Financial Statements

                                Wellspring Resources LLC

                              Year ended June 30, 1997 and
                            Three months ended June 30, 1996
                           with Report of Independent Auditors

<PAGE>


                                 Wellspring Resources LLC

                                  Financial Statements

                              Year ended June 30, 1997 and
                             Three Months ended June 30, 1996





                                        Contents

Report of Independent Auditors...............................................1

Audited Financial Statements

Balance Sheets...............................................................2
Statements of Operations.....................................................3
Statements of Changes in Partners' Equity....................................4
Statements of Cash Flows.....................................................5
Notes to Financial Statements................................................6

<PAGE>









                       Report of Independent Auditors

Board of Directors
Wellspring Resources LLC

We have audited the  accompanying  balance  sheets of Wellspring  Resources LLC
(the  Company) as of June 30,  1997 and 1996,  and the  related  statements  of
operations,  and cash flows for the twelve and three month  periods then ended.
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 audit.

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 financial position of the Company at June 30, 1997
and 1996,  and the results of its  operations and its cash flows for the twelve
and three month  periods then ended,  in  conformity  with  generally  accepted
accounting principles.

/S/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Jacksonville, Florida
July 18, 1997

                                      -1-
<PAGE>


                                    Wellspring Resources LLC

                                         Balance Sheets
<TABLE>
<CAPTION>

                                                                                             June 30
ASSETS                                                                              1997                1996
                                                                              ------------------ -------------------
<S>                                                                                  <C>                <C>
Current assets:
   Cash and cash equivalents                                                      $  3,159,664       $  6,326,590
   Receivables from clients                                                          3,077,787                  -
  Receivable from affiliates, net                                                   11,009,153         11,248,157
  Deferred client implementation costs - current portion, net of
     accumulated amortization                                                        3,133,109                  -
   Other current assets                                                                135,595            143,048
                                                                              ------------------ -------------------
Total current assets                                                                20,515,308         17,717,795

Fixed assets, net of accumulated depreciation                                        9,883,020          6,001,699
Deferred software development costs, net of accumulated amortization
                                                                                    37,157,057         16,309,000
Deferred client implementation costs - non-current, net of accumulated
  amortization                                                                      10,595,776          3,794,883
Other intangible assets, net of accumulated amortization                               500,000            916,667
                                                                              ================== ===================
Total assets                                                                       $78,651,161        $44,740,044
                                                                              ================== ===================

Liabilities and partners' equity
Current liabilities:
   Accounts payable and accrued liabilities                                        $11,220,020       $  7,858,200
   Deferred revenue - current portion                                                1,699,124                  -
                                                                              ------------------ -------------------
Total current liabilities                                                           12,919,144          7,858,200

Non-current liabilities:
   Deferred revenue - non-current portion                                            6,961,094            235,000
   Accrued retirement benefits                                                         306,168                  -
                                                                              ------------------ -------------------
Total non-current liabilities                                                        7,267,262            235,000

   Commitments and contingent liabilities

                                                                              ------------------ -------------------
Total liabilities                                                                   20,186,406          8,093,200

Partners' equity
   Partners' contributions                                                          73,500,000         39,462,000
   Retained (deficit)                                                              (15,035,245)        (2,815,156)
                                                                              ------------------ -------------------
Total partners' equity                                                              58,464,755         36,646,844
                                                                              ------------------ -------------------
Total liabilities and partners' equity                                             $78,651,161        $44,740,044
                                                                              ================== ===================

</TABLE>

SEE ACCOMPANYING NOTES.
                                     -2-
<PAGE>

                            Wellspring Resources LLC

                            Statements of Operations

<TABLE>
<CAPTION>



                                                                                                   Three Months
                                                                                 Year ended            ended
                                                                                   June 30,           June 30,
                                                                                     1997               1996
                                                                              ------------------ -------------------
<S>                                                                                <C>                <C>
Client Fees                                                                        $45,088,170        $10,829,487

