              average             average
                                                                              exercise            exercise            exercise
                                                                     Shares     price     Shares     price    Shares     price
-------------------------------------------------------------------------------------------------------------------------------
                                                                      (000)                (000)               (000)
<S>                                                                   <C>        <C>       <C>       <C>      <C>       <C>
                        Outstanding--January 1                        1,476      $ 5.53    1,471     $ 3.05   1,876     $1.94
                        Granted                                         558       22.98      525       9.01     515      5.33
                        Exercised                                      (452)       3.74     (517)      1.94    (920)     1.87
                        Canceled/forfeited                             (168)      26.93       (3)     10.17
-------------------------------------------------------------------------------------------------------------------------------
                        Outstanding--December 31                      1,414      $10.45    1,476     $ 5.53   1,471     $3.05
===============================================================================================================================

                        Options exercisable--December 31                509      $ 7.41      666     $ 3.63     772     $2.36
===============================================================================================================================

                        Weighted average fair value of
                          options granted during the year                        $17.47              $ 5.46             $3.25
</TABLE>

                        The following information applies to options outstanding
                        at December 31, 1996:
<TABLE>
<CAPTION>
                                                          Options outstanding                      Options exercisable
------------------------------------------------------------------------------------------------------------------------------
                                                            Weighted average    Weighted        Exercisable        Weighted
                        Range of          Outstanding as of    remaining        average           as of            average
                        exercise prices   December 31, 1996 contractual life exercise price  December 31, 1996  exercise price
------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>            <C>               <C>              <C>
                                               (000)                                              (000)

                        $ 0.00-$ 4.99           366              6.3            $ 2.94             306             $ 3.02
                          5.00-  9.99           381              6.6              6.22              96               6.55
                         10.00- 14.99           266              5.1             11.09              12              13.50
                         15.00- 19.99           212              5.7             18.18
                         20.00- 24.99            81              9.0             21.00              81              21.00
                         25.00- 29.99           108              6.3             25.99              14              25.33
------------------------------------------------------------------------------------------------------------------------------
                                              1,414              6.2            $10.45             509             $ 7.41
==============================================================================================================================
</TABLE>
<PAGE>
                        Certain  officers  have  the  right to  borrow  from the
                        Company against the exercise price of options exercised.
                        Such  borrowings  were repaid in 1994 in connection with
                        the repurchase of common stock from these officers.

                        The  Company has issued  warrants to purchase  shares of
                        its   common   stock  to  two   outside   business/legal
                        consulting  firms.  Warrants for 20,000 and 6,750 shares
                        were  granted,  respectively,  in  1996  and  1995.  The
                        exercise price is the fair value at the date of grant.


                        Shareholder Rights Plan

                        In July 1989, the Board of Directors declared a dividend
                        distribution  of .197 preferred  stock purchase right on
                        each  outstanding  share of common stock of the Company.
                        The rights were amended on February 13, 1990. Each right
                        will, under certain circumstances, entitle the holder to
                        buy one  one-hundredth  (1/100)  of a share of  Series A
                        preferred  stock at an exercise  price of $30.00 per one
                        one-hundredth (1/100) share, subject to adjustment. Each
                        one  one-hundredth  (1/100)  of  a  share  of  Series  A
                        preferred  stock has voting,  dividend  and  liquidation
                        rights and preferences  substantively  equivalent to one
                        share of common stock.

                        The  rights  will  be   exercisable   and   transferable
                        separately  from the  common  stock  only if a person or
                        group   acquires   20%  or  more,   subject  to  certain
                        exceptions, of the Company's outstanding common stock or
                        announces  a  tender  offer  that  would  result  in the
                        ownership  of 20% or  more  of the  common  stock.  If a
                        person  becomes  the  owner  of  at  least  20%  of  the
                        Company's  common shares (an "Acquiring  Person"),  each
                        holder of a right  other  than the  Acquiring  Person is
                        entitled,  upon  payment  of the then  current  exercise
                        price per  right  (the  "Exercise  Price"),  to  receive
                        shares of common  stock (or  common  stock  equivalents)
                        having a market value equal to twice the Exercise Price.

