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, 2003 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.)

6050 OAK TREE BOULEVARD, SOUTH
SUITE 500
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)

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 $306.4 million as of June 30, 2003. The number
of outstanding shares of the Registrant's common stock is 85,723,711 shares as
of February 27, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

Part III Portions of the Registrant's Definitive Proxy Statement relative to
the 2004 Annual Meeting of Stockholders.

CENTURY BUSINESS SERVICES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

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 to businesses
of various sizes, 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;

- Benefits and Insurance; and

- National Practices

CBIZ provides services through 62 reporting business units with more than
160 offices located in 34 states, Washington D.C., and Toronto, Canada. Included
in this total, and managed within the National Practices 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-serving. CBIZ built its professional outsourced business
through acquiring accounting, benefits, valuation and other service firms
throughout the United States, and has been established as a national provider
over the last several years. During 2003, CBIZ acquired four businesses that
enhance our benefits and insurance and accounting and tax services in our
existing markets. Our intention is to continue to selectively acquire businesses
with complementary services in target markets.

Formed as a Delaware corporation in 1987 under the name Stout Associates,
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, we changed our trading symbol 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 6050 OAK TREE BOULEVARD, SOUTH,
SUITE 500, CLEVELAND, OHIO 44131 AND OUR 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;

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

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- 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. Working with one provider for
several tasks saves the client the time of having to coordinate with multiple
vendors. For example, the employee data used to process payroll can also be used
by a CBIZ health and welfare insurance agent and benefits consultant to provide
appropriate benefits package to a client's employee base. In addition, the
relationship our accounting and tax advisors have with their clients allows us
to identify financial planning, wealth management, and other business
opportunities. The ability to combine several services and offer them through
one trusted 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 enhance the core CBIZ service offering in a geographical market.

In accordance with our strategy to deliver services to clients locally, and
to promote cross-serving between our various service groups, CBIZ consolidates
office locations wherever practical. Since 2000, CBIZ consolidated offices in
Atlanta, Boca Raton, Chicago, Cleveland, Columbus , Kansas City, Los Angeles,
Orlando, Minneapolis, Philadelphia, and St. Louis. CBIZ will continue to combine
offices, with consolidations planned for Dallas, Denver, Salt Lake City and San
Jose in 2004. Other potential consolidations could 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 and
financial statement preparation; 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; profitability, operational and efficiency
enhancement consulting to a number of specialized industries, internal audit
services and Sarbanes-Oxley consulting and compliance services.

Restrictions imposed by independence requirements and conflict of interest
rules preclude CBIZ from rendering audit and attest services (other than
internal audit services). As such, CBIZ and its subsidiaries maintain
joint-referral relationships and administrative service agreements (ASAs) with
independent licensed Certified Public Accounting (CPA) firms under which audit
and attest services may be provided to CBIZ's clients.

Under these ASAs, CBIZ provides a range of services to the CPA firms,
including (but not limited to): administrative functions such as office,
bookkeeping, and accounting; preparing marketing and promotion materials;
providing office space, computer equipment, and systems support; and leasing
administrative and professional staff. Services are performed in exchange for a
fee, which is a function of revenue generated by the CPA firms. Fees earned by
CBIZ under the ASAs are recorded as revenue in the accompanying consolidated
statements of operations. In the event that accounts receivable and unbilled
work in process become uncollectible by the CPA firms, the service fee due to
CBIZ is reduced on a pro-rata basis.
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The CPA firms with which CBIZ maintains service agreements operate as
limited liability corporations, limited liability partnerships or professional
corporations. The firms are separate legal entities with separate governing
bodies and officers. Neither the existence of the ASAs nor the providing of
services thereunder is intended to constitute control of the CPA firms by CBIZ.
CBIZ and the CPA firms maintain their own respective liability and risk of loss
in connection with performance of its respective services.

Attest services can not be performed by any individual or entity which is
not licensed to do so. CBIZ can not perform audits or reviews, does not contract
to perform them and does not provide audit or review reports. Given this legal
prohibition and course of conduct, CBIZ does not believe it is likely that we
would bear the risk of litigious losses related to attest services provided by
the CPA firms.

At December 31, 2003, CBIZ maintained administrative service agreements
with 14 CPA firms, which has decreased from 41 during 2002. Most of the members
and/or shareholders of the CPA firms are also CBIZ employees, and CBIZ renders
services to the CPA firms as an independent contractor. The number of firms with
which CBIZ maintains administrative service agreements decreased when a majority
of the partners of CPA firms with whom we previously maintained ASAs joined
Mayer Hoffman McCann, P.C. (MHM P.C.) an independent national CPA firm
headquartered in Kansas City, Kansas. MHM P.C. has 156 shareholders, a vast
majority of which are also employees of CBIZ. MHM maintains a five member Board
of Directors, one of which is the National Director of MHM and not an employee
of CBIZ. There are no board members of MHM P.C. who hold senior officer
positions at CBIZ.

CBIZ's association with MHM P.C. offers 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 we
maintain administrative service agreements.

Although the service agreements do not constitute control, CBIZ is one of
the beneficiaries of the agreements and may bear certain economic risks. As
such, the CPA firms with which CBIZ maintains administrative service agreements
may qualify as variable interest entities under FASB Interpretation No. 46 (FIN
46), "Consolidation of Variable Interest Entities". The impact to CBIZ of this
accounting pronouncement is discussed in the "New Accounting Pronouncements"
section of the accompanying Management's Discussion and Analysis of Financial
Condition and Results of Operations.

CBIZ's ATA practice is divided into four regions, representing the East,
Midwest, Great Lakes, and West regions of the United States. 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 $203.4
million of revenue, representing approximately 39% of CBIZ's annual revenue in
2003.

Benefits and Insurance Services. The business units that comprise CBIZ's
Benefits and Insurance group are organized by the following two groups: Retail
and National Services. The Retail group is divided into three geographical
regions representing the East, Central and West regions of the United States.
Each of the retail operations provides a broad range of services within their
geographic area. The services include: 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.

The National Services group is comprised of several specialty operations
that provide unique services on a much wider geographic scale. The services
include: specialty high-risk life insurance and clinical underwriting; employee
benefit worksite marketing; wholesale insurance brokerage services; bank-owned
executive life insurance; and wealth management services, including Registered
Investment Advisory Services, Investment Policy Statements; mutual fund
selections; and ongoing mutual fund monitoring.

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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 the three retail regions and their respective regional
directors, as well as each of the National Services companies.

The Benefits and Insurance group has grown in recent years due to
acquisitions, the expansion of our client base, and in part due to rising
healthcare costs which positively impacted the group benefits business and
increased demand for benefits consulting. In addition, the life insurance
product line, including executive compensation, bank compensation plans and
individual life sales, has also prospered due to continued favorable tax
treatment and estate planning concerns among the general public. CBIZ expects
growth to continue in the benefits and insurance group based on our intention to
aggressively pursue appropriate acquisitions, negotiate better rates with our
larger insurance carriers, increase our sales staff in select markets, and seek
cross-serving opportunities within CBIZ to garner new business and grow market
share and strengthen existing client relationships in order to promote
retention.

The Benefits and Insurance group contributed approximately $162.1 million
of revenue, or 32% of CBIZ's annual revenue, in 2003.

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 $147.3 million of
revenue, or 29% of CBIZ's annual revenue, in 2003. Included in the results of
the National Practices group are those of CBIZ MMP, which contributed
approximately $75.8 million of revenue, or 15% of CBIZ's annual revenue, in
2003.

CBIZ MMP. CBIZ's wholly-owned subsidiary, CBIZ MMP, provides coding and
billing services as well as records compliance for hospital-based physicians in
anesthesia, radiology, and other areas. CBIZ MMP's billing services include:
billing and accounts receivable management; automated claims processing and
collection; comprehensive delinquent claims follow up; compliance programming to
meet government regulations; and comprehensive statistical and operational
reporting. The financial management services provided by CBIZ MMP include:
financial reporting systems, 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 other entities; identifies and
coordinates practice merger and integration opportunities; and coordinates
practice expansion efforts.

SALES AND MARKETING

CBIZ's key competitive factors in attracting and retaining clients are:

- long-term established relationships;

- industry and technical expertise of our professional staff;

- 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

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- 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
significantly increase 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. This 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, has developed 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 has developed a
centralized client database, "CNECT," which is now being utilized by a majority
of our locations. CNECT supports marketing and distribution efforts such as
improved client service, new business development and product development. New
clients are generated primarily through local networking, referrals from
existing clients, and targeted new business efforts.

CUSTOMERS

CBIZ provides professional outsourced business services to over 70,000
clients. CBIZ's clients 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.

