UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
                    For the Fiscal Year Ended March 31, 1997

                                       OR

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
          For the transition period from _____________ to ____________

                           Commission File No. 0-18984

                         REYNOLDS, SMITH AND HILLS, INC.
             (Exact name of registrant as specified in its charter)

               Florida                              59-2986466
    (State or other jurisdiction of             (I.R.S. Employer
     incorporation or organization)            Identification No.)

        4651 Salisbury Road                          32256
       Jacksonville, Florida                       (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (904) 296-2000

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                                                  Name of each exchange on
     Title of each class                              which registered
     -------------------                              ----------------

     Common Stock, $.01 par value                           None

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
 YES [X] NO[  ]

         The  estimated   aggregate   market  value  of  Common  Stock  held  by
non-affiliates  as of June 20, 1997  computed  with  reference to the last sales
price, was $3,155,000.

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of  Regulation  S-K (ss.  229.405  of this  chapter)  is not  contained
herein,  and will not be contained,  to the best of registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]

         The number of shares of Common  Stock  outstanding  as of June 20, 1997
was 454,864 shares.

                      Documents incorporated by reference:

             DOCUMENT                              WHERE INCORPORATED
             --------                              ------------------

 Proxy Statement Dated June 20, 1997                   Part III


<PAGE>


                                TABLE OF CONTENTS

FORM 10-K
 Item
 Number           CAPTION                                                PAGE
 ------           -------                                                ----

                  PART I

Item  1. BUSINESS                                                         3

Item  2. PROPERTIES                                                       5

Item  3. LEGAL PROCEEDINGS                                                5

Item  4. SUBMISSION OF MATTERS TO A VOTE OF
                  SECURITY  HOLDERS                                       5

EXECUTIVE OFFICERS OF THE REGISTRANT                                      5

                  PART II

Item  5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
                  RELATED  STOCKHOLDER MATTERS                            6

Item  6. SELECTED FINANCIAL DATA                                          6

Item  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS                     8

Item  8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                     11

Item  9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE                    11

                  PART III

Item 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE
                  REGISTRANT                                             12

Item 11.          EXECUTIVE COMPENSATION                                 12

Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT                                         12

Item 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS         12

                  PART IV

Item 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                  REPORTS ON FORM 8-K                                    12


                                        2

<PAGE>



                                     PART I

Item 1.  BUSINESS

         Reynolds, Smith and Hills, Inc. (the Company) is a professional service
firm  operating  in the  engineering,  architectural  design  and  environmental
services  industry.  The Company is a Florida  corporation and operates  through
seven offices.  It was incorporated in 1989 and commenced business operations on
June 29, 1990. As used herein, the Company refers to Reynolds,  Smith and Hills,
Inc. and its subsidiaries.

         The  Company  provides  a full  range  of  architectural,  engineering,
planning  and  environmental  services  to public  and  private  sector  clients
primarily in the Southeastern United States.  Specific industry markets are also
served nationally and  internationally.  These services are provided through the
following market-focused programs of the Company:

         *        Transportation   -  Services  are  provided  to   governmental
                  agencies and private  entities and include  planning,  design,
                  environmental,  and  construction  engineering  and inspection
                  services for all modes of transportation  (including  highways
                  and bridges, mass transit, rail and port).

         *        Aviation - Services are provided to governmental  agencies and
                  private  entities  (including air carriers and  manufacturers)
                  and include planning,  design, and environmental  services for
                  airfields, terminals, and support buildings.

         *        Aerospace  and  Defense  -  Services  are  provided  to  NASA,
                  Department of Defense,  Spaceport  Florida Authority and major
                  aerospace  contractors  and include the  development of launch
                  and processing facilities for Saturn, Shuttle,  Trident, Titan
                  and other space vehicles.

         *        Public   Infrastructure  -  Services  are  provided  to  local
                  government and quasi-governmental  agencies.  Services include
                  planning,  evaluation,  architectural and engineering  design,
                  permitting,  and construction  administration for road, water,
                  wastewater,   storm  water  and  solid  waste  systems.  These
                  services are also included for public facilities such as parks
                  and public buildings.

         *        Commercial  -  Services  are   provided  to   commercial   and
                  industrial   entities  engaged  in  planning,   designing  and
                  construction   of  a  wide  variety  of  structures  and  land
                  development  (including  office  buildings  and office  parks,
                  warehouses,  hotels  and  resorts,   research/development  and
                  manufacturing facilities,  sports and recreational facilities,
                  and computer centers).

         *        Institutional  -  Services  are  provided  to public  agencies
                  engaged in governmental,  educational,  recreational,  medical
                  and  scientific  facilities,  and land  development.  Services
                  include planning and designing of a wide variety of structures
                  (including schools and campus master planning, courthouses and
                  other   governmental   buildings,   research   and   technical
                  facilities,  community parks and recreational facilities,  and
                  media centers).
 
                                        3
<PAGE>

         Competition.  The engineering and  architectural  services  industry is
highly  competitive.  The Company's  competitors include large national firms as
well as many small local  firms.  The Company  competes  with these firms on the
basis  of  technical  capabilities,  qualifications  of  personnel,  reputation,
quality and price. Additionally, a local presence is important in certain areas.
No one firm currently dominates a significant portion of the industry.

         Major  Customers.  For the years ended March 31,  1997,  1996 and 1995,
approximately 80%, 75% and 75%, respectively, of the Company's business was with
departments or agencies of federal, state and local governments.  Contracts with
the Florida  Department  of  Transportation  provided  35%, 40% and 35% of total
revenues  for fiscal  years  1997,  1996 and 1995,  respectively.  The loss of a
significant  client such as Florida  Department of  Transportation  would have a
material adverse effect on the Company.  No other customer  accounted for 10% or
more of total revenues.

