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FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

For the quarterly period ended September 30, 2002

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

For the transition period from                        to                        

Commission file number: 0-22141

COVANSYS CORPORATION

32605 West Twelve Mile Road

Registrant’s telephone number, including area code: (248) 488-2088

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 o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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COVANSYS CORPORATION

INDEX

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COVANSYS CORPORATION AND SUBSIDIARIES

The accompanying notes are an integral part of these condensed consolidated balance sheets.

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COVANSYS CORPORATION AND SUBSIDIARIES

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

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COVANSYS CORPORATION AND SUBSIDIARIES

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

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COVANSYS CORPORATION AND SUBSIDIARIES

1. Organization and Basis of Presentation

      Complete Business Solutions, Inc. was founded in 1985. In June 2001, Complete Business Solutions, Inc. changed its name to Covansys Corporation. Covansys Corporation and its subsidiaries (the Company) provide information technology (IT) services worldwide to large and mid-size organizations. The Company offers its clients a focused range of IT services specializing in systems integration services and strategic outsourcing. The Company’s range of experience runs from advising clients on IT business strategy and strategic technology plans to developing and implementing appropriate IT applications solutions.

      The accompanying condensed consolidated financial statements have been prepared by management, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2002, the results of its operations for the three and nine month periods ended September 30, 2001 and 2002, and cash flows for the nine month periods ended September 30, 2001 and 2002. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s 2001 Form 10-K.

      The results of operations for the three and nine month periods ended September 30, 2002 are not necessarily indicative of the results to be expected in future quarters or for the full fiscal year ending December 31, 2002.

2. Acquisition

      On May 31, 2002, Covansys acquired all of the outstanding capital stock of PDA Software Services, Inc (PDA), a wholly owned subsidiary of Selective Insurance Group. PDA is a market leader in the development, implementation and maintenance of systems for states required to meet federal tracking and reporting mandates of the Women, Infants & Children (WIC) Program. The acquisition expands the Company’s portfolio of capabilities for state governments and strengthens the Company’s business process outsourcing capabilities. For financial statement purposes the acquisition was accounted for as a purchase and, accordingly, PDA’s results are included in the condensed consolidated financial statements since the date of acquisition. The aggregate purchase price was approximately $15,914, net of cash acquired. The aggregate purchase price, which was funded through available working capital, has been allocated to the assets based upon their respective fair values.

3. Restructuring and Other Costs

      During the nine month period ended September 30, 2002, the Company recorded restructuring and other costs of $1,407, consisting of the following:

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      During the nine month period ended September 30, 2001, the Company recorded restructuring and other costs of $19,317, consisting of the following:

      The following is a roll forward of the accrual for restructuring and other related charges:

      Cash payments and other includes $1,600 of liabilities that were reclassified within accrued other liabilities based upon the nature of the item.

4. Income Taxes

      The Company has recorded federal and state income taxes in the condensed consolidated statements of operations for the nine month periods ended September 30, 2001 and 2002 based on the anticipated effective tax rate for fiscal years 2001 and 2002. The Company has incurred tax losses in excess of tax carrybacks in the United States. The Company benefited these tax losses and expects to realize these tax assets through future U.S. taxable income generated by operations.

5. Common Stock Repurchase Program and Net Loss Per Share

      In October of 2002, the Company’s board of directors authorized the repurchase of an additional 2,000,000 shares of the Company’s Common Stock, bringing the total authorization to repurchase Company Common Stock to 14,000,000 shares.

      Through December 31, 2001, the Company repurchased 9,500,300 shares of its Common Stock, for cash, at a total cost of $131,504. During the nine month period ended September 30, 2002, the Company repurchased 758,600 shares of its Common Stock at a total cost of $5,521.

      Basic and diluted net loss per share is computed in accordance with SFAS No. 128, “Earnings Per Share,” by dividing the net loss allocable to common shareholders by the weighted average number of shares of common stock outstanding. For the years 2001 and 2002, the effect of convertible redeemable preferred stock, stock options and warrants outstanding for the purchase of shares of common stock has not been used in the calculation of diluted net loss per share because to do so would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share allocable to common stockholders are equal. The total number of shares excluded from the calculations of diluted net loss per share, prior to application of the treasury stock method, was 8,773,877 and 8,705,652, for the three month periods ended September 30, 2001 and 2002, respectively, and 8,790,676 and 8,726,144, for the nine month periods ended September 2001 and 2002, respectively.

