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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT

TO SECTIONS 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

For the fiscal year ended December 31, 2002.

or

For the transition period from                      to                     

Commission File No. 0-22701

GEVITY HR, INC.

(exact name of registrant as specified in its charter)

(Registrant’s Telephone Number, Including Area Code):

(941) 741-4300

Securities Registered Pursuant to Section 12(b) of the Act:

NONE

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of class)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes  ¨    No  x

The aggregate market value of the voting stock of Gevity HR, Inc. held by non-affiliates (based upon the March 19, 2003, $5.82 closing sale price for the Common Stock on the Nasdaq National Market) was approximately $78.5 million.

The number of shares of the Registrant’s common stock, $.01 par value per share outstanding as of March 19, 2003 was 20,901,224.

DOCUMENTS INCORPORATED BY REFERENCE

PART III – Portions of Registrant’s Proxy Statement relating to the annual meeting of shareholders to be held May 22, 2003, are incorporated by reference in Part III.

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PART I

Cautionary Note Regarding Forward-Looking Statements

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”), Gevity HR, Inc. (“Gevity” or the “Company”) is hereby providing cautionary statements identifying important factors that could cause the Company’s actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company herein, in other filings made by the Company with the Securities and Exchange Commission, in press releases or other writings, or orally, whether in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will result,” “are expected to,” “anticipated,” “plans,” “intends,” “will continue,” “estimated,” and “projection”) are not historical facts and may be forward-looking and, accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such known and unknown risks, uncertainties and other factors include, but are not limited to, the following:

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

ITEM 1.    BUSINESS

General

Gevity is a leading United States provider of human capital management solutions. The Company offers its clients, which are typically small to medium-sized businesses with between five and one hundred employees, a broad range of products and services that provide a complete solution for the clients’ human resources (“HR”) outsourcing needs. As of December 31, 2002, the Company served more than 6,600 clients, as measured by individual client Federal Employer Identification Numbers (“FEIN”), with approximately 100,000 active worksite employees, and maintained offices in Florida, Texas, Georgia, Arizona, Minnesota, North Carolina, Tennessee, Alabama, Colorado, California and New York. The Company’s products and services include assistance with employee recruiting, performance management, training and development, benefits administration, payroll administration, governmental compliance, risk management, unemployment administration, and health, welfare and retirement benefits.

The Company’s services are designed to improve the productivity and profitability of its clients’ businesses by:

In order to utilize the Company’s products and services, the client transfers certain employment-related risks and liabilities to the Company and retains other risks and liabilities. In this context, the client and the Company are each viewed as and become a “co-employer” of the client’s worksite employees. In order to enter into a co-employer relationship, the Company operates as a Professional Employer Organization (“PEO”).

As a co-employer, employment-related liabilities are contractually allocated between the Company and the client under a written Professional Services Agreement. Under the Professional Services Agreement, the Company assumes responsibility for and manages the risks associated with each client’s worksite employee payroll obligations, including the liability for payment of salaries and wages (including payroll taxes) to each worksite employee and, at the client’s option, responsibility for providing group health, welfare and retirement benefits to such individuals. These obligations of the Company are fixed, whether or not the client makes timely

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payment of the associated service fee. In this regard, it is important to understand that, unlike payroll processing service providers, the Company issues to each of the client’s worksite employees Company payroll checks drawn on the Company bank accounts. The Company also reports and remits all required employment information and taxes to the Internal Revenue Service (“IRS”) and issues a Federal Form W-2 to each worksite employee under the appropriate Company FEIN. The Company assumes the responsibility for compliance with those employment-related governmental regulations that can be effectively managed away from the client’s worksite. The Company provides to each worksite employee workers’ compensation insurance coverage under the Company’s insurance policy. The client, on the other hand, contractually retains the general day-to-day responsibility to direct, control, hire, terminate and manage each of the client’s worksite employees. The worksite employee services are performed for the exclusive benefit of the client’s business. The client also remains responsible for compliance with those employment-related governmental regulations that are more closely related to the day-to-day management of worksite employees.