         Backlog.  Gross revenue backlog is the estimated revenue from contracts
entered  into with  clients,  less that  portion  which has been  recognized  as
revenue.  Backlog is subject to revision due to cancellations,  modifications or
changes  in the  scope  of  projects.  There  can be no  assurance  that  signed
contracts  will  ultimately be authorized or will not be cancelled by clients in
accordance with their terms. Net revenue backlog is estimated  revenue excluding
subconsultant and other direct costs and more accurately reflects the amounts to
be earned for activities performed by the Company.

         The  Company's  gross  backlog  at March  31,  1997 was  $32.6  million
compared to $38.1  million at March 31, 1996.  Net backlog was $23.1  million at
March 31,  1997 as compared to $25.3  million at March 31,  1996.  Approximately
$26.8 million of services  included in the  Company's  gross backlog as of March
31, 1997 will be performed in fiscal year 1998. The Company  expects  additional
revenue in 1998 from sales generated in 1998 which are not included in the March
31, 1997 backlog.

         Governmental  Contracts.  Some service  contracts  with  departments or
agencies of federal,  state, and local  governments are subject to renegotiation
of profits or termination at the election of the government.  The Company is not
aware of any adjustments which would have a material impact on the Company.

         Compliance with Environmental Laws. Compliance with federal,  state and
local  regulations which have been enacted or adopted relating to the protection
of the  environment is not expected to have any material effect upon the capital
expenditures,  earnings and competitive position of the Company.  However,  such
compliance   by  the   Company's   clients   may   require   the  need  for  the
environmental-related services which the Company provides.

         Employees.  At March 31, 1997 the Company  employed  approximately  365
persons.

                                        4

<PAGE>




Item 2.   PROPERTIES

         The  Company's   principal  office  occupies  leased  office  space  in
Jacksonville,  Florida  and six  branches  occupy  leased  office  space  in the
following  Florida  locations:  Tampa,  Merritt  Island,  Orlando,   Plantation,
Tallahassee,  and Fort Myers. These leases expire at various dates through 2001.
The current facilities are sufficient for the operation of the business.

Item 3.   LEGAL PROCEEDINGS

     The Company is subject to lawsuits  involving claims typical of those filed
against   engineering  and   architectural   professions,   alleging   primarily
professional  errors  and/or  omissions.   The  Company  maintains  professional
liability  insurance which insures against risk within the policy limits.  There
are no legal proceedings pending or, to the knowledge of the Company, threatened
against the Company which in management's  opinion would have a material adverse
effect on the Company's financial condition.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security  holders during the quarter
ended March 31, 1997.


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


                      EXECUTIVE OFFICERS OF THE REGISTRANT

      The following persons serve as the executive officers of the Company:

         Name                     Age          Position Held
         ----                     ---          -------------

         Leerie T. Jenkins, Jr.   48     Chairman of the Board
                                         and Chief Executive Officer

         David K. Robertson       45     Executive Vice President, Secretary,
                                         Treasurer, Chief Financial Officer, and
                                         Director

         Charles W. Gregg        47      Executive Vice President
                                         and Chief Operating Officer

         Darold F. Cole          55      Senior Vice President and Director

         J. Ronald Ratliff       48      Senior Vice President and Director

                                        5

<PAGE>



         Mr.  Jenkins'  principal  positions are Chairman of the Board and Chief
Executive Officer of the Company, which he has held since June 1990. Mr. Jenkins
has been employed with the Company and predecessor  companies for over 25 years.
He holds a Masters  and  Bachelors  degree in  landscape  architecture  from the
University of Michigan and University of Georgia, respectively.

         Mr. Robertson's principal positions are Executive Vice President, which
he has held since January 1995,  Secretary,  Treasurer,  Chief Financial Officer
and Director of the Company, which he has held since June 1990. Prior to January
1995 Mr.  Robertson was Senior Vice President.  Mr.  Robertson has been employed
with the Company and predecessor  companies for over 15 years. He graduated from
Florida State University with a degree in Business.

         Mr. Gregg's principal  positions are Executive Vice President and Chief
Operating Officer of the Company,  which he has held since September 1995. Prior
to September 1995 and since 1992 Mr. Gregg was Senior Vice  President.  Prior to
joining the Company in 1992, Mr. Gregg was Director of Business  Development for
Kiewit Construction Group, Inc. He graduated from the University of Florida with
a degree in civil  engineering and holds a Masters degree with Rollins  College,
Crummer School of Business.

         Mr. Cole's  principal  positions are Senior Vice President and Director
of the Company,  which he has held since June 1990.  Mr. Cole has been  employed
with the Company and predecessor  companies for over 28 years. He holds a degree
in electrical engineering from Kansas State University.

         Mr.  Ratliff's  principal  positions  are  Senior  Vice  President  and
Director of the Company, which he has held since June 1990. Mr. Ratliff has been
employed with the Company and predecessor  companies for over 19 years. He holds
a Masters and Bachelors degree from the University of South Florida.

                                     PART II

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

         The Company's  securities are not presently  traded on any public stock
exchange or other public market.  The Company had approximately 192 shareholders
of record  at March  31,  1997,  including  persons  owning  stock  through  the
Company's  401(k) plan. The Company has paid no dividends on its common stock as
it is prohibited from doing so pursuant to its Bank credit agreement. See Note 4
to the consolidated financial statements included in this report.

Item 6.  SELECTED FINANCIAL DATA

         The following  selected  financial  data should be read in  conjunction
with the financial statements of the Company, including the notes thereto.

