CENTURY BUSINESS SERVICES INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended December 31, 2002 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 NUMBER 0-25890

CENTURY BUSINESS SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 22-2769024
- -------------------------------------------- --------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

6480 ROCKSIDE WOODS BOULEVARD SOUTH,
SUITE 330
CLEVELAND, OHIO 44131
- -------------------------------------------- --------------------------------------------
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 447-9000

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 $.01
(TITLE OF CLASS)

Name of Each Exchange on Which Registered:
The Nasdaq Stock Market

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 Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $308.4 million as of June 28, 2002. The number
of outstanding shares of the Registrant's common stock is 95,409,243 shares as
of March 24, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

Part III Portions of the Registrant's Definitive Proxy Statement relative
to the 2003 Annual Meeting of Stockholders.

Part IV Portions of previously filed reports and registration statements.

CENTURY BUSINESS SERVICES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

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THE FOLLOWING TEXT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES
THERETO) APPEARING ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K. UNLESS THE
CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS ANNUAL REPORT TO "WE", "OUR",
"CBIZ", OR THE "COMPANY" SHALL MEAN CENTURY BUSINESS SERVICES, INC., A DELAWARE
CORPORATION, AND ITS OPERATING SUBSIDIARIES.

PART I

ITEMS 1 AND 2. BUSINESS AND PROPERTIES

OVERVIEW

CBIZ is a diversified services company which, acting through its
subsidiaries, provides professional outsourced business services primarily to
small and medium-sized businesses, as well as individuals, governmental entities
and not-for-profit enterprises throughout the United States and Toronto, Canada.
CBIZ delivers integrated services through the following three practice groups:

- Accounting, Tax and Advisory (formerly known as the Business Solutions
Group);

- Benefits and Insurance; and

- National Practices

CBIZ provides services through 59 business units with more than 160 offices
located in 33 states, Washington D.C., and Toronto, Canada. Included in this
total, and managed within the National Practice group, is the Company's medical
practice management business unit which has 73 offices.

CBIZ's goal is to be the leading provider of outsourced business services
within its target markets by providing clients with a broad range of
high-quality products and services; expanding locally through internal growth;
and through cross-severing. CBIZ initiated an acquisition program in November
1996 to expand its operations in the professional outsourced business services
industry. Since that time, CBIZ has acquired the businesses of 147 companies,
one of which was acquired in October 2002 and another of which was acquired in
January 2003. While we acquired only one business in 2002, it remains our
intention to selectively acquire businesses with complementary services in
target markets.

Formed as a Delaware corporation in 1987 under the name Stout
Environmental, Inc., CBIZ was acquired by Republic Industries, Inc. in 1992. In
April 1995, Republic spun off its hazardous waste operations, including CBIZ's
predecessor company, to stockholders. Re-named Republic Environmental Systems,
Inc., CBIZ's common stock began trading on the Nasdaq National Market under the
symbol "RESI." On June 24, 1996, the trading symbol changed to "IASI" in
anticipation of our merger with Century Surety Company and Commercial Surety
Agency, Inc., which resulted in a change of our name to "International Alliance
Services, Inc." This name change signaled our move away from the hazardous waste
business. CBIZ divested all remaining hazardous waste operations in 1997. On
December 23, 1997, CBIZ changed its name to Century Business Services, Inc. and
began trading under the symbol "CBIZ."

CBIZ'S PRINCIPAL EXECUTIVE OFFICE IS LOCATED AT 6480 ROCKSIDE WOODS BLVD.,
SOUTH, SUITE 330, CLEVELAND, OHIO 44131 AND ITS TELEPHONE NUMBER IS
216-447-9000.

BUSINESS STRATEGY

CBIZ's business strategy is to grow in the professional outsourced business
services industry by:

- offering a wide array of infrastructure support services;

- cross-serving these services to our existing customer base;

- attracting new customers with our diverse business services offerings;

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- leveraging our practice area expertise across all our businesses; and

- developing our core service offerings in target markets through selective
acquisitions.

Providing a range of outsourced business services to a client results in
advantages for both the client and for CBIZ. Dealing with one provider for
several tasks saves the client the time of having to deal with multiple vendors.
For example, the employee data used to process payroll can also be used by CBIZ
as a group health and welfare insurance agent and benefits consultant to provide
appropriate benefits package to a client's employee base. The ability to combine
several services and offer them through one provider distinguishes CBIZ from
other outsourced service providers.

CBIZ is looking to strengthen our operations and customer service
capabilities by making selective acquisitions in markets where we currently
operate and where the prospects are favorable to increase our market share and
become a significant provider of a comprehensive range of outsourced business
services. CBIZ's strategy is to acquire companies that generally:

- have a strong potential for cross-serving among CBIZ's subsidiaries;

- can integrate quickly with existing CBIZ operations;

- have strong and energetic leadership;

- are accretive to earnings; and

- help complete the core CBIZ service offering in a geographical market.

In accordance with our strategy to deliver services to clients
conveniently, and to promote cross-serving between our various service groups,
CBIZ consolidates office locations wherever practical. Since 2000, CBIZ
consolidated offices in Atlanta, Chicago, Cleveland, Columbus, Dallas, Los
Angeles, Orlando, Minneapolis, St. Louis, San Ramon, and Philadelphia. CBIZ will
continue to combine offices, with a consolidation planned for Kansas City in
mid-2003 and other potential consolidations to occur later. As further
consolidations occur, the Company may incur additional costs associated with
these consolidations.

OUTSOURCED BUSINESS SERVICES

The following is a description of the outsourced business services
currently offered by CBIZ.

Accounting, Tax and Advisory. The business units that comprise CBIZ's
Accounting, Tax and Advisory ("ATA") group offer services in the following
areas: cash flow management; strategic planning; consulting; record-keeping;
federal, state and local tax return preparation; tax planning based on financial
and investment alternatives; tax structuring of business transactions such as
mergers and acquisitions; quarterly and year-end payroll tax reporting;
corporate, partnership and fiduciary tax planning and return preparation;
outsourced chief financial officer services and other financial staffing
services; financial investment analysis; succession, retirement, and estate
planning; and profitability, operational and efficiency enhancement consulting
to a number of specialized industries. Other than internal audit services, CBIZ
does not currently offer audit and attest services, does not intend to offer
audit and attest services in the future and does not purchase the "audit and
attest practices" of any accounting business it acquires. However, CBIZ and its
subsidiaries maintain joint-referral relationships and service agreements with
licensed Certified Public Accounting or CPA firms under which audit and attest
services may be provided to CBIZ's clients.

Under these service agreements with licensed CPA firms, CBIZ subsidiaries
provide to the CPA firms, administrative services, including office,
bookkeeping, accounting and other administrative services; prepare marketing and
promotion materials; and lease administrative and professional staff in exchange
for a fee. Non-attest business services include any services other than those
which only licensed certified public accountants, licensed public accountants,
or licensed CPA or PA firms may perform in accordance with accountancy laws.
Under these agreements, each party has agreed to maintain its own liability and
risk of loss in connection with performance of its respective services. CBIZ
currently undergoes an annual peer review administered to ensure compliance with
independence requirements in its relationships with associated CPA firms and
clients. The peer review has found CBIZ in compliance with these rules every
year since the review was first administered in 1999.

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Of the 41 CPA firms associated with CBIZ during 2002, the partner group
from twelve of those firms joined Mayer Hoffman McCann P.C., an independent
national CPA firm headquartered in Kansas City, Missouri. CBIZ's association
with Mayer Hoffman McCann offers our clients access to the multi-state resources
and expertise of a national CPA firm. The advantage to CBIZ of these
consolidations is a reduction in the number of different firms with which it
maintains administrative service agreements.

CBIZ's ATA practice is divided into four regions, representing the East,
Midwest, Great Lakes, and West regions of the country. Each of these regions is
headed by a designated regional director, all of whom report to the Senior Vice
President, Accounting, Tax and Advisory Services.

The Accounting, Tax and Advisory group contributed approximately $209.9
million of revenue, or 42% of CBIZ's annual revenue, in 2002.

Benefits and Insurance Services. The business units that comprise CBIZ's
Benefits and Insurance group offer services in the following areas: employee
benefits, insurance brokerage, consulting, and administration, including the
design, implementation and administration of qualified plans, such as
profit-sharing plans, defined benefit plans, and money purchase plans; actuarial
services; health and welfare benefits consulting, including group health
insurance plans; dental and vision care programs; group life insurance programs;
accidental death and dismemberment and disability programs; COBRA administration
and voluntary insurance programs; health care and dependent care spending
accounts; premium reimbursement plans; communications services to educate
employees about their benefit programs; executive benefits consulting on
non-qualified retirement plans and business continuation plans; specialty
high-risk life insurance; employee benefit worksite marketing; and wealth
management services, including Registered Investment Advisory Services,
Investment Policy Statements; mutual fund selections; and ongoing mutual fund
monitoring. CBIZ's Benefits and Insurance group also provides an on-line
service, CBIZSolutions.com, that, in concert with our payroll services, enables
the employees of a client to access information such as health and welfare
benefits, retirement fund balances and payroll information; update their
personal information; and access company documents like employee handbooks and
policies.

CBIZ's Benefits and Insurance Services group operates under one Senior Vice
President, who oversees three regional divisions and their respective directors,
representing the Eastern, Central, and Western states. Additionally, CBIZ
operates wholesale insurance and other specialty insurance divisions, which also
report directly to CBIZ's Senior Vice President of Benefits and Insurance
Services.

The Benefits and Insurance group contributed approximately $150.5 million
of revenue, or 30% of CBIZ's annual revenue, in 2002.

National Practices. The business units that comprise CBIZ's National
Practices group offer services in the following areas: payroll processing and
administration; valuations of commercial, tangible, and intangible assets and
financial securities; mergers and acquisitions and capital advisory services;
health care consulting; government relations; process improvement; and
technology consulting, including strategic technology planning, project
management, development, network design and implementation and software
selection and implementation. CBIZ's medical practice management business, CBIZ
Medical Management Professionals ("CBIZ MMP"), is managed within the National
Practices group and is described below.

The business units within the National Practices group report to CBIZ's
President and Chief Operating Officer.

The National Practices group contributed approximately $143.9 million of
revenue, or 29% of CBIZ's annual revenue, in 2002. Included in the results of
the National Practices group are those of CBIZ MMP, which contributed
approximately $66.2 million of revenue, or 13% of CBIZ's annual revenue, in
2002.

CBIZ MMP. CBIZ's wholly-owned subsidiary, CBIZ MMP, provides billing and
practice management services to hospital-based medical practices primarily in
the specialties of anesthesiology, emergency medicine, pathology, and radiology.
CBIZ MMP's billing services include: billing and accounts receivable management;
coding and automated claims filing; comprehensive delinquent claims follow up
and collections; compliance plans to meet governmental and other third party
regulations; local office management; and comprehensive statistical and
operational reporting. The financial management services provided by CBIZ MMP
include:

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financial reporting, accounts payable, payroll, general ledger processing;
design of physician employment, stock and compensation arrangements; and
comprehensive budgeting, forecasting, and financial analysis. Additionally, CBIZ
MMP conducts analyses of managed care contracts with a focus on negotiation
strategies, pricing, cost containment and utilization tracking; reviews and
negotiates contracts with hospitals and evaluates other strategic business
partners; identifies and coordinates practice merger and integration
opportunities; and coordinates practice expansion efforts.

SALES AND MARKETING NETWORK AND ACCOUNT MANAGEMENT

CBIZ's key competitive factors in attracting, retaining and providing
services to clients are:

- established relationships;

- strong local and regional presence;

- the ability to match client requirements with available services;

- the ability to offer a number of services from one provider; and

- the ability to offer services at competitive rates.

CBIZ believes that by combining a local entrepreneurial marketing strategy
with the resources of a nationally branded company, we will be able to maximize
our market penetration. CBIZ expects that we can cross-serve new products and
services to existing clients who do not currently utilize all of the services
CBIZ offers.

CBIZ's primary marketing strategy is to deepen our relationships with
clients by providing them with additional CBIZ services that would be in the
best interest of their business. CBIZ refers to this strategy of penetrating our
existing client base as cross-serving. Because cross-serving is most effective
when it makes outsourcing more convenient for the client, the location of the
service provider is a key consideration, and requires marketing functions to be
carried out on a geographic basis. Using major metropolitan areas as our
marketing focal points, CBIZ, under the direction of a Senior Vice President of
National Marketing, is developing marketing plans that consider the needs of all
CBIZ business units in a common local area. While each business unit continues
to be individually responsible for executing a marketing plan and is accountable
for its own performance, marketing planning and resources are coordinated
nationally. These resources include print and radio advertisements, printed
material such as brochures and stationery, and CBIZ-branded merchandise for
trade shows and other client-oriented events. Additionally, CBIZ is developing a
centralized client database, "CNECT", which we expect to have fully implemented
by year-end 2003. CNECT will support marketing efforts such as improved client
service, new business development and product development. New clients are
generated primarily through networking, referrals from existing clients and
participation in trade shows.

The Company maintains a joint marketing agreement with HarborView Partners
(HarborView), a Stamford, Connecticut-based provider of internal audit and
business advisory services. Under the terms of the agreement, CBIZ is the
exclusive provider of professional staff to HarborView Partners to conduct
internal audits for engagements that HarborView Partners secures within the
United States. This agreement was entered into to capitalize on the SEC's
auditor independence rules prohibiting independent auditors from providing
internal audit services to their publicly traded audit clients. CBIZ's
relationship with HarborView will also allow us to better utilize our ATA
personnel during non-peak periods.

CUSTOMERS

CBIZ provides professional outsourced business services to over 65,000
clients. CBIZ's clients typically have fewer than 500 employees and prefer to
focus their resources on operational competencies while outsourcing non-core
administrative functions to CBIZ. Outsourcing administrative functions allows
clients to enhance productivity, reduce costs and improve service, quality and
efficiency by focusing on their core business. Depending on a client's size and
capabilities, it may choose to utilize some or many of CBIZ's broad array of
services, which it typically accesses initially through its original CBIZ
representative.

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CBIZ's clients come from a large variety of industries and markets. Edward
Jones, a financial services firm and client of CBIZ Network Solutions for
electronic networking and information services, contributed approximately 3.6%
of the Company's revenue in 2002. No other single customer individually
comprises more than 3% of CBIZ's total consolidated revenue. Management believes
that such diversity helps insulate CBIZ from a downturn in a particular
industry. Nevertheless, economic conditions among selected clients and groups of
clients may have an impact on the demand for such services.

COMPETITION

The professional outsourced business services industry is highly fragmented
and competitive, with a majority of industry participants, such as accounting,
employee benefits, payroll firms or professional employee organizations,
offering only a limited number of services. Competition is based primarily on
customer relationships, range and quality of services or product offerings,
customer service, timeliness, geographic proximity, and competitive rates. CBIZ
competes with a number of multi-location regional or national operators and a
large number of relatively small independent operators in local markets. CBIZ's
competitors in the professional outsourced business services industry include
independent consulting services companies, divisions of diversified enterprises,
insurance brokers and banks.

ACQUISITIONS AND DIVESTITURES

Acquisitions are an important part of our strategy. CBIZ is looking to
strengthen our operations and customer service capabilities by making
acquisitions in markets where we currently operate and where the prospects are
favorable to increase our market share and become a significant provider of a
comprehensive range of outsourced business services. In October 2002, CBIZ
acquired a benefits and insurance firm located in the Maryland area.

In 2002, CBIZ sold, closed, or committed to sale sixteen operating entities
in order to rationalize its business operations by divesting business units that
were either underperforming, located in secondary markets, or did not provide
the level of synergistic cross-serving opportunities with other CBIZ businesses
that is desired. These divestitures are consistent with CBIZ's plan to focus on
metropolitan markets in which we can strengthen our ATA and Benefits & Insurance
core service offerings. Going forward, CBIZ may, from time to time, recognize
additional gains and/or losses on divestitures.

REGULATION

CBIZ's operations are subject to regulations by federal, state, and local
governing bodies. Accordingly, our outsourced business services may be impacted
by legislative changes by these bodies, particularly with respect to provisions
relating to payroll, benefits administration and insurance services, pension
plan administration, tax and accounting. CBIZ remains abreast of regulatory
changes affecting our business, as these changes often affect clients'
procedures with respect to employment, taxation, benefits, and accounting. For
instance, changes in income, estate, or property tax laws may require additional
consultation with clients subject to these changes to ensure their procedures
comply with revised regulations.

CBIZ itself is subject to industry regulation and changes within it,
including changes in laws, regulations, and codes of ethics governing the
accounting industry, the interpretation of which may restrict CBIZ's operations.
CBIZ is currently in compliance with laws and regulations that have been
recently changed or imposed, and is not aware of any proposed changes that will
have a negative impact on CBIZ's operations, or that CBIZ does not believe it
will be able to comply with.

CBIZ is subject to certain privacy, security, and electronic-data
provisions of the Health Insurance Portability and Accountability Act of 1996
("HIPAA") and corresponding provisions of state law which may restrict CBIZ's
operations and give rise to expenses related to compliance.