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 2.5%
of the Company's revenue in 2003. No 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 professional
services firms and a large number of relatively small independent firms in local
markets. CBIZ's competitors in the professional outsourced business services
industry include but are not limited to independent consulting services
companies, independent accounting and tax firms, payroll service providers, and
divisions of diversified services companies, such as 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 more significant provider of
a comprehensive range of outsourced business services. In 2003, CBIZ acquired
benefits and insurance firms located in Boca

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Raton, Florida and Salt Lake City, Utah, an accounting, tax and advisory firm in
Orange County, California and HarborView Partners, which was based in Stamford,
Connecticut. Before acquiring HarborView, CBIZ had established a relationship to
provide staffing to HarborView, a provider of internal audit outsourcing and
Sarbanes-Oxley consulting and compliance services primarily to publicly held
companies.

In 2003, CBIZ sold or closed eight business operations in an effort to
rationalize our business by divesting 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'
activities 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 activities
comply with revised regulations.

CBIZ itself is subject to industry regulation and changes, 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 our ability to comply with such
existing or proposed regulations.

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. CBIZ is currently in
compliance with such laws and regulations, and expects to remain in compliance
in future periods.

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 CFOs to certify that company financial statements fairly
present the company's financial condition; and (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
2003, 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.

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EMPLOYEES

At December 31, 2003, CBIZ employed approximately 4,700 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 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 2003. 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 6050 Oak Tree Boulevard,
South, Suite 500, 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 34 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 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 2003 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.

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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 has and will continue to affect our
business. Potential new clients may defer from switching service providers when
they believe economic conditions are unfavorable. 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.

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 intend to
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.

10

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

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. Accordingly, 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 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 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
11

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 believe we have
controls and procedures in place to address our fiduciary responsibility and
mitigate these risks.

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 MAY HAVE SUBSTANTIAL CONTROL OVER OUR OPERATIONS.

As of February 27, 2004, the following individual owned the following
aggregate amount and percentage of our common stock, including shares that may
be acquired by exercising options:

- approximately 15,186,198 shares, representing 17.7% of all our
outstanding common stock, were owned by Michael G. DeGroote;

- approximately 18,299,280 shares, representing 21.3% of all our
outstanding common stock, were owned by our executive officers,
directors, and Mr. DeGroote as a group.

Because of their stock ownership, these persons may exert substantial
influence or actions that require the consent of a majority of our outstanding
shares, including the election of directors. CBIZ's share repurchase activities
may serve to increase the ownership percentage of these individuals and
therefore increase the influence they may exert, if they do not participate in
these share repurchase transactions.

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 86 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 February 27, 2004, approximately 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
February 27,

12

2004, 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 have made four acquisitions in 2003, and 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. There are certain provisions
under our bank line of credit that may limit 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.
However, management believes that funds available under the credit facility,
along with cash generated from operations, will be sufficient to meet our
liquidity needs, including planned acquisition activity, in the foreseeable
future. See note 8 to CBIZ's consolidated financial statements included
herewith.

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.

13

CBIZ makes available, free of charge on its website, , through the Investor
Information page, 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. In addition, our corporate code of
conduct and ethics and the charters of the Audit Committee, the Compensation
Committee and the Nominating and Governance Committee of the Board of Directors
are available on the Investor Relations page of CBIZ's website, referenced
above, and in print to any shareholder who requests them.

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 this lawsuit 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.

14

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, 2003, the last reported sale price of CBIZ's Common Stock
as reported on the Nasdaq National Market (Nasdaq Amex-Online) was $4.47 per
share. As of February 27, 2004, CBIZ had approximately 9,400 holders of record
of its common stock, and the last sale of CBIZ's common stock as of that date
was $4.42.

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.

15

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. 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 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 Exchange
Commission Staff Accounting Bulletin (SAB) No. 101, adopted January 1, 2000,
and Financial Accounting Standards Board (SFAS) No. 142, adopted January 1,
2002, were applied retroactively, net of taxes, for all periods presented.

16

(2) Pro forma diluted weighted average common shares for 2001 are 96,442, as the
effect of the incremental shares are not anti-dilutive on a pro forma basis.

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, 2003, 2002 and 2001. This discussion should be read in conjunction
with CBIZ's consolidated financial statements and notes thereto included
elsewhere in this Annual Report.

RECENT DEVELOPMENTS

CBIZ is focused on acquiring businesses that will complement its service
offerings in those primary markets where CBIZ already has a significant
presence. During 2003, CBIZ acquired benefits and insurance operations located
in Boca Raton, Florida, and Salt Lake City, Utah. The company also acquired an
accounting, tax and advisory operations in Orange County, California, and
acquired HarborView Partners, a firm specializing in internal audit services,
located in Stamford, Connecticut. Before acquiring HarborView Partners, CBIZ had
an arrangement to be the exclusive provider of professional staff to the firm.

CBIZ continues to rationalize and sharpen the focus of its operations by
divesting or closing non-core and non-performing units. During 2003, twelve
operations were divested, six of which were classified as discontinued
operations in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The
operations not meeting the criteria for treatment as discontinued operations
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.
Additional gains or losses may be incurred as future transactions are completed.

During the third quarter of 2003, CBIZ acquired approximately 10 million
shares of its common stock through a modified Dutch Auction tender offer. These
shares were purchased at $3.30 per share, for a total cost, including expenses,
of approximately $33.2 million, and are currently carried as treasury stock.

RESULTS OF OPERATIONS -- CONTINUING OPERATIONS

COMPARISON OF YEAR ENDED DECEMBER 31, 2003 TO YEAR ENDED DECEMBER 31, 2002

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 $203.4 million and $205.7 million of revenue, or approximately 39%
and 41% of CBIZ's annual revenue in 2003 and 2002, respectively. The decrease in
revenue of $2.3 million was a result of divestitures and the transfer of certain
technology businesses to the National Practices group during 2003, offset by
organic growth. Divestitures, net of acquisitions, resulted in a net decline in
revenue of $0.2 million in 2003. The transfer of certain technology business
from ATA to National Practices in January 2003 resulted in a decrease in revenue
of $5.1 million. For ATA businesses with a full period of operations for the
years ended December 31, 2003 and 2002 (excluding acquisitions, divestitures and
transfers), revenue increased $3.0 million or 1.5%. Gross margins decreased from
13.8% in 2002 to 12.4% in 2003 primarily due to increased compensation and
benefits costs that rose at a rate higher than revenue. CBIZ expects its ATA
Services group to achieve modest revenue growth, as well as improvement in gross
margin in 2004. Improvements in staff utilization, as well as the acquisition of
HarborView Partners and related opportunities with Sarbanes-Oxley compliance and
consulting, a new product offering to

17

provide diagnostic information to clients regarding their financial condition,
and modest billing rate increases are expected to contribute to such growth and
margin improvement. The economic environment is expected to improve in 2004,
which will offer opportunities for additional discretionary work.

Benefits and Insurance Services. The Benefits and Insurance group
contributed approximately $162.1 million and $150.5 million of revenue, or
approximately 32% and 30% of CBIZ's annual revenue in 2003 and 2002,
respectively. The increase in revenue is attributable to organic growth,
including larger bonuses from insurance carriers, as well as acquisitions.
Revenue increased $7.8 million due to acquisitions, offset by the decrease in
revenue related to divestitures completed during the year ended December 31,
2003 of $7.2 million. For Benefits and Insurance businesses with a full period
of operations for the years ended December 31, 2003 and 2002, same-unit revenue
increased $11.0 million, or 8.0%. The gross margin increased from 18.0% in 2002
to 20.8% in 2003. CBIZ Benefits and Insurance group continued to benefit in 2003
from increasing group benefits premium rates. In addition, the worksite
marketing business experienced significant revenue growth due to an increasing
number of new clients. The life insurance business also experienced revenue
growth through the sale of several large life cases and special risk insurance
cases, combined with bank-owned life insurance placements related to one major
carrier. CBIZ expects revenue and margin growth to continue in 2004, but may not
be able to sustain the levels of organic growth achieved during 2003, based on
the number of large cases placed that may not recur in future periods.

National Practices Services. The National Practices group contributed
approximately $147.3 million and $143.0 million of revenue, or approximately 29%
of CBIZ's annual revenue in 2003 and 2002, respectively. Included in the results
of the National Practices group are those of CBIZ MMP, which contributed
approximately $75.8 million and $66.2 million, or 15% and 13%, of CBIZ's annual
revenue in 2003 and 2002, respectively. This growth of 14.5% is attributable to
the addition of new clients, including the expansion into new markets, such as
the entrance into the Colorado market. Revenue for CBIZ MMP is based on a
percentage of amounts collected for their clients. The gross margin increased
from 17.6% in 2002 to 18.8% in 2003. CBIZ MMP invested capital dollars in
systems and new technologies in 2003 in order to accommodate future growth.
These systems are planned to be operational in 2004. Although CBIZ expects
growth in revenue of CBIZ MMP to continue, due to investments in systems and
technologies and the start-up costs incurred for opening new offices, we cannot
assure that gross margin growth will continue at the levels experienced in
recent years.