6. Adoption of SFAS No. 142 and SFAS No. 141

      Effective January 1, 2002, the Company adopted SFAS No. 141 Business Combinations and SFAS No. 142 Goodwill and Other Intangible Assets. SFAS 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. SFAS 142 requires that goodwill and certain intangibles no longer be amortized, but instead be tested for impairment at least annually.

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      The following table summarizes the reconciliation of reported net loss available for common shareholders to adjusted net loss available for common shareholders for the years ended December 31, 1999, 2000 and 2001 and for the three and nine month periods ended September 30, 2001, had SFAS 142 been applied.

      The Company completed the transitional goodwill impairment testing, as required by SFAS No. 142, during the three month period ended June 30, 2002. The Company tested for impairment of its reporting units by comparing fair value to carrying value. Fair value was determined using a discounted cash flow methodology. This evaluation indicated that goodwill was not impaired.

7. Comprehensive Income (Loss)

      Other comprehensive income (loss) mainly includes foreign currency translation adjustments. Total comprehensive income (loss) is summarized as follows:

8. Related Party Transactions

      Synova, Inc. (Synova) is an information technology professional services organization owned by a Co-Chairman of the Company’s Board of Directors. During the nine month period ended September 30, 2002, the Company provided services to Synova totaling $2,916. In addition, Synova provided services to the Company totaling $2,291. The net balance owed to the Company by Synova at September 30, 2002 was $696. In addition, under the terms of a note payable, Synova owes the Company $8,000. This note is included in Other Assets on the accompanying condensed consolidated balance sheet, is due in September 2005, and interest is paid quarterly in accordance with its terms.

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      The Company paid $750 to Clayton, Dubilier and Rice, Inc. (CDR), a shareholder, for financial and management advisory services during the nine month period ended September 30, 2002.

      During the three month period ended September 30, 2002, the Company entered into a ten year agreement to provide IT outsourcing services to SIRVA, Inc., a company related through common ownership by CDR. During the three month period ended September 30, 2002, services provided by the Company to SIRVA, Inc. totaled $1,300.

      During the nine month period ended September 30, 2002, the Company provided IT services totaling $185 to Acterna Corporation, a company related through common ownership by CDR.

      The Company paid approximately $237 during the nine month period ended September 30, 2002 for mergers and acquisitions consulting services provided by the Chesapeake Group, Inc. a company owned by a director.

      Praja, Inc. (Praja) is an information technology professional services organization owned in part by a Co-Chairman of the Company’s Board of Directors. During the nine month period ended September 30, 2002, the Company provided services to Praja totaling $62. In addition, Praja provided services and software to the Company totaling $183.

9. Recently Issued Financial Accounting Standards

      In July 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities”. This statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of the commitment to an exit or disposal plan. This statement will be effective for Covansys for any exit or disposal activities initiated after December 31, 2002. The adoption of this statement will not have a material effect on our results of operations or financial position.

      In April 2002, the FASB issued SFAS No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. This statement eliminates the automatic classification of gain or loss on extinguishment of debt as an extraordinary item of income and requires that such gain or loss be evaluated for extraordinary classification under the criteria of Accounting Principles Board No. 30 “Reporting Results of Operations”. This statement also requires sales-leaseback accounting for certain lease modifications that have economic effects that are similar to sales-leaseback transactions, and makes various other technical corrections to existing pronouncements. This statement will be effective for Covansys for the year ending December 31, 2003. The adoption of this statement will not have a material effect on our results of operations or financial position.

      In October 2002, the Emerging Issues Task Force issued tentative conclusions regarding EITF Issue 00-21 “Accounting for Revenue Arrangements with Multiple Deliverables”. This EITF is tentatively scheduled to be effective for revenue arrangements entered into in fiscal years beginning after December 15, 2002. We are closely monitoring developments in this issue and will complete our assessment of any potential impact on our results of operations upon the issuance of a final statement.

10. Subsequent Event — Stock Option Exchange Offer

      On October 7, 2002, our Board of Directors approved a plan under which certain option holders will be permitted to exchange outstanding Covansys stock options for a number of options to be calculated using the Black-Scholes valuation methodology. The new options will be issued no sooner than six months and a day from the date of cancellation of the original options. The new options will be issued with an exercise price equal to the fair market value of Covansys Common Stock on the date of grant.

      The following section should be read in conjunction with our Consolidated Financial Statements and related Notes appearing in this Form 10-Q. With the exception of statements regarding historical matters and

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Overview

      We provide IT services worldwide, offering clients flexible global delivery capabilities. Our strategy is to establish long-term client relationships and to secure additional engagements with existing clients by providing quality services and by being responsive to client needs. For each of the past five years, over 80% of our revenues were generated from existing clients from the previous fiscal year.

