UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K

|                                                           |  |                                                                                          
|---------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|[X]                                                        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the Fiscal Year Ended December 31, 1999               
|                                                          
|[     ]                                                    |  | 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 0-22141

COMPLETE BUSINESS SOLUTIONS, INC.

(Exact name of registrant as specified in its
charter)


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|--------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|Michigan(State or Other Jurisdiction of
	Incorporation or Organization)                                         |  | 38-2606945(IRS Employer Identification No.)
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|32605 West Twelve Mile Road, Suite 250
	Farmington Hills, Michigan 48334(Address of principal executive office) |  | 48334(Zip Code)                            

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

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

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

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.  [   ]

The aggregate market value of
common stock held by non-affiliates of the registrant as of
March 8, 2000 was $699,382,328.

The number of shares outstanding of
 the registrants common stock as of March 8, 2000
was 37,825,995.

Documents Incorporated by Reference

Portions of the Proxy Statement
of the Registrant for its 2000 Annual Meeting of Shareholders to
the extent expressly so stated, are incorporated by reference
into Part III of this Report.



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COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

FORM 10-K

For the Fiscal Year Ended December 31, 1999

INDEX

|           |  |                                                                                        |  |   
|---------- |  | -------------------------------------------------------------------------------------- |  | --
|          
|          
|          
|          
|Part I     |  |                                                                                        |  |   
|          
|          
|          
|          
|Item 1.    |  | Business                                                                               |  | 1 
|          
|          
|          
|          
|Item 2.    |  | Properties                                                                             |  | 7 
|          
|          
|          
|          
|Item 3.    |  | Legal Proceedings                                                                      |  | 7 
|          
|          
|          
|          
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                    |  | 7 
|          
|          
|          
|          
|Part II    |  |                                                                                        |  |   
|          
|          
|          
|          
|Item 5.    |  | Market for the Registrants Common Equity and Related
	Stockholder Matters             |  | 8 
|          
|          
|          
|          
|Item 6.    |  | Selected Financial Data                                                                |  | 9 
|          
|          
|          
|          
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |  | 11
|          
|          
|          
|          
|Item 8.    |  | Financial Statements and Supplementary Data                                            |  | 19
|          
|          
|          
|          
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure  |  | 39
|          
|          
|          
|          
|Part III   |  |                                                                                        |  |   
|          
|          
|          
|          
|Item 10.   |  | Directors and Executive Officers of the Company                                        |  | 40
|          
|          
|          
|          
|Item 11.   |  | Executive Compensation                                                                 |  | 40
|          
|          
|          
|          
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management                         |  | 40
|          
|          
|          
|          
|Item 13.   |  | Certain Relationships and Related Transactions                                         |  | 40
|          
|          
|          
|          
|Part IV    |  |                                                                                        |  |   
|          
|          
|          
|          
|Item 14.   |  | Exhibits, Financial Statement Schedules and Reports on Form 
	 8-K                     |  | 41
|          
|          
|          
|          
|Signatures |  | 42                                                                                    





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PART I

Item 1.  Business

Summary

Complete Business Solutions, Inc. is a leading provider of
information technology services offering clients flexible
delivery capabilities through a focused partnership sourcing
approach. We offer clients a broad range of IT services, from
advising them on IT business strategy and strategic technology
plans to developing and implementing appropriate IT applications
solutions. We are a single source provider of a broad range of IT
 services, including: (1) emerging technologies; (2) IT
 consulting; (3) large systems applications development and
maintenance; (4) reengineering legacy applications to
client/server technology; (5) client/server applications
development; (6) packaged software implementation, such as ERP;
and (7) contract programming services. In 1999, we
successfully transitioned our Y2K business to other service
offerings including emerging technologies.

We apply industry-specific IT consulting services to a wide range
 of leading technology platforms and perform these services in a
variety of emerging computing environments. Our emerging
technology service offerings include: (1) electronic
commerce solutions; (2) data warehousing solutions; and
(3) network services to support enterprise-wide applications
 such as sales force automation and Internet/intranet
development. We have established a growing capability to deliver
B to B and B to C solutions. We believe that our broad and
expanding range of services minimizes our dependence on any
single technology, enables us to serve as a single-source
provider for our clients IT applications needs and provides
 us with the ability to cross-sell our services to existing
clients.

We offer flexible, cost-effective project delivery capabilities
by providing our clients a choice among any combination of the
following options: (1) onsite at the client facility;
(2) offsite at one of our eight development facilities in
the U.S. and Canada; or (3) offshore at one of our three
development facilities in India and the Philippines. We have been
 developing our extensive offshore infrastructure since 1992 and
believe that it is one of the largest and best in the industry.
Our ability to deliver services globally is enhanced by our local
 branch management and recruiting infrastructure, consisting of a
 geographically dispersed network of 31 branch offices and
165 sales and account managers. Our local branch infrastructure
allows us to demonstrate our commitment to each market and
enhances our ability to attract locally based clients and
consultants.