                                        6

<PAGE>
<TABLE>
<CAPTION>

                            SELECTED FINANCIAL DATA
                     (in thousands, except per share data)

                                                         Year Ended March 31
                                                         -------------------
                                        1997        1996        1995        1994        1993
                                        ----        ----        ----        ----        ----
<S>                                  <C>         <C>         <C>         <C>         <C>     
STATEMENT OF OPERATIONS DATA:
Gross revenues                       $ 39,065    $ 34,070    $ 30,524    $ 27,974    $ 28,560
Net service revenues                   27,397      25,595      23,620      22,005      23,151
Net income                                593          92         350         271          62
Common stock per share data:
Net income per share                     1.30        0.20        0.78        0.61        0.15
Weighted average shares of common     455,000     451,000     446,000     442,000     428,000
   stock outstanding

BALANCE SHEET DATA:
Working capital                         2,781       1,935       2,314       2,536       2,574
Total assets                           12,680      12,521      11,858      11,203       9,901
Long-term debt (less current portion)       7          76         524       1,035       1,460
Common stockholders' equity             5,337       4,741       4,576       4,193       3,915
</TABLE>
<PAGE>



Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS
          


RESULTS OF OPERATIONS

         The following  table sets forth the  percentage of net service  revenue
represented by the items in the Company's consolidated statements of income:

                              Year Ended March 31,
                              --------------------

                                   1997       1996       1995
                                   -----     -----      -----

Gross revenue                      142.6%    133.1%     129.2%

Subcontract and other
 direct costs                       42.6      33.1       29.2
                                   -----     -----      -----

   Net service revenue             100.0     100.0      100.0

Cost of services                    39.5      40.4       41.2
                                   -----     -----      -----

   Gross profit                     60.5      59.6       58.8

Selling, general, and
 administrative expenses            56.9      58.0       55.4
                                   -----     -----      -----

   Operating income                  3.6       1.6        3.4

Other income (expense)                .2       (.6)       (.6)
                                   -----     -----      -----

   Income before income taxes        3.8       1.0        2.8

Income tax expense                   1.6        .6        1.3
                                   -----     -----      -----

   Net income                        2.2%       .4%       1.5%
                                    =====     =====      =====


                                        8

<PAGE>



Gross Revenue:

         Revenues for fiscal 1997  increased by 15% to $39.1  million from $34.1
million in fiscal  1996.  This  increase  was due to  transportation,  aviation,
aerospace and defense,  commercial and institutional projects. Revenues in these
program areas increased as a result of sales efforts  throughout the current and
prior  years.  Revenues for fiscal 1996  increased by 12% to $34.1  million from
$30.5  million in fiscal 1995.  This  increase was due primarily to increases in
transportation,  aviation,  commercial and institutional projects as a result of
the sales to public and private sector clients.

         For the fiscal years ended March 31, 1997, 1996 and 1995  approximately
80%, 75% and 75%,  respectively,  of the Company's  revenues were generated from
public  sector  clients.  For the same periods 35%, 40% and 35% of the Company's
revenues  resulted  from  services   provided  to  the  Florida   Department  of
Transportation.

Subcontract and Other Direct Costs:

         As a percentage of net service  revenue,  subcontract  and other direct
costs were 42.6%, 33.1% and 29.2% in 1997, 1996 and 1995, respectively. For both
fiscal 1997 and 1996, there was an increased use of subconsultants  primarily in
the transportation, aviation, commercial and institutional programs.

Net Service Revenue:

         Net service  revenue  increased 7% to $27.4 million in fiscal 1997 from
$25.6 million in fiscal 1997.  Net service  revenue for fiscal 1996 increased 8%
to $25.6 million from $23.6 million for fiscal 1995. These increases were due to
the increases in gross revenues as discussed above for both fiscal periods.

Cost of Services:

         Cost of services  represents  direct  labor costs  associated  with the
generation  of net service  revenues.  Cost of services,  as a percentage of net
service revenue,  has experienced  slight improvement at 39.5%, 40.4% and 41.2%,
respectively  for  fiscal  years  ended  March 31,  1997,  1996 and  1995.  This
percentage reflects improving project efficiency. Gross profit, as a result, has
also  improved at 60.5%,  59.6% and 58.8% for fiscal years 1997,  1996 and 1995,
respectively.

Selling, General and Administrative Expenses:

         Selling,  general and  administrative  (SG&A) expenses consist of labor
costs of operational  personnel not utilized on projects (i.e.  indirect labor),
labor costs of administrative and support personnel,  office rent, depreciation,
insurance, and other operating expenses.



                                        9

<PAGE>



         Selling,  general and  administrative  expenses  increased  5% to $15.6
million in 1997 from $14.8  million in 1996.  This increase was due primarily to
increased  incentive  compensation and further acquisition and implementation of
computer and  communications  technology.  SG&A  expense as a percentage  of net
service fees decreased to 56.9% in fiscal 1997 from 58.0% in fiscal 1996.

         SG&A expenses increased 13% to $14.8 million in 1996 from $13.1 million
in 1995. This increase was due primarily to decreases in the overall  percentage
of labor  costs  charged  directly to projects  (utilization).  Utilization  for
fiscal 1996 was 64% versus 66% for fiscal  1995.  Drops in  utilization  for the
Greensboro,  NC office and the Public Infrastructure program and the addition of
management  personnel were the primary causes of the Company's  overall decrease
in  utilization.   Increases  in  equipment   expenses  related  to  information
technology,  office rent  expense  due to addition of square  footage in several
offices, temporary help, professional fees, and professional liability insurance
costs also  caused the  increase in SG&A  expense.  In  addition,  costs for the
restructure  of the  Greensboro,  NC office  were  incurred  in fiscal 1996 (see
paragraph below). As a result of these increases in expenses,  SG&A expense as a
percentage  of net service fees  increased to 58.0% in fiscal 1996 from 55.4% in
fiscal 1995.

Other Income (Expense):

         Interest  expense was  $31,000,  $155,000 and $178,000 for fiscal 1997,
1996 and 1995, respectively.  These decreases were a result of lower outstanding
balances on the Company's term loan, credit line and capital leases.

Net Income:

         Net income was $593,000 in 1997, $92,000 in 1996, and $350,000 in 1995.
The  increase  in 1997 over 1996 was due  primarily  to  increased  net  service
revenue (gross revenue less subcontract  costs).  The decrease in 1996 from 1995
was due primarily to increases in SG&A expenses as discussed above.