Operating costs:
   Salaries and benefits                                                            23,038,910          4,853,592
   Subcontracted services                                                           20,014,717          6,025,063
   Occupancy and communications                                                      5,908,028            879,377
   Office expense                                                                    3,862,196            914,145
   Depreciation                                                                      1,792,082            966,490
   Amortization                                                                      2,312,767             83,333
                                                                              ------------------ -------------------
Total operating costs                                                               56,928,700         13,722,000
                                                                              ------------------ -------------------

Loss from operations                                                               (11,840,530)        (2,892,513)

Non-operating  income (expense):
   Interest income                                                                     206,257             77,357
   Interest expense                                                                   (585,816)                 -
                                                                              ================== ===================
Net loss                                                                          $(12,220,089)       $(2,815,156)
                                                                              ================== ===================

</TABLE>

SEE ACCOMPANYING NOTES.

                                     -3-

<PAGE>
                             Wellspring Resources LLC

                     Statements of Changes in Partners' Equity

<TABLE>
<CAPTION>


                                                                                                       Total
                                                             Retained            Partners'           Partners'
                                                             (Deficit)         Contributions           Equity
                                                         ------------------ -------------------- -------------------
<S>                                                      <C>                <C>                  <C>
Balance at April 1, 1996                                 $              -   $                -   $               -

Net loss                                                       (2,815,156)                   -          (2,815,156)

Partners' contributions                                                 -           39,462,000          39,462,000
                                                         ------------------ -------------------- -------------------

Balance at June 30, 1996                                       (2,815,156)          39,462,000          36,646,844

Net loss                                                      (12,220,089)                   -         (12,220,089)

Partners' contributions                                                 -           34,038,000          34,038,000
                                                         ------------------ -------------------- -------------------

Balance at June 30, 1997                                 $    (15,035,245)         $73,500,000         $58,464,755
                                                         ================== ==================== ===================

</TABLE>

SEE ACCOMPANYING NOTES.

                                     -4-
<PAGE>

                             Wellspring Resources LLC

                             Statements of Cash Flows
<TABLE>
<CAPTION>


                                                                                                       Three Months
                                                                                                          ended
                                                                               Year ended June           June 30,
                                                                                     30,
                                                                                    1997                   1996
                                                                              ------------------    -------------------

<S>                                                                           <C>                   <C>
Cash flows from operating activities
Net loss                                                                      $      (12,220,089)   $        (2,815,156)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation                                                                      1,792,082                966,490
     Amortization of software development costs, implementation costs and
       intangible assets                                                               2,312,767                 83,333
     Change in working capital                                                           836,659             (3,533,005)
                                                                              ------------------    -------------------
Net cash used in operating activities                                                 (7,278,581)            (5,298,338)

Cash flows from investing activities
Purchases of fixed assets                                                             (5,673,404)            (6,968,189)
Investment in software development                                                   (21,949,159)           (17,309,000)
Investment in client implementations                                                  (2,303,782)            (3,559,883)
                                                                              ------------------    -------------------
Net cash used in investing activities                                                (29,926,345)           (27,837,072)

Cash flows from financing activities
Capital contributions from affiliates                                                 34,038,000             39,462,000
                                                                              ------------------    -------------------
Net cash provided by financing activities                                             34,038,000             39,462,000
                                                                              ------------------    -------------------

Net (decrease) increase in cash and cash equivalents                                  (3,166,926)             6,326,590
Cash and cash equivalents at beginning of period                                       6,326,590                      -
                                                                              ==================    ===================
Cash and cash equivalents at end of period                                    $        3,159,664    $         6,326,590
                                                                              ==================    ===================

</TABLE>

SEE ACCOMPANYING NOTES.
                                     -5-

<PAGE>
                           Wellspring Resources LLC

                         Notes to Financial Statements

                                June 30, 1997


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Wellspring  Resources  LLC (the Company) was formed on April 1, 1996 as a joint
venture of Watson  Wyatt  Worldwide  (Wyatt) and State Street  Global  Advisors
(State  Street)  with equal  ownership.  The Company  previously  operated as a
separate  division of Wyatt under the name of Wyatt Preferred Choice (WPC). The
Company  operates  principally as an employee  benefits  outsourcing  firm with
ranges of services including administration and processing of corporate savings
plans, defined benefit and contribution plans, and health and welfare plans.