The Company charges its clients a service fee that is designed to yield a profit to the Company and to cover the cost of certain employment-related taxes, workers’ compensation insurance coverage and administrative and field services provided by the Company to the client. The component of the service fee related to administration varies according to the size of the client, the amount and frequency of the payroll payments and the method of delivery of such payments. The component of the service fee related to workers’ compensation and unemployment insurance is based, in part, on the client’s historical claims experience. In addition, the client may choose to offer certain health, welfare and retirement benefits to its worksite employees. The cost of the selected plans is billed separately from the service fee. In addition to the service fee and cost of selected benefit plans, billings to each client also include the wages and other employment related taxes of each worksite employee. The gross billings are invoiced at the time of delivery of each periodic payroll delivered to the client.

The Company contracts with a licensed insurance carrier for workers’ compensation insurance coverage for its worksite employees. In 2002, CNA Financial Corporation (“CNA”) was the provider of such insurance, and in 2003, member insurance companies of American International Group, Inc. (“AIG”) will provide such insurance. The Company pays the premiums for this coverage and passes along to its clients some or all of the costs attributable to the coverage for their respective worksite employees. The Company does not act as an insurance company and is not licensed in any state as an insurance company. However, as part of managing its workers’ compensation programs in 2003 the Company will operate a wholly owned Bermuda based insurance company. The Company does assume certain workers’ compensation risk as a result of providing its services. For a more detailed analysis of the CNA and AIG programs, see “Workers Compensation Plans” beginning on page 10.

The Company has an incentive to minimize its workers’ compensation and unemployment tax costs because the Company bears the risk that its actual costs will exceed those billed to clients, and conversely, the Company profits on these components of its service offerings in the event that it effectively manages such costs.

The Company also provides on a very limited basis HR products and services to small and medium-sized businesses without entering into a co-employer relationship. These products and services range from basic payroll processing to payroll processing and HR management solutions that include most of the Company’s product offerings. These services have not been actively marketed to new clients and revenues generated from such services are not significant.

References in this report to the “Company” or “Gevity” include Gevity HR, Inc. and its consolidated wholly-owned subsidiaries unless the context indicates otherwise. The Company was originally organized in 1993 as a limited partnership (the “Partnership”) to acquire the assets of a PEO business that had operated since 1984. Gevity HR, Inc. (formerly known as Staff Leasing, Inc.) was formed in 1997 to acquire all of the limited partnership interests in the Partnership held by various investors, including certain executive officers, directors, and employees of the Company, pursuant to a reorganization (the “Reorganization”). In the Reorganization, which was concluded in July 1997 simultaneously with the Company’s initial public offering, Gevity acquired all of the limited partnership interests in the Partnership, becoming the sole limited partner and

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in effect incorporating the business of the Company. In September 1997 as part of the Reorganization, all of the issued and outstanding capital stock of Staff Acquisition, Inc., the general partner of the Partnership, was acquired from Charles S. Craig.

On August 3, 2001 the Company began doing business using the name “Gevity HR”. The new identity was intended to (i) emphasize that the Company provides a broad range of HR solutions to its clients; (ii) confirm the Company’s objective of building long-term relationships with its clients; and (iii) avoid the connotation that the Company is a staffing firm. At its 2002 Annual Meeting of Shareholders, the Company’s shareholders voted to amend the Company’s Articles of Incorporation to change the name of the Company to Gevity HR, Inc.

Recent Events

On March 6, 2003, the Company announced that it executed a letter of intent on March 5, 2003 for the sale of its convertible preferred stock to an affiliate of Frontenac Company LLC (“Frontenac”) in a private placement for a purchase price of $30 million. Frontenac is a Chicago-based private equity investment firm with over $1 billion under active management.