         In fiscal 1996 the Greensboro,  North Carolina office was significantly
downsized as a result of continuing net losses.  That office's  restructure  was
completed in 1997. As a result of the Greensboro office restructure, the Company
made a provision  of $286,000  in fiscal  1996 to cover all related  costs.  The
Greensboro,  NC office's net losses from  operations  were $812,000 and $375,000
for fiscal years March 31, 1996 and 1995 respectively.




                                       10

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

         The Company's liquidity and capital measurements are set forth below:

                                    March 31
                                    --------

                                  1997       1996      1995
                                  ----       ----      ----

Working capital (in thousands)    $2,781    $1,935    $2,536

Current ratio                     1.42:1    1.28:1    1.38:1

Ratio of liabilities to equity    1.38:1    1.64:1    1.59:1


         Cash flows from  operations  were positive for each of the fiscal years
ended  March  31,  1997,  1996 and  1995.  The  Company  has made a  significant
investment  of working  capital in  information  technology  over the last three
years.  Payments on notes payable and long-term debt totalled  $448,000 in 1997,
including payment on the bank term loan of $375,000.

         The Company  has in place a line of credit  with a bank which  provides
for  additional  borrowing up to $1,750,000 at March 31, 1997,  with interest at
the bank's prime rate plus .75  percent.  There were no  borrowings  outstanding
under the line of credit at March 31, 1997.

         The  agreement  for the line of credit  contains  covenants  related to
working capital,  net worth,  debt to net worth, and debt service  coverage.  In
addition,  the  agreement  prohibits  the payment of  dividends on any shares of
capital stock.  The Company is in compliance  with all provisions of the line of
credit.

         The Company believes that its existing  financial  resources,  together
with its cash flow from  operations  and its unused  bank line of  credit,  will
provide sufficient capital to fund its operations for fiscal 1998.

Item 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The consolidated  Financial  Statements of the registrant are set forth
beginning on page 15 of this report.

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

         None.


                                       11

<PAGE>



                                    PART III


Item 10 through 13.

         The  information  required  by Items 10 through 13 is  included  in the
Company's definitive proxy statement dated June 20, 1997, incorporated herein by
reference.


                                     PART IV

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

(a)(1)   Financial Statements

         Independent Auditors' Report                                    15

         Consolidated Statements of Income, years ended
                  March 31, 1997, 1996, and 1995                         16

         Consolidated Balance Sheets as of March 31,
                  1997 and 1996                                          17

         Consolidated Statements of Common Shareholders'
                  Equity, years ended March 31, 1997, 1996,
                  and 1995                                               18

         Consolidated Statements of Cash Flows, years
                  ended March 31, 1997, 1996, and 1995                   19

         Notes to Consolidated Financial Statements                      20


(a)(2)   Financial Statement Schedules

         Independent Auditors' Report                                    28

         Schedule II - Valuation and Qualifying Accounts                 29




                                       12

<PAGE>



(a)(3)   Exhibits

3.1*     Articles of Incorporation of the Company, as amended

3.2*     By-Laws of the Company

10.5**   Reynolds, Smith and Hills, Inc. 1991 Employee Stock Bonus Plan

10.6**   Reynolds, Smith and Hills, Inc. 1991 Nonqualified Stock Option Plan
10.7**   Reynolds, Smith and Hills, Inc. 1991 Incentive Stock Option Plan

10.8***  Term Loan Agreement dated March 25, 1992 between the Company and 
         American National Bank of Florida.

10.9***  Revolving Loan Agreement dated March 25, 1992 between the Company and 
         American National Bank of Florida.

21       List of Subsidiaries                                          30

23       Consent of Deloitte & Touche LLP                              31

*    Filed  in   connection   with  and   incorporated   by  reference  to
     Registration Statement on Form 10 (filed January 15, 1991).
**   Filed in connection with and incorporated by reference to 
     Amendment No. 1 on Form 8 (filed April 2, 1991).
***  Filed as exhibit to and  incorporated  by  reference to Form 10-K 
     for fiscal year March 31, 1992.

(b)      Reports on Form 8-K

No report on Form 8-K was filed  during  the  quarter  ended  March 31, 1997.

                                       13

<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                      Reynolds, Smith and Hills, Inc.

Dated:  June 20, 1997                 By /s/David K. Robertson
        -------------                    ---------------------
                                      David K. Robertson
                                      Executive Vice President,
                                      Secretary, Treasurer, Chief
                                      Financial Officer and Director

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

          Signature                            Capacity                Date
          ---------                            --------                ----


/s/ Leerie T. Jenkins, Jr.          Chairman of the Board          June 20, 1997
-------------------------           and Chief Executive Officer
Leerie T. Jenkins, Jr.              (Principal Executive Officer)
                                    

/s/ David K. Robertson              Executive Vice President,      June 20, 1997
-------------------------           Treasurer, Chief Financial
David K. Robertson                  Officer, Secretary, and
                                    Director (Principal Financial
                                    and Accounting Officer)

/s/ Charles W. Gregg                Executive Vice President and   June 20, 1997
-------------------------           Chief Operating Officer
Charles W. Gregg                    


/s/ Darold F. Cole                  Director                       June 20, 1997
-------------------------
Darold F. Cole


/s/ Ronald Ratliff                  Director                       June 20, 1997
-------------------------
J. Ronald Ratliff


                                    Director
-------------------------
David E. Thomas, Jr.


                                    Director
-------------------------
Alexander P. Zechella

                                       14

<PAGE>





INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
Reynolds, Smith and Hills, Inc.
Jacksonville, Florida

We have audited the accompanying  consolidated balance sheets of Reynolds, Smith
and  Hills,  Inc.  and its  subsidiaries  as of March 31,  1997 and 1996 and the
related consolidated  statements of income,  shareholders' equity and cash flows
for  each  of the  three  years  in the  period  ended  March  31,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
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  consolidated  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,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Reynolds, Smith and Hills, Inc. and
its  subsidiaries  as of  March  31,  1997 and  1996  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
March 31, 1997 in conformity with generally accepted accounting principles.