The Company was created  with the Wyatt  contribution  of software  development
costs related to WPC, along with an equal  contribution  consisting of cash and
certain fixed assets from State Street.  The Company,  from its inception,  has
focused on building  and  maintaining  its own client base as well as servicing
certain contractual relationships owned by Wyatt. The Company has leveraged the
use of the contributed software technology to service its own client base which
it continues to build.

The Company,  operating as a limited liability  partnership,  is a pass-through
entity which  incurs no federal  income  taxes;  however,  it is obligated  for
payments of various  state income taxes and ad valorem  taxes which  ultimately
are passed to the joint venture partners.

ACCOUNTING PERIODS

The  Company's  two  accounting  periods  referred to hereafter  are the twelve
months ended June 30, 1997 and the three months ended June 30, 1996.

USE OF ESTIMATES

Preparation  of financial  statements in  conformity  with  generally  accepted
accounting  principles  requires  management to make estimates and  assumptions
that affect the  reported  amounts of assets and  liabilities,  disclosures  of
contingent  assets and liabilities at the date of the financial  statements and
the  reported  amounts of revenues and expenses  during the  reporting  period.
Actual  results  could  differ from those  estimates.  Estimates  are used when
accounting for revenue,  deferred software and development costs,  depreciation
and amortization, asset write-downs and employee benefit plans.

                                      -6-
<PAGE>


                             Wellspring Resources LLC

                      Notes to Financial Statements (continued)






1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

Fees  related to  long-term  contracts  for  administrative  and  recordkeeping
services are recognized as income when earned based on terms of the contract.

CASH AND CASH EQUIVALENTS

The Company  considers  short-term,  highly  liquid  investments  with original
maturities of 90 days or less to be cash equivalents.

RECEIVABLES FROM CLIENTS

Billed  receivables  from clients are  presented at their billed amount less an
allowance for doubtful  accounts,  if any.  Unbilled  receivables are stated at
their estimated net realizable  value.  The Company has determined that none of
its  receivables  were  uncollectible  as of June 30, 1997 and 1996.  The total
amount of unbilled  receivables  at June 30, 1997 was  $792,262;  there were no
unbilled receivables at June 30, 1996.

DEFERRED SOFTWARE DEVELOPMENT COSTS

Deferred  software  development  costs includes costs  associated with products
that are under  development  by the  Company for use in  providing  services to
current  and future  clients.  Deferred  software  development  costs  includes
certain  systems  development  and enhancement  costs,  which are  specifically
identifiable  and  which  will  be  associated  with  long-term  contracts  for
outsourcing and recordkeeping  services.  Deferred  software  development costs
will be amortized over the useful lives of the products.

The Company had  invested  $38,256,057  and  $16,309,000  in deferred  software
development at June 30, 1997 and 1996,  respectively.  Accumulated amortization
of deferred  software  development costs was $1,099,000 at June 30, 1997. There
was no accumulated amortization at June 30, 1996.

                                      -7-
<PAGE>


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company  assesses the  potential for  impairment  of its deferred  software
development  assets based upon whether it is probable that undiscounted  future
cash flows will be less than the net book value of the deferred  costs. At June
30, 1997 and 1996, management does not believe that any such impairment exists.

DEFERRED CLIENT IMPLEMENTATION COSTS AND REVENUES

The Company incurs costs  associated with converting  and/or creating  employee
databases  which are  required  for  providing  services to its  clients.  Such
pre-operational  costs are deferred  until the  initiation of operations  (on a
client/service  specific basis).  Upon commencement of a service for a specific
client all  deferred  implementation  costs  associated  with such  service are
ratably  amortized  over  the  remaining  life of the  contract  governing  the
specific client service.

The  Company  had  invested  $14,523,883  and  $3,794,883  in  deferred  client
implementation  costs at June  30,  1997 and  1996,  respectively.  Accumulated
amortization of deferred client  implementation  costs was $797,100 at June 30,
1997. There was no accumulated amortization at June 30, 1996.