On July 30, 2002, President George W. Bush signed into law the
Sarbanes-Oxley Act of 2002 to reform the oversight of public company auditing,
improve the quality and transparency of financial reporting by those companies
and strengthen the independence of auditors. The new legislation requires the
following: (i) CEOs and

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CFOs to certify that company financial statements fairly present the company's
financial condition.; (ii) public companies to report certain off-balance-sheet
transactions, as well as to present any pro forma disclosures in a way that is
not misleading and is in accordance with requirements to be established by the
Securities Exchange Commission (SEC). The new legislation also accelerates the
required reporting of insider stock transactions, which now generally must be
reported by the end of the second business day following a covered transaction;
requires that annual reports filed with the SEC include a statement by
management asserting that it is responsible for creating and maintaining
adequate internal controls and assessing the effectiveness of those controls;
and requires companies to disclose whether or not they have adopted an ethics
code for senior financial officers, and, if not, why not, and whether the audit
committee includes at least one "financial expert". CBIZ is currently in
compliance with those requirements effective in 2002, and believes it will be in
compliance with each of the foregoing requirements that become effective in
future periods.

LIABILITY INSURANCE

CBIZ carries commercial general liability, automobile liability,
professional liability, directors and officers liability, fiduciary liability,
employment practices liability and workers' compensation subject to prescribed
state mandates. Excess liability is carried over the underlying limits provided
by the commercial general liability and automobile liability policies.

EMPLOYEES

At December 31, 2002, CBIZ employed approximately 4,900 employees,
approximately half of whom are professionals. The Company believes that it has a
good relationship with its employees. CBIZ realizes that as a professional
services company that differentiates itself from competitors through the quality
and diversity of our service offering, the Company's employees are our most
important asset. Accordingly, CBIZ strives to remain competitive as an employer
while increasing the capabilities and performance of our employees.

SEASONALITY

A disproportionately large amount of CBIZ's revenue occurs in the first
half of the year. This is due primarily to the Company's accounting and tax
practice, which is subject to seasonality related to the heavy volume in the
first four months of the year. CBIZ's ATA group generated approximately 44% of
its revenue in the first four months of 2002. Like most professional service
companies, most of CBIZ's operating costs are fixed, resulting in much higher
operating margins in the first half of the year.

PROPERTIES

CBIZ's corporate headquarters are located at 6480 Rockside Woods Blvd.,
South, Suite 330, Cleveland, Ohio 44131, in leased premises. Some of CBIZ's
property and equipment are subject to liens securing payment of indebtedness of
CBIZ and its subsidiaries. CBIZ and its subsidiaries lease more than 160 offices
in 33 states and one in Toronto, Canada, as well as office equipment and company
vehicles. As CBIZ continues to consolidate and rationalize its operations, we
expect to reduce the number of leases we currently hold. CBIZ believes that our
current facilities are sufficient for our needs.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS

This Annual Report contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in this Annual Report, including without limitation, "Business and
Properties" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" regarding CBIZ's financial position, business strategy
and plans and objectives for future performance are forward-looking statements.
You can identify these statements by the fact that they do not relate strictly
to historical or current facts. Forward-looking statements are commonly
identified by the use of such terms and phrases as "intends," "believes,"
"estimates," "expects," "projects," "anticipates," "foreseeable future,"
"seeks," and words or phases of similar import in connection with any discussion
of future operating or financial

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performance. In particular, these include statements relating to future actions,
future performance or results of current and anticipated services, sales
efforts, expenses, and financial results. From time to time, we also may provide
oral or written forward-looking statements in other materials we release to the
public. Any or all of our forward-looking statements in this 10-K, in the 2002
Annual Report and in any other public statements that we make, are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. Such forward-looking statements can be affected
by inaccurate assumptions we might make or by known or unknown risks and
uncertainties. Many factors mentioned in the discussion below will be important
in determining future results. Consequently, no forward-looking statement can be
guaranteed. Actual future results may vary materially.

We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make on related
subjects in our 10-Q, 8-K and 10-K reports to the SEC. Also note that we provide
the following cautionary discussion of risks, uncertainties and possibly
inaccurate assumptions relevant to our businesses. These are factors that we
think could cause our actual results to differ materially from expected and
historical results. Other factors besides those listed here could also adversely
affect operating or financial performance. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.

RISK FACTORS

The following factors may affect our actual operating and financial results
and could cause results to differ materially from those in any forward-looking
statements. There may be other factors, and new risk factors may emerge in the
future. You should carefully consider the following information.

WE ARE DEPENDENT ON THE CURRENT TREND OF OUTSOURCING BUSINESS SERVICES.

Our business and growth depend in large part on the trend toward
outsourcing business services. We can give you no assurance that this trend in
outsourcing will continue. Current and potential customers may elect to perform
such services with their own employees. A significant reversal of, or a decline
in, this trend would have a material adverse effect on our business, financial
condition and results of operations.

WE MAY BE MORE SENSITIVE TO REVENUE FLUCTUATIONS THAN OTHER COMPANIES, WHICH
COULD RESULT IN FLUCTUATIONS IN THE MARKET PRICE OF OUR COMMON STOCK.

A substantial majority of our operating expenses such as personnel and
related costs, depreciation and rent, are relatively fixed in the short term. As
a result, we may not be able to quickly reduce costs in response to any decrease
in revenue. For example, any decision by a significant client to delay or cancel
our services may cause significant variations in operating results and could
result in losses for the applicable quarters. Additionally, the general
condition of the United States economy, and the current weakness in the economy,
has and will continue to affect our business. Potential new clients may defer
from switching service providers in light of these economic conditions. Any of
these factors could cause our quarterly results to be lower than expectations of
securities analysts, which could result in a decline in the price of our common
stock.

WE HAVE A RISK THAT PAYMENTS ON ACCOUNTS RECEIVABLE OR NOTES RECEIVABLE MAY BE
SLOWER THAN EXPECTED, OR THAT AMOUNTS DUE ON RECEIVABLES OR NOTES MAY NOT BE
FULLY COLLECTABLE.

Professional services firms often experience higher average accounts
receivable days outstanding compared to many other industries. If collections
become slower, our liquidity may be adversely impacted. We monitor the aging of
receivables regularly and make assessments of the ability of customers to pay
amounts due. We accrue for potential bad debts each month and recognize
additional reserves against bad debts as we deem it appropriate. Notwithstanding
these measures, our customers may face unexpected circumstances that adversely
impact their ability to pay their trade receivables or note obligations to us
and we may face unexpected losses as a result.

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WE ARE DEPENDENT ON THE SERVICES OF OUR EXECUTIVE OFFICERS AND OTHER KEY
EMPLOYEES.

Our success depends in large part upon the abilities and continued services
of our executive officers and other key employees, such as our business unit
presidents. In the course of business operations, employees may resign and seek
employment elsewhere. Certain principal employees, however, are bound in writing
to non-compete agreements barring competitive employment, client solicitation,
and solicitation of employees for a period of between two and ten years
following his or her resignation. We cannot assure you that we will be able to
retain the services of our key personnel. If we cannot retain the services of
key personnel, there could be a material adverse effect on our business,
financial condition and results of operations. While we generally have
employment agreements and non-competition agreements with key personnel, courts
are at times reluctant to enforce such non-competition agreements. In addition,
many of our executive officers and other key personnel are either participants
in our stock option plan or holders of a significant amount of our common stock.
We believe that these interests provide additional incentives for these key
employees to remain with us. In order to support our growth, we will continue to
effectively recruit, hire, train and retain additional qualified management
personnel. Our inability to attract and retain necessary personnel could have a
material adverse effect on our business, financial condition and results of
operations.

RESTRICTIONS IMPOSED BY INDEPENDENCE REQUIREMENTS AND CONFLICT OF INTEREST
RULES MAY LIMIT THE CLIENTS WE SERVICE AND THE ABILITY OF THE ATTEST FIRMS
WITH WHICH WE HAVE CONTRACTUAL RELATIONSHIPS TO PROVIDE ATTESTATION SERVICES.

We do not offer audit and attest services, other than internal audit
services. However, we maintain joint-referral relationships with independent
licensed CPA firms under which audit and attest services may be provided to
CBIZ's clients. Under these service agreements, we provide administrative
services and lease staff in exchange for a fee. Revenue from these agreements is
reflected in our financial statements.

With respect to attest firm clients that are required to file audited
financial statements with the SEC, the SEC staff views us and the attest firms
with which we have contractual relationships as a single entity in applying
independence rules established by the accountancy regulators and the SEC.
According to the SEC staff, we are required to abide by all of the independence
rules that the attest firms must follow in order to be independent of an
SEC-reporting attest client. According to the SEC staff, these independence
rules prohibit us, and our officers, directors, affiliates and significant
stockholders, to the extent an attest firm is so prohibited, from:

- holding any financial interest in an SEC-reporting attest client;

- entering into any business relationship with an SEC-reporting attest
client; or

- selling any prohibited non-audit services to an SEC-reporting attest
client.

In addition, under these rules, the SEC staff views an attest firm and us
as lacking independence with respect to:

- an SEC-reporting attest client where that client, or its directors,
officers, affiliates or significant stockholders, own stock in us or our
affiliates; or

- entities involved in an offering of our stock or in making a market for,
or otherwise facilitating the trading of, our stock in the secondary
market, including any entity that is a member of a syndicate underwriting
an offering of our stock, that is a broker-dealer exercising
discretionary buy and sell authority over customer accounts holding
significant positions in our stock, or that employs securities analysts
that follow us.

CBIZ and the attest firms with which we are associated have implemented
policies and procedures designed to enable us to maintain independence and
freedom from conflicts of interest in accordance with applicable standards.
These procedures include independence screening in connection with the selection
of attest clients as well as periodic confirmations of independence by officers,
directors and professionals of us and the attest firms. We remain in contact
with state accountancy regulators in jurisdictions in which we operate to ensure
our business services model complies with independence regulations. To date, no
state accountancy regulatory

10

authority has prohibited our operations in any jurisdiction. However, state
accountancy regulatory authorities may elect to apply new rules that may
restrict our service offerings to clients.

There can be no assurance that following the policies and procedures
implemented by us and the attest firms will enable us and the attest firms to
avoid circumstances that would cause us and them to lack independence from an
SEC-reporting attest client; nor can there be any assurance that state
accounting associations will not extend current restrictions on the profession
to include private companies. To the extent that licensed CPA firms for whom we
provide administrative and other services are affected, we may experience a
decline in fee revenue from these businesses as well. To date, revenues derived
from providing services in connection with attestation engagements of the attest
firms performed for SEC-reporting clients have not been material.

GOVERNMENTAL REGULATIONS AND INTERPRETATIONS ARE SUBJECT TO CHANGES.

Laws and regulations often result in changes in the amount or the type of
business services required by businesses and individuals. We cannot be sure that
future laws and regulations will provide the same or similar opportunities for
us to provide business consulting and management services to businesses and
individuals. Accordingly, CBIZ's ability to continue to operate in some states
may depend on our flexibility to modify our operational structure in response to
these changes in regulations.

WE ARE SUBJECT TO RISK AS IT RELATES TO PROCESSING CUSTOMER TRANSACTIONS FOR
OUR PAYROLL, MEDICAL PRACTICE MANAGEMENT, PROPERTY TAX MANAGEMENT, AND CERTAIN
OTHER TRANSACTION PROCESSING BUSINESSES.

The high volume of client funds processed by us in our payroll and certain
other businesses entails risks for which we may be held liable if the accuracy
or timeliness of the transactions processed is not correct. We could incur
significant legal expense to defend any claims against us, even those claims
without merit. While we carry insurance against these potential liabilities, we
cannot be certain that circumstances surrounding such an error would be entirely
reimbursed through insurance coverage.

WE ARE SUBJECT TO RISK AS IT RELATES TO SOFTWARE THAT WE LICENSE FROM THIRD
PARTIES.

We license software from third parties, much of which is integral to our
systems and our business. The licenses are terminable if we breach our
obligations under the license agreements. If any of these relationships were
terminated or if any of these parties were to cease doing business or cease to
support the applications we currently utilize, we may be forced to spend
significant time and money to replace the licensed software. However, we cannot
assure you that the necessary replacements will be available on reasonable
terms, if at all.

WE COULD BE HELD LIABLE FOR ERRORS AND OMISSIONS.

All of our professional business services entail an inherent risk of
professional malpractice and other similar claims. Therefore, we maintain errors
and omissions insurance coverage. Although we believe that our insurance
coverage is adequate, we cannot be certain that actual future claims or related
legal expenses would not exceed the coverage amounts. If we have a large claim
on our insurance, the rates for such insurance may increase, but contractual
arrangements with clients may constrain our ability to incorporate such
increases into service fees. Such insurance rate increases, as well as any
underlying claim, could have a material adverse effect on our business,
financial condition and results of operations.

OUR PRINCIPAL STOCKHOLDERS HAVE SUBSTANTIAL CONTROL OVER OUR OPERATIONS.

As of March 24, 2003, the following groups owned the following aggregate
amounts and percentages of our common stock, including shares that may be
acquired by exercising options or warrants:

- approximately 14,788,098 shares, representing 15.5% of all our
outstanding common stock, were owned by Michael G. DeGroote;

- approximately 5,422,222 shares, representing 5.7% of all our outstanding
common stock, were owned by H. Wayne Huizenga, a principal stockholder;
and

11

- approximately 23,289,418 shares, representing 24.4% of all our
outstanding common stock, were owned by our executive officers,
directors, Mr. DeGroote and Mr. Huizenga, as a group.

Because of their stock ownership, these persons can substantially influence
actions that require the consent of a majority of our outstanding shares,
including the election of directors.

WE HAVE SHARES ELIGIBLE FOR FUTURE SALE THAT COULD ADVERSELY AFFECT THE PRICE
OF OUR COMMON STOCK.

Future sales or issuances of common stock, or the perception that sales
could occur, could adversely affect the market price of our common stock and
dilute the percentage ownership held by our stockholders. We have authorized 250
million shares, and have issued and outstanding approximately 95 million shares.
More than 47 million of these shares have been issued in connection with
acquisitions. As part of many acquisition transactions, the shares were
contractually restricted from sale for periods up to two years, most of which
had expired by the end of 2001. As of March 24, 2003, 177,000 shares of common
stock were under lock-up contractual restrictions. We cannot be sure when sales
by holders of our stock will occur, how many shares will be sold or the effect
that sales may have on the market price of our common stock. As of March 24,
2003, we also have registered under the Securities Act the following shares of
common stock for the following purposes:

- $125 million in shares of our common stock, debt securities, and warrants
to purchase common stock or debt securities, of which $100 million remain
available to be offered from time to time by us to the public under our
universal shelf registration statement;

- 15 million shares of our common stock, all of which remain available to
be offered from time to time by us in connection with acquisitions under
our acquisition shelf registration statement; and

- 6 million shares of our common stock, part of a shelf registration
statement, of which a majority have yet to be sold thereunder.

WE ARE RELIANT ON INFORMATION PROCESSING SYSTEMS.

Our ability to provide outsourced business services depends on our capacity
to store, retrieve process and manage significant databases, and expand and
upgrade periodically our information processing capabilities. Interruption or
loss of our information processing capabilities through loss of stored data,
breakdown or malfunctioning of computer equipment and software systems,
telecommunications failure, or damage caused by fire, tornadoes, lightning,
electrical power outage, or other disruption could have a material adverse
effect on our business, financial condition and results of operations. Although
we have disaster recovery procedures in place and insurance to protect against
such contingencies, we cannot be sure that insurance or these services will
continue to be available at reasonable prices, cover all our losses or
compensate us for the possible loss of clients occurring during any period that
we are unable to provide outsourced business services.

WE MAY NOT BE ABLE TO ACQUIRE AND FINANCE ADDITIONAL BUSINESSES.

We completed a significant number of acquisitions from 1996 through 1999.
While we have made only one acquisition in 2002, it is our intention to
selectively acquire businesses that are complementary in building out our
service offerings in our target markets. However, we cannot be certain that we
will be able to continue identifying appropriate acquisition candidates and
acquire them on satisfactory terms. We cannot assure you that such acquisitions,
even if obtained, will perform as expected or will contribute significant
revenues or profits. In addition, we may also face increased competition for
acquisition opportunities, which may inhibit our ability to complete
transactions on terms that are favorable to us. Management believes that funds
available under the credit facility, along with cash generated from operations,
will be sufficient to meet our liquidity needs in the foreseeable future;
however, there are certain restrictions under our bank line of credit that may
prohibit our ability to acquire additional businesses. In the event that we are
not in compliance with certain covenants as specified in our credit facility, we
could be restricted from making acquisitions, restricted from borrowing funds
from our credit facility for other uses, or required to pay down the outstanding
balance on the line of credit. See note 8 to CBIZ's consolidated financial
statements included herewith.

12

THE OUTSOURCING INDUSTRY IS COMPETITIVE AND FRAGMENTED.

We face competition from a number of sources in both the outsourced
business services industry and from specialty insurance agencies. Competition in
both industries has led to consolidation of many large companies that may have
greater financial, technical, marketing and other resources than us. In addition
to these new large companies, we face competition in the outsourced business
services industry from in-house employee services departments, local outsourcing
companies and independent consultants, as well as from new entrants into our
markets. We cannot assure you that, as our industry continues to evolve,
additional competitors will not enter the industry or that our clients will not
choose to conduct more of their business services internally or through
alternative business services providers. Although we intend to monitor industry
trends and respond accordingly, we cannot assure you that we will be able to
anticipate and successfully respond to such trends in a timely manner. We cannot
be certain that we will be able to compete successfully against current and
future competitors, or that competitive pressure will not have a material
adverse effect on our business, financial condition and results of operations.

CBIZ makes available, free of charge on its website, www.cbiz.com, through
the Investor Information pages, its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to all those
reports as soon as reasonably practicable after CBIZ files (or furnishes) such
reports to the U.S. Securities and Exchange Commission.