The Company also announced on March 6, 2003 that it executed a letter of intent with Charles S. Craig on March 5, 2003, to purchase 3.1 million shares of Gevity common stock held by Mr. Craig, at a per share price of $5.44 less $.06 per share to reimburse the Company for related expenses. The price of $5.44 per share is the average of the closing prices of the Company’s common stock for the five business days preceding the execution of such letter of intent. Mr. Craig’s holdings in the Company will be reduced from 4.9 million shares to 1.8 million shares (or 9.9% of the Company’s outstanding shares of common stock as of March 5, 2003) after the purchase is completed.

Proceeds from the sale of the convertible preferred stock will provide additional capital to the Company to enable it to pursue its growth strategy, including possible acquisitions. In addition, $16.6 million of the proceeds will be used by the Company to fund the purchase of Mr. Craig’s shares of common stock.

Under the terms of the agreement with Frontenac, dividends will accrue on the convertible preferred stock at the greater of (i) 4% of its stated value or (ii) on an as converted basis, the amount declared on the Company’s common stock on a per share basis. The convertible preferred stock will be convertible into common stock at a per share price of $5.44 which is average of the closing prices of the Company’s common stock for the five business days preceding the execution of this letter of intent. This could result in the issuance of up to 5.5 million shares of common stock upon conversion, or approximately 23.6% of the outstanding shares of common stock as of March 5, 2003, on an as-converted basis, after the repurchase of Mr. Craig’s shares.

As part of the financing, two representatives of Frontenac will join the Board of Directors of the Company. The closing of the private placement with Frontenac is subject to the Company and Frontenac entering into a definitive agreement, approval of the Company’s Board of Directors, shareholder approval and other customary conditions. Such shareholder approval will be sought at the Annual Meeting of Shareholders to be held on May 22, 2003. The closing of the private placement and the repurchase of Mr. Craig’s shares will occur promptly after such shareholder approval is received.

HR Outsourcing Industry

The HR outsourcing industry began to evolve in the early 1980s, largely in response to the difficulties faced by small to medium-sized businesses in procuring workers’ compensation and group health insurance coverage on a cost-effective basis and operating in an increasingly complex legal and regulatory environment. While various service providers, such as payroll processing firms, benefits and safety consultants and temporary staffing firms, were available to assist these businesses with specific tasks, PEOs began to emerge as providers of a more comprehensive outsourcing solution to these burdens. PEOs combined the employees of a large number of clients and leveraged their purchasing power to obtain discounted workers’ compensation and group health insurance policies.

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The Company believes that the key factors driving demand for HR outsourcing services include:

Another factor affecting the HR outsourcing industry has been the increasing recognition and acceptance by regulatory authorities of PEOs and the co-employer relationship created by PEOs, with the development of licensing or registration requirements at the state level. The Company and other industry leaders, in concert with the National Association of Professional Employer Organizations (“NAPEO”), have worked with the relevant government entities for the establishment of a regulatory framework that would clarify the roles and obligations of the PEO and the client in the “co-employer” relationship. This framework generally imposes financial responsibility on the PEO in order to promote the increased acceptance and further development of the industry. See “Industry Regulation — State Regulation” beginning on page 16.

Twenty-two states, including five states where the Company has offices (Florida, New York, Texas, Colorado, Tennessee and Minnesota), have passed laws that have licensing, registration or other regulatory requirements for PEOs and several states are considering such regulation. Such laws vary from state to state, but generally codify the requirements that the PEO must reserve the right to hire, terminate and discipline worksite employees and secure workers’ compensation insurance coverage. In certain instances, the Company delegates or assigns such rights to the client. The laws also generally provide for monitoring the fiscal responsibility of PEOs and, in many cases, the licensure of the controlling officers of the PEO.