The Company  receives fee revenues from its clients for the  implementation  of
contracts.  The  recognition  of such fees is also  deferred  until the related
contracts become  operational.  Deferred fee income was $8,660,218 and $235,000
at June 30, 1997 and 1996, respectively.

The Company  assesses the  potential  for  impairment  of its  deferred  client
implementation  assets  based upon  whether it is  probable  that  undiscounted
future cash flows will be less than the net book value of the  deferred  costs.
At June 30, 1997 and 1996, management does not believe that any such impairment
exists.

OTHER INTANGIBLES

The Company's other  intangibles  include  purchased  employee benefit software
packages  from  Wyatt.  Accordingly,  the  $1,000,000  original  cost of  these
packages had  accumulated  amortization  of $500,000 and $83,333 as of June 30,
1997 and 1996, respectively.

                                      -8-
<PAGE>

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying  amount of the Company's  cash and cash  equivalents,  receivables
from clients and accounts  payable and accrued  liabilities  approximates  fair
value because of the short maturity and ready liquidity of those instruments.

CONCENTRATION OF CREDIT RISK

Financial  instruments which potentially  subject the Company to concentrations
of credit  risk  consist  principally  of  certain  cash and cash  equivalents,
short-term  investments and receivables  from clients.  The Company invests its
excess cash in high credit quality financial institutions.

The  Company has  relatively  few  customers  that make up its  customer  base.
Concentrations  of credit risk with respect to  receivables  from those clients
are reduced due to the credit worthiness of the customer base.

2. FIXED ASSETS

Furniture,  fixtures,  equipment,  and leasehold  improvements  are recorded at
cost, and presented net of accumulated depreciation or amortization. Furniture,
fixtures and  equipment are  depreciated  using the  straight-line  method over
lives ranging from three to seven years.  Leasehold  improvements are amortized
on a  straight-line  basis over the shorter of the assets'  lives or underlying
lease terms.

The components of fixed assets are:

                                                      June 30
                                              1997                1996
                                       ------------------   ------------------

Furniture, fixtures and equipment      $        8,942,315   $        6,813,836
Leasehold improvements                          3,699,278              154,353
                                       ------------------   ------------------
                                               12,641,593            6,968,189
Less accumulated depreciation and
     amortization                              (2,758,573)            (966,490)
                                       ==================   ==================
                                       $        9,883,020   $        6,001,699
                                       ==================   ==================

                                      -9-
<PAGE>


3. EMPLOYEE BENEFIT PLANS

PENSION PLAN

The Company has a qualified  defined  benefit pension plan that is available to
substantially  all of its  employees.  This  plan,  formed on  January 1, 1997,
succeeds a defined  benefit plan from Wyatt which  covered  employees  that had
previously been employees of the Company and WPC.

Pension  benefits  are  based on a  multi-variable  formula  which  takes  into
consideration  age,  years of  service,  and average  compensation  levels with
compensation  increases  projected at 5% and the benefit  liability  discounted
currently at 7.5%.  Employees are eligible for benefits upon  retirement at age
65. As of June 30,  1997,  the Company  had no  retirement  benefits  currently
payable  to  eligible  participants  and  accordingly,  had no plan  assets nor
funding as of the end of this period.  However,  the accrued  liability for the
plan was $306,168 which was comprised of an accumulated  benefit  obligation of
$259,919 and a vested benefit obligation of $46,249.

LONG TERM SAVINGS PLAN

Effective January 1, 1997, the Company sponsored a deferred savings plan set up
as a 401(k).  Under  this  plan,  the  Company  matches  up to 50% of  employee
contributions  made  subject  to a  maximum  of 3% of their  compensation.  The
Company incurred $325,976 in expenses for this plan during fiscal year 1997.

Contributions  are limited to amounts  that are  currently  deductible  for tax
purposes.