Our flexible delivery capabilities enable our clients to
determine their degree of project involvement and to control the
costs and speed of project delivery, consistent with our
team-focused partnership sourcing approach. Under this approach,
we seek to establish long-term relationships with our clients by
serving as a virtual extension of their organizations. Proven,
innovative methodologies combined with highly competent IT
professionals enable us to deliver flexible, team-oriented
solutions to meet our clients expectations.

Our goal is to become the preferred, single-source provider of IT
 services to an expanding base of clients by establishing teams
that quickly and cost effectively provide strong
industry-specific IT applications solutions. To achieve this
goal, our strategy is to:



| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Support each service offering with our program management team to
	 create new opportunities and leverage existing relationships;                                   
|
| |  | Capitalize on the marketing and development efforts of vertically
	 focused industry solutions groups;                                                              
|
| |  | Expand the breadth and depth of our technical capabilities
	through a continued evaluation of emerging technologies and
	development of industry solutions;         
|
| |  | Expand our branch infrastructure, both domestically and
	internationally, and capitalize on our significant investment in
	offsite and offshore development centers;
|
| |  | Create virtual partnerships with our clients to provide them with
	 a broad range of IT solutions and create cross-selling
	opportunities; and                      
|
| |  | Seek mergers and acquisitions that complement our core skills or
	expand our geographic reach and have the potential to increase
	our overall value.                

1



---



The CBSI Advantage

The CBSI advantage enables our clients to use IT as a more
effective business tool consistent with their evolving business
needs. The key attributes of the CBSI advantage are that we:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Offer clients a single-source provider of a broad range of IT
	services, from advising them on IT business strategy and
	strategic technology plans to developing and implementing
	appropriate IT applications solutions. This range includes
	emerging technology services such as data warehousing solutions,
	electronic commerce solutions and network services.                                                                                               
|
| |  | Assure clients of the highest quality software services by
	 achieving a Level 5 quality rating at our offshore
	development centers in India. CBSI is one of a very few companies
	 worldwide to achieve this designation as set by the Software
	Engineering Institutes Capability Maturity Model. Our
	proven software engineering and management processes are
	extremely efficient in managing project costs and delivery for
	customers.                     
|
| |  | Provide flexible project deliveryby offering our clients
	any combination of the following options: (1) onsite at the
	client facility; (2) offsite at one of our eight development
	 facilities in the U.S. and Canada; or (3) offshore at one
	of our three development facilities in India and the Philippines.
	 This flexibility enables our clients to determine their degree
	of project involvement and to control the costs and speed of
	project delivery.
|
| |  | Offer a local presenceby delivering our services to
	clients through a geographically dispersed network of 31 branch
	offices and 165 sales and account managers. Our local presence
	allows us to demonstrate our commitment to each local market and
	enhances our ability to attract locally based clients and
	consultants.                                                                                                                                     
|
| |  | Recruit and train our consultants globallythrough our
	established domestic and international network. Consultants
	receive up to two months of training in software engineering
	techniques and key technologies at one of our five U.S. training
	centers or one of our two overseas training centers in India.
	These centers are equipped with a variety of hardware, software
	and development tools.                                                          

CBSI Growth Strategy

Our goal is to become the preferred single-source provider of IT
services to an expanding base of clients by establishing teams
that quickly and cost effectively provide industry-based IT
applications solutions. To achieve this goal, our strategy is to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Support each service offering with a program management teamto create new opportunities and develop existing accounts. We
	 have 50 sales people in our branch offices developing new
	accounts and 115 account managers maintaining and expanding
	existing client relationships by cross selling our broad range of
	 service offerings. These long-term relationships provide us with
	 a significant advantage over our competitors in marketing
	additional services and solutions to our clients.            
|
| |  | Capitalize on vertically focused industry solutions groups. These groups develop solutions based on in-depth knowledge
	of particular industries and a detailed understanding of the
	clients business. They sell and market a broad range of ERP
	 and other solutions to existing clients and also obtain new
	clients within our targeted industries. Targeted industries
	include banking and financial services, health care, public
	sector, retail and distribution, and utilities and
	telecommunications.
|
| |  | Expand the breadth and depth of our technical capabilitiesthrough training existing personnel, recruiting experienced
	talent and acquiring or merging with complementary businesses.
	Our continued evaluation of emerging technologies enables us to
	add new service offerings and minimizes our dependence on any
	single technology.                                                                                                                                                                          
|
| |  | Expand our branch infrastructure, both domestically and
	internationally, and capitalize on our significant investment in
	offsite and offshore development centers, as well as our systems,                                                                                                                                                                                                                                                                                                                       