Jacksonville, Florida
May 23, 1997


/S/DELOITTE & TOUCHE LLP



                                       15


<PAGE>

REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                            1997             1996             1995
                                        -----------       ----------       ----------

<S>                                    <C>              <C>              <C>         
GROSS REVENUE                          $ 39,065,000     $ 34,070,000     $ 30,524,000

SUBCONTRACT AND OTHER DIRECT COSTS       11,668,000        8,475,000        6,904,000
                                        -----------       ----------       ----------

        Net service revenue              27,397,000       25,595,000       23,620,000

COST OF SERVICES                         10,817,000       10,357,000        9,730,000
                                        -----------       ----------       ----------

        Gross profit                     16,580,000       15,238,000       13,890,000

SELLING, GENERAL AND
        ADMINISTRATIVE EXPENSES         15,581,0000       14,839,000       13,094,000
                                        -----------       ----------       ----------

        Operating income                    999,000          399,000          796,000

OTHER INCOME (EXPENSE):
Interest and other income (expense)          90,000           (4,000)          34,000
interest expense                            (31,000)        (155,000)        (178,000)
                                        -----------       ----------       ----------

        Income before income taxes        1,058,000          240,000          652,000

INCOME TAX EXPENSE                          465,000          148,000          302,000
                                        -----------       ----------       ----------

        NET INCOME                     $    593,000     $     92,000     $    350,000
                                        ===========       ==========       ==========

NET INCOME PER COMMON SHARE            $       1.30     $       0.20     $       0.78
                                        ===========       ==========       ==========

AVERAGE COMMON SHARES OUTSTANDING           455,000          451,000          446,000
                                        ===========       ==========       ==========

</TABLE>

See accompanying notes to consolidated financial statements.

                                       16

<PAGE>

REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED BALANCE SHEETS
YEARS ENDED MARCH 31
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

Assets                                                           1997         1996
------                                                           ----         ----

<S>                                                        <C>           <C>      
CURRENT ASSETS:                                            $ 1,459,000   $   263,000
Cash
Accounts receivable, net of allowance for
  doubtful accounts of $127,000 and $148,000                 3,682,000     5,178,000
Unbilled service revenue                                     3,955,000     3,312,000
Prepaid expenses and other current assets                      210,000       197,000
Deferred income taxes                                          166,000             0
                                                            ----------    ----------

Total current assets                                        9,472,0000     8,950,000

PROPERTY AND EQUIPMENT, net                                  2,202,000     2,456,000

OTHER ASSETS                                                    62,000        91,000

IDENTIFIABLE INTANGIBLE ASSETS, net of accumulated
amortization of $852,000 and $795,000                          186,000       243,000

COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESS,
net of accumulated amortization of $154,000 and $131,000       758,000       781,000
                                                            ----------    ----------
                                                           $12,680,000   $12,521,000
                                                            ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
Notes payable and current portion of
 long-term debt                                            $    69,000   $   863,000
Accounts payable                                             2,080,000     2,244,000
Accrued expenses                                             2,604,000     1,832,000
Unearned service revenue                                     1,938,000     2,053,000
Deferred income taxes                                                0        23,000
                                                            ----------    ----------

Total current liabilities                                    6,691,000     7,015,000

LONG-TERM DEBT                                                   7,000        76,000

DEFERRED INCOME TAXES                                          281,000       223,000

OTHER LIABILITIES                                              364,000       466,000
                                                            ----------    ----------

Total liabilities                                            7,343,000     7,780,000
                                                            ----------    ----------

COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)

SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 4,000,000 shares
authorized, 455,000 issued and outstanding                       5,000         5,000
Paid-in capital                                              3,537,000     3,534,000
Retained earnings                                            1,795,000     1,202,000
                                                            ----------    ----------
Total shareholders' equity                                   5,337,000     4,741,000
                                                            ----------    ----------

                                                           $12,680,000   $12,521,000
                                                            ==========    ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       17

<PAGE>

REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                   Common Stock
                                   ------------
                                                        Paid-in       Retained
                               Shares        Amount     Capital       Earnings    Total
                               -----------------------------------------------------------
<S>                           <C>            <C>      <C>            <C>        <C>      
BALANCE, MARCH 31, 1994       $444,000       $4,000   $3,429,000     $760,000   $4,193,000

Issuance of common stock,
net of issuance costs            4,000        1,000       32,000                    33,000

Net Income                                                            350,000      350,000
                               -----------------------------------------------------------

BALANCE, MARCH 31, 1995        448,000        5,000    3,461,000    1,110,000    4,576,000

Issuance of common stock,
net of issuance costs            7,000         --         73,000                    73,000

Net Income                                                             92,000       92,000
                               -----------------------------------------------------------

BALANCE, MARCH 31, 1996        455,000        5,000    3,534,000    1,202,000    4,741,000

Issuance of common stock,
net of issuance costs             --           --          3,000                     3,000

Net Income                                                            593,000      593,000
                               -----------------------------------------------------------

BALANCE, MARCH 31, 1997       $455,000       $5,000   $3,537,000   $1,795,000   $5,337,000
                               ===========================================================
</TABLE>




See accompanying notes to consolidated financial statements.