ITEM 3. LEGAL PROCEEDINGS

Since September 1999, seven purported stockholder class-action lawsuits
filed against CBIZ and certain of our current and former directors and officers
were consolidated as In Re Century Business Services Securities Litigation, Case
No. 1:99CV2200, in the United States District Court for the Northern District of
Ohio. The plaintiffs alleged that the named defendants violated certain
provisions of the Securities Exchange Act of 1934 and certain rules promulgated
thereunder in connection with certain statements made during various periods
from February 1998 through January 2000 by, among other things, improperly
amortizing goodwill and failing to adequately monitor changes in operating
results. The United States District Court dismissed the matter with prejudice on
June 27, 2002. The matter was appealed by the plaintiffs to the Sixth Circuit
Court of Appeals. No decision has been rendered on the appeal.

CBIZ and the named officer and director defendants deny all allegations of
wrongdoing made against them in these actions and intend to continue vigorously
defending this matter. Although the ultimate outcome of such litigation is
uncertain, based on the allegations contained in the complaints and the
carefully considered judgment of the District Court in dismissing the case,
management does not believe that these lawsuits will have a material adverse
effect on the financial condition, results of operations or cash flows of CBIZ.

In addition to the above-disclosed items, CBIZ is from time to time subject
to claims and suits arising in the ordinary course of business. Although the
ultimate disposition of such proceedings is not presently determinable,
management does not believe that the ultimate resolution of these matters will
have a material adverse effect on the financial condition, results of operations
or cash flows of CBIZ.

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

No matters were submitted to a vote of CBIZ's stockholders during the
fourth quarter of the fiscal year covered by this Annual Report.

13

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

The common stock of CBIZ is quoted on the Nasdaq National Market under the
trading symbol "CBIZ". The table below sets forth the range of high and low
sales prices for the Common Stock as reported on the Nasdaq National Market for
the periods indicated.

On December 31, 2002, the last reported sale price of CBIZ's Common Stock
as reported on the Nasdaq National Market (Nasdaq Amex-Online) was $2.65 per
share. As of February 21, 2003, CBIZ had 8,844 holders of record of its common
stock, and the last sale of CBIZ's common stock as of that date was $2.75.

DIVIDEND POLICY

CBIZ has not paid cash dividends on its common stock since April 27, 1995,
and does not anticipate paying cash dividends in the foreseeable future. CBIZ's
Board of Directors decides on the payment and level of dividends on common
stock. The Board of Directors' decision is based among other things on results
of operations and financial condition. In addition, CBIZ's credit facility
contains a requirement for lender consent prior to the declaration of any
dividends. CBIZ currently intends to retain future earnings to finance the
ongoing operations and growth of the business. Any future determination as to
dividend policy will be made at the discretion of the Board of Directors and
will depend on a number of factors, including future earnings, capital
requirements, financial condition and future prospects, limitations on dividend
payments pursuant to credit or other agreements and such other factors as the
Board of Directors may deem relevant.

14

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected historical financial data for CBIZ
and is derived from the historical consolidated financial statements and notes
thereto, which are included elsewhere in this Annual Report of CBIZ. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of CBIZ and the notes thereto, which are
included elsewhere in this Annual Report.

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

(1) Pro forma net income (loss) represents income from continuing operations
assuming the change in accounting principles for Securities and Exchange
Commission Staff Accounting Bulletin (SAB) No. 101, adopted January 1, 2000,
and Financial Accounting Standards Board (FASB) No. 142, adopted January 1,
2002, were applied retroactively, net of taxes, for all periods presented.

15

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

The following discussion is intended to assist in the understanding of
CBIZ's financial position and results of operations for each of the years ended
December 31, 2002, 2001 and 2000. This discussion should be read in conjunction
with CBIZ's consolidated financial statements and notes thereto included
elsewhere in this Annual Report.

RECENT DEVELOPMENTS

During 2002, CBIZ rationalized and sharpened the focus of its operations by
selling, closing or committing to sale, the divestiture of sixteen businesses.
Five of these operations have been classified as discontinued operations, in
connection with the adoption of Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Eleven of
these operations did not meet the criteria for treatment as discontinued
operations and have been accounted for as gain (loss) on divested operations
from continuing operations in the accompanying statements of operations. CBIZ
will continue to divest those non-strategic businesses that are either
under-performing, are located in secondary markets, or that do not provide the
level of synergistic cross-serving opportunities with other CBIZ businesses that
is desired. Although we cannot predict the proceeds for certain units or the
resulting gain or loss, additional gains/losses may be incurred as future
transactions are completed.

In conjunction with the focus to rationalize the business, CBIZ is also
focused on acquiring businesses that will complement its service offerings in
those primary markets where CBIZ already has a significant presence. During the
fourth quarter of 2002, CBIZ acquired a benefits and insurance company to
strengthen our presence in the Maryland area.

OPERATING PRACTICE GROUPS

CBIZ currently delivers products and services through three practice
groups. Below is a brief description of these groups' operating results and
factors affecting their businesses. The services offered under each of these
groups are described in Part I of this report.

Accounting, Tax and Advisory Services. The ATA group contributed
approximately $209.9 million and $231.4 million of revenue, or approximately 42%
and 45% of CBIZ's annual revenue in 2002 and 2001, respectively. The decrease in
revenue attributable to divestitures completed during the year ended December
31, 2002 was $11.0 million. For ATA businesses with a full period of operations
for the year ended December 31, 2002, revenue decreased $10.5 million, or 4.5%.
This decrease in same-unit revenue was primarily driven by the decrease for the
demand in discretionary work, such as consulting projects and special work
related to business transactions related to mergers and acquisitions, and a weak
economy. These decreases in revenue caused a decrease in gross margin from 14.7%
in 2001 to 13.3% in 2002. CBIZ expects its ATA Services group to achieve modest
revenue growth, as well as improvement in gross margin in 2003. Improvements in
staff utilization, both internally and through the arrangement with HarborView,
are expected to contribute to margin improvement. Under the terms of the
agreement between the two companies, CBIZ is the exclusive provider of
professional staff to HarborView Partners to conduct internal audits for
engagements that HarborView Partners secures within the United States.

Benefits and Insurance Services. The Benefits and Insurance group
contributed approximately $150.5 million and $141.3 million of revenue, or
approximately 30% and 27% of CBIZ's annual revenue in 2002 and 2001,
respectively. The increase in revenue is attributable to organic growth, offset
by the decrease in revenue related to divestitures completed during the year
ended December 31, 2001 of $5.0 million. For Benefits and Insurance businesses
with a full period of operations for the year ended December 31, 2002, same-unit
revenue increased $14.2 million, or 10.0%. The gross margin decreased slightly
from 20.6% in 2001 to 18.0% in 2002. CBIZ's Benefits and Insurance group had
benefited in the last year from a firming of premium prices, particularly for
the group health and property and casualty products. In addition, the worksite
marketing division increased revenue and improved their profitability
significantly, due to several large cases closed in 2002. However, reductions in
equity values have caused revenue to decline on asset-based fees, particularly
in the pension and retirement areas.

16

Due to a number of factors, including the increasing costs of health care and an
aging population, CBIZ expects premium pricing to remain stable.

National Practices Services. The National Practices group contributed
approximately $143.9 million and $144.2 million of revenue, or approximately 28%
of CBIZ's annual revenue in 2002 and 2001, respectively. Included in the results
of the National Practices group are those of CBIZ MMP, which contributed
approximately $66.2 million and $56.8 million, or 13% and 11%, of CBIZ's annual
revenue in 2002 and 2001, respectively. CBIZ MMP's revenue growth of 16.4% is
attributable to the addition of new clients, growth of existing clients and
expansion into new markets, such as entrance into the western region of the
United States during 2002. Revenue for CBIZ MMP is based on a percentage of
patient accounts collected on behalf of their clients. The gross margin
decreased slightly from 19.4% in 2001 to 17.6% in 2002 due in part to medicare
reimbursement costs and investment costs related to the expansion into new
regions. CBIZ expects growth in revenue of CBIZ MMP to continue, although we
cannot assure that the growth will continue at the levels we have seen in the
past year.

The other units within National Practices, excluding CBIZ MMP, contributed
approximately $77.8 million and $87.4 million of revenue in 2002 and 2001,
respectively. The decrease in revenue attributable to divestitures completed
during the year ended December 31, 2001 was $8.1 million. For other National
Practices businesses with a full period of operations for the year ended
December 31, 2002, revenue decreased $1.5 million, or 1.7%. The decrease in
same-unit revenue was related to several areas, including the information
technology (IT) area, valuation and property tax services, and government
relations. This was offset by improvement in health care consulting and
improvement in CBIZ's Mergers & Acquisition Group. The increase in capital
management revenues was primarily affected by one significant transaction in the
fourth quarter, the sale of its clients Floors, Inc., Arvada Hardwood Floor Co.
and Floorworks Inc. to the Home Depot. Gross margins for other National
Practices decreased from 4.1% in 2001 to 1.5% in 2002, primarily driven by
valuation adjustments to inventory in the IT group. While CBIZ targets large
transactions of this nature in our mergers and acquisition business, we are not
able to predict the timing or amount of these types of transactions, nor are we
able to determine if they will continue in the future. CBIZ does expect modest
growth in revenue for the other National Practices, as well as margin
improvement.

RESULTS OF OPERATIONS -- CONTINUING OPERATIONS

COMPARISON OF YEAR ENDED DECEMBER 31, 2002 TO YEAR ENDED DECEMBER 31, 2001

Revenues

Total revenue for the year ended December 31, 2002 was $504.3 million as
compared to $516.9 million for the year ended December 31, 2001, representing a
decrease of $12.6 million, or 2.4%. The decrease in revenue attributable to
divestitures completed during the year ended December 31, 2002 was $24.1
million. For business units with a full period of operations for the year ended
December 31, 2002 revenue increased $11.6 million or 2.3%. A more comprehensive
analysis of revenue is discussed above by operating practice groups.

Expenses

Operating expenses decreased to $445.7 million for the year ended December
31, 2002, from $447.5 million for the comparable period in 2001, representing a
decrease of $1.8 million. The decrease was primarily attributable to the
divestiture of low-margin businesses, as well as expense reductions initiated in
the second quarter of 2002 to help bring compensation expenses back in line with
revenue levels. Compensation expense (excluding severance), which represents
approximately 71% of operating expenses, decreased by $8.0 million, or 2.5%.
These cost reductions were offset by charges for severance, restructuring and
inventory adjustments. As a result of expense reductions and continuing
consolidation activities, CBIZ incurred severance and restructuring costs of
$4.6 million for the year ended December 31, 2002, an increase of $2.4 million.
In addition, CBIZ incurred a $1.3 million expense charge related to a valuation
and obsolescence adjustment for inventory carried to support IT network
maintenance contracts that have been recently terminated. As a percentage of
revenue, operating expenses for the year ended December 31, 2002 were 88.4%
compared to 86.6% for the year ended December 31, 2001, representing an increase
of 1.8%.

17

Corporate general and administrative expenses decreased to $19.7 million
for the year ended December 31, 2002, from $19.8 million for the comparable
period in 2001, representing a decrease of $0.1 million, or 0.5%. While costs
have remained relatively flat, the composition of general and administrative
costs has changed from 2001. Compensation expenses have decreased, while
expenditures for national marketing efforts and legal costs to pursue cases
concerning non-competition violations by former employees, insurance coverage
issues, and other cases in which CBIZ is involved, have increased. Corporate
general and administrative expenses represented 3.9% of total revenues for the
year ended December 31, 2002, compared to 3.8% for the comparable period in
2001.

Depreciation and amortization expense decreased to $20.7 million for the
year ended December 31, 2002, from $40.6 million for the comparable period in
2001, representing a decrease of $19.9 million, or 49.0%. The decrease is
primarily attributable to a decrease in goodwill amortization of $21.9 million
resulting from the adoption of SFAS No. 142 which no longer allows for the
amortization of goodwill. The decrease was offset by increases related to
accelerated amortization expense of deferred debt costs in connection with
entering into a new credit facility, accelerated depreciation costs related to
changes in useful lives of assets held at sites being consolidated, and
additional capital expenditures made since December 31, 2001. As a percentage of
revenue, depreciation and amortization expense (excluding goodwill amortization)
decreased to 4.1% for the year ended December 31, 2002 from 3.6% for the
comparable period in 2001.

Interest expense decreased to $2.5 million for the year ended December 31,
2002, from $6.8 million for the same period in 2001, a decrease of $4.3 million,
or 63.5%. The decrease is the result of both lower average outstanding debt
balances and a lower average interest rate in 2002. The average debt balance was
$38.6 million for the year ended December 31, 2002 compared to $84.7 million for
the year ended December 31, 2001. The weighted average interest rate on bank
debt was 5.6% for the year ended December 31, 2002 compared to 7.6% for the same
period in 2001.

CBIZ recorded a net gain from divested operations of $0.9 million for the
year ended December 31, 2002, as compared to a net loss of $7.1 million for the
year ended December 31, 2001. CBIZ completed the divestiture of eleven non-core
business operations during the year ended December 31, 2002, either through sale
or closure. During 2001, the net loss was attributable to the divestiture of
fifteen non-core operations. CBIZ also recorded in 2001 a loss on the planned
divestiture of four non-core business units for 2002, based on estimated
proceeds. In addition to this divestiture activity, CBIZ classified five
operations as discontinued operations during 2002, in connection with the
adoption of Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." The results of these
operations are disclosed separately on the consolidated financial statements and
discussed separately under "Results of Operations -- Discontinued Operations"
below.

Other income (expense), net was $1.1 million of expense for the year ended
December 31, 2002, as compared to $3.9 million of income for the comparable
period in 2001, representing a change of approximately $5.0 million. Other
income (expense), net is comprised primarily of interest income earned in CBIZ's
payroll business, gains and losses on the sale of assets, charges for legal
reserves and settlements, and miscellaneous income, such as contingent royalties
from previous divestitures. The decrease in other income (expense), net is
primarily attributable to a $2.4 million charge related to the write-down of
CBIZ's investment in two high-tech start-up ventures, and a note taken in
connection with the divestiture of the hazardous waste operation in 1997, that
were deemed impaired in 2002. In addition, interest income decreased $1.3
million related to lower interest rates in 2002.

CBIZ recorded income tax expense from continuing operations of $8.1 million
for the year ended December 31, 2002, compared with $12.2 million in 2001. The
effective tax rate was 51.8% for the year ended December 31, 2002. The effective
tax rate for the year ended December 31, 2002, is higher than the statutory
federal and state tax rates of approximately 40% due to permanent differences
such as non-deductible goodwill related to the disposition of businesses. The
effective tax rate 2001 is higher than the statutory rates primarily due to the
significant amount of goodwill amortization expense, the majority of which is
not deductible for tax purposes.

18

COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000

Revenues

Total revenue for the year ended December 31, 2001 was $516.9 million as
compared to $551.2 million for the year ended December 31, 2000, representing a
decrease of $34.3 million, or 6.2%. The decrease in revenue was primarily
attributable to (i) divestitures completed during the year ended December 31,
2001, and (ii) lower than expected revenue resulting from generally weak
economic conditions. The decrease in revenues attributable to divestitures was
$30.9 million. For business units with a full period of operations for the years
ended December 31, 2001 and 2000, revenue decreased $3.4 million. For the period
of September through December, the company experienced lower revenues in most of
its business units due to weak economic conditions. Lower revenues were
particularly significant in several lines of business including ten business
units which provide capital markets, IT and other consulting services. Same-unit
revenue in these business units fell $17.2 million, or 20.9% in 2001 compared to
2000. During the fourth quarter, same-unit revenue from these business units
declined by $6.1 million, or 30.7% compared to the fourth 2000.

Expenses

Operating expenses decreased to $447.5 million for the year ended December
31, 2001, from $490.6 million for the comparable period in 2000, representing a
decrease of $43.1 million, or 8.8%. Such decrease was primarily attributable to
reductions in personnel costs of $15.5 million, facility costs of $1.3 million,
and the reduction in bad debt expense of $17.4 million. These reductions in
expenses were primarily from ongoing operations, although a portion of the
reductions are a result of divestitures completed subsequent to December 31,
2000. Other operating costs such as commission expense and product costs have
also decreased due to decreased revenue. As a percentage of revenue, operating
expenses for the year ended December 31, 2001 were 86.6% compared to 89.0% for
the year ended December 31, 2000, representing a decrease of 2.4%.

Corporate general and administrative expenses decreased to $19.8 million
for the year ended December 31, 2001, from $24.7 million for the comparable
period in 2000, representing a decrease of $4.9 million, or 19.8%. Such decrease
was attributable to lower personnel costs of $1.2 million and lower technology
expenditures of $2.8 million. Corporate general and administrative expenses
represented 3.8% of total revenues for the year ended December 31, 2001,
compared to 4.5% for the comparable period in 2000.

Depreciation and amortization expense decreased to $40.6 million for the
year ended December 31, 2001, from $43.3 million for the comparable period in
2000, representing a decrease of $2.7 million, or 6.2 %. The decrease is
primarily attributable to lower goodwill amortization of $4.1 million as a
result of goodwill impairment recorded in the fourth quarter of 2000 and a
reduction in goodwill related to divestures completed in 2000 and 2001. The
decrease was primarily offset by an increase in depreciation expense related to
capital expenditures, a significant amount of which occurred in 2000, which were
primarily related to consolidation efforts. As a percentage of revenue,
depreciation and amortization expense increased to 7.9% for the year ended
December 31, 2001 from 7.9% for the comparable period in 2000.