2



---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | methodologies, training programs and marketing efforts. We
	believe that our existing development centers can be further
	leveraged to support a significantly larger number of
	consultants.                                                                                                                                                                                                                                                                                                    
|
| |  | Create virtual partnerships with our clientsto provide
	them with IT solutions so that we become an extension of their
	organization. This partnership sourcing model uses a team
	approach that makes the client an integral team member. We
	consider the impact of each project on the entire application to
	build a broader solution over time. We quickly assemble capable
	teams and use the strategic insights of the client to produce
	flexible, supportable business and IT solutions.
|
| |  | Seek mergers, acquisitions and investments in technology
	alliances or start-up companies that complement our core skills
	or expand our geographic reach and have the potential to
	increase our overall value, rather than merely increase our
	revenues. We believe that our branch management organization
	allows us to efficiently integrate acquisitions.                                                                                                                                 

3



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CBSI Services

We offer our clients a broad range of IT services, from
advising clients on strategic technology plans to developing and
implementing appropriate IT solutions. We provide services in the
 following categories:

|                                                               |  |                                                                                                                      
|-------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------
|                                                              
|                                                              
|CBSI SERVICES                                                  |  | DESCRIPTION                                                                                                          
|                                                              
|                                                              
|Electronic Commerce Solutions*                                 |  |  Develop business-to-business and business-to-consumer
	 applications                                               
|                                                               |  |  Couple web-enabled front-end systems across a network
	 to back-end database systems                               
|                                                              
|Data Warehousing Solutions*                                    |  |  Design enterprise-wide repositories and update
	mechanisms for data culled from operational systems                
|                                                               |  |  Design, build and implement datamarts that employ
	portions of the data warehouses for specific applications       
|                                                              
|Network Services*                                              |  |  Provide assessments of existing network stability and
	 capacity                                                   
|                                                               |  |  Provide network design services to support new
	enterprise-wide applications                                       
|                                                               |  |  Conceptualize and design Internet/intranet solutions                                                               
|                                                              
|IT Consulting                                                  |  |  IT business strategy and strategic technology
	planning                                                            
|                                                               |  |  Provide technical architecture and network design and
	 business process reengineering consulting services         
|                                                              
|Large Systems Applications Development and Maintenance         |  |  Design, develop and maintain large-scale, complex
	solutions capable of managing transaction-intensive applications
|                                                              
|Reengineering Legacy Applications to Client/ Server Technology |  |  Reengineer from centralized, mainframe-based systems
	to open, distributed architectures                           
|                                                              
|Client/ Server Applications Development                        |  |  Conceptualize and design systems based on distributed
	 object-oriented technologies and methodologies             
|                                                              
|Packaged Software Implementation                               |  |  Implement packaged software solutions, including ERP                                                               
|                                                               |  |  Customize software packages to client specifications                                                               
|                                                              
|Contract Programming                                           |  |  Develop, maintain and enhance client/server and
	mainframe software applications                                   
|                                                               |  |  Reengineer software applications across platforms                                                                  
|                                                              

* Part of our emerging technologies service offering.

4



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Industry Solutions

We have designed and developed proprietary software to solve
industry-specific problems for our clients. These include
APECS/Discovery, Clarety and Business Solutions Framework.

APECS enables K-12 school districts and higher education
institutions to manage their business and student records. Our
APECS Product has been reengineered to a client/ server platform
and renamed Discovery. We market the Student Administration
module of Discovery jointly with PeopleSofts finance and
HR/ payroll applications.

Clarety is a set of reusable software modules for the public
employee retirement systems (PERS) industry. We are currently
implementing Clarety software for California PERS, Mississippi
PERS, Nevada PERS and the Ohio State Teachers Retirement System.

The Business Solutions Framework consists of infrastructure
software used as a foundation for our e-commerce solutions
practice. This Business Solutions Framework allows us to build
e-commerce solutions more efficiently for our clients and is
written in JAVA.

Clients

Approximately 70% of our clients are middle market companies with
 annual revenues between $500 million and $4 billion,
and state governments. Using our partnership sourcing approach,
we are quickly becoming an important supplier to these middle
market clients. We have also started to serve emerging companies
with revenues from $50 million to $500 million. These
emerging companies require the expertise CBSI can provide and
have limited alternative sources, either internal or external, to
 meet their IT needs.