                        Additionally,  if the Company  subsequently engages in a
                        merger or other business  combination with the Acquiring
                        Person  in  which  the  Company  is  not  the  surviving
                        corporation,  or in which the outstanding  shares of the
                        Company's  common stock are changed or exchanged,  or if
                        more than 50% of the  Company's  assets or earning power
                        is sold or transferred, a right would entitle a Computer
                        Horizon  Corp.  shareholder,  other  than the  Acquiring
                        Person and its  affiliates,  to purchase upon payment of
                        the  Exercise  Price,  shares  of the  Acquiring  Person
                        having a market value of twice the Exercise Price. Prior
                        to a person becoming an Acquiring Person, the rights may
                        be redeemed at a redemption price of one cent per right,
                        subject  to  adjustment.   The  rights  are  subject  to
                        amendment  by the  Board.  No  shareholder  rights  have
                        become  exercisable.  The rights will expire on July 16,
                        1999.
<PAGE>
--------------------------------------------------------------------------------
Note 6                  The provision for income taxes consists of the following
Income Taxes            for the years ended December 31: 
<TABLE>
<CAPTION>
                 
                                                  1996          1995        1994
--------------------------------------------------------------------------------
                                                         (in thousands)
<S>                                            <C>          <C>          <C>
                        Current:           
                              Federal          $6,282       $5,875       $3,645
                              State             2,010        2,263        1,399
                        Deferred:
                              Federal            (331)        (339)        (255)
                              State               (31)        (135)        (102)
--------------------------------------------------------------------------------
                                               $7,930       $7,664       $4,687
================================================================================
</TABLE>
<PAGE>
                        Deferred  tax  assets  and  liabilities  consist  of the
                        following at December 31:
<TABLE>
<CAPTION>

                                                                                                             1996         1995
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              (in thousands)
<S>                                                                                                        <C>          <C>
                        Deferred tax assets:
                              Accrued insurance                                                            $  291       $  477
                              Accrued payroll and benefits                                                    938          516
                              Deferred lease obligations                                                       72           99
                              Allowance for doubtful accounts                                                 249          221
                              Other                                                                            77          140
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            1,627        1,453
------------------------------------------------------------------------------------------------------------------------------------
                        Deferred tax liabilities:
                              Depreciation                                                                     20          208
------------------------------------------------------------------------------------------------------------------------------------
                              Deferred tax assets, net                                                     $1,607       $1,245
====================================================================================================================================
</TABLE>
                        A  reconciliation  of income taxes,  as reflected in the
                        accompanying  statements,  with  the  statutory  Federal
                        income tax rate of 35% for the years ended  December 31,
                        1996 and 1995 and 34% for the year  ended  December  31,
                        1994, is as follows:
<TABLE>
<CAPTION>
                                                                                              1996         1995         1994
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       (in thousands)
<S>                                                                                           <C>          <C>          <C>
                        Statutory Federal income taxes                                        $6,707       $6,149       $3,527
                        State and local income taxes, net of Federal tax benefit               1,286        1,382          858
                        Amortization of goodwill                                                 201          180          158
                        Equity in net earnings of joint venture                                 (310)        (126)
                        Other, net                                                                46           79          144
------------------------------------------------------------------------------------------------------------------------------------
                                                                                              $7,930       $7,664       $4,687
====================================================================================================================================
</TABLE>
                        Deferred   income   taxes  of   approximately   $436,000
                        ($310,000  in 1996 and  $126,000  in 1995) have not been
                        provided on  undistributed  earnings of a foreign  joint
                        venture in the amount of  $1,246,000  ($885,000  in 1996
                        and $361,000 in 1995) as the earnings are  considered to
                        be permanently reinvested.


--------------------------------------------------------------------------------
Note 7                  The  Company  maintains a defined  contribution  savings
Savings Plan            plan  covering  eligible  employees.  The Company  makes
and Other               contributions   up   to   a   specific   percentage   of
Retirement Plans        participants'  contributions.  The  Company  contributed
                        approximately  $324,000,  $229,000 and $204,000 in 1996,
                        1995 and 1994, respectively.
<PAGE>
                        In 1995, the Company instituted a Supplemental Executive
                        Retirement  Plan whereby key  executives are entitled to
                        receive lump-sum payments (or, if they elect, a ten-year
                        payout)  upon  reaching  the age of 65 and  being in the
                        employ of the  Company.  The maximum  commitment  if all
                        plan members  remain in the employ of the Company  until
                        age 65 is approximately $6 million.  Benefits accrue and
                        vest based on a formula which  includes total years with
                        the Company and total years  possible  until age 65. The
                        plan is  non-qualified  and not  formally  funded.  Life
                        insurance  policies  on the  members  are  purchased  to
                        assist in funding the cost.  The  deferred  compensation
                        expense is charged to  operations  during the  remaining
                        service   lives  of  the   members   and   amounted   to
                        approximately  $97,000  and  $82,000  in 1996 and  1995,
                        respectively.