      We offer our clients a focused range of IT services specializing in systems integration services and strategic outsourcing. Our range of experience runs from advising clients on IT business strategy and strategic plans to developing and implementing appropriate IT applications solutions.

      We generally assume responsibility for project management and may bill the client on either a time-and-materials or fixed-price basis. We recognize revenues on time-and-materials engagements as the services are performed. On fixed-price engagements, we recognize revenues under the percentage of completion method or, for outsourcing contracts, ratably over the applicable period. For the three months ended September 30, 2001 and 2002, approximately 29% and 42%, respectively, of our total revenues were generated from fixed-price engagements. The increase in the ratio of fixed-price projects is due to long term development projects we have with clients in the state and local government sector, the increased level of total outsourcing projects, and an increase in project work for other large clients.

      Our most significant cost is project personnel cost, which consists primarily of salaries, wages and benefits for our IT professionals. We strive to maintain our gross profit margin by controlling project costs and offsetting increases in salaries and benefits with increases in billing rates. We use a human resource management team to ensure that IT professionals are quickly placed on assignments to minimize nonbillable time and are placed on assignments that use their technical skills and allow for maximum billing rates.

      In an effort to sustain our growth and profitability, we have made and continue to make substantial investments in our infrastructure, including: (1) development centers in the United States and India; (2) system methodologies; (3) sales and marketing teams; and (4) internal systems.

      The following section discusses our Critical Accounting Policies. For information regarding our other accounting policies please refer to our discussion of our significant accounting policies provided in our Annual Report on Form 10-K for the year ended December 31, 2001.

Critical Accounting Policies and Estimates

      The following is an overview discussion of our critical accounting policies.

      Revenue Recognition. The Company recognizes professional service fee revenue on time-and-materials contracts as the services are performed.

      Revenues on fixed-priced contracts are recognized using the percentage of completion method. The percentage of completion is determined by relating the actual cost of labor performed to date to the estimated total cost of labor for each contract. If the estimate indicates a loss on a particular contract, a provision is made for the entire estimated loss without reference to the percentage of completion. Revenues from

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      Computer Software. The Company performs research to develop software for various business applications. The costs of such research are charged to expense when incurred. When the technological feasibility of the product is established, subsequent costs are capitalized. Capitalized software costs are amortized on a product-by-product basis. Amortization is recorded on the straight-line method over the estimated economic life of the product, generally five years, commencing when such product is available. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs requires considerable judgment by management with respect to certain external factors including, but not limited to, anticipated future gross product revenue, estimated economic product lives and changes in software and hardware technology. These assumptions are reevaluated and adjusted as necessary at the end of each accounting period. On an ongoing basis, management reviews the valuation and amortization of capitalized development costs. As part of this review, the Company considers the value of future cash flows attributable to the capitalized development costs in evaluating potential impairment of the asset. Amounts charged to expense for research and development of computer software were not material in the periods indicated.

Results of Operations

      Revenues. Revenues decreased 0.9% to $99,273 for the three month period ended September 30, 2002 from $100,136 for the same period in 2001. Revenues decreased 7.9% to $284,699 for the nine month period ended September 30, 2002 from $309,219 for the same period in 2001. These decreases were largely attributable to slower demand caused by current economic conditions, longer sales cycles, and lower bill rates offset by revenue from PDA Software Services, Inc. (PDA) representing 5.2% and 2.5% of revenue for the three and nine month periods ended September 30, 2002. PDA was acquired on May 31, 2002.

      Gross Profit. Gross profit consists of revenues less cost of revenues. Cost of revenues consists primarily of salaries (including nonbillable and training time), benefits, travel and relocation for IT professionals. In addition, cost of revenues includes depreciation and amortization, direct facility costs and contractual services. Gross profit decreased approximately 16.9% to $23,838 for the three month period ended September 30, 2002 from $28,683 for the same period in 2001. Gross profit as a percentage of revenues decreased to approximately 24.0% for the three month period ended September 30, 2002 from approximately 28.6% for the same period in 2001. Gross profit decreased 14.3% to $73,545 for the nine month period ended September 30, 2002 from $85,825 for the same period in 2001. Gross profit as a percentage of revenue decreased to 25.8% for the nine month period ended September 30, 2002 from 27.8% for the same period in 2001. These decreases in gross profit and gross profit as a percentage of revenues are primarily attributable to lower utilization in the U.S., lower bill rates in the U.S. and India, changes in project mix and project phase, and start-up costs on large new projects and the process to transition the mix from onshore to offshore delivery.