The other units within National Practices, excluding CBIZ MMP, contributed
approximately $71.5 million and $76.8 million of revenue in 2003 and 2002,
respectively. Approximately $4.3 million of the decrease in revenue was related
to the lack of transactions in CBIZ's Mergers and Acquisition Group (CBIZ M&A),
as compared to 2002, in which one significant transaction closed in the fourth
quarter. While CBIZ endeavors to find 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. In addition to the decrease in CBIZ M&A's revenue, the valuation,
property tax and information technology (IT) businesses suffered from decreased
revenue in 2003 primarily due to rationalization of certain unproductive offices
and business lines. Gross margins for other National Practices decreased from
1.7% in 2002 to (1.9%) in 2003 also due primarily to the decision to close
certain unproductive offices and discontinue certain product lines within the
property tax, mergers and acquisitions, and IT businesses. Although gross
margins have declined in the last two years, CBIZ expects modest growth in
revenue and a positive gross margin for the other National Practices in 2004 due
to an improving environment in IT consulting and growth in the payroll business.

Revenues

Total revenue for the year ended December 31, 2003 was $512.8 million as
compared to $499.2 million for the year ended December 31, 2002, representing an
increase of $13.6 million, or 2.7 %. The increase in revenue attributable to
acquisitions completed during the year ended December 31, 2003 was $9.4 million,
offset by decreases in revenue attributable to divestitures of $9.0 million. For
business units with a full period of operations for the year ended December 31,
2003, revenue increased $13.1 million or 2.7%. A more comprehensive analysis of
revenue is discussed above by operating practice groups.

18

Expenses

Operating expenses increased to $448.7 million for the year ended December
31, 2003, from $439.9 million for the comparable period in 2002, representing an
increase of $8.8 million. The increase was primarily attributable to increased
compensation expense (excluding severance) of $9.6 million or 3.1%, which was
primarily to support higher revenue in the medical management and benefits and
insurance areas. Compensation expense represents approximately 72% of operating
expenses in 2003, compared to 71% of operating expenses in 2002. Also included
in operating expenses are costs related to continuing consolidation activities;
CBIZ incurred severance and restructuring costs of $3.0 million for the year
ended December 31, 2003, compared to $4.6 million in 2002, a decrease of $1.6
million. In addition, CBIZ incurred charges of $0.3 million and $1.3 million for
the years ended December 31, 2003 and 2002 related to a valuation and
obsolescence adjustment for inventory carried to support IT network maintenance.
As a percentage of revenue, operating expenses for the year ended December 31,
2003 were 87.5% compared to 88.1% for the year ended December 31, 2002.

Corporate general and administrative expenses decreased slightly to $19.6
million from $19.7 million for the years ended December 31, 2003, and 2002,
respectively. While total costs have remained relatively flat, compensation
expenses have increased in 2003, primarily due to $0.7 million of severance
expense. Expenditures for legal costs to pursue cases concerning non-competition
violations by former employees, insurance coverage issues, and other cases in
which CBIZ is involved, have decreased approximately $1.4 million. Corporate
general and administrative expenses represented 3.8% of total revenues for the
year ended December 31, 2003, compared to 3.9 % for the comparable period in
2002. CBIZ expects the core level of corporate, general and administrative
expenses to remain relatively constant in 2004. However, there may be increases
in expenses related to marketing, investments in wealth management, or training
costs to support these types of corporate initiatives. In addition, CBIZ will
incur additional costs to comply with Section 404 of the Sarbanes-Oxley Act,
which will become effective in 2004.

Depreciation and amortization expense decreased to $17.2 million for the
year ended December 31, 2003, from $20.5 million for the comparable period in
2002, representing a decrease of $3.3 million, or 16.2%. The decrease primarily
related to dispositions and assets that became fully depreciated, offset by
increases related to additional capital expenditures made since December 31,
2002 of approximately $10 million. In addition, approximately $0.9 million of
the decrease is directly related to the shift from purchasing certain assets to
leasing assets, which are recorded as operating leases in operating expense. As
a percentage of revenue, depreciation and amortization expense decreased to 3.3%
for the year ended December 31, 2003 from 4.1% for the comparable period in
2002. CBIZ expects depreciation and amortization expense to be approximately
$17.0 million in the future.

Interest expense decreased to $1.1 million for the year ended December 31,
2003, from $2.5 million for the same period in 2002, a decrease of $1.4 million,
or 57.4%. The decrease is the result of both lower average outstanding debt
balances and a lower average interest rate in 2003. The average debt balance was
$18.2 million for the year ended December 31, 2003 compared to $38.6 million for
the year ended December 31, 2002. The weighted average interest rate on bank
debt was 4.4% for the year ended December 31, 2003 compared to 5.6% for the same
period in 2002.

CBIZ recorded a net gain from divested operations of $2.5 million for the
year ended December 31, 2003, as compared to a net gain of $0.9 million for the
year ended December 31, 2002. CBIZ completed the divestiture of six non-core
business operations during the year ended December 31, 2003, either through sale
or closure. During 2002, the net gain was attributable to the divestiture of
eleven non-core operations. In addition to this divestiture activity, CBIZ
classified five operations as discontinued operations during 2003 and 2002,
respectively, in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
144)." The results of these operations are disclosed separately in the
consolidated financial statements and discussed separately under "Results of
Operations -- Discontinued Operations," below.

Other expense, net was $1.1 million for the years ended December 31, 2003
and 2002. Other 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. For 2003, other income is offset by $2.8
million of impairment charges, of which $2.4 million related

19

to the impairment of a note taken in connection with the divestiture of the
hazardous waste operation in 1997, that filed bankruptcy in 2003. For 2002,
other income was offset by $2.4 million of charges related to the write-down of
CBIZ's investment in two high-tech start-up ventures, including $0.8 million
impairment charge related to the note previously discussed. In addition,
interest income decreased $0.4 million related to lower interest rates in 2003.

CBIZ recorded income tax expense from continuing operations of $12.1
million for the year ended December 31, 2003, compared with $8.4 million in
2002. The effective tax rate was 43.8% for the year ended December 31, 2003. The
effective tax rate for the year ended December 31, 2003, is higher than the
statutory federal and state tax rates of approximately 40% primarily due to
differences such as the establishment of a valuation allowance related to asset
impairment charges, portions of certain meal and entertainment expenses that are
not fully deductible for tax purposes, and tax credit carryforwards.

RESULTS OF OPERATIONS -- CONTINUING OPERATIONS

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

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 $205.7 million and $226.0 million of revenue, or approximately 41%
and 44% 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 $9.3 million, or 4.3%.
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. This decrease in revenue caused a decrease in gross margin from 14.7%
in 2001 to 13.8% in 2002.

Benefits and Insurance Services. The Benefits and Insurance group
contributed approximately $150.5 million and $141.3 million of revenue, or
approximately 30% and 28% 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 10.7%. The gross margin decreased from 20.6%
in 2001 to 18.0% in 2002. CBIZ's Benefits and Insurance group has 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.

National Practices Services. The National Practices group contributed
approximately $143.0 million and $143.3 million of revenue, or approximately 29%
and 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. This growth of 16.4% is attributable to
the addition of new clients, including the expansion into new markets, such as
the entrance into the Colorado market in 2002, as well as rising healthcare
prices. Revenue for CBIZ MMP is based on a percentage of amounts collected for
their clients. The gross margin decreased from 19.4% in 2001 to 17.6% in 2002,
based on the investment of start up costs, which decreases the margin until new
clients and regions reach expected levels of profitability.

The other units within National Practices, excluding CBIZ MMP, contributed
approximately $76.8 million and $86.4 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 1.6%.
20

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 5.1% in 2001 to 1.7% in 2002, primarily driven by
valuation adjustments to inventory in the IT group.

Revenues

Total revenue for the year ended December 31, 2002 was $499.2 million as
compared to $510.5 million for the year ended December 31, 2001, representing a
decrease of $11.3 million, or 2.2%. 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 $12.8 million or 2.6%. A more comprehensive
analysis of revenue is discussed above by operating practice groups.

Expenses

Operating expenses decreased to $439.9 million for the year ended December
31, 2002, from $441.2 million for the comparable period in 2001, representing a
decrease of $1.3 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 88.1%
compared to 86.4% for the year ended December 31, 2001, representing an increase
of 1.7%.

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 0.6%. 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
years ended December 31, 2002, and 2001.

Depreciation and amortization expense decreased to $20.5 million for the
year ended December 31, 2002, from $40.5 million for the comparable period in
2001, representing a decrease of $20.0 million, or 49.4%. 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 7.9% 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.

21

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 $8.4 million
for the year ended December 31, 2002, compared with $12.2 million in 2001. The
effective tax rate was 51.0% 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.