Interest expense decreased to $6.8 million for the year ended December 31,
2001, from $12.1 million for the same period in 2000, a decrease of $5.3
million, or 43.9%. The decrease is a result of CBIZ paying down its bank debt
during 2001 from $117.5 million to $55 million, a reduction in debt of $62.5
million. Additionally, CBIZ's average interest rate on bank debt dropped
throughout 2001. The weighted average interest rate on bank debt was 7.6% for
the year ended December 31, 2001 compared to 8.7% for the same period in 2000,
and includes the effect of the interest rate swap in 2001.

CBIZ recorded a loss on sale of operations of $7.1 million for the year
ended December 31, 2001, as compared to $31.6 million for the year ended
December 31, 2000. Such charges in 2001 are related to the sale or closing of
fifteen operations for an aggregate price of $16.5 million, which included $14.0
million of cash, $2.4 million of notes receivables, and $0.1 million in CBIZ
stock. In addition to an estimated loss related to the planned divestiture of
five additional business units to be completed in 2002. Such charges in 2000
were the result of the divestiture of four operations including three business
units previously announced in

19

December 1999, the sale of CBIZ's franchise operations for $3.8 million and an
estimated loss of $27.2 million related to the planned divestiture of two
additional business units to be completed in 2001.

Other income (expense), net was $3.9 million of income for the year ended
December 31, 2001, as compared to $5.8 million of expense for the comparable
period in 2000, representing a change of approximately $9.8 million. In 2001,
other expense is comprised primarily of $2.7 million of interest income and $2.2
million of miscellaneous income offset by $0.6 million of loss on sale of assets
and $0.4 million of other expenses. In 2000, other expense is comprised
primarily of $1.6 million impairment of note received in connection with the
sale on environmental properties in 1997, $3.8 million related to the settlement
of and reserve for certain legal proceedings, $0.4 million related to the
closing of operations; and $2.7 million related to software and other asset
impairment, offset by interest income of $3.9 million.

CBIZ recorded income tax expense from continuing operations of $12.2
million for the year ended December 31, 2001, compared with an income tax
expense of $1.5 million in 2000. CBIZ expensed goodwill amortization of $21.9
million in 2001, a majority of which was not deductible for tax purposes. In
addition, CBIZ reduced goodwill by $13.8 million in 2001 in connection with
divestures, of which $11.4 million was not deductible for tax purposes. As a
result of these adjustments, CBIZ's taxable income was significantly higher than
the $1.0 million pretax loss reported, resulting in a tax expense of $12.2
million.

RESULTS OF OPERATIONS -- DISCONTINUED OPERATIONS

During 2002, CBIZ adopted formal plans to divest five non-core operations
which were no longer part of CBIZ's strategic long-term growth objectives. These
operations were classified as discontinued operations in connection with the
adoption of Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," and the net assets and
liabilities and results of operations are reported separately in the
consolidated financial statements. Four of these operations were either sold or
closed as of December 31, 2002. One operation remains available for sale as of
December 31, 2002, and the sale is expected to be completed within one year.
Based on the estimated cost of closure and purchase price, CBIZ recorded a loss
on disposal from discontinued operations, net of tax, of $2.5 million for the
year ended December 31, 2002. Revenue associated with these five discontinued
operations for the years ended December 31, 2002, 2001 and 2000 was $7.2
million, $10.0 million and $16.6 million, respectively. The loss from
operations, net of tax, associated with these divestitures for the years ended
December 2002, 2001 and 2000 was $1.9 million, $2.8 million and $15.8 million,
respectively.

During 2000, CBIZ completed the sale of its risk-bearing specialty
insurance segment, as well as American Inspection and Audit Services, Inc. and
CSC Insurance Agency, Inc., collectively referred to as the Divested Entities,
for $28 million, resulting in a loss on disposal of discontinued businesses, net
of tax of $5.7 million. These Divested Entities were classified as discontinued
operations in 2000 under APB Opinion 30, the accounting literature for
discontinued operations then in effect. For the year ended December 31, 2000
revenue associated with these discontinued operations was $22.6 million and the
related loss from operations, net of tax, was $1.2 million.

RESULTS OF OPERATIONS -- CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

Effective January 1, 2002, CBIZ adopted Statement of Financial Accounting
Standard No., 142 "Goodwill and Other Intangible Assets" (SFAS 142), which
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least annually at
the reporting unit level. SFAS 142 also requires intangible assets with finite
useful lives to be amortized over their respective estimated useful lives and
reviewed for impairment in accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." CBIZ finalized the required
transitional tests of goodwill during 2002, and recorded an impairment charge of
$88.6 million on a pre-tax basis. This non-cash charge is reflected as a
cumulative effect of a change in accounting principle net of tax benefit of $8.6
million.

During the fourth quarter of 2000, CBIZ adopted Securities and Exchange
Commission Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in
the Financial Statements." SAB 101 summarizes certain of the Commission's views
in applying generally accepted accounting principles to revenue recognition in
20

financial statements. In light of the guidance to conform to SAB 101 and the
SEC's "Frequently Asked Questions and Answers" bulletin released on October 12,
2000, CBIZ changed certain revenue recognition policies effective January 1,
2000. Prior to this change CBIZ's revenue recognition had been in accordance
with GAAP and industry standards. Due to this change, CBIZ recorded a cumulative
adjustment in the first quarter 2000 of $11.9 million (net of tax benefit of
$7.9 million). The impact in 2000 of adopting SAB 101 resulted in a reduction in
revenue of approximately $18.2 million, a reduction in operating expense of
approximately $11.4 million, and a reduction in income from continuing
operations (before cumulative effect of accounting change) of approximately $6.8
million (pretax).

FINANCIAL CONDITION

Total assets were $433.1 million and total liabilities were $138.8 million
as of December 31, 2002 and shareholders equity was $294.3 million. Current
assets of $202.7 million exceeded current liabilities of $116.4 million by $86.3
million at December 31, 2002.

Cash and cash equivalents increased $2.0 million to $6.4 million for the
year ended December 31, 2002. Restricted cash was $17.0 million at December 31,
2002, an increase of $3.6 million from a year ago. Restricted cash represents
those funds held in connection with CBIZ's NASD regulated operations and funds
held in connection with the pass through of insurance premiums to the carrier.
As further described in note 1 to the consolidated financial statements
contained herein, funds held for clients were $49.2 million, which is directly
offset by client fund obligations. Cash, restricted cash and funds held for
clients fluctuate during the year based on the timing of cash receipts and
related payments. Accounts receivable were $103.0 million at December 31, 2002,
and declined by $9.7 million from a year ago. The decline in receivables was due
to the improvement in collection of amounts due, divestitures, and the write-off
of certain accounts that were deemed uncollectible. Other assets, including
notes receivable and property and equipment, are carried at amounts that CBIZ
reasonably estimates reflect the value of these assets, considering current
circumstances and future expectations. Goodwill and other intangible assets, net
of accumulated amortization, decreased $83.4 million, primarily due to
impairment for goodwill of $88.6 million recorded in 2002 as a result of the
adoption of SFAS 142.

The accounts payable balance of $22.5 million at December 31, 2002 reflects
amounts due to suppliers and vendors. Other current liabilities increased $5.3
million to $37.7 million at December 31, 2002. The change primarily reflects the
recording of anticipated costs related to restructuring and accrued compensation
expense. Client fund obligations of $49.2 million were directly related to funds
held for clients in the same amount as reflected in current assets. CBIZ's
credit facility was $17.5 million at December 31, 2002, a reduction of $37.5
million from December 31, 2001. The reduction in debt was a result of CBIZ's
positive cash flow generated during 2002.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities in 2002 was $42.3 million versus
$55.6 million in 2001, a decrease of $13.3 million. Net cash provided by
operating activities was the principal source of funds used to reduce CBIZ's
bank debt by $37.5 million.

Net cash used in investing activities during 2002 of $3.0 million consisted
of $7.8 million in proceeds from the disposition of non-core and underperforming
business units and $1.9 million collected on notes receivable offset by $8.2
million used for capital expenditures, and $4.6 million used toward the
acquisition of a benefits and insurance firm, and funding provided under the
HarborView agreement. Capital expenditures consisted of leasehold improvements
and equipment in connection with the consolidation of certain offices, IT
capital to support the growth of the medical management practice, and equipment
purchases in relation to normal replacement. The majority of capital
expenditures represent investment in technology-related items including hardware
and software, both to improve back office functions and to provide better
solutions for our clients.

Cash used in investing activities during 2001 of $1.2 million consisted of
$14.0 million in proceeds from the disposition of non-core and underperforming
business units and $0.2 million of collections on notes receivables. These
proceeds were offset by $12.7 million used for capital expenditures, $1.7
million used toward the acquisition of a technology services business and
contingent consideration for previous acquisitions (earn-outs),
21

and $1.0 million funding provided under the HarborView agreement. Capital
expenditures consisted of leasehold improvements and equipment in connection
with the consolidation of certain offices and equipment purchases in relation to
normal replacement.

During the year ended December 31, 2002, cash used in financing activities
of $37.2 million consisted of a net reduction in the bank credit facility of
$37.5 million. On September 26, 2002 CBIZ entered into a new senior secured
credit agreement with a group of four banks, as described below under "Sources
of Cash." CBIZ expects to use the facility for working capital, internal growth
initiatives, and its acquisition program.

Cash used in financing activities in 2001 of $66.1 million consisted
primarily of net reduction of $62.5 million in the revolving credit facility and
net payments of $3.2 million toward notes payable and capitalized leases. In
addition, approximately $0.4 million in cash was used toward the purchase of
170,000 shares of CBIZ's common stock, in accordance with CBIZ's Share
Repurchase Program approved by the Board of Directors on August 8, 2001

SOURCES OF CASH

CBIZ's principal source of net operating cash is derived from the
collection of fees from professional services rendered to its clients and
commissions earned in the areas of accounting, tax, valuation and advisory
services, benefits consulting and administration services, insurance, human
resources and payroll solutions, capital advisory, retirement and wealth
management services and technology solutions.

On September 26, 2002 CBIZ entered into a new senior secured credit
agreement with a group of four banks. The new $73 million facility carries an
option to increase the facility to $80 million and allows for the allocation of
funds for strategic initiatives, including acquisitions and the repurchase of
CBIZ stock. CBIZ expects to use the facility for working capital, internal
growth initiatives, and its acquisition program. The facility has a three year
term with an expiration date of September 2005. The new credit agreement is
secured by all assets and capital stock of CBIZ and its subsidiaries and allows
for greater operating flexibility as it pertains to acquisitions and the use of
funds for the repurchase of CBIZ stock. Under the new credit agreement, CBIZ is
subject to a monthly borrowing base related to accounts receivable and unbilled
revenues, and is required to meet certain financial covenants. These covenants
require CBIZ to meet certain requirements with respect to (i) minimum tangible
net worth; (ii) maximum leverage ratio; and (iii) a minimum fixed charge
coverage ratio. CBIZ is in compliance with its covenants as of December 31, 2002
and projects that it will remain in compliance in 2003.

At December 31, 2002, CBIZ had $17.5 million outstanding under its credit
facility. Management believes that the available funds from the credit facility,
along with cash generated from operations, will be sufficient to meet its
liquidity needs in the foreseeable future.

See note 8 to CBIZ's consolidated financial statements included herewith.

USES OF CASH AND LIQUIDITY OUTLOOK

CBIZ's capital expenditures from continuing operations totaled $8.2
million, $12.7 million and $19.7 million for the years ended December 31, 2002,
2001 and 2000, respectively, which included expenditures for fixed assets for
normal replacement, implementation of the enterprise-wide solution to integrate
back office operations and other initiatives, office consolidations, compliance
with regulations and market development. During the year ended December 31,
2002, CBIZ principally funded capital expenditures from operating cash flow and
financing activities. In 2003, capital expenditures are expected to be
approximately $7.5 million, and CBIZ anticipates that during 2003, it will
continue to fund these expenditures from operating cash flow supplemented by
borrowings under its revolving credit agreement, as necessary.

At December 31, 2002, based on the borrowing base calculation, CBIZ had
approximately $36.0 million of available funds under its credit facility.
Management believes that those available funds, along with cash generated from
operations, will be sufficient to meet its liquidity needs in the foreseeable
future. To fund operations, capital expenditures and potential acquisitions,
CBIZ may also obtain funding by offering securities or debt, through the public
markets or the private markets. CBIZ currently has a number of shelf
registrations

22

active, under which we can offer such securities. See note 12 to the
consolidated financial statements contained herein for a description of the
aforementioned registration filings.

CBIZ's aggregate amount of obligations for the next five years and
thereafter is set forth below (in thousands):

INTEREST RATE RISK MANAGEMENT

CBIZ entered into an interest rate swap agreement in the third quarter of
2001 to reduce the impact of potential rate increases on variable rate debt
through its credit facility. The interest rate swap was entered into with a
notional amount of $25 million, a fixed LIBOR rate of 3.58%, and a maturity date
of August 2003. During 2002, primarily as a result of continued strong cash flow
from operations, CBIZ continued to reduce its outstanding debt; therefore, to
maintain an effective hedge CBIZ reduced the notional amount of the swap to $15
million. CBIZ accounts for the interest rate swap as a cash flow hedge, whereby
the fair value of the interest rate swap is reflected as an asset or liability
in the accompanying consolidated balance sheet. The interest rate swap (hedging
instrument) matches the notional amount, interest rate index and re-pricing
dates as those that exist under the variable rate debt through its credit
facility (hedged item). When the interest rate index is below the fixed rate
LIBOR, the change in fair value of the instrument represents a change in
intrinsic value, which is an effective hedge. This portion of change in value
will be recorded as other comprehensive income (loss). For the year ended
December 31, 2002, the change in fair value resulted in a loss of approximately
$0.3 million, which is recorded as accumulated other comprehensive income (loss)
in stockholders' equity.

CRITICAL ACCOUNTING POLICIES

The policies discussed below are considered by management to be critical to
the understanding of CBIZ's consolidated financial statements because their
application places significant demand on management's judgment, with financial
reporting results relying on estimation about the effects of matters that are
inherently uncertain. Specific risks for these critical accounting policies are
described in the following paragraphs. For all of these policies, management
cautions that estimates may require adjustment if future events develop
differently than forecasted.

REVENUE RECOGNITION AND VALUATION OF UNBILLED REVENUES

Revenue is recognized only when all of the following are present:
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, our fee to the client is fixed or determinable, and
collectibility is reasonably assured, which is in accordance with GAAP and SAB
101. CBIZ offers a vast array of products and outsourced business services to
its clients. Those services are delivered through three practice groups. A
description of revenue recognition, as it relates to those groups, is provided
below:

ACCOUNTING, TAX AND ADVISORY SERVICES -- Revenue consists primarily of fees
for accounting services, preparation of tax returns and consulting services.
Revenues are recorded in the period in which they are earned. CBIZ bills clients
based upon a predetermined agreed-upon fixed fee or actual hours incurred on
client projects at expected net realizable rates per hour, plus any
out-of-pocket expenses. The cumulative impact on any subsequent revision in the
estimated realizable value of unbilled fees for a particular client project is
reflected in the period in which the change becomes known.

23

BENEFITS & INSURANCE -- Revenue consists primarily of brokerage and agency
commissions, and fee income for administering health and retirement plans. A
description of the revenue recognition, based on insurance product and billing
arrangement, is described below:

- Commissions relating to brokerage and agency activities whereby CBIZ has
primary responsibility for the collection of premiums from insured's
(agency or indirect billing) are generally recognized as of the earlier
of the effective date of the insurance policy or the date billed to the
customer.
- Commissions to be received directly from insurance companies (direct
billing) are generally recognized when the amounts are determined.
- Life insurance commissions are generally recognized when the amounts are
determined.
- Commission revenue is reported net of sub-broker commissions.
- Contingent commissions are recognized at the earlier of notification or
cash collection.
- Fee income is recognized as in the period earned, and may be based on
actual hours incurred on an hourly fee basis, fixed fee arrangements, or
asset-based fees.

NATIONAL PRACTICES -- The business units that comprise this practice group
offer a variety of services. A description of revenue recognition associated
with the primary services is provided below:

- Mergers & Acquisitions and Capital Advisory -- Revenue associated with
non-refundable retainers are recognized on a pro rata basis over the life
of the engagement. Revenue associated with success fee transactions are
recognized when the transaction is completed.

- Technology Consulting -- Revenue associated with hardware and software
sales are recognized upon delivery and acceptance of the product. Revenue
associated with installation and service agreements are recognized as
services are performed. Consulting revenue is recognized on an hourly or
per diem fee basis.

- Valuation and Property Tax -- Revenue associated with retainer contracts
are recognized on a pro rata basis over the life of the contract, which
is generally twelve months. Revenue associated with contingency
arrangements is recognized once written notification is received from an
outside third party (e.g., assessor in the case of a property tax
engagement) acknowledging that the contingency has been resolved.

- Medical Practice Management -- Revenue is recognized when payments are
received on our clients' patient accounts.

VALUATION OF ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE

The preparation of consolidated financial statements requires management to
make estimates and assumptions that affect the reported amount 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 reporting period. Specifically, management must make estimates of the
collectability of our accounts receivable, including unbilled accounts
receivable, related to current period service revenue. Management analyzes
historical bad debts, client credit-worthiness, and current economic trends and
conditions when evaluating the adequacy of the allowance for doubtful accounts
and the collectibility of notes receivable. Significant management judgments and
estimates must be made and used in connection with establishing the allowance
for doubtful accounts in any accounting period. Material differences may result
if management made different judgments or utilized different estimates.