      Selling, General and Administrative. Selling, general and administrative expenses consist primarily of costs associated with our direct selling and marketing efforts, human resources and recruiting departments, administration and indirect facility costs. Selling, general and administrative expenses decreased approximately 18.1% to $23,647 for the three months ended September 30, 2002 compared to $28,887 for the same period in 2001 and approximately 17.8% to $71,769 for the nine month period ended September 30, 2002 from $87,308 in 2001. Selling, general and administrative expenses for the three month period ended September 30, 2002 includes $386 provided for non-recurring expenses incurred by a special committee of independent directors of our Board of Directors in connection with the possible acquisition of all of our outstanding Common Stock by an existing shareholder at a price exceeding the current market price. These discussions have been terminated. As a percentage of revenues, selling, general and administrative expenses decreased to 23.8% for the three month period ended September 30, 2002 from 28.8% for the same period in 2001 and to 25.2% for the nine month period ended September 30, 2002 from 28.2% in 2001. These decreases are primarily

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      Other Expense (Income). Other expense (income) represents interest earned on cash and cash equivalents. Other income for the three and nine month periods ended September 30, 2002 was $626 and $2,456, respectively, as compared to $1,006 and $4,229 for the same periods in 2001. The decrease is primarily due to lower cash and cash equivalent balances and lower interest rates.

      Provision (Benefit) for Income Taxes. The provision for income taxes for the three and nine month periods ended September 30, 2002 was $67 and $233, respectively, as compared to a benefit for income taxes of $222 and $4,376 in 2001. Our 2002 provision for income taxes is based upon our expectation that our 2002 effective tax rate will be approximately 8.2%.

      Restructuring and Other Costs.

      During the nine month period ended September 30, 2002, the Company recorded restructuring and other costs of $1,407, consisting of the following:

      During the nine month period ended September 30, 2001, the Company recorded restructuring and other costs of $19,317, consisting of the following:

Liquidity and Capital Resources

      We generally fund our operations and working capital needs through internally generated funds, periodically supplemented by borrowings under our revolving credit facilities with a commercial bank. Our cash provided by operations was $7,768 for the nine month period ended September 30, 2002 compared to $1,791 for the same period in 2001. The increase of cash provided by operations is primarily due to improved operating net income and the receipt of a tax refund of $10,300.

      The principal use of cash for investing activities during the nine month period ended September 30, 2002 was the acquisition of PDA, for $15,914, net of cash acquired.

      In addition to our current cash balance of $97,902, we maintain an arrangement with a commercial bank to facilitate future cash flow requirements. Under this arrangement we may borrow an amount not to exceed $30,000 with interest at the bank’s prime rate, or the LIBOR rate plus 1 1/4%. Borrowings under this facility are short-term, payable on demand and are secured by our trade accounts receivable and equipment.

      Net cash used in financing activities of $4,933 for the nine month period ended September 30, 2002 was due primarily to the repurchase of 758,600 shares of our Common Stock, offset slightly by proceeds from stock option exercises and issuances of common stock under our employee stock purchase plan.

      Our offshore development centers’ operations accounted for approximately 16% of our total revenues during the three month period ended September 30, 2002. These revenues were comprised of rates and hours charged in the direct billings to our customers. Most of our revenues are billed in U.S. dollars. We recognize transaction gains and losses in the period of occurrence. Foreign currency fluctuations during the three and nine month periods ended September 30, 2002 did not have a material impact on income from operations as

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      Inflation did not have a material impact on our revenues or income from operations during the three and nine month periods ended September 30, 2002 and 2001.

Related Party Transactions

      Synova, Inc. (Synova) is an information technology professional services organization owned by a Co-Chairman of our board of directors. During the nine month period ended September 30, 2002, we provided services to Synova totaling $2,916. In addition, Synova provided services to us totaling $2,291. The net balance owed to us by Synova at September 30, 2002 was $696. In addition, under the terms of a note payable, Synova owes us $8,000. This note is due in September 2005, and interest is paid quarterly in accordance with its terms.

      We paid $750 to Clayton, Dubilier and Rice, Inc. (CDR), a shareholder, for financial and management advisory services during the nine month period ended September 30, 2002

      During the three month period ended September 30, 2002, we entered into a ten year agreement to provide IT outsourcing services to SIRVA, Inc., a company related through common ownership of CDR. During the three month period ended September 30, 2002, services provided by us to SIRVA, Inc. totaled $1,300.