In 1999 we provided services to over 600 clients in the United
States, Europe and Asia. Our strategy is to maximize our client
retention rate and to secure additional engagements by providing
quality services and by being responsive to client needs. For
each of the past five years, existing clients from the previous
fiscal year generated more than 80% of our revenues.

Certain of our representative clients in various industries are
listed in the following table:

Banking and Financial Services

Bank One Services Corporation















Health Care

Anthem Blue Cross Blue Shield of Connecticut







Manufacturing

DaimlerChrysler AG









Public Sector


State of California















Retail and Distribution

Fred Meyer, Inc.







Utilities and Telecommunications

Ameritech Corporation













5



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Sales and Marketing

We generate the majority of new sales through our branch
management structure. Our branches focus on all clients within a
geographic area. The manager of each branch office is responsible
 for managing client relationships, ensuring the delivery team is
 performing as expected and identifying new business
opportunities, and is compensated primarily on the financial
performance of the branch. This structure fosters an
entrepreneurial atmosphere within each branch and results in a
significant number of client referrals and opportunities to
cross-sell our services.

In many cases, we use a consultant from one of our industry
solutions groups, an expert in the IT needs of the specific
industry, to enhance the initial planning and development phase
of a project. They are also able to share common solutions for an
 industry with a specific client prospect. Our ability to provide
 industry-specific solutions enables our clients to take
advantage of our vertically focused business and IT knowledge.

Our partnership sourcing approach facilitates the sale of
services to clients by making us an extension of their
organization and making the client a member of our service
delivery team. When clients view us as part of their team, they
often decide to source their additional IT services needs through
 us with little sales effort on our part.

Cross-selling our industry solutions and other services to
existing clients has proven to be a successful way to expand our
business and accounts for much of the extensive recurring revenue
 volume we have enjoyed over the years. Our acquisitions have
expanded our range of industry solutions and services, enabling
us to be even more successful in this activity.

In addition to our sales group, we have a dedicated marketing
department which is responsible for coordination of all corporate
 communications, including the scheduling of press conferences to
 promote our services and delivery methodologies. In addition,
the marketing group provides information to industry analysts
including the Gartner, Giga and Meta Groups and Forrester.

Human Resources

Our success depends in large part on our ability to attract,
develop, motivate and retain highly skilled IT professionals. Our
 strategy for achieving career-based employment
includes career planning, thorough initial and ongoing training,
allocation of assignments in accordance with employee skills and
career objectives and a comprehensive benefits package including
a Company-matched 401(k) plan, stock purchase plan, health,
dental and vision insurance, preventive medical short-term
disability insurance, a flexible spending account and tuition
reimbursement. We also will continue to grant stock options as
part of our recruitment and retention strategy. As part of our
effort for minimizing turnover we emphasize:



| |   |                            
| | - | ---------------------------
| |  | Human resource management; 
|
| |  | Competitive salaries;      
|
| |  | Comprehensive benefits;    
|
| |  | Employee stock options; and
|
| |  | Deferred compensation      

Our branch offices use intensive programs to recruit consultants
throughout the United States, screen them through a variety of
interview and testing processes and select them for future
assignments on our project teams. In addition, our recruiting
activities seek to draw on an international pool of IT talent. We
 actively recruit in India, England, Australia, New Zealand, the
Philippines, Mexico and Singapore. Recruiting methods include
advertising in leading newspapers and trade magazines, using the
Internet and participation in career fairs. In addition, we
actively involve our employees in referring individuals and
screening candidates for new positions.

Our consultants typically have Bachelors or Masters
degrees in Computer Science or another technical discipline. As
of December 31, 1999, we had 4,947 employees comprised of
4,322 IT professionals, 179 sales

6



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We have five employee training centers located in the United
States and two in India. These training centers employ full-time
instructors and are equipped with hardware, software and
development tools. New college graduates receive two months of
full-time classroom instruction in program analysis and design.
Along with technical training, we provide business skills to
enhance team building, diversity awareness and key consulting
skills such as presentations and communications training. We also
 provide training to prepare for specific future technical
assignments followed by one month of self-study.

Between projects and after business hours, all IT professionals
receive ongoing training on a variety of technology platforms.
Our education and training department helps employees make the
transition from legacy and client/server skills to e-commerce
skills by providing cross-platform training in new technologies.
In addition to comprehensive technical training, we provide
extensive training in quality processes and cross-cultural
communications skills. In addition, we offer training courses to
non-employees for a fee and may hire graduates of these training
programs.

We provide over 200 courses on our computer-based training
system, which is available 24 hours a day, 7 days a week. In
 addition to technical skills in a variety of programming
languages, we offer courses in business and administration
skills.