RESULTS OF OPERATIONS -- DISCONTINUED OPERATIONS

During each of the years 2003 and 2002, CBIZ adopted formal plans to divest
five non-core operations which were no longer part of CBIZ's strategic long-term
growth objectives. The ten 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, liabilities and results of operations are reported separately in
the consolidated financial statements. At December 31, 2003, all operations
classified as discontinued operations had been sold or are in the process of
being closed. Based on the sales proceeds and cost of closure, CBIZ recorded a
gain (loss) on disposal from discontinued operations, net of tax, of $0.7
million and ($2.5) million for the years ended December 31, 2003 and 2002,
respectively. Revenue associated with discontinued operations for the years
ended December 31, 2003, 2002 and 2001 was $6.5 million, $12.4 million and $16.3
million, respectively. The loss from operations of these discontinued
businesses, net of tax, for the years ended December 31, 2003, 2002 and 2001 was
$0.9 million, $2.5 million and $2.8 million respectively.

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 in the amount of $80.0,
net of a tax benefit of $8.6 million.
22

FINANCIAL CONDITION

Total assets were $402.1 million and total liabilities were $124.3 million
as of December 31, 2003 and shareholders equity was $277.8 million. Current
assets of $184.8 million exceeded current liabilities of $108.4 million by $76.4
million at December 31, 2003. Total assets and liabilities decreased as cash was
used to pay for the share repurchase and to pay down debt.

Cash and cash equivalents decreased $2.6 million to $3.8 million for the
year ended December, 31, 2003. Restricted cash was $10.9 million at December 31,
2003, a decrease of $6.1 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 $44.9 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, net were $111.6 million at December 31,
2003, an increase of $9.6 million from a year ago, primarily due to increased
sales in the fourth quarter of 2003, as well as a slight slow down in
collections. Days sales outstanding (DSO), which are calculated based on gross
accounts receivable balance at the end of the period divided by daily revenue,
increased slightly from 79 days at December 31, 2002 to 82 days at December 31,
2003. CBIZ provides DSO data because such data is commonly used as a performance
measure by analysts and investors and as a measure of the Company's ability to
collect on receivables in a timely manner. Goodwill and other intangible assets,
net of accumulated amortization, increased $3.6 million from 2002. Acquisitions
resulted in a $7.5 million increase in intangibles in 2003. In addition,
intangibles decreased by $2.2 million as a result of divestitures completed
during 2003, and amortization expense for client lists and other intangibles.

In addition to changes in cash, receivables, and goodwill, the following is
a summary of other significant changes in assets: notes receivable (current and
non-current) decreased by $5.9 million due to the $2.4 million impairment charge
of a note related to the sale of operation in 1997, $2.1 million contributed in
connection with the HarborView acquisition, and collections; decrease in income
taxes recoverable of $4.5 million based on refunds received in 2003 offset by
estimated tax payments; decrease in deferred tax assets (current and non-
current) of $2.1 million due to the increase in valuation allowance; and
decrease in assets of discontinued operations of $14.7 million due to the sale
or closure of all operations classified as held for sale as of December 31,
2003.

The accounts payable balance of $28.7 million at December 31, 2003 reflects
amounts due to suppliers and vendors. Other current accrued expenses decreased
$2.6 million to $34.6 million at December 31, 2003. Client fund obligations of
$44.9 million were directly related to funds held for clients in the same amount
as reflected in current assets. Bank debt for amounts due on CBIZ's credit
facility was $14.0 million at December 31, 2003, a reduction of $3.5 million
from December 31, 2002. The reduction in debt was a result of CBIZ's positive
cash flow generated during 2003.

Stockholders' equity decreased $16.5 million from 2002 to 2003, primarily
related to $33.2 million (approximately 10 million shares) of additional
treasury stock based on shares that were acquired through a modified Dutch
Auction tender offer in the third quarter of 2003. Funds used to purchase shares
were provided by cash flow generated from CBIZ's operations, as well as
borrowings under CBIZ's credit facility, which was amended in the third quarter
of 2003 to allow for the Dutch Auction tender offer, as previously described.
The decrease in stockholders' equity was offset by net income of $15.3 million
earned for the year ended December 31, 2003, and $1.2 million related to the
exercise of stock options.

On March 3, 2004, the Board of Directors authorized a share repurchase of
up to 8.5 million shares. On March 4, 2004, CBIZ announced a tender offer to
purchase up to 7.5 million shares of its outstanding common stock at a price of
$5.00 per share, which will expire on April 1, 2004. CBIZ anticipates that it
will obtain all of the funds necessary to purchase shares tendered, and to pay
related fees and expenses, by borrowing under its $73 million secured revolving
credit facility, which was amended on March 3, 2004, to permit CBIZ to borrow up
to an aggregate of $50 million for the repurchase, on or before December 31,
2004, of shares of CBIZ stock. CBIZ believes that investing in its own shares is
an attractive use of capital and an efficient means to provide value to CBIZ
stockholders.
23

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities in 2003 was $39.6 million versus
$42.3 million in 2002, a decrease of $2.7 million, primarily due to an increase
in working capital. Net cash provided by operating activities was the principal
source of funds used to reduce CBIZ's bank debt by $3.5 million during 2003 and
to fund the repurchase of approximately $33.6 million of CBIZ stock, in
accordance with CBIZ's Share Repurchase Program approved by the Board of
Directors on June 9, 2003.

Net cash used in investing activities during 2003 of $5.5 million consisted
of $7.2 million in proceeds from the disposition of non-core and underperforming
business units and $1.8 million collected on notes receivable. Offsetting the
sources of investing activities was $10.6 million used for net capital
expenditures, and $3.9 million used toward business acquisitions including
contingent consideration from prior year acquisitions. 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 2002 of $3.1 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 business
acquisitions including contingent consideration from prior year acquisitions.
Capital expenditures consisted of leasehold improvements and equipment in
connection with the consolidation of certain offices and equipment purchases in
relation to normal replacement.

Cash used in financing activities during 2003 of $36.6 million consisted
primarily of $33.6 million used toward the purchase of CBIZ's common stock, in
accordance with CBIZ's Share Repurchase Program, a net reduction of $3.5 million
in the revolving credit facility and net payments of $1.1 million toward notes
payable and capitalized leases.

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.

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.

The Company has a senior secured credit agreement with a group of four
banks. The $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. The primary use of the
credit facility is for working capital, internal growth initiatives, and
business acquisitions. The facility has a three year term with an expiration
date of September 2005. The credit agreement is secured by substantially all
assets and capital stock of CBIZ and its subsidiaries. Under the 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, 2003 and projects that it will remain in compliance
in 2004.

At December 31, 2003, CBIZ had $14 million outstanding under its credit
facility. In addition, CBIZ had letters of credit outstanding for $3.2 million
provided as security to certain lessors for office space leased by the Company.
Management believes 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.

24

USES OF CASH AND LIQUIDITY OUTLOOK

CBIZ's capital expenditures from continuing operations totaled $10.6
million, $8.2 million and $12.9 million for the years ended December 31, 2003,
2002 and 2001, respectively, which included expenditures for fixed assets for
normal replacement, implementation of the enterprise-wide solution to integrate
back office operations and other initiatives and office consolidations. During
the year ended December 31, 2003, CBIZ principally funded capital expenditures
from operating cash flow and financing activities. In 2004, capital expenditures
are expected to be approximately $10.0 million, and CBIZ anticipates that during
2004, it will continue to fund these expenditures from operating cash flow
supplemented by borrowings under its revolving credit agreement, as necessary.

At December 31, 2003, based on the borrowing base calculation, CBIZ had
approximately $45.4 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 active, under which it 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 future obligations for the next five years and
thereafter is set forth below:

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

(1) Excludes cash payments for subleases.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2003, CBIZ maintained administrative service agreements
with 14 CPA firms, as described more fully under "Outsourced Business Services"
section of Business and Properties. CBIZ is one of the beneficiaries of the
agreements and may bear certain economic risks. As such, the CPA firms with
which CBIZ maintains administrative service agreements may qualify as variable
interest entities under FASB Interpretation No. 46 (FIN 46), "Consolidation of
Variable Interest Entities," as amended. The impact to CBIZ of this accounting
pronouncement is discussed in the "New Accounting Pronouncements" section of the
accompanying Management's Discussion and Analysis of Financial Condition and
Results of Operations.

During 2003, CBIZ provided guarantees of contractual obligations for a CPA
firm with which CBIZ maintains an administrative services agreement. Potential
obligations under the guarantees totaled $0.7 million at December 31, 2003 and
expire in 2005. CBIZ expects the guarantees to expire without the need to
advance any cash.

Letters of credit are discussed in note 8 of the accompanying consolidated
financial statements.