VALUATION OF GOODWILL

Effective January 1, 2002, CBIZ adopted the non-amortization provisions of
SFAS 142, and accordingly ceased amortization of our remaining goodwill balance.
CBIZ evaluated the goodwill for impairment using the new fair value impairment
guidelines of SFAS 142. During 2002, CBIZ completed the process of evaluating
our goodwill for impairment using the new fair market impairment guidelines of
SFAS 142. This change to a new method of accounting for goodwill resulted in a
non-cash impairment charge of $88.6 million on a pretax basis ($80.0 million net
of tax), which was recorded as a cumulative effect of a change in accounting
principle.

24

VALUATION OF INVESTMENTS

CBIZ has certain investments in privately held companies that are currently
in their start-up or development stages and are included in "other assets" in
the accompanying consolidated balance sheets. These investments are inherently
risky as the market for the technologies or products they have under development
are typically in the early stages. The value of these investments is influenced
by many factors, including the operating effectiveness of these companies, the
overall health of the companies' industries, the strength of the private equity
markets and general market conditions. During 2002, CBIZ recorded charges of
approximately $1.6 million related to the impairment of certain investments
held. Although the market value of these investments is not readily
determinable, management believes their current fair values approximate their
carrying values as of December 31, 2002. In light of the circumstances noted
above, particularly with respect to the current economic environment, it is
possible that the fair value of these investments could decline in future
periods, and further impairment could occur.

LOSS CONTINGENCIES

Loss contingencies, including litigation claims, are recorded as
liabilities when it is probable that a liability has been incurred and the
amount of the loss is reasonably estimable. Contingent liabilities are often
resolved over long time periods. Estimating probable losses requires analysis
that often depends on judgment about potential actions by third parties.

ESTIMATES OF INCENTIVE COMPENSATION COSTS AND EFFECTIVE INCOME TAX RATES

Incentive compensation costs and income tax expense are two significant
expense categories that are highly dependent upon management estimates and
judgments, particularly at each interim reporting date. In arriving at the
amount of expense to recognize, management believes it makes reasonable
estimates and judgments using all significant information available. Incentive
compensation costs are accrued on a monthly basis, and the ultimate
determination is made after our year-end results are finalized; thus, estimates
are subject to change. Circumstances that could cause our estimates of effective
income tax rates to change include the impact of information that subsequently
became available as we prepared our corporate income tax returns; the level of
actual pre-tax income; revisions to tax positions taken as a result of further
analysis and consultation, and changes mandated as a result of audits by taxing
authorities

OTHER SIGNIFICANT POLICIES

Other significant accounting policies not involving the same level of
measurement uncertainties as those discussed above are nevertheless important to
understanding the consolidated financial statements. Those policies are
described in Note 1 to the consolidated financial statements contained herein.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities." The standard requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. The statement is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002 and it is not expected to have a
significant impact on our financial position and results of operations.

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosures," an amendment to SFAS 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The transition guidance
and annual disclosure provisions are effective for the year ended

25

December 31, 2002, and the interim disclosure requirements are effective for
financial reports containing financial statements for interim periods beginning
after December 15, 2002.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others," which addresses the disclosure
to be made by a guarantor in its interim and annual financial statements about
its obligations under guarantees. FIN 45 requires the recognition of a liability
by a guarantor at the inception of certain guarantees, specifically recognition
of a liability for the non-contingent component of the guarantee, which is the
obligation to stand ready to perform in the event that specified triggering
events or conditions occur, even if it is not probable that the payments will be
required under the guarantee or if the guarantee was issued with a premium
payment or as part of a transaction with multiple elements. CBIZ has adopted the
disclosure requirements effective for the year ended December 31, 2002. CBIZ
will apply the initial recognition and measurement provisions effective for all
guarantees issued or modified after December 31, 2002. Other than letters of
credit that are issued in the normal course of business, CBIZ does not enter
into guarantees and therefore does not expect the adoption of FIN 45 to have a
significant impact on our financial position and results of operations.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." This interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," addresses
consolidation by business enterprises of variable interest entities (VIEs) which
have the characteristics of equity investments at risk not sufficient to permit
the entity to finance its activities without additional financial support from
other parties, or VIEs in which the equity investor lacks essential
characteristics of a controlling financial interest. FIN 46 applies to VIEs
created after January 31, 2003 and to VIEs in which an enterprise obtains an
interest after that date. CBIZ will adopt the provisions of FIN 46 in 2003.

ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

Quantitative Information About Market Risk. CBIZ's floating rate debt
under its credit facility exposes the Company to interest rate risk. A change in
the Federal Funds Rate, or the Reference Rate set by the Bank of America (San
Francisco), would affect the rate at which CBIZ could borrow funds under its
credit facility. If market interest rates were to increase or decrease
immediately and uniformly by 100 basis points from the levels at December 31,
2002, interest expense would increase or decrease by $0.2 million annually. CBIZ
has entered into an interest rate swap to minimize the potential impact of
future increases in interest rates. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Interest Rate Risk
Management," for a further discussion of this financial instrument.

CBIZ does not engage in trading market risk sensitive instruments. Except
for the interest rate swap discussed above, CBIZ does not purchase instruments,
hedges, or "other than trading" instruments that are likely to expose CBIZ to
market risk, whether foreign currency exchange, commodity price or equity price
risk. CBIZ has not issued debt instruments, entered into forward or futures
contracts, or purchased options.

Qualitative Information About Market Risk. CBIZ's primary market risk
exposure is that of interest rate risk. A change in the Federal Funds Rate, or
the reference rate set by the Bank of America (San Francisco), would affect the
rate at which CBIZ could borrow funds under its credit facility. See
"Quantitative Information about Market Risk" for a further discussion on the
potential impact of a change in interest rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and Supplementary Data required hereunder are
included in this Annual Report as set forth in Item 15(a) hereof.

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

None.

26

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information appearing under the caption "Proposal No. 1 -- Election of
Directors" in CBIZ's definitive proxy statement relating to the 2003 Annual
Stockholders Meeting is incorporated herein by reference.

On October 10, 2002, CBIZ announced that Chairman Michael G. DeGroote had
resigned from the Company's Board of Directors for health reasons, and that
current Chief Executive Officer and Director Steven L. Gerard was elected as
Chairman of the Board. In addition, to fill the vacancy created by Mr.
DeGroote's resignation, the Board of Directors appointed Mr. DeGroote's son, Mr.
Gary W. DeGroote, to the Board.

The following table sets forth certain information regarding the directors,
executive officers and certain key employees of CBIZ. Each executive officer of
CBIZ named in the following table has been elected to serve until his successor
is duly appointed or elected or until his earlier removal or resignation from
office. No arrangement or understanding exists between any executive officer of
CBIZ and any other person pursuant to which he or she was selected as an
officer.

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

(1) Member of Management Executive Committee

(2) Member of Audit Committee

(3) Member of Nominating & Governance Committee

(4) Member of Compensation Committee

EXECUTIVE OFFICERS AND DIRECTORS:

Steven L. Gerard was elected by the Board to serve as its Chairman in
October, 2002. He was appointed Chief Executive Officer and Director in October,
2000. Mr. Gerard was Chairman and CEO of Great Point Capital, Inc., a provider
of operational and advisory services from 1997 to October 2000. From 1991 to
1997, he was Chairman and CEO of Triangle Wire & Cable, Inc. and its successor
Ocean View Capital, Inc. Mr. Gerard's

27

prior experience includes 16 years with Citibank, N.A. in various senior
corporate finance and banking positions, including ultimately Senior Managing
Director, responsible for the risk management of Citibank's commercial and
investment banking activities in the United States, Europe, Australia and Japan.
Further, Mr. Gerard served seven years with the American Stock Exchange, where
he last served as Vice President of the Securities Division. Mr. Gerard also
serves on the Boards of Directors of Fairchild Company, Inc., Lennar
Corporation, TIMCO Aviation Services, Inc. and Joy Global, Inc.

Rick L. Burdick has served as a Director of CBIZ since October 1997, when
he was elected as an outside director. In October 2002, he was elected by the
Board as Vice Chairman, a non-officer position. Mr. Burdick has been a partner
at the law firm of Akin Gump Strauss Hauer & Feld L.P since April 1988. Mr.
Burdick serves on the Board of Directors of AutoNation, Inc.

Gary W. DeGroote has served as a Director of CBIZ since October, 2002, when
he was elected as an outside director to serve the remaining term of his father,
Michael G. DeGroote, who resigned from the Board for health reasons. Mr.
DeGroote is the President of GWD Management Inc., a private Canadian diversified
investment holding company founded in 1980 with an office in Burlington,
Ontario. Mr. DeGroote also serves as a Director and Officer of other private
companies. From 1976 to 1989, Mr. DeGroote held several positions with Laidlaw
Inc., a public waste services and transportation company, ending as
Vice-President and Director in 1989. From 1991 to 1994, Mr. DeGroote served as
President of Republic Environmental Systems Ltd., and Director of Republic
Industries Inc. He is currently a Director of Capital Environmental Resources
Inc.

Joseph S. DiMartino has served as a Director of CBIZ since November 1997,
when he was elected as an outside director. Mr. DiMartino has been Chairman of
the Board of the Dreyfus Family of Funds since January 1995. Mr. DiMartino
served as President, Chief Operating Officer and Director of The Dreyfus
Corporation from October 1982 until December 1994 and also served as a director
of Mellon Bank Corporation. Mr. DiMartino also serves on the Board of Directors
of LEVCOR International, The Newark Group, and the Muscular Dystrophy
Association.

Harve A. Ferrill has served as a Director of CBIZ since October 1996, when
he was elected as an outside director. Mr. Ferrill served as Chief Executive
Officer and Chairman of Advance Ross Corporation, a company that provides tax
refunding services, from 1992 to 1996. Mr. Ferrill served as President of
Advance Ross Corporation from 1990 to 1992. Since 1996, Advance Ross Corporation
has been a wholly-owned subsidiary of Cendant Corporation. Mr. Ferrill has
served as President of Ferrill-Plauche Co., Inc., a private investment company,
since 1982.

Richard C. Rochon has served as a Director of CBIZ since October 1996, when
he was elected as an outside director. Mr. Rochon is Chairman and Chief
Executive Officer of Royal Palm Capital Partners, a private investment and
management fund. From 1985 to February 2002, Mr. Rochon served in various
capacities with, and most recently as, President of Huizenga Holdings, Inc., a
management and holding company owned by H. Wayne Huizenga. Mr. Rochon also
served, as a director since September 1996 and as Vice Chairman since April
1997, of Boca Resorts, Inc., the owner and operator of luxury resort properties
in South Florida. From 1979 until 1985, Mr. Rochon was employed as a certified
public accountant by the public accounting firm of Coopers & Lybrand, L.L.P. Mr.
Rochon also serves on the Board of Directors of Citizens Bancshares of South
Florida.

Jerome P. Grisko, Jr. has served as President and Chief Operating Officer
of CBIZ since February 1, 2000. Mr. Grisko joined CBIZ as Vice President,
Mergers & Acquisitions in September 1998 and was promoted to Senior Vice
President, Mergers & Acquisitions and Legal Affairs in December of 1998. Prior
to joining CBIZ, Mr. Grisko was associated with the law firm of Baker &
Hostetler LLP, where he practiced from September 1987 until September 1998,
serving as a partner of such firm from January 1995 to September 1998. While at
Baker & Hostetler, Mr. Grisko concentrated his practice in the area of mergers,
acquisitions and divestitures.

Ware H. Grove has served as Senior Vice President and Chief Financial
Officer of CBIZ since December 2000. Before joining CBIZ, Mr. Grove served as
Senior Vice President and Chief Financial Officer of Bridgestreet
Accommodations, Inc., which he joined in early 2000 to restructure financing,
develop strategic operating alternatives, and assist with merger negotiations.
Prior to joining Bridgestreet, Mr. Grove served for

28

three years as Vice President and Chief Financial Officer of Lesco, Inc. Since
beginning his career in corporate finance in 1972, Mr. Grove has held various
financial positions with large companies representing a variety of industries,
including Computerland/Vanstar, Manville Corporation, The Upjohn Company, and
First of America Bank.

Douglas R. Gowland has served as a Senior Vice President since November
1997. Mr. Gowland served as a Director of CBIZ from April 1995 through November
1997. From April 1995 until October 1996, Mr. Gowland served as CBIZ's Executive
Vice President and Chief Operating Officer. From January 1992 to April 1995, Mr.
Gowland served as Vice President -- Hazardous Waste Operations of Republic
Industries, Inc., the predecessor of AutoNation, Inc. From March 1991 to January
1992, Mr. Gowland served as Vice President of DRG Environmental Management, Inc.
Prior thereto, he served as President of Great Lakes Environmental Systems, Ltd.

Leonard Miller has served as CBIZ Accounting, Tax and Advisory Services
Practice Head since November 2000 and was appointed Senior Vice President in
February 2002. Mr. Miller was the President and Director of Financial Operations
for Miller Wagner & Company, Ltd. in Phoenix, Arizona for 22 years before the
firm joined the Century Business Services family and became Miller Wagner
Business Services, Inc. and Miller Wagner & Company, PLLC. Mr. Miller was the
Regional Managing Partner for Lester Witte and Company, and was responsible for
11 of its offices prior to co-founding Miller Wagner & Company, Ltd. With over
38 years of experience, Mr. Miller is a recognized expert in the fields of
finance, real estate, general business consulting and various litigation support
matters. Professional affiliations include the American Institute of Certified
Public Accountants (AICPA), the Arizona Society of Certified Public Accountants
(ASCPA) and the Illinois Society of Certified Public Accountants (ISCPA).

Robert A. O'Byrne has served as a Senior Vice President of CBIZ since
December 1998 and is responsible for CBIZ's Benefits Administration & Insurance
Services Group. Mr. O'Byrne served as President and Chief Executive Officer of
employee benefits brokerage/consulting firms Robert D. O'Byrne and Associates,
Inc. and The Grant Nelson Group, Inc. prior to their acquisition by CBIZ in
December 1997. Mr. O'Byrne has more than 24 years of experience in the insurance
and benefits consulting field.

Michael W. Gleespen has served as Corporate Secretary and General Counsel
since June 2001 and General Counsel since June 2001. Mr. Gleespen is an attorney
and has served as CBIZ's Vice President of Regulatory Compliance and Accountancy
Compliance Officer and Technical Director since February 1998. Prior to joining
CBIZ, Mr. Gleespen was an Assistant Ohio Attorney General in the Business &
Government Regulation Section and the Court of Claims Defense Section from 1988
until 1998, during which time he was counsel to the Ohio Accountancy Board, the
Ohio State Teachers Retirement System and represented many other state
departments and agencies. Mr. Gleespen also held the post of Associate Attorney
General for Pension, Disability and Annuity Plans and was the Co-Chairman of the
Public Pension Plan Working Group. Mr. Gleespen is a member of the Board of
Directors of the Cancer Hope Foundation and is a member of the American Society
of Corporate Secretaries.

OTHER KEY EMPLOYEES:

George A. Dufour was appointed Chief Technology Officer in July 2001. Prior
to joining CBIZ, Mr. Dufour served as Corporate Director of Information Access
Services for University Hospitals Health Systems (UHHS), where he achieved
substantial cost savings by consolidating IS resources throughout the health
system. Prior to joining UHHS in 1999, Mr. Dufour acted as Vice President and
CIO for Akron General Health Systems. From 1986 through 1994, Mr. Dufour was
with Blue Cross/Blue Shield of Ohio and served most recently there as Director
of Information Systems Development. Mr. Dufour commenced his career in
information technology, which includes tenures at Cook United, Cole National
Corporation, General Tire & Rubber, Picker Corporation, and Sherwin Williams, in
1971 as the Director of Education for the Institute of Computer Management, a
division of Litton Industries. Mr. Dufour is a member of the northeast Ohio
chapter of the Healthcare Information Management Systems Society.

Mark M. Waxman has over twenty years experience in marketing and branding.
Prior to joining CBIZ, he was CEO/Creative Director of one of Silicon Valley's
most well-known advertising agencies, Carter Waxman.

29

Most recently, he was a founding partner of SK Consulting (acquired by CBIZ in
1998) providing strategic marketing and branding services to a wide range of
companies and industries. Waxman has been a featured marketing columnist and
contributor to many business and trade publications, and currently serves on the
Board of Trustees of the Montalvo Center for the Arts, the West Valley Mission
Foundation, and Catholic Charities, and he recently served as the Chairman of
the Board of the Silicon Valley Chamber of Commerce.

Teresa E. Bruce has served as Vice President of Human Resources since
January 1999. From 1995 to 1999 Ms. Bruce served as Director of Human Resources
for Robert D. O'Byrne & Associates, Inc. and The Grant Nelson Group, Inc.,
subsidiaries of CBIZ now known as CBIZ Benefits and Insurance Services, Inc. Ms.
Bruce has over 15 years of experience in human resources and is an active member
of the Greater Kansas City Chapter of The Human Resources Management Association
and Society of Human Resources Management.

Chris Spurio has served as Vice President of Finance since July 1999.
Previously, Mr. Spurio was Controller since January 1998. Mr. Spurio also served
as Acting Chief Financial Officer from May 2000 to December 2000. Mr. Spurio was
associated with KPMG LLP, an international accounting firm, from July 1988 to
January 1998, serving as a Senior Manager of such firm from July 1995 to January
1998. Mr. Spurio is a CPA and a member of the American Institute of Certified
Public Accountants and the Ohio Society of Certified Public Accountants.