Item 2.  Properties

We lease approximately 70,000 square feet of office space in
Farmington Hills, Michigan for our headquarters office. In
addition to our headquarters, we lease office space throughout
the world. Currently, our facilities are adequate for our needs,
however, additional space may be required as our business
expands. We believe we will be able to obtain suitable space as
needed.

We have principal offices in the following locations:

|                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                 |  |                                                                                                                                                                                 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                
|North America                                                                                                                                                                                                                                 |  | International                                                                                                                                                                                                                  
|Atlanta, GA
	Basking Ridge, NJ
	Boston, MA
	Charlotte, NC
	Chicago, IL
	Cincinnati, OH
	Cleveland, OH
	Columbus, OH
	Dallas, TX
	Denver, CO
	Farmington Hills, MI
	Grand Rapids, MI
	Hartford, CT
	Houston, TX
	Indianapolis, IN
	Lansing, MI |  | Los Angeles, CA
	Louisville, KY
	Milpitas, CA
	Milwaukee, WI
	Minneapolis, MN
	Montreal, Canada
	Nashua, NH
	Phoenix, AZ
	Pittsburgh, PA
	Portland, OR
	Providence, RI
	Sacramento, CA
	Seattle, WA
	Springfield, MA
	Tampa, FL |  | Bangalore, India
	Brussels, Belgium
	Chennai, India
	Hyderabad, India
	London, United Kingdom
	Manila, Philippines
	Mumbai, India
	Munich, Germany
	Singapore
	Sydney, Australia

Item 3.  Legal Proceedings

In April 1999, CBSI signed a Mutual Settlement and Release
Agreement (the Agreement) with Network Six, Inc.
(NSI) to settle all claims relating to the litigation
 between CBSI and NSI in the Superior Court for the State of
Rhode Island and the Circuit Court for the State of Hawaii
arising from a software development project for the State of
Hawaii. The settlement did not have a material effect on
CBSIs financial condition, results of operations or cash
flows.

Item 4.  Submission of Matters to a Vote of Security
Holders

No matters were submitted to a vote of CBSIs security
holders during the fourth quarter of the year ended
December 31, 1999.

7



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PART II

Item 5.  Market for the Registrants Common Equity
and Related Stockholder Matters

Our common stock is traded on the Nasdaq National Market under
the symbol CBSI. The following table sets forth, for the periods
indicated, the range of high and low bid prices for our common
stock as reported on the Nasdaq National Market.

|                              |                |                |   |     |       |  |   |    |     
|----------------------------- | -------------- | -------------- | - | --- | ----- |  | - | -- | ----
|                              |                |               
|                              |                | Price Range of
|                              |                | Common Stock  
|                              |                |               
|                              |                | High           |   | Low
|                             
|                             
|                             
|                             
|Year Ended December 31, 1998: |                |                |   |     |       |  |   |   
|                             
|                             
|                             
|                             
|                              | First Quarter  |                | $ | 35  | 7/8   |  | $ | 19 | 3/8 
|                             
|                             
|                             
|                             
|                              | Second Quarter |                | $ | 41  | 15/16 |  | $ | 23 | 1/2 
|                             
|                             
|                             
|                             
|                              | Third Quarter  |                | $ | 37  | 3/8   |  | $ | 15 | 1/8 
|                             
|                             
|                             
|                             
|                              | Fourth Quarter |                | $ | 33  | 3/4   |  | $ | 15 | 3/8 
|                             
|                             
|                             
|                             
|Year Ended December 31, 1999: |                |                |   |     |       |  |   |   
|                             
|                             
|                             
|                             
|                              | First Quarter  |                | $ | 34  | 3/4   |  | $ | 15 | 7/8 
|                             
|                             
|                             
|                             
|                              | Second Quarter |                | $ | 27  |       |  | $ | 14 | 7/16
|                             
|                             
|                             
|                             
|                              | Third Quarter  |                | $ | 21  | 1/16  |  | $ | 13 | 1/8 
|                             
|                             
|                             
|                             
|                              | Fourth Quarter |                | $ | 27  | 5/8   |  | $ | 13 | 3/8 

As of March 8, 2000, there were approximately 816
shareholders of record of CBSIs common stock.

Since our initial public offering in March 1997, we have not
 paid cash dividends on our common stock. We currently anticipate
 that all of our earnings will be retained for the continued
development of our business and we do not anticipate paying any
cash dividends in the foreseeable future.

8



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Item 6.  Selected Financial Data

The selected financial data presented below for the five years
ended December 31, 1999, are derived from CBSIs
Consolidated Financial Statements and related Notes thereto. The
selected financial data should be read in conjunction with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated
Financial Statements and related Notes thereto included in
Item 8 of this Form 10-K.