                        In addition, the Company adopted a Deferred Compensation
                        Plan for Key Executives  that permits the individuals to
                        defer a portion  of their  annual  salary or bonus for a
                        period of at least five years. There is no effect on the
                        Company's  operating  results since any amounts deferred
                        would have  previously been expensed.  Amounts  deferred
                        have been included in other non-current liabilities.
<PAGE>
--------------------------------------------------------------------------------
Note 8                  Leases
Commitments  
                        The  Company   leases   office  space  under   long-term
                        operating  leases expiring  through 2001. As of December
                        31, 1996, approximate minimum rental commitments were as
                        follows:

<TABLE>
<CAPTION>
                              Year ending                               (in thousands)
-------------------------------------------------------------------------------------- 
<S>                                                                         <C>                
                                1997                                        $2,588
                                1998                                         2,234
                                1999                                         1,611
                                2000                                           324
                                2001                                           158
--------------------------------------------------------------------------------------
                                                                            $6,915
======================================================================================
</TABLE>
                        Office  rentals  are  subject  to  escalations  based on
                        increases in real estate taxes and  operating  expenses.
                        Aggregate rent expense for operating leases approximated
                        $2,612,000, $2,007,000 and $1,796,000 in the years ended
                        December 31, 1996, 1995 and 1994, respectively.


                        Other

                        In 1994,  the Vice Chairman and Executive Vice President
                        of  the  Company  announced  his  resignation  effective
                        February 15, 1995.  The Company  recorded  approximately
                        $400,000 of deferred compensation in 1994 which is to be
                        paid  beginning  February 1998 through 2005. The Company
                        also  agreed  to  retain   this  former   officer  as  a
                        consultant  for a  three-year  period for  approximately
                        $75,000  each  year and  entered  into a  noncompetition
                        agreement  for that  period.  In  connection  with  this
                        resignation,   the  Company  repurchased   approximately
                        240,000  shares of common stock of the Company from this
                        former officer for approximately $2,792,000.




--------------------------------------------------------------------------------
Note 9                  The Company's  largest client accounted for  9.8%,  7.8%
Major Client            and 9.0%,  respectively,  of the Company's  consolidated
                        revenues  in  1996,  1995  and  1994.  No  other  client
                        accounted for more than 7% in those years.

<PAGE>
Note 10                 For the years ended December 31, 1996 and 1995, selected
Selected Quarterly      quarterly financial data is as follows:
Financial Data  
(Unaudited) 
<TABLE>
<CAPTION>
                                                                                                Quarters
------------------------------------------------------------------------------------------------------------------------------
                                                                           First         Second          Third         Fourth
------------------------------------------------------------------------------------------------------------------------------
                                                                                 (in thousands, except per share data)
<S>                                                                     <C>            <C>            <C>           <C>
                        1996
------------------------------------------------------------------------------------------------------------------------------
                        Revenues                                        $  57,031      $ 56,032       $  57,275     $  63,520
                        Direct costs                                       39,368        39,960          39,756        44,188
                        Selling, general and administrative                12,120        12,505          13,177        14,344
                        Income from operations                              5,543         3,567           4,342         4,988
                        Interest expense--net                                 (41)          (83)            (16)          (23)
                        Equity in net earnings of joint venture               213           230             200           242
                        Income before income taxes                          5,715         3,714           4,526         5,207
                        Income taxes                                        2,413         1,576           1,893         2,048
                        Net income                                      $   3,302      $  2,138       $   2,633     $   3,159
------------------------------------------------------------------------------------------------------------------------------
                        Earnings per share                                   $.20          $.13            $.16          $.19
==============================================================================================================================

                        1995
------------------------------------------------------------------------------------------------------------------------------
                        Revenues                                        $  43,867      $ 48,397       $  51,467     $  56,319
                        Direct costs                                       31,366        34,230          35,696        39,052
                        Selling, general and administrative                 9,294        10,222          10,922        11,693
                        Income from operations                              3,207         3,945           4,849         5,574
                        Interest expense--net                                (175)         (165)            (36)           11
                        Equity in net earnings of joint venture                              96             124           141
                        Income before income taxes                          3,032         3,876           4,937         5,726
                        Income taxes                                        1,350         1,711           2,133         2,470
                        Net income                                      $   1,682      $  2,165       $   2,804     $   3,256
------------------------------------------------------------------------------------------------------------------------------
                        Earnings per share                                   $.12          $.15            $.17          $.20
==============================================================================================================================
</TABLE>
<PAGE>