25

INTEREST RATE RISK MANAGEMENT

During June 2003, CBIZ paid its revolving credit facility balance down to
zero, thus requiring it to terminate its interest rate swap. CBIZ used the
interest rate swap to manage the interest rate mix of its credit facility and
related overall cost of borrowing by allowing the Company to maintain a target
range of fixed to floating rate debt. The interest rate swap was scheduled to
expire during August 2003 and carried a fixed rate of 5.58% (fixed Libor rate of
3.58% plus an applicable margin of 2.0%).

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
104. 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
including Sarbanes-Oxley consulting and compliance projects. Revenues are
recorded in the period in which services are provided and meet revenue
recognition criteria in accordance with SAB 104. 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. A
description of the revenue recognition, based on the 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 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 (direct
billing) are recognized when the policy becomes effective.

- Life insurance commissions are recognized when the policy becomes
effective.

- Commission revenue is reported net of sub-broker commissions.

- Contingent commissions are recognized at the earlier of notification that
the contingency has been satisfied or cash collection.

- Fee income is recognized in the period in which services are provided,
and may be based on actual hours incurred on an hourly fee basis, fixed
fee arrangements, or asset-based fees.

26

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 as services are performed.

- 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 Management Group -- 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 fair value impairment
guidelines of SFAS 142. During 2002, CBIZ completed the process of evaluating
our goodwill for impairment using the 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 as of January 1, 2002. CBIZ evaluates goodwill for impairment annually
during the fourth quarter of each fiscal year. During 2003, there was no
impairment of goodwill based on our annual evaluation.

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, 2003. In light of the circumstances noted
above, particularly with respect to the current economic environment, it

27

is possible that the fair value of these investments could decline in future
periods, and further impairment could occur. At December 31, 2003, CBIZ has one
remaining investment valued at approximately $0.6 million.

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 January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46"). FIN 46
addresses conditions for consolidating an entity based on variable interests (as
defined in the standard) rather than voting interests. FIN 46 clarifies that
variable interest entities that do not disperse risks among the parties involved
should be consolidated by the entity that is determined to be the primary
beneficiary. FIN 46 applied immediately to variable interest entities created
after January 31, 2003. For variable interest entities in which an enterprise
holds a variable interest that was acquired before February 1, 2003, FIN 46
originally had to be adopted no later than the first fiscal year or interim
period beginning after June 15, 2003. However, in October 2003, the FASB issued
FASB Staff Position ("FSP") 46-e, "Effective Date of Interpretation 46." FSP
46-e deferred the effective date for applying the provisions of FIN 46, for
interests held by public entities in variable interest entities created before
February 1, 2003, until the end of the first interim or annual period ending
after December 15, 2003. In December 2003, the FASB issued a revision to FIN 46
("FIN 46R") to clarify some of the provisions of FIN 46 and to exempt certain
entities from its requirements. Under FIN 46R, special effective date provisions
apply to enterprises that have fully or partially applied FIN 46 prior to
issuance of FIN 46R. Otherwise, application of FIN 46R is required in financial
statements of public entities that have interests in structures that are
commonly referred to as special-purpose entities for periods ending after
December 15, 2003.

CBIZ has evaluated FIN 46, FSP 46-e and FIN 46R and determined that its
relationship with certain Certified Public Accounting firms with whom we
maintain administrative service agreements, may qualify as variable interest
entities. The accompanying financial statements do not reflect the consolidation
of the variable

28

interest entities, as the impact is immaterial and as consolidation does not add
material information. If the activities of the entities had been consolidated,
selected financial data would be as follows:

Total service fees recognized as revenue in the accompanying statement of
operations under the administrative services agreements (ASAs) was approximately
$40 million during the year ended December 31, 2003. Net assets related to the
ASAs and recorded in the accompanying statement of position as of December 31,
2003 are approximately $5 million.

In December 2003, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 104 (SAB 104), "Revenue Recognition". SAB 104 supersedes
SAB 101, "Revenue Recognition in Financial Statements," to include the guidance
from Emerging Issues Task Force EITF 00-21 "Accounting for Revenue Arrangements
with Multiple Deliverables." The guidance addresses how to determine if an
arrangement has multiple elements or deliverables, and whether or not the
elements should be treated as one unit of accounting, or segregated into
multiple units of accounting. The adoption of SAB 104 did not have an impact on
CBIZ's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 applies specifically to a number of financial instruments that companies
have historically presented within their financial statements either as equity
or between the liabilities section and the equity section, rather than as
liabilities. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not impact CBIZ's consolidated results of operations and financial position.

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, 2003, interest expense would increase or decrease by $0.1
million annually. During June 2003, CBIZ paid its revolving credit facility
balance down to zero, thus requiring it to terminate its interest rate swap. The
interest rate swap was scheduled to expire during August 2003 and carried a
fixed rate of 5.58% (fixed Libor rate of 3.58% plus an applicable margin of
2.0%).

29

CBIZ does not engage in trading market risk sensitive instruments. The
company has used interest rate swaps to manage the interest rate mix of its
credit facility and related overall cost of borrowing. Interest rate swaps
involve the exchange of floating for fixed rate interest payments to effectively
convert floating rate debt into fixed rate debt based on one- three- or
six-month U.S. dollar LIBOR. Interest rate swaps allow the company to maintain a
target range of fixed to floating rate debt.

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.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS

We evaluated the effectiveness of our disclosure controls and procedures
("Disclosure Controls") as of the end of the 2003 fiscal year. This evaluation
("Controls Evaluation") was done with the participation of our Chairman and
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO").

Disclosure Controls are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934 ("Exchange Act") is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms. Disclosure Controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act is accumulated and communicated to our management, including our CEO and
CFO, as appropriate to allow timely decisions regarding required disclosure.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

Our management, including our CEO and CFO, does not expect that our
Disclosure Controls or our internal controls over financial reporting ("Internal
Controls") will prevent all error and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, but not absolute,
assurance that the objectives of a control system are met. Further, any control
system reflects limitations on resources, and the benefits of a control system
must be considered relative to its costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within CBIZ have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of a control. A design of a control system is also based upon certain
assumptions about the likelihood of future events, there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.

30

CONCLUSIONS

Based upon the Controls Evaluation, our CEO and CFO have concluded that,
subject to the limitations noted above, the Disclosure Controls are effective in
providing reasonable assurance that material information relating to CBIZ is
made known to management on a timely basis during the period when our periodic
reports are being prepared.

There were no changes in our Internal Controls that occurred during the
quarter covered by this report that have materially affected, or are reasonably
likely to materially affect, our Internal Controls.

31

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to this item not included below is incorporated by
reference from CBIZ's definitive proxy statement for the 2004 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.

At its July 31, 2003 Board of Directors Meeting, the Board resolved to
expand the current size of the Board from six to eight directors. Upon
nomination by the Nominating and Governance Committee of the Board of Directors,
Todd Slotkin and Donald V. Weir were elected to fill the newly created seats.
Mr. Weir will hold office until the 2005 Annual Meeting of Shareholders, and Mr.
Slotkin shall hold office until the 2006 Annual Meeting of Shareholders.
Further, Mr. Slotkin became a member of the Nominating & Governance Committee as
well as the Compensation Committee during 2003. Mr. Weir became a member of the
Audit Committee and the Nominating & Governance Committee during 2003.

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

32

(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 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 independent 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 independent 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 independent 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, Inc. (formerly Carlyle Industries, Inc.), 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 independent 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 independent 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.

Todd Slotkin has served as a Director of CBIZ since September 2, 2003, when
he was elected as an independent director. Mr. Slotkin serves as Executive Vice
President and CFO of MacAndrews and Forbes Holdings, and as Executive Vice
President and CFO of publicly owned MYF Worldwide (NYSE:MFW). Prior to

33

joining MacAndrews & Forbes in 1992, Mr. Slotkin spent 17 years with Citicorp,
ultimately serving as senior managing director and senior credit officer. Mr.
Slotkin serves on the Board of Managers of Spectaguard and the Board of
Directors of TransTech Pharma; formerly served as director of CalFed Bank; and
is Chairman and co-founder of the Food Allergy Institute.

Donald V. Weir has served as a Director of CBIZ since September 2, 2003,
when he was elected as an independent director. Mr. Weir has served as financial
consultant with Sanders Morris Harris for the past four years. Prior to this Mr.
Weir was CFO and director of publicly-held Deeptech International and two of its
subsidiaries, Tatham Offshore and Leviathan Gas Pipeline Company, the latter of
which was a publicly-held company. Prior to his employment with Deeptech, Mr.
Weir worked for eight years with Sugar Bowl Gas Corporation, as Controller and
Treasurer and later in a consulting capacity. Mr. Weir was associated with Price
Waterhouse, an international accounting firm, from 1966 to 1979.

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 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 Revco D.S.,
Inc., Computerland/Vanstar, Manville Corporation, The Upjohn Company, and First
of America Bank.