Since the late 1990’s, due to changes in the workers’ compensation and the group health insurance markets, many PEOs have encountered significant difficulties in obtaining workers’ compensation and group health benefit insurance policies. Many PEOs have exited the industry due to the lack of available workers’ compensation and group health benefit insurance programs or due to their inability to provide the financing security required by insurance companies in order to obtain insurance coverage.

Many of the surviving PEOs, especially the larger ones, are capitalizing on the co-employment model and transforming their businesses into full-service HR outsourcing companies while still offering workers’ compensation and group health benefit insurance programs.

Products and Services

The Company provides a broad range of products and services to its clients. These products and services are primarily offered to the Company’s clients on a “bundled” or all inclusive basis. Health, welfare and retirement programs may be elected to be offered to worksite employees at the option of each client. The Company provides these products and services to its clients through the following core activities:

Find the Right People.    The Company assists its clients in finding the right people for their businesses by providing:

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Develop and Manage People.    The Company assists its clients in developing and managing their people by providing:

Retain the Best Employees.    The Company assists its clients in retaining the best employees for their businesses by providing:

Manage the Paperwork.    The Company assists its clients in managing employment related paperwork by providing the following services:

Protect our clients’ business.    The Company assists its clients in protecting their businesses by providing:

Clients

Overview.    As of December 31, 2002, the Company’s customer base consisted of over 6,600 client companies with an average of 15.0 employees.

The Company had clients classified in over 500 Standard Industrial Classification (“SIC”) codes. The following table shows the Company’s client distribution by major SIC code industry grouping for the years indicated, ranked as a percentage of gross billings to clients:

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The Company delivers its services through a combination of dedicated client services professionals located in the field offices and at the Company’s headquarters, as well as through the Gevity HR Central portal. In order to provide proactive client relationship management, each of the Company’s clients has been assigned a single client services professional to serve as the client relationship manager. This allows the client to interface with the Company through a single point of contact.

Client Selection and Retention Strategy.    Historically, the Company’s sales force sold its services to all businesses within an established client selection criteria. As a result, the Company’s client base has contained significant segments of businesses with fewer than five employees, start-up businesses and small construction businesses that tend to be volatile and less likely to succeed than larger businesses with longer operating histories in less cyclical industries.

During 2000, the Company modified its selection criteria for new clients to restrict the solicitation of businesses with fewer than five employees and those paying wages substantially below the average for their trade or business. At that time, the Company modified its pricing model to take into account factors such as the size of the client based on worksite employee count, competitiveness of wages and payroll volume, and the length of time the client has been in business. Additionally, the Company decided to exit certain high-risk industry segments and terminated all clients within those segments. In 2001, the Company further refined its client selection criteria for new business by targeting clients with a lower-risk profile. The Company considers industries to be high-risk if there is a likelihood of a high frequency of on-the-job accidents involving worksite employees or a likelihood that any such accidents will be severe.

By no longer selling its services to high-risk clients, the Company believes that it will reduce the volatility of its earnings that are attributable to the cost of its workers’ compensation programs. Volatility in workers’ compensation costs arises due to the complexity in projecting the number of accidents, the ultimate severity of such accidents, and the time over which claims must be paid.

As part of its current client selection strategy, the Company offers its services to businesses within specified SIC codes. All prospective clients are also evaluated individually on the basis of total predicted profitability. This analysis takes into account workers’ compensation risk and claims history, unemployment claims history, payroll adequacy, and credit status. With respect to potential clients operating in certain industries believed by the Company to present a level of risk exceeding industry norms, more rigorous approval requirements must be met before the Company agrees to provide services to the client. This process may include an on-site inspection and review of workers’ compensation and unemployment claims experience for the last three years. In addition, under the terms of the Company’s workers’ compensation agreement, prospective clients operating in certain industries or with historically high workers’ compensation insurance claims experience must also be approved by the Company’s insurance carrier before the Company enters into a contract to provide services.