                                       18

<PAGE>

REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                              1997           1996          1995
                                                           ---------      ---------      ---------
<S>                                                       <C>             <C>            <C>      
 
OPERATING ACTIVITIES:                                     $  593,000      $  92,000      $ 350,000
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                                747,000        714,000        710,000
Deferred income taxes                                       (131,000)       101,000       (283,000)
Loss on disposal of fixed assets                              11,000         28,000         11,000
Deferred rent charges                                        (97,000)       (82,000)       (68,000)
Change in operating assets and liabilities:
Accounts receivable and unbilled service revenue             853,000       (801,000)      (501,000)
Other assets and prepaid expenses                              6,000        (30,000)       (52,000)
Accounts payable and accrued expenses                        605,000        869,000        531,000
Unearned service revenue                                    (115,000)         9,000        835,000
                                                           ---------      ---------      ---------

Net cash provided by operating activities                  2,472,000        900,000      1,533,000
                                                           ---------      ---------      ---------

INVESTING ACTIVITIES:
Capital expenditures                                        (422,000)      (905,000)      (778,000)
Proceeds from sale of fixed assets                             8,000         16,000          8,000
                                                           ---------      ---------      ---------

Net cash used by investing activities                       (414,000)      (889,000)       770,000
                                                           ---------      ---------      ---------

FINANCING ACTIVITIES:
Repayments of long-term debt                                (448,000)      (510,000)      (612,000)
Net increase (decrease) in credit line payable to bank      (415,000)       136,000        (99,000)
Net proceeds from issuance of common stock                     1,000         49,000              0
                                                           ---------      ---------      ---------

Net cash used by financing activities                       (862,000)      (325,000)      (711,000)
                                                           ---------      ---------      ---------

NET INCREASE (DECREASE) IN CASH                            1,196,000       (314,000)        52,000

CASH AT BEGINNING OF PERIOD                                  263,000        577,000        525,000
                                                           ---------      ---------      ---------

CASH AT END OF PERIOD                                     $1,459,000      $ 263,000      $ 577,000
                                                           =========      =========      =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest Paid                                               $ 36,000      $ 155,000      $ 176,000
Income Taxes Paid                                            444,000        360,000        437,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                       19

<PAGE>


REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation - Reynolds,  Smith and Hills,  Inc. (the Company)
         is a  professional  service  firm  operating  in  the  engineering  and
         architectural  design services  industry.  The Company  provides a full
         range  of  architectural,   engineering,   planning  and  environmental
         services.

         The  consolidated  financial  statements  include  the  accounts of the
         Company and its wholly-owned subsidiaries. All significant intercompany
         transactions and accounts have been eliminated in consolidation.

         Use  of  Estimates  -  The  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  and disclosure of contingent  assets
         and  liabilities  at the  date  of the  financial  statements  and  the
         reported  amounts of revenues and expenses during the reported  period.
         Actual results could differ from those estimates.

         Income  Recognition - Revenue from  contract  services is recognized on
         the percentage-of-  completion method. Revenue is recorded as costs are
         incurred,  and  profit  is  recognized  on each  contract  based on the
         percentage  that incurred costs bear to estimated  total costs.  In the
         event of an anticipated  loss, the entire amount of the loss is charged
         to current operations.

         The Company incurs  subcontract  and other direct costs  (out-of-pocket
         expenses) some of which are passed through directly to its clients. The
         Company  believes that revenue  excluding  subcontract and other direct
         costs,  more  accurately  reflects  the amounts  earned for  activities
         performed by the Company.  Accordingly,  the Company reports such costs
         as a reduction of gross revenue to arrive at net service revenue.

         Unbilled service revenue  represents  revenues  recognized in excess of
         amounts billed.  Unearned service revenue represents billings in excess
         of revenues  recognized.  Unbilled  service  revenues which will not be
         collected during the next year are not significant.

         Property  and  Equipment - Property  and  equipment  is stated at cost.
         Depreciation is computed  principally on the straight-line  method over
         the  estimated  useful  lives of the  assets.  Depreciation  of  assets
         recorded  under  capitalized  leases is computed  on the  straight-line
         method over the lesser of the estimated useful life of the asset or the
         term of the lease.

         Identifiable Intangible Assets - Identifiable intangible assets consist
         

                                       20

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

         of values allocated to key employees,  contract backlog, proposals, and
         a covenant not to compete and are being  amortized  on a  straight-line
         basis over periods of 2 to 10 years.

         Cost in Excess of Net Assets of  Acquired  Business - Cost in excess of
         net  assets  of  acquired   businesses   is  being   amortized  on  the
         straight-line method over forty years.

         Income  Taxes - The  Company  and its  subsidiaries  file  consolidated
         Federal  income tax  returns.  Deferred  taxes  primarily  result  from
         accelerated  depreciation  methods  used for tax  purposes and deferred
         rent charges.

         New Accounting Standards - Effective April 1, 1996, the Company adopted
         SFAS No. 123, "Accounting for Stock-Based  Compensation." The pro forma
         effect of SFAS No.  123 on net  income  and  earnings  per share is not
         material to the financial statements.

         For the  fiscal  year  ending  March 31,  1998 and the  quarter  ending
         December 31, 1997,  the Company will be required to adopt SFAS No. 128,
         "Earnings Per Share". The impact on the financial  statements when SFAS
         No. 128 is adopted is expected to be immaterial.

         Net Income per Common  Share - Net income per common  share is computed
         by dividing net income by the weighted  average number of common shares
         outstanding.  Options  outstanding  to  purchase  common  stock  had no
         significant dilutive effect.

         Cash Equivalents - The Company  considers cash on hand and cash held in
         banks subject to immediate withdrawal to represent cash.

         Reclassifications  -  Certain  reclassifications  have been made in the
         1996 and 1995 financial  statements to conform to classifications  used
         in the 1997 financial statements.

2.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following at March 31:

                                1997            1996
                            -----------     -----------

Leasehold improvements      $   165,000     $   163,000
Equipment                     5,321,000       4,968,000
                            -----------     -----------
                              5,486,000       5,131,000
Accumulated depreciation     (3,284,000)     (2,675,000)
                            -----------     -----------
                            $ 2,202,000     $ 2,456,000
                            ===========     ===========

                                       21

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

3.       ACCRUED EXPENSES

         Accrued expenses consist of the following at March 31:

                                     1997          1996
                                  ----------    ----------

Accrued Payroll                   $  633,000    $  639,000
Accrued Incentive Compensation       570,000       117,000
Other                              1,401,000     1,076,000
                                  ----------    ----------

                                  $2,604,000    $1,832,000
                                  ==========    ==========


4.       NOTES PAYABLE AND CURRENT PORTION OF LONG-TERM DEBT

         Notes payable and the current  portion of long-term debt consist of the
         following at March 31:
                                           1997        1996
                                         --------    --------
Credit line payable to bank, interest
 at prime plus 3/4% (9.25% at March
 31, 1997)                               $   --      $415,000

Current portion of long-term debt          69,000     448,000
                                         --------    --------

                                         $ 69,000    $863,000
                                         ========    ========


         The credit line is collateralized by the Company's accounts receivable,
         unbilled  service  revenue,  and property and  equipment.  At March 31,
         1997,  the Company had  $1,750,000  of additional  borrowing  available
         under the credit line.