Kelly J. Kuna has served as Corporate Controller since July 1999. Mrs. Kuna
served as Manager of External Reporting from December 1998 to June 1999. Prior
to joining CBIZ, Mrs. Kuna was associated with KPMG LLP, an international
accounting firm, from 1992 to December 1998, serving as a Senior Manager of such
firm from July 1998 to December 1998. Mrs. Kuna is a CPA and a member of the
American Institute of Certified Public Accountants and the Ohio Society of
Certified Public Accountants.

ITEM 11. EXECUTIVE COMPENSATION

Information with respect to this item is incorporated by reference from the
discussion under the heading "Executive Compensation" in CBIZ's definitive proxy
statement for the 2003 Annual Stockholders' Meeting to be filed with the
Securities and Exchange Commission no later than 120 days after the end of
CBIZ's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to this item is incorporated by reference from
CBIZ's definitive proxy statement for the 2003 Annual Stockholders' Meeting to
be filed with the Securities and Exchange Commission no later than 120 days
after the end of CBIZ's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following is a summary of certain agreements and transactions between
or among CBIZ and certain related parties. It is CBIZ's policy to enter into
transactions with related parties on terms that, on the whole, are no less
favorable than those that would be available from unaffiliated parties. Based on
CBIZ's experience and the terms of its transactions with unaffiliated parties,
it is the Board of Directors' belief that the transactions described below met
these standards at the time of the transactions.

A number of the businesses acquired since October 1996 are located in
properties owned indirectly by and leased from persons employed by CBIZ. In the
aggregate, CBIZ paid approximately $0.8 million, $1.5 million and $1.5 million
for the years ended 2002, 2001 and 2000, respectively, under such leases which
management believes were at market rates.

Rick L. Burdick, a director of CBIZ, is a partner of Akin Gump Strauss
Hauer & Feld LLP Akin Gump performed legal work for CBIZ during 2002, 2001 and
2000 for which the firm received $119,064, $68,540 and $116,000 from CBIZ,
respectively.

CBIZ and/or its subsidiaries maintain joint-referral relationships and
service agreements with licensed CPA firms under which CBIZ subsidiaries provide
administrative services (including office, bookkeeping, accounting, and other
administrative services, preparing marketing and promotion materials, and
leasing of administrative and

30

professional staff) in exchange for a fee. The majority of the partners in the
independent CPA firms maintaining administrative service agreements with CBIZ
are CBIZ employees.

Robert A. O'Byrne, Senior Vice President, Benefits & Insurance, was
indebted to CBIZ in the amount of $250,000 at December 31, 2002 and $325,000 at
December 31, 2001. Likewise, CBIZ was indebted to the former shareholders of
RDOB/GNG, of which Mr. O'Byrne is a shareholder, for $420,000 at December 31,
2002. Mr. O'Byrne also has an interest in a partnership that receives
commissions from CBIZ that are paid to certain eligible benefits and insurance
producers in accordance with a formal program to provide benefits in the event
of death, disability, retirement or other termination. The note and the program
were both in existence at the time CBIZ acquired the former company, of which
Mr. O'Byrne was an owner.

CBIZ has divested several operations during 2002, in an effort to
rationalize the business and sharpen the focus on non-strategic businesses. In
accordance with this strategy, CBIZ has sold and may sell in the future
businesses to former employees or shareholders. Management believes these
transactions were priced at market rates, competitively bid, and entered into at
arm's length terms and conditions. See note 17 to CBIZ's consolidated financial
statements included herewith.

ITEM 14. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer have evaluated the
disclosure controls and procedures pursuant to Rule 13a-15 of the Securities
Exchange Act of 1934, as of a date within 90 days before the filing date of this
annual report. Based on this evaluation they concluded that the disclosure
controls and procedures effectively ensure that information required to be
disclosed in our filings and submissions under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

CHANGES IN INTERNAL CONTROLS

There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the
evaluation of the internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual Report or
incorporated by reference:

1. Financial Statements.

As to financial statements and supplementary information, reference
is made to "Index to Financial Statements" on page F-1 of this
Annual Report.

2. Financial Statement Schedules.

As to financial statement schedules, reference is made to "Index to
Financial Statements" on page F-1 of this Annual Report.

3. Exhibits.

The following documents are filed as exhibits to this Form 10-K
pursuant to Item 601 of Regulation S-K.

31

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

* Indicates documents filed herewith.

(b) Reports on Form 8-K

The following Current Report on Form 8-K was filed during the three months
ended December 31, 2002:

(a) On October 10, 2002, CBIZ filed a Form 8-K announcing that Chairman
Michael G. DeGroote had resigned from CBIZ's Board of Directors for
health reasons, and that current Chief Executive Officer and Director
Steven L. Gerard had been elected as Chairman of the Board, and that
Mr. DeGroote's son, Mr. Gary W. DeGroote, was appointed to the Board to
fill the vacancy created by Mr. DeGroote's resignation.

33

SIGNATURES

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

CENTURY BUSINESS SERVICES, INC.
(Registrant)

By: /s/ WARE H. GROVE
------------------------------------
Ware H. Grove
Chief Financial Officer March 24,
2003

KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below on this Annual Report hereby constitutes and appoints Steven L. Gerard and
Ware H. Grove, and each of them, with full power to act without the other, his
true and lawful attorney-in-fact and agent, with full power of substitution for
him and his name, place and stead, in all capacities (until revoked in writing),
to sign any and all amendments to this Annual Report of Century Business
Services, Inc. and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary fully to all
intents and purposes as he might or could do in person, thereby ratifying and
confirming all that each attorney-in-fact and agent, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Annual Report has been signed below by the following persons on
behalf of Century Business Services, Inc. and in the capacities and on the date
indicated above.

/s/ STEVEN L. GERARD /s/ JOSEPH S. DIMARTINO
- -------------------------------------------- --------------------------------------------
Steven L. Gerard Joseph S. DiMartino
Chairman and Chief Executive Officer Director

/s/ WARE H. GROVE /s/ HARVE A. FERRILL
- -------------------------------------------- --------------------------------------------
Ware H. Grove Harve A. Ferrill
Chief Financial Officer (Principal Financial Director
and Accounting Officer)

/s/ GARY W. DEGROOTE /s/ RICHARD C. ROCHON
- -------------------------------------------- --------------------------------------------
Gary W. DeGroote Richard C. Rochon
Director Director

/s/ RICK L. BURDICK
- --------------------------------------------
Rick L. Burdick
Director

34

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Century Business Services, Inc.:

We have audited the consolidated financial statements of Century Business
Services, Inc. and Subsidiaries (Company) as listed in the accompanying index on
page F-1. In connection with our audits of the consolidated financial
statements, we also have audited the consolidated financial statement schedule
as listed in the accompanying index on page F-1. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Century
Business Services, Inc. and Subsidiaries as of December 31, 2002 and 2001, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

As discussed in note 1 note 18 to the consolidated financial statements,
the Company adopted Securities and Exchange Commission Staff Accounting Bulletin
No. 101 "Revenue Recognition in Financial Statements," and changed certain
revenue recognition policies effective January 1, 2000.

As discussed in notes 1 and 6 to the consolidated financial statements, the
Company adopted Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets,"
and changed its method of accounting for goodwill and other intangible assets,
effective January 1, 2002.

As discussed in notes 1 and 21 to the consolidated financial statements,
the Company adopted FASB Statement No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," and changed its method for identifying and
measuring discontinued operations, effective January 1, 2002.

/s/ KPMG LLP

Cleveland, Ohio
February 7, 2003

F-2

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2002 AND 2001

(IN THOUSANDS, EXCEPT PER SHARE DATA)

See the accompanying notes to the consolidated financial statements.
F-3

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(IN THOUSANDS, EXCEPT PER SHARE DATA)

See the accompanying notes to the consolidated financial statements.
F-4

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(IN THOUSANDS)

See the accompanying notes to the consolidated financial statements.
F-5

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(IN THOUSANDS)

See the accompanying notes to the consolidated financial statements.
F-6

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Century Business Services, Inc. and its wholly-owned subsidiaries (CBIZ)
are a diversified services company which, acting through its subsidiaries,
provides professional outsourced business services primarily to small and
medium-sized businesses, as well as individuals, governmental entities, and
not-for-profit enterprises throughout the United States and Toronto, Canada.
CBIZ offers integrated services through its three practice groups: accounting,
tax and advisory services, benefits and insurance services, and national
practices.

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
CBIZ. All intercompany accounts and transactions have been eliminated in
consolidation.

Use of Estimates

Preparing the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosures of contingent
assets and liabilities as of the date of the consolidated financial statements
and the reported amounts of revenues and expenses for the reporting period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and short-term highly liquid
investments with a maturity of three months or less at the date of purchase. The
carrying amount approximates fair value because of the short maturity of those
instruments.

Restricted Cash

Restricted cash represents fees earned by CBIZ in relation to its capital
and investment advisory services, as those funds are restricted in accordance
with applicable NASD regulations, funds on deposit from clients in connection
with the administering and settling of claims, and the pass through of insurance
premiums to the carrier. The related liability for these funds is recorded in
accrued expenses and other liabilities in the consolidated balance sheets.

Funds Held for Clients and Client Funds Obligations

As part of its payroll and payroll tax filing services, CBIZ is engaged in
the preparation of payroll checks, federal, state, and local payroll tax
returns, and the collection and remittance of payroll obligations. In relation
to its payroll services, CBIZ collects payroll funds from its client's account
in advance of paying the client's employees. Likewise, for its payroll tax
filing services, CBIZ collects payroll taxes from its clients in advance of
paying the various taxing authorities. Those funds that are collected before
they are due are invested in short-term investment grade instruments. The funds
held for clients and the related client fund obligations are included in the
consolidated balance sheets as current assets and current liabilities,
respectively. The amount of collected but not yet remitted funds for CBIZ's
payroll and tax filing services varies significantly during the year.

Derivative Instruments and Hedging Activities

In January 2001, CBIZ adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that entities
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Gains and losses
resulting from

F-7

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

changes in the fair values of those derivatives are to be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. CBIZ entered into an interest rate swap agreement which qualifies as
a cash flow hedge in 2001. For the year ended December 31, 2002, the change in
fair value relating to CBIZ's hedging activity resulted in a loss of
approximately $0.3 million, which is recorded in stockholders' equity under
accumulated other comprehensive loss.

Other Financial Instruments

The carrying amount of CBIZ's accounts receivable and accounts payable
approximates fair value because of the short maturity of these instruments. The
carrying value of bank debt approximates fair value, as the interest rate on the
bank debt is variable and approximates current market rates.

Goodwill and Other Intangible Assets

Effective June 30, 2001, CBIZ adopted Statement of Financial Accounting
Standard No., 141 "Business Combinations" (SFAS 141), which requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Intangible assets include client lists and non-compete
agreements. These intangible assets are amortized principally by the
straight-line method over their expected period of benefit not exceeding ten
years

Effective January 1, 2002, CBIZ adopted Statement of Financial Accounting
Standard No., 142 "Goodwill and Other Intangible Assets" (SFAS 142), which
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least annually at
the reporting unit level. Prior to the adoption of SFAS 142, goodwill was
amortized over periods not exceeding 15 years. In connection with the adoption
of SFAS 142, CBIZ recorded a non-cash impairment charge of $88.6 million on a
pretax basis, which was recorded as a cumulative effect of a change in
accounting principle in the accompanying consolidated statement of operations.
CBIZ conducts a formal impairment test of goodwill on an annual basis and
between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying
value. CBIZ performed its annual impairment review of goodwill as of the
beginning of the fourth quarter of fiscal 2002 and determined that no impairment
of goodwill existed.

Other intangible assets, including purchased client lists and non-compete
agreements, are amortized over their estimated useful lives and reviewed for
impairment in accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." CBIZ reviews the carrying value of its
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be fully recoverable.
Recoverability of long-lived assets is assessed by a comparison of the carrying
amount of the asset to the estimated future net cash flows expected to be
generated by the asset.

Investments

CBIZ has certain investments in privately held companies that are currently
in their start-up or development stages and are included in "other assets" in
the accompanying consolidated balance sheets. These investments are inherently
risky as the market for the technologies or products they have under development
are typically in the early stages. The value of these investments is influenced
by many factors, including the operating effectiveness of these companies, the
overall health of the companies' industries, the strength of the private equity
markets and general market conditions.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation
and amortization. Depreciation and amortization are provided on the
straight-line basis over estimated useful lives.

F-8

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The cost of software purchased or developed for internal use is capitalized
and amortized to expense by the straight line method, in accordance with
Statement Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," over an estimated useful life not to
exceed seven years. The cost of software purchased or developed to be marketed,
including software acquired through acquisitions of businesses, is capitalized
and amortized over its estimated economic life in accordance with SFAS No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed."

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is provided when it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
CBIZ determines a valuation allowance based on the analysis of amounts available
in the statutory carryback period, consideration of future deductible amounts,
and assessment of the consolidated and/or separate company profitability of
certain acquired entities.

Revenue Recognition and SAB 101

Revenue is recognized only when all of the following are present:
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, our fee to the client is fixed or determinable, and
collectibility is reasonably assured. CBIZ offers a vast array of outsourced
business services to its clients. Those services are delivered through three
practice groups. A description of revenue recognition, as it relates to those
groups, is provided below:

ACCOUNTING, TAX AND ADVISORY SERVICES -- Revenue consists primarily of fees
for accounting services, preparation of tax returns and consulting services.
Revenues are recorded in the period in which they are earned. CBIZ bills clients
based upon a predetermined agreed upon fixed fee or actual hours incurred on
client projects at expected net realizable rates per hour, plus any
out-of-pocket expenses. The cumulative impact on any subsequent revision in the
estimated realizable value of unbilled fees for a particular client project is
reflected in the period in which the change becomes known.

BENEFITS & INSURANCE -- Revenue consists primarily of brokerage and agency
commissions, and fee income for administering health and retirement plans.
Commissions relating to brokerage and agency activities whereby CBIZ has primary
responsibility for the collection of premiums from insured's are generally
recognized as of the latter of the effective date of the insurance policy or the
date billed to the customer. Commissions to be received directly from insurance
companies are generally recognized when the amounts are determined. Life
insurance commissions are recorded on the accrual basis. Commission revenue is
reported net of sub-broker commissions. Contingent commissions are generally
recognized when received. Fee income is recognized as services are rendered.

NATIONAL PRACTICES -- The business units that comprise this group offer a
variety of services. A description of revenue recognition associated with the
primary services is provided below:

- Mergers & Acquisitions and Capital Advisory -- Revenue associated with
non-refundable retainers are recognized on a straight-line basis over the
life of the engagement. Revenue associated with success fee transactions
are recognized when the transaction is completed.

- Technology Consulting -- Revenue associated with hardware and software
sales are recognized upon delivery and acceptance. Revenue associated
with installation and service agreements are recognized as
F-9

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

services are performed and maintenance agreements are recognized ratably over
the term of the agreement. Consulting revenue is recognized on an hourly or per
diem fee basis.

- Valuation and Property Tax -- Revenue associated with retainer contracts
are recognized on a straight-line basis over the life of the contract,
which is generally twelve months. Revenue associated with contingency
arrangements is recognized once written notification is received from an
outside third party (e.g., assessor in the case of a property tax
engagement) acknowledging that the revenue cycle has been completed.

- Medical Practice Management -- Revenue is recognized when collections are
received on our clients' patient accounts.

During the fourth quarter of 2000, CBIZ adopted Securities and Exchange
Commission Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in
the Financial Statements." SAB 101 summarizes certain of the Commission's views
in applying generally accepted accounting principles to revenue recognition in
financial statements. In light of the guidance to conform to SAB 101 and the
SEC's "Frequently Asked Questions and Answers" bulletin released on October 12,
2000, CBIZ changed certain revenue recognition policies effective January 1,
2000. Prior to this change CBIZ's revenue recognition had been in accordance
with GAAP and industry standards.

Due to this change, CBIZ recorded a cumulative adjustment in the first
quarter 2000 of $11.9 million (net of tax benefit of $7.9 million). The impact
in 2000 of adopting SAB 101 resulted in a reduction in revenue of approximately
$18.2 million, a reduction in operating expense of approximately $11.4 million,
and a reduction in income from continuing operations (before cumulative effect
of accounting change) of approximately $6.8 million (pretax). See note 7 for the
impact on deferred taxes and note 19 for the impact on previously reported
quarterly financial information.

Earnings per Share

Basic earnings (loss) per share are computed by dividing net income (loss)
by the weighted average number of shares outstanding for the period. Diluted
earnings per share include the dilutive effect of stock options, warrants and
contingent shares.

Stock Options

Compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeds the exercise price. CBIZ provides
pro forma net income and pro forma earnings per share disclosures for employee
stock option grants as if the fair-value-based method had been applied. See note
12 to the consolidated financial statements.

Reclassifications

Certain amounts in the prior periods consolidated financial statements have
been reclassified to conform to the current year's presentation.