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. Mr. Miller's 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 serves 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.
34

OTHER KEY EMPLOYEES:

George A. Dufour was appointed Senior Vice President and 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. 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. Mr.
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.

Michael P. Kouzelos has served as Vice President of Strategic Initiatives
since April 2001. Mr. Kouzelos served as Vice President of Shared Services from
August 2000 to March 2001 and Director of Business Integration from June 1998 to
July 2000. Mr. Kouzelos was associated with KPMG LLP, an international
accounting firm, from 1990 to September 1996 and received his Masters in
Business Administration from The Ohio State University in May of 1998. Mr.
Kouzelos 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. Ms. Kuna
served as Manager of External Reporting from December 1998 to June 1999. Prior
to joining CBIZ, Ms. 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. Ms. Kuna is a CPA and a member of the
American Institute of Certified Public Accountants and the Ohio Society of
Certified Public Accountants.

David S. Azzolina joined CBIZ in April 1999 and was appointed Corporate
Treasurer in May 2000. Prior to joining CBIZ, Mr. Azzolina spent 13 years at
Bioproducts, Inc. in a broad range of financial assignments, including strategic
initiatives, financial planning and analysis, accounting, and cash management.
Mr. Azzolina has twenty years of financial experience. He received a B.S. degree
in accounting from The Ohio State University in 1983 and an M.B.A. degree from
The University of Akron in 1998. Mr. Azzolina is a licensed Certified Public
Accountant, State of Ohio.

35

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 2004 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 AND
RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated by reference from
CBIZ's definitive proxy statement for the 2004 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 $1.4 million, $0.8 million and $1.5 million
for the years ended 2003, 2002 and 2001, 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, L.L.P. (Akin, Gump.) Akin, Gump performed legal work for CBIZ
during 2003, 2002 and 2001 for which the firm received approximately $180,000,
$119,000, and $69,000 from CBIZ, respectively.

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. The notes to CBIZ and Mr.
O'Byrne were paid in 2003, and no indebtedness remains at December 31, 2003. 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 maintains 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. A number of CBIZ employees own
interests in the independent companies maintaining administrative services
agreements with CBIZ. See a more detailed discussion of this arrangement in Part
I of the accompanying Annual Report.

During 2003, CBIZ guaranteed two letters of credit for a CPA firm with
which CBIZ maintains an administrative services agreement. The letters of credit
total $654,000.

In 2002, CBIZ executed a note receivable with a CPA firm whose partner
group has since joined MHM, PC, a CPA firm with which CBIZ maintains an
administrative services agreement. The balance on the note at December 31, 2003
and 2002 was approximately $222,000 and $263,000, respectively. The note does
not have a stated maturity date.

CBIZ divested several operations during 2003, 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

36

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. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated by reference from
CBIZ's definitive proxy statement for the 2004 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.

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.

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

* 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, 2003:

(a) On October 30, 2003, CBIZ filed a current report on Form 8-K to provide
investors with its third quarter earnings, as released to the public
and discussed on a conference call on October 28, 2003.

38

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 15, 2004

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 Director
(Principal Financial and Accounting Officer)

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

/s/ RICK L. BURDICK /s/ TODD SLOTKIN
- -------------------------------------------- --------------------------------------------
Rick L. Burdick Todd Slotkin
Director Director

/s/ DONALD V. WEIR
- --------------------------------------------
Donald V. Weir
Director

39

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 accompanying 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 have also audited the consolidated
financial statement schedule as listed in the accompanying index on page F-1.
These consolidated financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and the 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, 2003 and 2002, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2003, 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, presents
fairly, in all material respects, the information set forth herein.

As discussed in notes 1 and 6 to the consolidated financial statements, the
Company adopted Financial Accounting Standards Board (FASB) Statement 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, 17, and 20 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 12, 2004

F-2

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

(IN THOUSANDS)

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, 2003, 2002 AND 2001

(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, 2003, 2002 AND 2001

(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, 2003, 2002 AND 2001

(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 Fund 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

CBIZ records derivative instruments in accordance with SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as subsequently
amended by SFAS 137, SFAS 138 and SFAS 149. Derivatives are recognized as either
assets or liabilities in the statement of financial position and are measured at

F-7

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

fair value. The treatment of gains and losses resulting from changes in the fair
values of derivative instruments is dependent on the use of the respective
derivative instruments and whether they qualify for hedge accounting.

In 2001, CBIZ entered into an interest rate swap agreement that qualified
as a cash flow hedge. 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; the interest rate swap was terminated in the third quarter,
2003. CBIZ does not have any outstanding derivative instruments at December 31,
2003.

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

CBIZ utilizes the purchase method of accounting for all business
combinations, in accordance with Statement of Financial Accounting Standard No.,
141, "Business Combinations" (SFAS 141). Intangible assets include client lists
and non-compete agreements, which are amortized principally by the straight-line
method over their expected period of benefit.

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. 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.

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 CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Capitalized Software

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 of 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. Capitalized software is classified in property and
equipment.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes.
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
basis and operating loss and tax credit carryforwards. State income tax credits
are accounted for by the flow-through method.

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 or carryforward periods, consideration of future deductible
amounts, and assessment of the consolidated and/or separate company
profitability of certain acquired entities.

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
104. 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
including Sarbanes-Oxley consulting and compliance projects. Revenues are
recorded in the period in which services are provided and meet the revenue
recognition criteria in accordance with SAB 104. 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. A
description of the revenue recognition, based on the 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 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 (direct
billing) are recognized when the policy becomes effective.

- Life insurance commissions are recognized when the policy becomes
effective.

- Commission revenue is reported net of sub-broker commissions.

- Contingent commissions are recognized at the earlier of notification that
the contingency has been satisfied or cash collection.

F-9

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

- Fee income is recognized in the period in which services are provided,
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 as services are performed.

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

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

CBIZ accounts for its employee stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, 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
in accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." 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):

F-10

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

See note 12 to the consolidated financial statements for a complete
description of stock options and the assumptions used in determining the fair
value of such stock options.

Reclassifications

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

2. ACCOUNTS RECEIVABLE

Accounts receivable balances for the years ended December 31, 2003 and 2002
were as follows (in thousands):

3. NOTES RECEIVABLE

Notes receivable balances for the years ended December 31, 2003 and 2002
were as follows (in thousands):

The HarborView Partners note was contributed in connection with the
acquisition of HarborView Partners LLC during the third quarter of 2003. The
Philip Services note was received in connection with the divestiture of the
hazardous waste operations in 1997, and was written off through impairment
charges of $1.6 million and $0.8 million in the first and fourth quarters of
2003, respectively. Philip Services' plan of reorganization under Chapter 11
bankruptcy was confirmed by the court in December 2003, and CBIZ estimates that
any recovery is unlikely.

4. INVESTMENTS

Investment balances of $0.6 million for the years ended December 31, 2003
and 2002 are included in other assets (non-current) and are accounted for under
the cost method of accounting. CBIZ's primary investment is a 4% ownership
interest in Statement One, Inc., which was purchased in 1999. In the third
quarter of 2002, the carrying value was written down to its current amount of
$0.6 million due to a decrease in the market valuation of

F-11

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the investment. CBIZ held an interest in QuikCAT Technologies. CBIZ wrote-off
the investment of $1.3 million and a related outstanding trade receivable of
$0.5 million in the third quarter of 2002, and QuikCat has subsequently filed
for bankruptcy.

5. PROPERTY AND EQUIPMENT

Property and equipment, net at December 31, 2003 and 2002 consisted of the
following (in thousands):

The increase in buildings and leasehold improvements in 2003 over 2002 is
largely the result of consolidations in the Kansas City market. The plan of
consolidation in the Kansas City market was initiated in 2002, and completed in
2003.

Depreciation expense (including amortization of capitalized software) was
approximately $13.7 million, $15.8 million, and $14.2 million in 2003, 2002, and
2001, respectively.

6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

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

Client lists are amortized over periods not exceeding ten years. Other
intangibles, which consist primarily of non-compete agreements and website
development costs, are amortized over periods ranging from two to ten years.
Amortization expense of client lists and other intangible assets was
approximately $1.8 million, $2.2 million and $2.4 million in 2003, 2002 and
2001, respectively.

During 2003, CBIZ recorded a $0.3 million (pre-tax) non-cash impairment
charge in accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". The impairment charge relates to a client list
purchased in 1999 and is recorded as depreciation and amortization expense in
the accompanying consolidated statement of operations.

During 2002, in connection with the adoption of SFAS No. 142, "Goodwill and
Other Intangible Assets," CBIZ recorded a non-cash impairment charge to goodwill
of $88.6 million on a pretax basis. The charge is

F-12

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recorded as a cumulative effect of a change in accounting principle in the
accompanying consolidated statement of operations. CBIZ performed its annual
impairment review of goodwill in the fourth quarters of 2002 and 2003 and
determined that no impairment of goodwill existed.