         The credit line requires the Company to be in compliance with financial
         covenants  relating to working capital,  net worth,  debt to net worth,
         and debt coverage.  Additionally,  the financial covenants restrict the
         Company from paying common stock  dividends as long as the debt remains
         outstanding.




                                       22

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5.       LONG-TERM DEBT

         Long-term debt consists of the following at March 31:

                                    1997          1996
                                 ---------     ---------
Installment note; interest at
 9.25%, due April 1, 1997        $  31,000     $ 406,000

Capital lease obligations           45,000       118,000
                                 ---------     ---------

                                    76,000       524,000
Less current portion               (69,000)     (448,000)
                                 ---------     ---------

Total long-term debt             $   7,000     $  76,000
                                 =========     =========

         Substantially  all of the  Company's  tangible  assets  are  pledged as
         security for the above debt obligations.

         Future maturities of long-term debt at March 31, 1997 are as follows:

                              1998    $69,000
                              1999      7,000
                                      -------

                                      $76,000
                                      =======


6.       INCOME TAXES

         The  provision for income taxes for the years ended March 31 consist of
the following:

                1997          1996         1995
              ---------     ---------    ---------
Current:
 Federal     $ 495,000     $  37,000    $ 497,000
 State         101,000        10,000       88,000
Deferred:
 Federal      (109,000)       84,000     (240,000)
 State        ( 22,000)       17,000     ( 43,000)
              ---------     ---------    ---------
             $ 465,000     $ 148,000    $ 302,000
              =========     =========    =========

                                       23

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
         The differences between the provision for income taxes and income taxes
         computed using the U.S. Federal statutory rate are as follows:

                               1997         1996         1995
                            ---------    ---------    ---------
Amount computed using
  the statutory rate       $ 360,000    $  82,000    $ 222,000
Increase (reduction) in
  taxes resulting from:
State income taxes            51,000       15,000       45,000
Goodwill amortization          9,000        9,000        9,000
Alternative minimum tax
  (credit)                      --           --        (30,000)
Meals and entertainment       37,000       34,000       32,000
Other                          8,000        8,000       24,000
                           ---------    ---------    ---------
                           $ 465,000    $ 148,000    $ 302,000
                           =========    =========    =========

         The following  table  identifies net deferred  taxes  recognized in the
         Company's balance sheet at March 31:
                                            1997          1996
                                          ---------     ---------
               Deferred tax asset        $ 505,000     $ 431,000
               Valuation allowance            --        ( 82,000)
               Deferred tax liability     (620,000)     (595,000)
                                         ---------     ---------
               Total deferred taxes      $(115,000)    $(246,000)
                                         =========     ========= 


         The types of temporary  differences and their related tax effects which
         create deferred taxes at March 31 are summarized as follows:
         
                                             1997          1996
                                             ----          ----
Assets:
  Allowance for doubtful accounts         $  49,000     $  56,000
  Allowance for warranty claims             111,000        81,000
  Excess rental expense over payments        59,000        97,000
  Accruals not currently deductible         286,000       115,000
  Capital loss carryover                       --          82,000
                                          ---------     ---------
                                          $ 505,000     $ 431,000
                                          =========     =========
Liability:
  Excess of tax over book depreciation    $(309,000)    $(315,000)
  Accrued Liabilities                      (108,000)     ( 78,000)
  Capitalized expenses                     (203,000)     (202,000)
                                          ---------     ---------
                                          $(620,000)    $(595,000)
                                          =========     ========= 

                                       24

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

7.       LEASES

         The   Company   leases   certain   facilities   and   equipment   under
         noncancellable  leases  expiring in various years through 2002. Some of
         the operating  leases provide that the Company pay taxes,  maintenance,
         insurance and other occupancy costs applicable to these premises.  Rent
         expense for the years ended March 31, 1997,  1996 and 1995  amounted to
         $2,109,000, $1,808,000 and $1,798,000, respectively.

         Future  minimum  payments  under  capital  leases  and   noncancellable
         operating leases are as follows:
                                              Capital            Operating
                                               Leases             Leases
                                               ------             ------

                           1998               $ 41,000         $ 1,621,000
                           1999                  7,000             793,000
                           2000                  -----             675,000
                           2001                  -----             451,000
                           2002                  -----             146,000
                                           -------------      ------------
         Total minimum payments                 48,000         $ 3,686,000
                                                               ===========
         Amount representing interest          ( 3,000)
                                              ----------
         Present value of net minimum lease
          payments                            $ 45,000
                                              ========


8.       COMMITMENTS AND CONTINGENCIES

         The Company is subject to lawsuits  involving  claims  typical of those
         filed   against   engineering   and   architectural   professions.   In
         management's  opinion the  potential  losses not  covered by  insurance
         would not be material to the Company's financial position.

         For each of the years ended March 31, 1997, 1996 and 1995 approximately
         80%,  75% and 75% of the  Company's  business  is with  departments  or
         agencies of Federal, state and local governments.  For the same periods
         35%, 40% and 35% of the Company's gross revenues resulted from services
         provided to the Florida Department of  Transportation.  These contracts
         may be subject to  renegotiation  or termination at the election of the
         government.  The Company is subject to examinations by  representatives
         of certain  governmental  agencies for which it provides  services.  In
         management's  opinion the results of any  examination  would not have a
         significant effect on the Company's financial position.