On April 20, 1999, CBSI acquired E-Business Solutions.com,
Inc. (EBS), formerly Impact Innovations Group, Inc.
This acquisition was accounted for by the purchase method of
accounting and accordingly, the operating results of EBS have
been included in the consolidated financial statements since the
date of acquisition.

On January 27, 1998 and July 24, 1998, CBSI merged with
 c.w. Costello & Associates, inc. (Costello)
 and Claremont Technology Group, Inc. (Claremont),
respectively. These mergers were accounted for by the pooling of
interests method of accounting and accordingly, the consolidated
balance sheets, statements of income, cash flows and
shareholders equity and all financial information of CBSI
included in this Form 10-K have been retroactively restated.

CBSI and Costello had fiscal years ending December 31 and
Claremont had a fiscal year ending June 30. The statement of
 income data presented below for the three years ended
December 31, 1997, combine CBSIs and Costellos
results for the years ended December 31, 1997, 1996 and
1995, with Claremonts results for the years ended
June 30, 1997, 1996 and 1995, respectively. The statement of
 income data for the year ended December 31, 1998, combine
all three companies results for the year ended
December 31, 1998. The balance sheet data as of
December 31, 1997, 1996 and 1995 combine CBSIs and
Costellos balance sheets as of December 31, 1997, 1996
 and 1995, with Claremonts balance sheet as of
June 30, 1997, 1996 and 1995, respectively. The balance
sheet data as of December 31, 1998, combine all three
companies balance sheets as of that date.

|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |         |  
|------------------------------------------- | -------------------------------------------------------------- | ------------------------------------- | ------ | ------- |  | ---- | ------ | ------- |  | ---- | ------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                            |                                                                |                                      
|                                            |                                                                | Years Ended December 31,             
|                                            |                                                                |                                      
|                                            |                                                                | 1995                                  |        | 1996    |  | 1997 |        | 1998    |  | 1999
|                                            |                                                                |                                      
|                                            |                                                                | (In thousands, except per share data)
|                                           
|                                           
|                                           
|                                           
|Statement of Income Data:                   |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                           
|                                           
|                                           
|                                           
|                                            | Revenues                                                       |                                       | $      | 125,378 |  |      | $      | 182,632 |  |      | $      | 261,282 |   |  | $ | 376,567 |   |  | $ | 462,070 |  
|                                           
|                                           
|                                           
|                                           
|                                            | Cost of revenues                                               |                                       |        | 88,110  |  |      |        | 126,247 |  |      |        | 178,780 |   |  |   | 249,099 |   |  |   | 312,678 |  
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                            | Gross profit                                                   |                                       |        | 37,268  |  |      |        | 56,385  |  |      |        | 82,502  |   |  |   | 127,468 |   |  |   | 149,392 |  
|                                           
|                                           
|                                           
|                                           
|                                            | Selling, general and administrative expenses                   |                                       |        | 29,729  |  |      |        | 43,569  |  |      |        | 64,618  |   |  |   | 85,468  |   |  |   | 101,692 |  
|                                           
|                                           
|                                           
|                                           
|                                            | Merger costs and other(a)                                      |                                       |        |        |  |      |        | 111     |  |      |        | 1,559   |   |  |   | 28,250  |   |  |   | 5,367   |  
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                            | Income from operations                                         |                                       |        | 7,539   |  |      |        | 12,705  |  |      |        | 16,325  |   |  |   | 13,750  |   |  |   | 42,333  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other expense (income)                                         |                                       |        | 672     |  |      |        | 934     |  |      |        | (842    | ) |  |   | (2,927  | ) |  |   | (3,737  | )
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                            | Income before provision for income taxes and minority interest |                                       |        | 6,867   |  |      |        | 11,771  |  |      |        | 17,167  |   |  |   | 16,677  |   |  |   | 46,070  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Provision for income taxes                                     |                                       |        | 1,490   |  |      |        | 2,444   |  |      |        | 7,278   |   |  |   | 9,986   |   |  |   | 16,273  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Minority interest                                              |                                       |        | 252     |  |      |        | 158     |  |      |        | 82      |   |  |   |        |   |  |   |        |  
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                            | Net income                                                     |                                       | $      | 5,125   |  |      | $      | 9,169   |  |      | $      | 9,807   |   |  | $ | 6,691   |   |  | $ | 29,797  |  
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                           
|                                           
|                                           
|                                           
|Pro forma incremental income tax benefit(b) |                                                                | $                                     | (764   | )       |  | $    | (1,417 | )       |  | $    |       |        
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                           
|                                           
|                                           
|                                           
|Pro forma net income                        |                                                                | $                                     | 10,571 |         |  | $    | 8,108  |         |  | $    | 29,797 |        
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                           
|                                           
|                                           
|                                           
|Pro forma diluted earnings per share        |                                                                | $                                     | 0.33   |         |  | $    | 0.22   |         |  | $    | 0.78   |        
|                                            |                                                                |                                       |        |         |  |      |        |         |  |      |        |         |   |  |   |         |   |  |   |        
|                                           
|                                           
|                                           
|                                           
|Diluted weighted average shares outstanding |                                                                |                                       | 32,029 |         |  |      | 36,211 |         |  |      | 38,212 |        