      During the nine month period ended September 30, 2002, we provided IT services totaling $185 to Acterna Corporation, a company related through common ownership by CDR.

      We paid approximately $237 during the nine month period ended September 30, 2002 for merger and acquisition consulting services provided by the Chesapeake Group, Inc., a company owned by a director.

      Praja, Inc. (Praja) is an information technology professional services organization owned in part by a Co-Chairman of our Board of Directors. During the nine month period ended September 30, 2002, we provided services to Praja totaling $62. In addition, Praja provided services and software to us totaling $183.

Subsequent Event — Stock Option Exchange Offer

      On October 7, 2002, our Board of Directors approved a plan under which certain option holders will be permitted to exchange outstanding Covansys stock options for a number of options to be calculated using the Black-Scholes valuation methodology. The new options will be issued no sooner than six months and a day from the date of cancellation of the original options. The new options will be issued with an exercise price equal to the fair market value of Covansys Common Stock on the date of grant.

Recently Issued Financial Accounting Standards

      In July 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities”. This statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of the commitment to an exit or disposal plan. This statement will be effective for Covansys for any exit or disposal activities initiated after December 31, 2002. The adoption of this statement will not have a material effect on our results of operations or financial position.

      In April 2002, the FASB issued SFAS No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. This statement eliminates the automatic classification of gain or loss on extinguishment of debt as an extraordinary item of income and requires that such gain or loss be evaluated for extraordinary classification under the criteria of Accounting Principles Board No. 30 “Reporting Results of Operations”. This statement also requires sales-leaseback accounting for certain lease modifications that have economic effects that are similar to sales-leaseback transactions, and makes various other technical corrections to existing pronouncements. This statement will be

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      In October 2002, the Emerging Issues Task Force issued tentative conclusions regarding EITF Issue 00-21 “Accounting for Revenue Arrangements with Multiple Deliverables.” This EITF is tentatively scheduled to be effective for revenue arrangements entered into in fiscal years beginning after December 15, 2002. We are closely monitoring developments in this issue and will complete our assessment of any potential impact on our results of operations upon the issuance of a final statement.

      We have evaluated our internal control structure and disclosure controls and procedures. As a result of such review, minor enhancements to formalize and document procedures in place will be implemented prior to the end of 2002. The effectiveness of our internal control structure and disclosure controls and procedures will be evaluated quarterly. Based on the evaluation as of a date within 90 days of the filing of this Form 10-Q, Martin C. Clague, our Chief Executive Officer, and Michael S. Duffey, our Chief Financial Officer, have concluded our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities and Exchange Act of 1934) are effective to ensure that material information relating to the Company would be made known to us by others within the Company, particularly during the period this Form 10-Q was being prepared.

      No significant changes were made to our internal controls or in the other factors that could significantly affect these controls subsequent to the date of the evaluation and there were no required corrective actions with regard to significant deficiencies or material weaknesses of these controls.

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(a) Exhibits

(b) Reports on Form 8-K

      On August 12, 2002, Covansys filed a Form 8-K with the Securities and Exchange Commission containing the statements required by Section 906 of the Sarbanes-Oxley Act of 2002 filed by the Chief Executive Officer and the Chief Financial Officer.

      On October 15, 2002, Covansys filed a Form 8-K with the Securities and Exchange Commission announcing the promotion of Martin C. Clague to president and chief executive officer. It was also announced that the board of directors had authorized the repurchase of an additional 2,000,000 shares of its outstanding Common Stock.

      On November 6, 2002, Covansys filed a Form 8-K with the Securities and Exchange Commission which included a copy of the Company’s October 24, 2002 press release announcing earnings for the three month period ended September 30, 2002.

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      Pursuant to the requirements 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.

	COVANSYS CORPORATION

	By:	/s/ MARTIN C. CLAGUE

	Martin C. Clague
	Chief Executive Officer, President and Director
	/s/ MICHAEL S. DUFFEY
	Michael S. Duffey
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Dated: November 7, 2002

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I, Martin C. Clague, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Covansys Corporation;
	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and

have:

	a).	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b).	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c).	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function);

	a).	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b).	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

	6.	The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

	/s/ Martin C. Clague
	Chief Executive Officer and President

Date: November 7, 2002

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I, Michael S. Duffey, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Covansys Corporation;
	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a).	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b).	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c).	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function);

	a).	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b).	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

	6.	The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

	/s/ Michael S. Duffey
	Chief Financial Officer

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