The Company maintains a client review program that includes a detailed profitability and risk analysis of all its clients. Based on the results of these analyses, the Company may modify its pricing, or if necessary, terminate certain clients that the Company believes would otherwise be detrimental or not contribute to its long-term profitability. For example, in February 2002, the Company reduced its overall risk profile by terminating all clients in the roofing and trucking industries.

Due to general market increases in the costs of insurance related to workers’ compensation and health benefits, the Company implemented a general price increase as of January 1, 2002 and 2003 for most of its clients.

The Company’s client retention rate for 2002 was 74.4% The Company uses the NAPEO standard for measuring client retention, which is computed by dividing the number of clients at the end of the period by the sum of the number of clients at the beginning of the period plus the number of clients added during the period. The client retention rate is affected by a number of factors including the natural instability of the small to

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medium-sized business market and clients that were terminated by the Company for reasons that include unacceptable risk and low profitability to the Company.

In order to increase retention of desired clients, the Company implemented several client care initiatives focused on improving client service. For example, each client has been assigned a single relationship manager with proactive responsibility to enrich and broaden the client experience through a single point of contact with the Company. In addition, the Company has fully deployed the Oracle Customer Relationship Management System that allows the Company to quickly respond to and monitor client issues, track response time of client service professionals, and provide better overall client service. The Company also contracts with outside consultants to perform customer satisfaction surveys to gain a better understanding of the reasons that may cause clients to terminate their business relationship with the Company.

Professional Services Agreement.    All clients are required to enter into the Company’s Professional Services Agreement. The Professional Services Agreement provides for an initial one-year term, subject to termination by the Company or the client at any time upon 30 days prior written notice. After the initial term the contract may be renewed, terminated or continued on a month-to-month basis. Following the initial term, most contracts are continued on a month-to-month basis. Based on the results of a financial review, the Company may require the owners of client companies to personally guarantee the client’s obligations under the Professional Services Agreement.

The Company retains the ability to terminate the Professional Services Agreement as well as its co-employment relationship with the worksite employees immediately upon non-payment by a client. The Company manages its credit risk through the periodic nature of payroll, client credit checks, owner guarantees, the Company’s client selection process and its right to terminate the Professional Services Agreement and the co-employment relationship with the worksite employees.

Employment-related liabilities are generally allocated between the Company and the client pursuant to the Professional Services Agreement, with the Company assuming responsibility for worksite employee payroll obligations and for compliance with certain employment-related governmental regulations. On the other hand, the client remains responsible for compliance with the employment-related governmental regulations that are more closely related to the daily supervision, direction and control of worksite employees. In some cases, employment-related liabilities are shared between the Company and the client. The following table summarizes

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the general division of responsibilities for employment related regulatory compliance under the Professional Services Agreement:

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Sales and Marketing

The Company markets its services through a direct sales force, which as of December 31, 2002 consisted of approximately 160 sales associates. In order to exercise more control over the client selection process, the Company uses a direct sales force rather than selling through agents. The Company’s sales force is distributed throughout its branch offices. The Company plans to expand its national coverage and add sales offices in major metropolitan areas over the next few years as it targets higher wage employees in white-collar businesses. The Company’s sales associates are compensated by a combination of salary and commission that has, for top producers, generated annual earnings in excess of $250,000.

As the Company’s focus has shifted to selling its services to lower-risk, higher paying clients, an associated change has been required in the composition of the sales force. As a result, the Company has revised the profile of its targeted sales candidates and has also restructured its hiring practices.

In addition, the Company expanded and improved its training and orientation programs. For many years, the Company provided a formal one-week training program for new sales hires, together with on-the-job training. In the fourth quarter of 2002, the Company implemented a comprehensive four-week training program for all new sales associates and also designed a new one-week training program for all existing sales associates. Both training courses emphasize the benefits available to clients through the Company’s expansive technology-based service delivery model and also analyzes the Company’s sales process.

The Company also restructured the compensation system of its sales force, effective January 1, 2003. Historically, sales associates had no defined sales territory and earned commiss