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

2. ACCOUNTS RECEIVABLE

Accounts receivable for the years ended December 31, 2002 and 2001 were as
follows (in thousands):

3. NOTES RECEIVABLE

The notes receivable balance of $9.6 million and $7.3 million for the years
ended December 31, 2002 and 2001, respectively consisted of: (i) the HarborView
note related to HarborView Partners LLC agreement with a balance of $2.3 million
and $1.0 million at December 31, 2002 and 2001, respectively; (ii) the Philip
note taken in connection with the divestiture of the hazardous waste operations
in 1997 with a balance of $2.4 million and $3.2 million at December 31, 2002 and
2001 respectively; and (iii) $4.0 million and $2.2 million of notes taken as
consideration for divestitures as December 2002 and 2001 respectively. The
Philip note was written down by $0.8 million at September 30, 2002 due to
management's growing concern of the Philip Services Corporation's ability to
pay. The balances of other miscellaneous note receivables were $0.9 million and
$0.9 million for the year ended December 31, 2002 and 2001, respectively.

4. INVESTMENTS

The investments balance of $0.6 million and $2.2 million for the years
ended December 31, 2002 and 2001 respectively, are included in other assets
(non-current) and are accounted for under the cost method of accounting. CBIZ's
primary investment is in Statement One, Inc. which was purchased in 1999 and has
a carrying value of $0.6 million which represents an ownership interest of 4%.
On September 30, 2002, this investment was written down due to a decrease in the
market valuation of the investment. CBIZ also holds a 3% ownership interest in
QuikCAT Technologies, however management doubts QuikCAT's ability to reach
profitability and, as such, has considered the QuickCAT investment fully
impaired. In September 2002, CBIZ wrote-off the QuickCAT investment of $1.3
million and a related outstanding trade receivable of $0.5 million.

5. PROPERTY AND EQUIPMENT

Property and equipment, net at December 31, 2002 and 2001 consisted of the
following (in thousands):

Depreciation expense was approximately $16.0 million, $14.5 million, and
$14.0 million in 2002, 2001 and 2000, respectively.

F-11

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The components of intangible assets, net are as follows (in thousands):

Client lists are primarily amortized over a period not to exceed ten years.
Other intangibles, which consist primarily of non-compete agreements,
expirations, trademarks and website costs; and are amortized over a period
ranging from three to ten years.

Changes in goodwill for the year ended December 31, 2002 are as follows:

Prior to January 1, 2002, goodwill was being amortized over periods not
exceeding 15 years. Pro forma net income (loss) and earnings (loss) per share
for the years ended December 2002, 2001 and 2000 adjusted to eliminate
historical amortization of goodwill and related tax effects, are as follows (in
thousands):

F-12

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

7. INCOME TAXES

A summary of income tax expense (benefit) included in the consolidated
statements of operations is as follows (in thousands):

The provision (benefit) for income taxes attributable to earnings (loss)
from continuing operations differed from the amount obtained by applying the
federal statutory income tax rate to income (loss) from continuing operations
before income taxes, as follows (in thousands):

F-13

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities from continuing
operations at December 31, 2002 and 2001, are as follows (in thousands):

CBIZ had U.S. net operating loss (NOL) carryforwards of approximately $3.0
million and $5.5 million at December 31, 2002, and 2001, from the separate
return years of certain acquired entities. These losses are subject to
limitations regarding the offset of CBIZ's future taxable income and will begin
to expire in 2007. CBIZ has a Canadian NOL carryforward, of which the balance
was approximately $3.4 million and $3.3 million at December 31, 2002, and 2001,
respectively. The Canadian NOL carryforward begins to expire in 2006. CBIZ also
had state NOL carryforwards with a tax benefit of $4.3 million and $3.5 million
at December 31, 2002, and 2001, which have various expiration dates. The
availability of all the NOL's is reported in the financial statement as deferred
tax assets, net of the applicable valuation allowance.

CBIZ has established valuation allowances for portions of the Canadian and
state NOL carryforwards, and state deferred taxes related to tax deductible
goodwill. The net change in the valuation allowance for the years ended December
31, 2002 and 2001 was an increase of $2.5 million and $1.5 million,
respectively. The net change in the valuation allowance for NOL carry forwards
for the year ended December 31, 2002 and 2001 was an increase of $1.4 million
and $1.5 million, respectively. For December 31, 2002, $1.6 million was recorded
as an addition to income tax expense and $0.2 million was allocated to reduce
goodwill, and for December 31, 2001, the full amount was recorded as an addition
to income tax expense. A valuation allowance of $1.1 million was established for
the year ended December 31, 2002, for state deferred taxes related to an
impairment of tax deductible goodwill. The portion of the valuation allowance
for deferred tax assets for which subsequently recognized tax benefits will be
allocated to reduce goodwill of acquired entities is $0 and $0.5 million at
December 31, 2002 and 2001.

F-14

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

8. BANK DEBT

Bank debt for the years ended December 31, 2002 and 2001 consists of the
following (in thousands):

In September 2002, CBIZ negotiated a new $73 million revolving credit
facility with a group of four banks. Under the facility, loans are charged an
interest rate consisting of a base rate or Eurodollar Libor plus an applicable
margin. Additionally, a commitment fee of 40 to 50 basis points is charged on
the unused portion of the facility. Borrowings and commitments by the banks
under the credit facility mature in September 2005. The credit facility is
secured by all assets and capital stock of CBIZ and its subsidiaries.

The bank agreement contains certain financial covenants. These covenants
require CBIZ to meet certain requirements with respect to (i) minimum tangible
net worth; (ii) maximum leverage ratio; and (iii) a minimum fixed charge
coverage ratio. Limitations are also placed on CBIZ's ability to acquire as well
as divest certain operations. As of December 31, 2002 CBIZ is in compliance with
its covenants

The bank credit agreement also places significant restrictions on CBIZ's
ability to create liens or other encumbrances, to make certain payments
(including dividends), investments, loans and guarantees and to sell or
otherwise dispose of a substantial portion of assets, or to merge or consolidate
with an unaffiliated entity. The agreement contains a provision that, in the
event of a defined change in control, the agreement may be terminated.

In the ordinary course of business, CBIZ provides letters of credit to
certain lessors in lieu of security deposits. Letters of credit under the credit
facility were $1.9 and $1.5 million as of December 31, 2002, and 2001,
respectively. Management does not believes it is practicable to estimate the
fair value of these financial instruments, and does not expect any material
losses to result from these instruments because performance is not expected to
be required.

At December 31, 2002, based on the borrowing base calculation, CBIZ had
approximately $36.0 million of available funds under its credit facility.
Management believes that the carrying amount of bank debt recorded at December
31, 2002 approximate its fair value.

9. COMMITMENTS AND CONTINGENCIES

Operating Leases

CBIZ leases certain of its premises and equipment under various operating
lease agreements. At December 31, 2002, future minimum rental commitments
becoming payable under all operating leases are as follows (in thousands):

F-15

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Total rental expense incurred under operating leases was $28.5 million,
$29.2 million, and $26.3 million in 2002, 2001, and 2000, respectively.

Legal Proceedings

Since September 1999, seven purported stockholder class-action lawsuits
were filed against CBIZ and certain of its current and former directors and
officers, and were consolidated as In Re Century Business Services Securities
Litigation, Case No. 1:99CV2200, in the United States District Court for the
Northern District of Ohio. The plaintiffs alleged that the named defendants
violated certain provisions of the Securities Exchange Act of 1934 and certain
rules promulgated thereunder in connection with certain statements made during
various periods from February 1998 through January 2000 by, among other things,
improperly amortizing goodwill and failing adequately to monitor changes in
operating results. The United States District Court dismissed the matter with
prejudice on June 27, 2002. The matter was appealed by the plaintiffs to the
Sixth Circuit Court of Appeals. No decision has been rendered on appeal.

CBIZ and the named officer and director defendants deny all allegations of
wrongdoing made against them in these actions and intend to continue vigorously
defending this matter. Although the ultimate outcome of such litigation is
uncertain, based on the allegations contained in the complaints and the
carefully considered judgment of the District Court in dismissing the case,
management does not believe that these lawsuits will have a material adverse
effect on the financial condition, results of operations or cash flows of CBIZ.

In addition to the above-disclosed items, CBIZ is from time to time subject
to claims and suits arising in the ordinary course of business. Although the
ultimate disposition of such proceedings is not presently determinable,
management does not believe that the ultimate resolution of these matters will
have a material adverse effect on the financial condition, results of operations
or cash flows of CBIZ.

10. CONSOLIDATION AND INTEGRATION RESERVE

The 1999 Plan -- During the fourth quarter of 1999, CBIZ's Board of
Directors approved a plan to consolidate several operations in multi-office
markets and integrate certain back-office functions into a shared-services
center. The plan included the consolidation of approximately 60 locations, the
elimination of more than 200 positions, and the divestiture of four non-core
businesses. Pursuant to the plan, CBIZ recorded a consolidation and integration
pre-tax charge of $27.4 million in December 1999.

During 2000, CBIZ's Board of Directors approved a revision to the 1999 Plan
as a result of management changes and certain other strategic changes, and
extended the timing of certain office consolidations beyond one year
Accordingly, CBIZ reduced approximately $8.4 million of accruals originally
provided for in the plan related to several noncancellable lease and severance
obligations. In addition, CBIZ completed the planned consolidation of locations
in Atlanta, Dallas, Orlando, and Phoenix.

During 2001, CBIZ reduced the 1999 Plan by $0.5 million related to
non-cancelable lease obligations, with the postponement of planned
consolidations in the San Jose and St. Louis markets.

During 2002, CBIZ further reduced its 1999 Plan by $0.1 million resulting
from the buyout of one of its noncancellable lease obligations in the Atlanta
market.

Other Plans -- Since adoption of the 1999 Plan management has continued to
evaluate market areas in order to meet its strategy to deliver services to
client conveniently, and to promote cross-serving between various service
groups. CBIZ has initiated the consolidation in some of these markets and has
incurred expenses related to noncancellable lease obligations, severance
obligations, and expense-reduction initiatives. During 2002, CBIZ initiated
plans for the consolidation of the Kansas City market which resulted in $1.7
million of cost related to two noncancellable lease obligations. In addition,
CBIZ continued its consolidations in the Philadelphia and

F-16

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Columbia markets. During 2000 and 2001, expenses were incurred related to
consolidations in the Los Angeles, Chicago, Philadelphia, Phoenix, Cleveland,
Southern California, and Columbia, Maryland markets.

Consolidation and integration reserve balances as of December 31, 2002,
2001 and 2000, and activity during the twelve-month periods ended December 31,
2001 and 2000 were as follows (in thousands):

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

(1) Amounts adjusted to income are included in operating expense and corporate
general and administrative expense in the accompanying consolidated
statement of operations for the twelve-month periods then ended. See the
table below for the respective amounts recorded in each line item.

Consolidation and integration charges incurred for years ended December 31,
2002, 2001 and 2000 were as follows ($ in thousands):

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

11. EMPLOYEE BENEFITS

CBIZ has employee savings plans covering substantially all of its
employees. Participating employees may elect to contribute, on a tax-deferred
basis, a portion of their compensation, in accordance with Section 401(k) of the
Internal Revenue Code. Employer contributions made to the plans in 2002, 2001
and 2000, amounted to approximately $5.3 million, $5.0 million, and $5.6
million, respectively.

Two acquisitions made in 1998 and 1999 had employee stock option plans
(ESOP) which were subsequently frozen by CBIZ. The ESOP related to the 1999
acquisition was terminated in 2000, and as required under the Statement of
Position No. 93-6, the difference between the cost of the remaining unearned
ESOP shares and the fair value of those shares of approximately $1.8 million has
been charged to additional paid-in capital in the accompanying consolidated
statements of stockholders' equity.

12. COMMON STOCK

CBIZ's authorized common stock consists of 250,000,000 shares of common
stock, par value $0.01 per share (Common Stock). The holders of CBIZ's common
stock are entitled to one vote for each share held on all matters submitted to a
vote of stockholders. There are no cumulative voting rights with respect to the
election of directors. Accordingly, the holder or holders of a majority of the
outstanding shares of Common Stock will be able to elect the directors of CBIZ
then standing for election as terms expire. Holders of Common Stock have no
preemptive rights and are entitled to such dividends as may be declared by the
Board of Directors of CBIZ out of funds legally available therefore. The Common
Stock is not entitled to any sinking fund, redemption or conversion provisions.
On liquidation, dissolution or winding up of CBIZ, the holders of Common Stock
are entitled to share ratably in the net assets of CBIZ remaining after the
payment of any and all creditors. The outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and non-assessable. The transfer
agent and registrar for the Common Stock is Fifth Third Bank, N.A.

CBIZ completes registration filings related to its Common Stock to register
shares under the Securities Act of 1933. To date, CBIZ has registered the
following shares of Common Stock for the following purposes: (i) approximately
six million shares of our common stock, part of a Shelf Registration Statement,
of which a majority has yet to be sold thereunder; (ii) $125 million in shares
of our Common stock, debt securities, and warrants to purchase common stock or
debt securities, of which $100 million remain available to be offered from time
to time to the public under our universal shelf registration statement; and
(iii) 15,000,000 shares of our Common Stock, all of which remain available to be
offered from time to time in connection with acquisitions under our acquisition
shelf registration statement.

In February 1999, CBIZ issued 1,800,000 restricted shares of common stock
and 900,000 warrants to an outside party for a $25 million equity investment in
CBIZ. Fifty percent of the common stock is subject to a one-year lock-up
restriction, while the remaining common stock is subject to a two-year lock-up
restriction, and warrants to purchase shares of common stock may be exercised
under the following terms: 300,000 shares for three years at $20 per share;
300,000 shares for four years at $25 per share; and 300,000 for five years at
$30 per share.

TREASURY STOCK

In August 2001, CBIZ's Board of Directors authorized the implementation of
a share repurchase plan. The initial plan authorized the purchase of up to one
million shares of CBIZ's common stock over the first six months of the plan. In
accordance with the plan, CBIZ purchases shares though the open market and can
privately negotiate purchases and reserve them for possible use in the future in
connection with acquisitions, the employee stock investment plan and other
general purposes. The repurchase program does not obligate CBIZ to acquire any
specific number of shares and may be suspended at any time. As of December 31,
2002, CBIZ had repurchased 170,000 shares at a cost of $0.4 million.

F-18

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

As part of the new bank credit agreement obtained in September 2002,
repurchases are subject to limitations based on net income. At December 31,
2002, CBIZ is in compliance with this covenant.

EMPLOYEE STOCK INVESTMENT PLAN

Effective June 1, 2001, CBIZ established the Employee Stock Investment Plan
which provides CBIZ employees with a method of purchasing shares of CBIZ's
common stock, $.01 par value per share. Participation in the plan is open to all
CBIZ employees whose payroll is processed by the designated CBIZ payroll
provider. CBIZ pays all opening and transaction charges related to the
enrollment and purchase of stock, other than those due upon the sale of the
shares.

Participants may also purchase shares of CBIZ Stock by making optional cash
investments in accordance with the provisions of the Plan. Shares of CBIZ Stock
purchased by participants in the Plan may be treasury or new issue stock, or at
CBIZ's option, CBIZ Stock purchased in the open market or negotiated
transactions. Treasury or new issue stock is purchased from CBIZ at the market
price on the applicable investment date. The price of CBIZ Stock purchased in
the open market or in negotiated transactions is the weighted average price at
which the shares are actually purchased.

WARRANTS

In connection with the spin off of the hazardous waste operations
(including CBIZ's predecessor company) to the stockholders of Republic
Industries, Inc. (the "RESI Transaction") in 1996, RESI agreed to issue to
holders of unexpired warrants of its former parent, additional RESI warrants to
acquire shares of RESI's Common Stock equal to one fifth of the number of shares
available. At the Distribution date, RESI adjusted the per share exercise price
of the RESI warrants to reflect the effect of the distribution on the market
prices of RESI and its former parent's common stock. These warrants are
designated as stapled warrants and expired at various dates through December
2000. Prior to the expiration of such warrants, the holders of these warrants
were able to exercise under the original terms of the warrants and receive CBIZ
stock.

In addition to warrants issued through the RESI Transaction, CBIZ also
issued warrants in connection with private placements completed in October 1996,
December 1996, and April 1997, and granted warrants in connection with certain
acquisitions made during 1997. Portions of the warrants issued in connection
with 1997 acquisitions are restricted from being transferred in accordance with
various lock-up agreements between the former shareholders of the acquired
entities and CBIZ.

During 1999, certain holders of warrants issued in connection with 1997
acquisitions gave up demand registration rights due to them. In November 1999,
the Board of Directors extended the expiration dates of the aforementioned
warrant holders by an additional twelve months in consideration of forgoing
demand registration rights. In December 1999, the Board of Directors extended
the expiration dates of certain warrants outstanding from the December 1996 and
April 1997 private placements through June 2000. As consideration for the
extension of the term, the holders of the warrants will pay the original
exercise price, plus a premium for each month from the original expiration date
to the exercise date, upon exercise of the warrants.

F-19

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Information relating to warrants to purchase common stock is summarized
below (in thousands):

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

(a) Exercise prices for warrants outstanding at December 31, 2002 ranged from
$25.00 to $30.00. Exercise prices for warrants outstanding at December 31,
2001 ranged from $13.00 to $30.00. Exercise prices for warrants outstanding
at December 31, 2000 ranged from $3.875 to $30.00.

STOCK OPTIONS

Under the 1997 Agents Stock Option Plan, a maximum of 1,200,000 options may
be awarded. The purpose of the plan is to provide performance-based compensation
to certain insurance agencies and individual agents who write quality surety
business for CBIZ's insurance subsidiaries. The options vest only to the extent
the agents satisfy minimum premium commitments and certain loss ratio
performance criteria. The options terminated in June 2002, or earlier under
certain conditions, including termination of the agency agreement.