OTHER NONQUALIFIED PLANS

At June 30, 1997, the Company had  established  nonqualified  plans including a
salary  deferral plan and a defined  benefit plan.  Effective upon  retirement,
benefits will be paid  according to these plans which are otherwise  subject to
certain limitations imposed by the Internal Revenue Code.

No contributions were made during 1996,  however,  contributions of $61,996 for
the salary deferral plan was made for 1997.

                                      -10-
<PAGE>

4. SELF INSURANCE RESERVES

The Company provides certain medical and dental benefits to its employees at no
cost.  These benefits had previously  been provided by Wyatt up to December 31,
1996.  Expense for the  medical  benefits  and dental  benefits  provided  were
$1,494,506  and  $377,603  for the  periods  ended  June  30,  1997  and  1996,
respectively. As the Company is self insured for these benefits up to a certain
amount, reserve for claims development is estimated for reported and unreported
claims  and  is  reflected  as  a  liability  in  the  accompanying   financial
statements. The Company has specific case indemnification for individual losses
that exceed  $160,000 up to a  $1,000,000  maximum.  As of June 30,  1997,  the
liability for reported and unreported claims was estimated at $595,540.

5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of:

                                                       June 30
                                               1997                1996
                                         ----------------   -----------------
                                         ----------------   -----------------

Accounts payable and accrued
      liabilities                        $      7,433,988   $       6,734,251
Accrued salaries and bonuses                    2,363,636             413,016
Accrued vacation                                  826,856             710,933
Self insurance reserves                           595,540                   -
                                         ================   =================
Total accounts payable and accrued
      liabilities                        $     11,220,020   $       7,858,200
                                         ================   =================

                                      -11-
<PAGE>


6. Leases

The Company leases office space and various computer  equipment under operating
lease  agreements with terms ranging from one to ten years.  The rental expense
was  $4,849,248  and  $341,007  for fiscal  years 1997 and 1996,  respectively.
Future minimum lease payments for operating lease commitments are:


          Years ending June 30                         Lease Commitments
          --------------------                         -----------------

                    1998                               $       7,659,054
                    1999                                       8,845,669
                    2000                                       9,296,342
                    2001                                       9,071,949
                    2002                                       6,823,480
                    Thereafter                                30,002,877
                                                       =================
                                                       $      71,699,371
                                                       =================

7. RELATED PARTIES

The Company's Board of Managers is comprised of officers and management of both
Wyatt and State Street as well as the  Company's  Chief  Executive  Officer who
serves as its Chairman. Due to the spin-off of Wyatt's previous division,  WPC,
the Company was reliant on various Wyatt financial  reporting processes through
the end of fiscal year 1997. The Company was charged  approximately $78,000 for
these services during fiscal year 1997.

Capital  contributed  by Wyatt and State  Street at June 30, 1997 and 1996 were
$73,500,000  and  $39,462,000,  respectively.  Of the  $39,462,000  of  capital
contributed  at June 30, 1996,  $12,060,117  was  receivable  from State Street
which is included in receivable  from  affiliates in the balance  sheet.  As of
June 30, 1997, all of the capital contributed had been funded.

Under an agreement between the Company and Wyatt, the Company provides services
to certain clients whose  contracts were retained by Wyatt.  The client service
agreement  provides  (in part) that the  Company may bill Wyatt for 100% of the
costs associated with providing  services to the retained  clients.  As of June
30, 1997,  Wyatt owed the Company  $11,009,153  for retained  client  services.
Client fees and cost billed to Wyatt amounted to $40,313,000  and  $10,829,000,
respectively, in 1997 and 1996.

                                      -12-
<PAGE>

8. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is currently negotiating settlement of a long standing dispute over
the pricing of certain services from one of its major service providers.  As of
June 30, 1997, the Company has recognized its liability to the service provider
to the extent of the Company's position in the negotiations. Should the dispute
be settled in favor of the service provider, the Company could be exposed to as
much as  $2,200,000  in additional  liability to the service  provider.  Of the
$2,200,000,  approximately $1,900,000 would be recoverable from Wyatt under the
client services agreement.

                                      -13-