Changes in goodwill for the year ended December 31, 2003 are as follows:

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

Prior to January 1, 2002, goodwill was amortized over periods not exceeding
15 years. Pro forma net income (loss) and earnings (loss) per share (EPS) for
the years ended December 2003, 2002 and 2001 adjusted to eliminate historical
amortization of goodwill and related tax effects, are as follows (in thousands):

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

(1) Pro forma diluted weighted average common shares for 2001 are 96,442, as the
effect of the incremental shares are not anti-dilutive on a pro forma basis.

F-13

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO 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, except percentages):

F-14

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO 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, 2003 and 2002, are as follows (in thousands):

CBIZ had U.S. net operating loss (NOL) carryforwards of approximately $2.4
million and $3.0 million at December 31, 2003, and 2002, 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 $4.1 million and $3.4 million at December 31, 2003, and 2002,
respectively. The Canadian NOL carryforwards begin to expire in 2006. CBIZ also
had state NOL carryforwards for continuing operations with a tax benefit of $3.2
million and $2.1 million at December 31, 2003, and 2002, respectively, and state
NOL carryforwards for discontinued operations with a tax benefit of $1.8 million
and $2.2 million at December 31, 2003 and 2002, respectively, all of which have
various expiration dates. The availability of all the NOL's for continuing
operations is reported in the consolidated financial statements as deferred tax
assets, net of the applicable valuation allowance.

During 2003 CBIZ earned state income tax credits of $3.9 million, net of
federal taxes. These income tax credits arose from investments made by several
CBIZ subsidiaries. Of the total net credits earned, $0.4 million were used to
reduce current 2003 tax expense, and $3.5 million are available as state income
tax credit carryforwards with expiration dates ranging from 10 to 14 years. The
state income tax credit carryforwards are reported in the consolidated financial
statements 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 income tax credit carryforwards, and for the
asset impairment charge. The overall net change in the valuation allowance for
the years ended December 31, 2003 and 2002 was an increase of $4.6 million and
$2.5 million, respectively. The net change in the valuation allowance for the
NOL carryforwards for the years ended December 31, 2003 and 2002 was an increase
of $1.9 million and $1.4 million. The valuation allowance, net of federal tax,
established for the state tax credit carryforwards in the year ended December
31, 2003 was $2.5 million, and a valuation allowance of $1.3 million was
established in the year ended December 31, 2003

F-15

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

related to the asset impairment charge. A valuation allowance of $1.1 million
established in 2002 for state deferred taxes related to an impairment of tax
deductible goodwill was reversed in 2003.

8. BANK DEBT

Bank debt balances for the years ended December 31, 2003 and 2002 were as
follows (in thousands, except percentages):

CBIZ maintains a $73 million revolving credit facility with a group of four
banks. The facility was amended in the third quarter of 2003, for the purposes
of increasing restricted payments to allow CBIZ to repurchase up to $52.5
million of capital stock through December 31, 2003, in addition to the existing
provision permitting the purchase of stock up to 50% of the trailing twelve
months of income.

Under the facility, loans are charged an interest rate consisting of a base
rate or Eurodollar rate 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 substantially all assets and
capital stock of CBIZ and its subsidiaries.

The bank agreement contains financial covenants that require CBIZ to meet
certain requirements with respect to (i) minimum net worth; (ii) maximum
leverage ratio; and (iii) a minimum fixed charge coverage ratio. Limitations are
also placed on CBIZ's ability to acquire businesses, repurchase CBIZ common
stock and to divest operations. As of December 31, 2003, 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 $3.2 and $1.9 million as of December 31, 2003, and 2002,
respectively. CBIZ also acted as guarantor on two letters of credit for a CPA
firm with which we have an affiliation. The letters of credit total $0.7 million
as of December 31, 2003. CBIZ did not act as a guarantor on any letter of credit
at December 31, 2002. Management does not expect any material changes to result
from these instruments because performance is not expected to be required.

At December 31, 2003, based on the borrowing base calculation, CBIZ had
approximately $45.4 million of available funds under its credit facility.

Management believes that the carrying amount of bank debt recorded at
December 31, 2003 approximates its fair value.

F-16

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

Operating Leases

CBIZ leases certain of its premises and equipment under various operating
lease agreements. At December 31, 2003, future minimum rental commitments
becoming payable under operating leases are as follows (in thousands):

Total rental expense incurred under operating leases was $30.4 million,
$28.0 million, and $28.6 million in 2003, 2002, and 2001, respectively.

Legal Proceedings

Since September 1999, seven purported stockholder class-action lawsuits
were 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 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 this lawsuit 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.

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
clients conveniently, and to promote cross-serving between various

F-17

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

service groups. CBIZ has initiated consolidation activities in several markets
and has incurred expenses related to non-cancelable lease obligations, severance
obligations, and expense-reduction initiatives.

During 2003, CBIZ initiated plans of consolidation for offices in Orange
County California, which resulted in $0.2 million of costs related to
non-cancelable lease obligations and moving expenses, as well as plans in the
Cleveland market. In addition, CBIZ continued the consolidation in the Kansas
City market, which was initiated in 2002. During 2002, CBIZ recognized $1.7
million of costs for consolidations in Kansas City, related to non-cancelable
lease obligations. During 2001, expenses were incurred related to consolidations
in the Los Angeles, Chicago, Philadelphia, Phoenix, Southern California, and
Columbia, Maryland markets.

Consolidation and integration reserve balances as of December 31, 2003,
2002 and 2001, and activity during the twelve-month periods ended December 31,
2003 and 2002 were as follows (in thousands):

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

(1) Amounts adjusted (to) or against income are included in operating expenses
and corporate general and administrative expenses in the accompanying
consolidated statements of operations. See the table below for the
respective amounts recorded in each line item.

Consolidation and integration charges incurred for years ended December 31,
2003, 2002 and 2001 were as follows (in thousands):

F-18

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO 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 2003, 2002
and 2001, amounted to approximately $5.1 million, $5.3 million, and $5.0
million, respectively.

12. COMMON STOCK

CBIZ's authorized common stock consists of 250 million 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 Computershare Investor Services,
LLC.

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 6
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 million 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.

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. During the years
ended December 31, 2003, 2002 and 2001, CBIZ repurchased approximately 104
thousand shares, no shares and 170 thousand shares at costs of $0.4 million,
$0.0 million and $0.4 million, respectively.

In July 2003, CBIZ completed a modified Dutch Auction tender offer which
resulted in the purchase of approximately 10 million shares of common stock at a
purchase price of $3.30 per share, or a total cost (including expenses) of
approximately $33.2 million.

As part of the current credit agreement, repurchases are subject to
limitations based on net income. At December 31, 2003, 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. 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
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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

During 1997, CBIZ issued warrants in connection with acquisitions, which
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 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 foregoing demand registration rights.

In 1999, CBIZ issued 1.8 million restricted shares of common stock and
900,000 warrants to an outside party for a $25 million equity investment in
CBIZ. The restrictions on the common stock expired in 2001, and the warrants 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.

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

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

(a) Exercise prices for warrants outstanding at December 31, 2003 are $30.00.
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.

STOCK OPTIONS

Under the 1997 Agents Stock Option Plan, a maximum of 1.2 million 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 1996 Employee Stock Option Plan, a maximum of 15 million 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.

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The 2002 Stock Incentive Plan is an amendment and restatement of the 1996
Employee Stock Option Plan. A maximum of 15 million options may be awarded,
which number shall include those shares that are available for grants under the
prior plan. Stock options, restricted stock and other stock based compensation
awards may be made under the plan. Stock options may be granted alone or in
addition to other awards granted under the plan and may be of two types:
Incentive Stock Options and Nonqualified Stock Options. The options awarded
under this plan continue to be subject to a 20% incremental vesting schedule
over a five-year period commencing from the date of grant. At the discretion of
the Compensation Committee of the Board of Directors, the options may vest
immediately, or in a time period shorter than five years. 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. In the event the optionee of an
incentive stock option owns, at the time such stock option is awarded or
granted, more than ten percent (10%) of the voting power of all classes of stock
of CBIZ, the option price shall not be less than 110% of such fair market value.

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):

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

(a) Options were granted at average prices of $3.12, $3.44 and $1.54 in 2003,
2002 and 2001, respectively.

(b) Options were exercised at prices ranging from $1.53 to $3.45 and averaging
$2.47 in 2003. Options were exercised at 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.

(c) Exercise prices for options outstanding at December 31, 2003 range from
$1.08 to $17.75 and average $4.58 with expiration dates ranging from March
2003 to May 2009. 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.

(d) Exercise prices for options exercisable at December 31, 2003, 2002, and 2001
averaged $5.64, $6.67, and $8.50, respectively.