Under the 2002 Employee Stock Option Plan (formerly the 1996 Employee Stock
Option Plan), a maximum of 15,000,000 options may be awarded. The options
awarded are subject to a 20% incremental vesting schedule over a five-year
period commencing from the date of grant. The options are awarded at a price not
less than fair market value at the time of the award and expire six years from
the date of grant. Further, under the 1996 plan 250,000 options were granted to
non-employee directors. These options became exercisable immediately upon being
granted with a six-year expiration term from the date of grant.

Prior to the RESI Transaction, certain options were granted to employees,
directors and affiliates of RESI's former parent company. When RESI was spun-off
in April 1995 (the "Distribution Date"), optionees received options to acquire
RESI Common Stock at the ratio of one RESI option for each five options under
the former parent's 1990 and 1991 Stock Option plans. The outstanding options at
the Distribution Date and the RESI options granted with respect thereto are
stapled and are only exercisable if exercised together. As a result of the sale
of RESI in July 1997, options under these plans became fully vested. These
options remain vested as long as the optionee is employed by the former parent,
RESI or their affiliates. The option price is based on the fair market value of
the common shares on the date of grant.

Information relating to the stock option plans is summarized below (in
thousands):

F-20

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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

(a) Options were granted at average prices of $3.44, $1.54 and $2.98 in 2002,
2001 and 2000, respectively.

(b) Options were exercised at a prices ranging from $1.53 to $3.41 and averaging
$2.27 in 2002. Options were exercised at a price of $3.41 in 2001. No
options were exercised in 2000.

(c) Exercise prices for options outstanding at December 31, 2002 ranged from
$1.08 to $17.75 and averaged $4.81 with expiration dates ranging from March
2003 to November 2008. Exercise prices for options outstanding at December
31, 2001 ranged from $1.08 to $17.75 and averaged $5.49 with expiration
dates ranging from May 2002 to December 2007. Exercise prices for options
outstanding at December 31, 2000 ranged from $1.08 to $17.75 and averaged
$8.17 with expiration dates ranging from May 2002 to December 2006.

(d) Exercise prices for options exercisable at December 31, 2002, 2001, and 2000
averaged $6.67, $8.50, and $11.59, respectively.

Had the cost of stock option plans been determined based on the fair value
of options at the grant date, CBIZ's net income (loss) and earnings (loss) per
share pro forma amounts would be as follows (amounts in thousands, except per
share data):

The above results may not be representative of the effects on net income
for future years.

CBIZ applied the Black-Scholes option-pricing model to determine the fair
value of each option granted in 2002, 2001 and 2000. Below is a summary of the
assumptions used in the calculation:

13. EARNINGS PER SHARE

For the years presented, CBIZ presents both basic and diluted earnings per
share. The following data shows the amounts used in computing earnings (loss)
per share and the effect on the weighted average number of shares of dilutive
potential common stock (amounts in thousands, except per share data). Included
in potential dilutive

F-21

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

shares are contingent shares, which represent shares issued and placed in escrow
that will not be released until certain performance goals have been met.

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

(a) The effect of the incremental shares from warrants, options, and contingent
shares of 1,624 and 325 in 2001, and 2000, respectively, have been excluded
from diluted weighted average shares, as the net loss for the period would
cause the incremental shares to be anti-dilutive.

14. SUPPLEMENTAL CASH FLOW DISCLOSURES

During 2002, CBIZ received consideration for divestitures of $4.2 million
in the form of notes receivable in lieu of cash. In addition, CBIZ reduced $0.1
million of accruals for non-cancelable lease obligations due to changes in the
consolidation and integration plan.

During 2001, CBIZ received consideration for divestitures of $2.4 million
in the form of notes receivable in lieu of cash. CBIZ also reduced approximately
$0.5 million of accruals for non-cancelable lease obligations and $0.2 million
for severance obligations due to changes in the consolidation and integration
plan.

During 2000, CBIZ reduced approximately $8.4 million of accruals for
non-cancelable lease obligations and severance obligations due to changes in the
consolidation and integration plan.

CASH PAID (RECEIVED) DURING THE YEAR FOR (IN THOUSANDS):

15. RELATED PARTIES

The following is a summary of certain agreements and transactions between
or among CBIZ and certain related parties. It is CBIZ's policy to enter into
transactions with related parties on terms that, on the whole, are no less
favorable than those that would be available from unaffiliated parties. Based on
CBIZ's experience and the terms of its transactions with unaffiliated parties,
it is the Board of Directors' belief that the transactions described below met
these standards at the time of the transactions.

A number of the businesses acquired since October 1996 are located in
properties owned indirectly by and leased from persons employed by CBIZ. In the
aggregate, CBIZ paid approximately $0.8 million, $1.5 million

F-22

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

and $1.5 million for the years ended 2002, 2001 and 2000, respectively, under
such leases which management believes were at market rates.

Rick L. Burdick, a director and Vice Chairman of CBIZ, is a partner of
Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Akin, Gump.) Akin, Gump performed
legal work for CBIZ during 2002, 2001 and 2000 for which the firm received
$119,064, $68,540 and $116,000 from CBIZ, respectively.

CBIZ maintain joint-referral relationships and service agreements with
licensed CPA firms under which CBIZ provides administrative services (including
office, bookkeeping, accounting, and other administrative services, preparing
marketing and promotion materials, and leasing of administrative and
professional staff) in exchange for a fee. The majority of the partners in the
independent CPA firms maintaining administrative service agreements with CBIZ
are CBIZ employees.

Robert A. O'Byrne, a Senior Vice President, was indebted to CBIZ in the
amount of $250,000 and $325,000 at December 31, 2002 and 2001, respectively.
Likewise, CBIZ was indebted to the former shareholders of RDOB/GNG of which Mr.
O'Byrne is one, for $420,000 at December 31, 2002. Mr. O'Byrne also has an
interest in a partnership that receives commissions from CBIZ that are paid to
certain eligible benefits and insurance producers in accordance with a formal
program to provide benefits in the event of death, disability, retirement or
other termination. The note and the program were both in existence at the time
CBIZ acquired the former company, of which Mr. O'Byrne was an owner.

CBIZ has divested several operations during 2002 and 2001, in an effort to
rationalize the business and sharpen the focus on non-strategic businesses. In
accordance with this strategy, CBIZ has sold and may sell in the future
businesses to former employees or shareholders. Management believes these
transactions were priced at market rates, competitively bid, and entered into at
arm's length terms and conditions.

16. ACQUISITIONS

In October 2002, CBIZ acquired a benefits and insurance firm located in
Calverton, Maryland. The operating results of this firm have been included in
the accompanying consolidated financial statements since the date of the
acquisition. The aggregate purchase price of this acquisition was approximately
$4.1 million in cash. The excess of purchase price over fair value of the net
assets was allocated as follows: (i) goodwill of $2.0 million, (ii) purchased
client list of $2.6 million, and (iii) a lease obligation of $0.5 million
expiring in January 2006. The purchased client list is being amortized over a
ten-year period.

In May 2001, CBIZ acquired one Accounting, Tax and Advisory Services firm
which was accounted for under the purchase method of accounting. Accordingly,
the operating results of the acquired company have been included in the
accompanying consolidated financial statements since the date of the
acquisition. The aggregate purchase price of this acquisition was approximately
$0.3 million in cash. The excess of the purchase price over fair value of the
net assets acquired (goodwill) was approximately $0.1 million.

The pro forma revenue and results of operations for the acquisitions
completed in 2002, 2001 and 2000, had the acquisitions occurred at the beginning
of such fiscal years, are not significant, and accordingly, have not been
provided.

17. DIVESTITURES

During 2002, CBIZ sold, closed, or committed to sale the divestiture of
sixteen businesses. Five of these operations have been classified as
discontinued operations, in connection with the adoption of SFAS No. 144,
"Accounting for the Impairment of or the Disposal of Long-Lived Assets," as
discussed in note 21. The remaining eleven operations were either initiated
before CBIZ's adoption of SFAS No. 144 or did not meet the criteria for
treatment as a discontinued operation and were reported under gain (loss) on
divested operations from continuing operations. Of these eleven operations, CBIZ
completed the sale or closing of eight ATA operations,

F-23

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

one Benefit and Insurance operation, and two National Practice operations for an
aggregate price of $7.2 million which included $4.0 million in notes
receivables. These divestitures resulted in a pretax gain of $0.9 million.

During fiscal 2001, CBIZ completed the sale or closing of fifteen business
operations. In addition, CBIZ also recorded an additional charge related to the
planned divestiture or closing of five additional business units to be completed
in 2002. The aggregate price of these divestitures was $16.5 million which
included $14.0 million in cash, $2.4 million notes receivables and $0.1 million
in CBIZ stock. In addition CBIZ also retained a $6.0 million contingent note.
These divestitures resulted in a pretax loss of $7.1 million.

During fiscal 2000, CBIZ completed the sale of three business operations
and its franchise operations for an aggregate price of $1.2 million. In
addition, CBIZ recorded an additional charge of $27.2 million related to the
planned divestiture of two business operations with estimated proceeds of $15.5
million, which were scheduled to be completed in 2001. These six divestitures
resulted in a pretax loss of $31.6 million.

18. CHANGE IN ACCOUNTING PRINCIPLE RELATED TO SAB 101

During the fourth quarter of 2000, CBIZ adopted Securities and Exchange
Commission Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognized in
Financial Statements." SAB 101 summarizes certain of the Commission's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. In light of the guidance given by SAB 101 and the SEC's
"Frequently Asked Questions and Answers" bulletin released on October 12, 2000,
CBIZ changed certain revenue recognition policies effective January 1, 2000.

Due to this change, CBIZ recorded a cumulative adjustment in the first
quarter 2000 of $11.9 million (net of tax benefit of $7.9 million). The impact
in 2000 of adopting SAB 101 resulted in a reduction in revenue of approximately
$18.2 million, a reduction in operating expenses of approximately $11.4 million,
and an increase in pretax loss from continuing operations (before cumulative
effect of accounting change) of approximately $6.8 million. Prior to the
issuance of SAB 101, CBIZ recorded revenue in a manner consistent with generally
accepted accounting principles and industry practice. Based upon our review of
SAB 101, CBIZ elected to change its revenue recognition policies for the
following items.

- Commissions revenue due from insurance carriers from single-premium
bank-owned life insurance policies (BOLI) are recorded based on the
amounts due at the time of sale, thereby eliminating a substantial
portion of commission receivable and resulted in an increase in deferred
tax assets. Prior to SAB 101, CBIZ accrued for commission revenue from
BOLI products based on the estimated commission to be received over the
life of the insurance policy.

- Commission revenue contingent on meeting volume-based bonus levels are
recorded once the volume threshold has been met. Prior to SAB 101, CBIZ
accrued for such commission revenue periodically based on the probability
of meeting or exceeding the required threshold.

- Revenue related to CBIZ's medical practice management services are
recorded once payment is received for our client by the third-party
payor, thereby eliminating unbilled receivables and resulted in an
increase in deferred tax assets. Prior to SAB 101, CBIZ recognized
revenue as services were provided to the client.

- Commission revenue at certain wholesale insurance businesses is reported
net of sub-broker commissions, thereby reducing revenue and operating
expense proportionately. Prior to SAB 101, commission revenue recognized
at these units was reported on a "gross" basis. This change had no impact
on net income.

CBIZ recognized $10.1 million of revenue in 2000 which was included as a
component of the cumulative effect of a change in accounting principle. During
2002 and 2001, CBIZ recognized $1.0 million of revenue.

F-24

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

19. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations
for fiscal years 2002, 2001 (in thousands, except per share amounts):

F-25

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

20. SEGMENT DISCLOSURES

CBIZ's business units have been aggregated into three reportable segments:
Accounting, Tax and Advisory Services, Benefits and Insurance and National
Practices. The business units have been aggregated based on the following
factors: similarity of the products and services; similarity of the regulatory
environment; the long-term performance of these units is affected by similar
economic conditions; and the business is managed along these segment lines,
which each report to a Practice Group Leader.

During the year 2002 the medical practice management unit under the segment
of National Practices exceeded the quantitative threshold of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," prompting
CBIZ to disclose this reporting unit separately.

Accounting, Tax and Advisory Services. The Accounting, Tax and Advisory
Services practice group offers services in the following areas: tax planning and
preparation; cash flow management; strategic planning; consulting;
record-keeping; federal, state and local tax return preparation; tax planning
based on financial and investment alternatives; tax structuring of business
transactions such as mergers and acquisitions; quarterly and year-end payroll
tax reporting; corporate, partnership and fiduciary tax planning and return
preparation; outsourced chief financial officer services and other financial
staff services; financial investment analysis, succession, retirement, and
estate planning; and profitability, operational and efficiency enhancement
consulting to a number of specialized industries.

Benefits and Insurance Services. The Benefits and Insurance practice group
offers services in the following areas: employee benefits, brokerage,
consulting, and administration, including the design, implementation and
administration of qualified plans, such as 401(k) plans, profit-sharing plans,
defined benefit plans, and money purchase plans; actuarial services; health and
welfare benefits consulting, including group health insurance plans; dental and
vision care programs; group life insurance programs; accidental death and
dismemberment and disability programs; COBRA administration and voluntary
insurance programs; health care and dependent care spending accounts; premium
reimbursement plans; communications services to inform and educate employees
about their benefit programs; executive benefits consulting on non-qualified
retirement plans and business continuation plans; specialty high-risk life
insurance; employee benefit worksite marketing; and wealth management services,
including Registered Investment Advisory Services, Investment Policy Statements,
also known as IPS, mutual fund selection based on IPS and ongoing mutual fund
monitoring.

National Practices. The National Practices group offers services in the
following areas: payroll processing and administration; valuations of
commercial, tangible, and intangible assets and financial securities; mergers
and acquisitions and capital advisory services, health care consulting,
government relations; process improvement; and technology consulting, including
strategic technology planning, project management, development, network design
and implementation and software selection and implementation.

Medical Practice Management. The CBIZ MMP subsidiary of the National
Practice group offers services in the following areas: billing and accounts
receivable management; coding and automated claims filing; comprehensive
delinquent claims follow up and collections; compliance plans to meet
governmental and other third party regulations; local office management; and
comprehensive statistical and operational reporting; financial reporting;
accounts payable, payroll, general ledger processing; design of physician
employment, stock and compensation arrangements; comprehensive budgeting,
forecasting, and financial analysis; conducts analyses of managed care contracts
with a focus on negotiation strategies, pricing, cost containment and
utilization tracking; reviews and negotiates contracts with hospitals and
evaluates other strategic business partners; identifies and coordinates practice
merger and integration opportunities; and coordinates practice expansion
efforts.

Corporate and other charges represent costs at the corporate office that
are not allocated to the business units, which include goodwill amortization and
impairment for all acquisitions accounted for under the purchase method of
accounting.

F-26

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Prior to 2001, CBIZ reported with four reportable segments: Accounting, Tax
and Advisory Services, Benefits and Insurance, Performance Consulting, and
Technology Services. CBIZ reorganized its management structure and changed from
four reportable segments to the three described above. Segment information for
the year ended December 31, 2000 has been reclassified in accordance with the
new segments.

CBIZ operates in the United States and Toronto, Canada and there is no one
customer that represents a significant portion of sales.

Segment information for the years ended December 31, 2002, 2001, and 2000
was as follows (in thousands):

F-27

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

21. DISCONTINUED OPERATIONS

During 2002, CBIZ adopted formal business plans to sell or close five
business operations, which were no longer part of CBIZ's strategic long-term
growth objectives. The business operations are reported as discontinued
operations and the net assets and liabilities and results of operations are
reported separately in the consolidated

F-28

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

financial statements. Four of these operations were either sold or closed as of
December 31, 2002 for an aggregate price of $4.6 million of cash and $0.2
million of notes receivables. One operation still remains available for sale as
of December 31, 2002. In connection with these five divestitures, CBIZ recorded
a loss on disposal of discontinued operations, net of tax, of $2.5 million.

Revenues from the discontinued operations for the year ended December 31
2002, 2001 and 2000 were $7.2 million, $10.0 million and $16.6 million,
respectively.

The net assets and liabilities of the five business units classified of
discontinued operations consisted of the following (in thousands):

In October 2000, CBIZ completed the sale of its risk-bearing specialty
insurance segment (which included Century Surety Company, Evergreen National
Indemnity Company, and Continental Heritage Insurance Company) for $28 million
in cash, resulting in a loss on disposal of discontinued business, net of tax,
of $5.7 million for the year ended December 31, 2000.

22. SUBSEQUENT EVENTS

In January 2003, CBIZ completed the acquisition of a benefits and insurance
firm. The aggregate purchase price of this acquisition was approximately $0.7
million in cash, 177,000 shares of restricted common stock (estimated stock
value of $0.5 million at acquisition) and was accounted for under the purchase
method of accounting.

F-29

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

F-30

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Steven I. Gerard, Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of Century Business
Services, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a 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 annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officers 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
we 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 annual 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 annual report (the "Evaluation Date"); and

c) presented in this annual 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 officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of 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 registrant's 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 officers and I have indicated in this
annual 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.

By: /s/ STEVEN L. GERARD
------------------------------------
Steven L. Gerard
Chief Executive Officer

Date: March 24, 2003

F-31

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Ware H. Grove, Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K of Century Business
Services, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a 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 annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officers 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
we 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 annual 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 annual report (the "Evaluation Date"); and

c) presented in this annual 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 officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of 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 registrant's 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 officers and I have indicated in this
annual 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.

By: /s/ WARE H. GROVE
------------------------------------
Ware H. Grove
Chief Financial Officer

Date: March 24, 2003

F-32