9



---



|                    |                                              |                    |   |        |  |      |   |        |  |      |   |         |  |  |   |         |  |  |   |         | 
|------------------- | -------------------------------------------- | ------------------ | - | ------ |  | ---- | - | ------ |  | ---- | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                    |                                              |                   
|                    |                                              | As of December 31,
|                    |                                              |                   
|                    |                                              | 1995               |   | 1996   |  | 1997 |   | 1998   |  | 1999
|                    |                                              |                   
|                    |                                              | (In thousands)    
|                   
|                   
|                   
|                   
|Balance Sheet Data: |                                              |                    |   |        |  |      |   |        |  |      |   |         |  |  |   |         |  |  |   |        
|                   
|                   
|                   
|                   
|                    | Cash and cash equivalents                    |                    | $ | 1,603  |  |      | $ | 4,463  |  |      | $ | 72,698  |  |  | $ | 60,732  |  |  | $ | 90,551  | 
|                   
|                   
|                   
|                   
|                    | Working capital                              |                    |   | 12,690 |  |      |   | 17,906 |  |      |   | 101,106 |  |  |   | 108,857 |  |  |   | 172,293 | 
|                   
|                   
|                   
|                   
|                    | Total assets                                 |                    |   | 40,895 |  |      |   | 68,281 |  |      |   | 168,240 |  |  |   | 191,045 |  |  |   | 277,821 | 
|                   
|                   
|                   
|                   
|                    | Revolving credit facility and long-term debt |                    |   | 8,770  |  |      |   | 17,348 |  |      |   | 4,958   |  |  |   |        |  |  |   |        | 
|                   
|                   
|                   
|                   
|                    | Total shareholders equity                   |                    |   | 17,738 |  |      |   | 28,724 |  |      |   | 125,326 |  |  |   | 141,155 |  |  |   | 236,417 | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Fiscal year 1999 consists of approximately $5.4 million of
	certain non-capitalizable merger and other costs, including lease
	 termination and severance, related to the acquisition of EBS.
	Fiscal year 1998 consists of approximately $12.7 million in
	transaction costs related to the mergers with Costello and
	Claremont and approximately $15.6 million related primarily
	to the write-down of certain assets which Claremont determined,
	prior to June 30, 1998, were no longer realizable. Fiscal
	year 1997 consists of approximately $1.6 million in transaction
	costs related to the merger with Synergy Software, Inc.



|    |                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The pro forma adjustments for the incremental income tax benefit
	reflects the additional benefit for Federal and state income
	taxes at the effective income tax rate as if the applicable
	merged companies Subchapter S elections had been
	revoked prior to January 1, 1998, and the merged companies
	had been taxed as C corporations.

10



---



Item 7.  Managements Discussion and Analysis of
Financial Condition and Results of Operations

The following section should be read in conjunction with our
Consolidated Financial Statements and related Notes appearing in
Item 8 of this Form 10-K. With the exception of
statements regarding historical matters and statements concerning
 our current status, certain matters discussed in this
Managements Discussion and Analysis of Financial
Condition and Results of Operations are forward-looking
statements that involve substantial risks and uncertainties. Such
 forward-looking statements may be identified by the words
anticipate, believe,
estimate, expect or intend
and similar expressions. Our actual results, performance or
achievements could differ materially from these forward-looking
statements. Factors that could cause or contribute to such
material differences include our failure to recruit and retain
IT professionals, risks related to our merger, acquisition
and strategic investment strategy, variability of our quarterly
operating results, government regulation of immigration,
potential cost overruns on fixed-price projects, increasing
significance of non-U.S. operations, exposure to regulatory,
political and economic conditions in India, competition in the IT
 services industry, short-term and termination provisions of
contracts, failure to properly manage growth, possible write-off
of computer software development costs, limited protection of
intellectual property rights, and potential liability to clients,
 each of which are discussed herein under the caption
Factors that may Affect Future Results.