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 2003, 2002 and 2001. Below is
a summary of the assumptions used in the calculation:

13. EARNINGS PER SHARE

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

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

14. SUPPLEMENTAL CASH FLOW DISCLOSURES

During 2003, CBIZ received consideration for divestitures of $0.4 million
in the form of notes receivable, $0.1 million in other receivables and $0.2
million in the form of common stock, in lieu of cash. In addition, CBIZ reduced
$0.5 million of accruals for non-cancelable lease obligations due to changes in
the consolidation and integration plan.

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.

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 $1.4 million, $0.8 million and $1.5 million
for the years ended 2003, 2002 and 2001, 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, L.L.P. (Akin, Gump.) Akin, Gump performed legal work for CBIZ
during 2003, 2002 and 2001 for which the firm received approximately $180,000,
$119,000, and $69,000 from CBIZ, respectively.

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. The notes to CBIZ and Mr.
O'Byrne were paid in 2003, and no indebtedness remains at December 31, 2003. 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 maintains joint-referral relationships and service agreements with
licensed CPA firms under which CBIZ provides administrative services (including
office, bookkeeping, accounting, and other administrative
F-23

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

services, preparing marketing and promotion materials, and leasing of
administrative and professional staff) in exchange for a fee. A number of CBIZ
employees own interests in the independent companies maintaining administrative
services agreements with CBIZ. The CPA firms with which CBIZ maintains service
agreements operate as limited liability corporations, limited liability
partnerships or professional corporations. The firms are separate legal entities
with separate governing bodies and officers. Neither the existence of the ASAs
nor the providing of services thereunder is intended to constitute control of
the CPA firms by CBIZ. CBIZ and the CPA firms maintain their own respective
liability and risk of loss in connection with performance of its respective
services. Although the service agreements do not constitute control, CBIZ is one
of the beneficiaries of the agreements and may bear certain economic risks. As
such, the CPA firms with which CBIZ maintains administrative service agreements
may qualify as variable interest entities under FASB Interpretation No. 46 (FIN
46), "Consolidation of Variable Interest Entities". The impact to CBIZ of this
accounting pronouncement is discussed in the "New Accounting Pronouncements"
section of the accompanying Management's Discussion and Analysis of Financial
Condition and Results of Operations. See a more detailed discussion of this
arrangement in Part I of the accompanying Annual Report.

During 2003, CBIZ guaranteed two letters of credit for a CPA firm with
which CBIZ maintains an administrative services agreement. The letters of credit
total $654,000.

In 2002, CBIZ executed a note receivable with a CPA firm whose partner
group has since joined MHM, PC, a CPA firm with which CBIZ maintains an
administrative services agreement. The balance on the note at December 31, 2003
and 2002 was approximately $222,000 and $263,000, respectively. The note does
not have a stated maturity date.

CBIZ divested several operations during 2003, 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

During the year ended December 31, 2003, CBIZ completed the acquisition of
benefits and insurance firms in Boca Raton, Florida and Salt Lake City, Utah, as
well as accounting, tax & advisory firms in Orange County, California and
Stamford, Connecticut. In addition to the acquisitions of these businesses, CBIZ
purchased the client lists of four benefits agencies. The aggregate purchase
price of these acquisitions and client lists was approximately $11.2 million,
comprised of $2.8 million in cash and 177,000 shares of restricted common stock
(estimated stock value of $0.3 million at acquisition) paid at closing, $2.1
million of notes contributed, and up to an additional $6.0 million payable in
cash which is contingent on the businesses meeting certain future revenue
targets. The impact of acquisitions, including contingent consideration earned
during 2003 was an increase to goodwill, client lists and other intangibles
assets of $3.0 million, $4.5 million and $0.2 million, respectively.

During 2002, CBIZ acquired a benefits and insurance firm located in
Calverton, Maryland for an aggregate purchase price of approximately $4.1
million in cash. In 2001, CBIZ acquired an accounting tax and advisory firm for
approximately $0.3 million in cash.

The excess of purchase price over fair value of net assets acquired was
allocated to the purchased client lists, which are being amortized periods not
exceeding ten years, to certain non-compete agreements, which are being
amortized over two years to five years, and to goodwill. The operating results
of these firms have been included in the accompanying consolidated financial
statements since the dates of acquisition.

17. DIVESTITURES

During 2003, CBIZ sold or closed eight business operations consisting of
four ATA operations, two Benefit and Insurance operations and two National
Practice operations. Six of the business operations satisfied the criteria
F-24

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for treatment as discontinued operations, and were classified as such in the
accompanying financial statements (see note 20). The two operations that did not
meet the criteria for treatment as discontinued operations were reported under
gain (loss) on divested operations from continuing operations. These two
operations were sold for an aggregate purchase price of $4.3 million in cash,
and resulted in a pretax gain of $1.8 million. CBIZ also sold four client lists
and related assets within the ATA practice group for an aggregate purchase price
of $1.3 million in cash and $0.1 million in stock, resulting in a pretax gain of
$0.7 million. CBIZ may earn additional proceeds on the sale of a client list,
which are contingent upon future revenue generated by the client list. CBIZ will
record the proceeds as other income when they are earned.

During 2002, CBIZ sold, closed, or committed to sale the divestiture of
sixteen businesses. Five of the operations have been classified as discontinued
operations. The remaining eleven operations were either initiated before CBIZ's
adoption of SFAS No. 144 "Accounting for the Impairment of or the Disposal of
Long-Lived Assets", 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, one Benefit and Insurance operation, and two
National Practice operations for an aggregate price of $7.1 million which
included $4.0 million notes receivable. These divestitures resulted in a pretax
gain of $0.9 million.

During the year ended December 31, 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 cash, $2.4 million notes receivable
and $0.1 million in stock. In addition CBIZ also retained a $6.0 million
contingent note. These divestitures resulted in a pretax loss of $7.1 million.

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations
for fiscal years 2003 and 2002 (in thousands, except per share amounts):

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CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. SEGMENT DISCLOSURES

CBIZ's business units have been aggregated into three practice groups:
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. These practice groups were each
reported as segments until 2001. During 2002, the medical practice management
unit under the National Practices group 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: 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; profitability,
operational and efficiency enhancement consulting to a number of specialized
industries, internal audit services and Sarbanes-Oxley consulting and compliance
services.

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

F-26

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 government
and other third party regulations; local office management; and comprehensive
statistical and operational reporting; financial reporting, accounts payable,
payroll, general ledger processing; design and implementation of managed care
contracts with focus on negotiation strategies, pricing, cost containment and
utilization tracking; review and negotiation of hospital contracts; evaluation
of other strategic business partners; identification and coordination of
practice manager and integration opportunities; and coordination of 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.

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, 2003, 2002, and 2001
was as follows (in thousands):

F-27

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. 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. During 2003, CBIZ adopted formal plans to divest five
additional operations. These business operations are reported as discontinued
operations and the net assets and liabilities and results of operations are
reported separately in the consolidated financial statements.

F-28

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Six operations were actually sold during 2003 or are in the process of
being closed, one of which was available for sale at December 31, 2002.
Aggregate proceeds were $1.6 million cash, $0.4 million of notes receivable,
$0.1 million other receivables and $0.1 million stock. During 2002, four
operations were either sold or closed for an aggregate price of $4.6 million of
cash and $0.2 million of notes receivable. There are no operations available for
sale at December 31, 2003.

Revenue and loss from operations of discontinued businesses for the years
ended December 31 2003, 2002 and 2001 were as follows:

Gain (loss) on disposal of discontinued businesses for the years ended
December 31 2003, 2002 and 2001 were as follows:

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

21. SUBSEQUENT EVENTS (UNAUDITED)

In 2004, CBIZ implemented a nonqualified deferred compensation plan
developed for the benefit of its highly compensated employees. Under the plan,
employees may contribute on a tax-deferred basis, a portion of their
compensation, into a rabbi trust which is separated from the working capital of
the company and protected from a change in management or company control.
Amounts deferred are always 100% vested and are subject to FICA taxes at the
time of the deferral. The plan is exempt from ERISA minimum funding,
participation and vesting requirements. CBIZ does not make contributions to the
plan.

On March 3, 2004, the Board of Directors authorized a share repurchase of
up to 8.5 million shares. On March 4, 2004, CBIZ announced a tender offer to
purchase up to 7.5 million shares of its outstanding common stock at a price of
$5.00 per share, which will expire on April 1, 2004. CBIZ anticipates that it
will obtain all of the funds necessary to purchase shares tendered, and to pay
related fees and expenses, by borrowing under its $73 million secured revolving
credit facility, which was amended on March 3, 2004, to permit CBIZ to borrow up
to an aggregate of $50 million for the repurchase, on or before December 31,
2004, of shares of CBIZ stock.

F-29

CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND
RESERVES FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

F-30