MARKET AND DIVIDEND INFORMATION


                        The  Company's  common  stock is  quoted  on the  Nasdaq
                        National  Market,  under the symbol  CHRZ.  The range of
                        high and low closing  stock  prices,  as reported by the
                        Nasdaq National Market, for each of the quarters for the
                        years ended  December  31, 1996 and 1995,  retroactively
                        adjusted to reflect the three-for-two common stock split
                        declared by the Board of Directors in December  1995, is
                        as follows:
<TABLE>
<CAPTION>


                                                                        1996                                     1995
-------------------------------------------------------------------------------------------------------------------------------
                        Quarter                                    High         Low                        High          Low
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>                        <C>           <C>
                        First                                     $38.50      $19.00                     $ 8.44        $ 5.89
                        Second                                     54.00       33.00                      10.83          7.33
                        Third                                      42.25       15.00                      15.83         10.17
                        Fourth                                     38.75       24.25                      26.67         11.50
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                        The  Company  plans to reinvest  its  earnings in future
                        growth opportunities and, therefore, does not anticipate
                        paying  cash  dividends  in the near  future and has not
                        paid any to date.  As of December 31,  1996,  there were
                        approximately 1,200 holders of record of common stock.
<PAGE>
Computer
Horizons Corp. and
Subsidiaries
--------------------------------------------------------------------------------
CORPORATE INFORMATION

Board of  Directors

John J. Cassese
     Chairman and President
Thomas J. Berry
     Retired--AT&T
Rocco J. Marano
     Retired--Bellcore
Wilfred R. Plugge
     Retired--SRI International

Corporate

John J. Cassese
     Chairman and President
William J. Murphy
     Executive Vice President & CFO
David M. Reingold
     Vice President
Michael J. Shea
     Vice President & Controller
Mark W. Walztoni
     Vice President--Human Resources

Field Organization

Charles J. McCourt
     Senior Vice President
Barry D. Olson
     Senior Vice President
Robert J. Palmieri
     Senior Vice President
Terry C. Quinn
     Senior Vice President

Solutions Companies

Pamela A. Fredette
     President--Horizons Consulting
Arthur V. Quinlan
     Senior V.P.--Horizons Consulting
Steven J. Morgenthal
     President--Unified Systems Solutions
David M. Reingold
     Vice Chairman--Birla Horizons International
Barry D. Olson
     President--ComputerKnowledge
Edward D. Williams
     President--Strategic Outsourcing Services
<PAGE>
Corporate and Financial
Headquarters

     49 Old Bloomfield Avenue
     Mountain Lakes, New Jersey
     07046-1495
     (201) 402-7400

Regional and Local Offices

Eastern Region
     Hartford, CT
     Washington, DC
     Pompano Beach, FL
     Boston, MA
     Iselin, NJ
     Mountain Lakes, NJ
     New York, NY
     Philadelphia, PA

Central States Region
     Atlanta, GA
     Indianapolis, IN
     Louisville,  KY 
     Charlotte, NC
     Raleigh, NC
     Cincinnati, OH 
     Cleveland, OH 
     Columbus, OH 
     Dayton, OH
     Memphis, TN
     Nashville, TN
     Dallas, TX 
     Houston, TX

Midwest/West Region
     Phoenix, AZ
     Concord, CA
     Los Angeles, CA
     Colorado Springs, CO
     Denver, CO
     Cedar Rapids, IA
     Chicago, IL
     Detroit, MI
     Minneapolis, MN
     Kansas City/St. Louis, MO
     Toronto, Canada

Communications Division
     Washington, DC
     Jacksonville, FL
     Orlando, FL
     Tampa, FL
     Clark, NJ
     Dallas, TX
<PAGE>

Birla Horizons International
     New Delhi, India
     London, England
     Sunnyvale, CA
     Iselin, NJ
     Toronto, Canada

Corporate Counsel
     Dennis M. DiVenuta, Esq.

General Counsel
     Proskauer Rose Goetz &
     Mendelsohn LLP

Auditors
     Grant Thornton LLP

Transfer Agent
     Registrar & Transfer Company
     Cranford, New Jersey

Shares Traded
     Nasdaq National Market
     Symbol--CHRZ

Options Traded
     Chicago Board Options Exchange
     Symbol--ZQH

Availability  of Form 10-K A copy of the  Company's  Annual Report to the SEC on
Form 10-K may be obtained without charge by writing to:

Shareholder Relations
     Computer Horizons Corp.
     49 Old Bloomfield Avenue
     Mountain Lakes,
     New Jersey 07046-1495

Annual Meeting
     The Annual Meeting of Shareholders will be held at
     The Parsippany Hilton
     One Hilton Court
     Parsippany, New Jersey,
     on Wednesday, May 7, 1997
     at 10:00 A.M.