                                       25

<PAGE>



REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

9.       EMPLOYEE BENEFIT PLAN

         The  Company  sponsors  a Profit  Sharing  Plan which  qualifies  under
         Section   401(k)  of  the  Internal   Revenue  Code.  The  Plan  allows
         participating  employees to  contribute  from 2% to 15% of their earned
         compensation  to the plan.  The Company  contributes to the plan 25% of
         each   participant's   contribution,   up  to  the  6%   level  of  the
         participant's  contribution.  For the years ended March 31, 1997,  1996
         and 1995 the  Company  contributed  $167,000,  $158,000  and  $119,000,
         respectively.  Participants  in the plan have the  option  to  purchase
         shares of the Company's common stock. At March 31, 1997,  96,000 shares
         of Company  stock have been issued and 294,000  shares are reserved for
         future issuance under the plan.


10.      STOCK BONUS AND OPTION PLAN

         The Company has a stock bonus plan that  provides  for the  awarding of
         the Company's  common stock to selected  employees.  At March 31, 1997,
         39,000 shares are reserved for future issuance under the plan.

         The Company has stock option  plans that provide to selected  employees
         the granting of  incentive  and  non-qualified  options to purchase the
         Company's  common  stock.  A summary  of option  transactions  is shown
         below.


                                 1997                  1996
                          ------------------    ------------------
                                    Weighted              Weighted
                                     Average               Average
                                    Exercise              Exercise
                          Options     Price     Options     Price
                          -------     -----     -------     -----
Outstanding at
  beginning of year        31,400    $    11     25,400    $    11
Options granted               500         12      7,100         11
Options exercised             100         10        100         10
Options forfeited           3,500         11      1,000         12
                          -------               -------
Outstanding at
  end of year              28,300    $    11     31,400    $    11
                          =======               =======
Options exercisable at
  year end                 21,300                19,300


                                       26

<PAGE>


REYNOLDS, SMITH AND HILLS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The following table summarizes  information  about stock options  outstanding at
March 31, 1997:

                      Options Outstanding          Options Exercisable
                      -------------------          -------------------

                             Weighted
                              Average    Weighted                Weighted
   Range of     Number       Remaining   Average    Number       Average
   Exercise    Outstanding  Contractual  Exercise Exercisable    Exercise
      Prices    at 3/31/97 Life (years)  Price    at 3/31/97     Price
      ------    ---------- ------------  -----    ----------     -----

$10.25-$10.99     8,000        2.3      $10.45       5,800       $10.42
$11.00-$11.99    18,600        1.6       11.35      14,200        11.44
$12.00-$12.65     1,700        1.5       12.47       1,300        12.57
                 ------                            ------
                 28,300        1.8       11.16      21,300        11.23
                 ======                            ======


Remaining non-exercisable stock options as of March 31, 1997 become available as
follows:

                                    1998             4,300
                                    1999             2,500
                                    2000               200
                                                     ------
                                                     7,000
                                                     =====

At March 31, 1997,  121,700 stock options are reserved for future issuance under
the plans.


11.      FINANCIAL INSTRUMENTS

         The Company used the following  methods and assumptions to estimate the
         fair value of the following financial instrument:

                  Debt.  Interest  rates  that are  currently  available  to the
         Company  for  issuance  of  debt  with  similar   terms  and  remaining
         maturities  are used to estimate fair value for debt  instruments.  The
         Company  believes the carrying amount is a reasonable  estimate of such
         fair value.


                          *****************************

                                       27
<PAGE>














INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
Reynolds, Smith and Hills, Inc.
Jacksonville, Florida

We have audited the accompanying  consolidated financial statements of Reynolds,
Smith and Hills, Inc. and its subsidiaries as of March 31, 1997 and 1996 and for
each of the three years in the period ended March 31, 1997,  and have issued our
report  thereon  dated May 23, 1997;  such report is included  elsewhere in this
Form  10-K.  Our audits  also  included  the  consolidated  financial  statement
schedule  of  Reynolds,   Smith  and  Hills,  Inc.,  listed  in  Item  14.  This
consolidated financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly in all material respects the information set forth therein.


/s/DELOITTE & TOUCHE LLP


Jacksonville, Florida
May 23, 1997



                                       28
<PAGE>

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                        REYNOLDS, SMITH AND HILLS, INC.

--------------------------------------------------------------------------------
         COLUMN A             COLUMN B       COLUMN C   COLUMN D       COLUMN E
--------------------------------------------------------------------------------
                                            ADDITIONS: DEDUCTIONS:

                              BALANCE AT    CHARGED TO                BALANCE AT
                              BEGINNING     COSTS AND                     END
        DESCRIPTION           OF PERIOD     EXPENSES   WRITE-OFFS      OF PERIOD
        -----------           ---------     --------   ----------      ---------


Year ended March 31, 1997:
 Allowance for
  doubtful accounts           $ 148,000    $ 68,000     ($89,000)     $ 127,000

Year ended March 31, 1996:
 Allowance for
  doubtful accounts           $ 151,000    $ 56,000     ($59,000)     $ 148,000


Year ended March 31, 1995:
 Allowance for
  doubtful accounts           $ 172,000    $107,000    ($128,000)     $ 151,000

                                       29

<PAGE>



                                   Exhibit 21



                              List of Subsidiaries
                              --------------------


1.       RS&H Architects-Engineers-Planners, Inc.
         (a North Carolina corporation)

2.       Reynolds, Smith and Hills CS, Incorporated
         (a Florida corporation)

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<PAGE>














INDEPENDENT AUDITORS' CONSENT



We consent to the incorporation by reference in Registration Statements Numbered
33-40554,  33-40553, 33-40552 and 33-40551 of Reynolds, Smith and Hills, Inc. on
Form S-8 of our report  dated May 23, 1997  appearing  in this Annual  Report on
Form 10-K of Reynolds, Smith and Hills, Inc. for the years ended March 31, 1997,
1996 and 1995.


/S/DELOITTE & TOUCHE LLP


Jacksonville, Florida
June 17, 1997




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