Overview

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

CBSI offers its clients a broad range of IT services, from
advising them on IT business strategy and strategic technology
plans to developing and implementing appropriate IT applications
solutions through its partnership sourcing approach.

CBSIs service offerings include: (1) emerging
technologies; (2) IT consulting; (3) large systems
applications development and maintenance; (4) reengineering
legacy applications to client/server technology;
(5) client/server applications development;
(6) packaged software implementation; and (7) contract
programming services. CBSIs emerging technology service
offerings include: (1) electronic commerce solutions
including, B to B and B to C; (2) data warehousing
solutions; and (3) network services to support
enterprise-wide applications such as sales force automation and
Internet/intranet development. In 1999, we successfully
transitioned our Y2K business to other service offerings
including emerging technologies.

CBSI generally assumes responsibility for project management and
may bill the client on either a time-and-materials or fixed-price
 basis, although such projects are generally billed on a
time-and-materials basis. Contract programming services are
typically provided as a member of a project team working under
the direct supervision of the client, billed on a
time-and-materials basis, and have lower gross profit margins
than other service offerings. CBSI continues to shift its
business away from contract programming services toward higher
margin service offerings.

CBSI recognizes revenues on time-and-materials engagements as the
 services are performed. On fixed-price engagements, CBSI
recognizes revenues under the percentage of completion method.
For the year ended December 31, 1999 approximately 18% of
total revenues were generated from fixed-price engagements.

CBSIs most significant cost is project personnel cost,
which consists primarily of salaries, wages and benefits for its
IT professionals. CBSI strives to maintain its gross profit
margin by controlling project costs and offsetting increases in
salaries and benefits with increases in billing rates. CBSI uses
a human resource allocation team to ensure that IT professionals
are quickly placed on assignments to minimize nonbillable time
and are placed on assignments that use their technical skills and
 allow for maximum billing rates. CBSI has realized higher gross
profit margins from its shift away from contract programming
services and from its shift to offshore projects in India, where
the personnel cost of IT professionals is lower as a percentage
of

11



---





In an effort to sustain its growth and profitability, CBSI has
made and continues to make substantial investments in its
infrastructure, including: (1) software development centers
in the United States, Canada, India, and the Philippines;
(2) global recruiting and training centers in the United
States and India; (3) system methodologies; (4) a
geographically dispersed branch management structure; and
(5) internal systems.

Results of Operations

The following table sets forth, for the periods indicated,
selected statement of income data as a percentage of revenues:

|                                             |  |              |       |      |  |      |       |   |  |  |       |  
|-------------------------------------------- |  | ------------ | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                             |  |             
|                                             |  | Years Ended 
|                                             |  | December 31,
|                                             |  |             
|                                             |  | 1997         |       | 1998 |  | 1999
|                                            
|                                            
|                                            
|                                            
|Revenues                                     |  |              | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                            
|                                            
|                                            
|                                            
|Cost of revenues                             |  |              | 68.4  |      |  |      | 66.1  |   |  |  | 67.7  |  
|                                             |  |              |       |      |  |      |       |   |  |  |       |  
|Gross profit                                 |  |              | 31.6  |      |  |      | 33.9  |   |  |  | 32.3  |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |  |              | 24.8  |      |  |      | 22.7  |   |  |  | 22.0  |  
|                                            
|                                            
|                                            
|                                            
|Merger costs and other                       |  |              | 0.6   |      |  |      | 7.5   |   |  |  | 1.2   |  
|                                             |  |              |       |      |  |      |       |   |  |  |       |  
|Income from operations                       |  |              | 6.2   | %    |  |      | 3.7   | % |  |  | 9.1   | %

1999 Compared to 1998

Revenues.  CBSIs revenues increased 22.7% to
$462.1 million for fiscal 1999 from $376.6 million in fiscal
1998. This growth is primarily attributable to increases in
CBSIs IT professional workforce, increases in average
billing rates, and additional services provided to existing
clients. The completion of Y2K projects and the Y2K-induced
industry slowdown has and will continue to temporarily decrease
our growth rate and margins as we transition our offshore
services to high-margin services, including emerging technology
services. CBSIs IT professional workforce increased 7% for
1999 compared to 1998. For the year ended December 31, 1999,
 approximately 86% of CBSIs revenues were generated from
existing clients.

Gross Profit.  Gross profit consists of revenues less
 cost of revenues. Cost of revenues consists primarily of
salaries (including nonbillable and training time), benefits,
travel and relocation for IT professionals. In addition, cost of
revenues includes depreciation and amortization, direct facility
costs and contractual services. Gross profit increased 17.2% to
$149.4 million in fiscal 1999 from $127.5 million in fiscal 1998.
 This increase is primarily attributable to increases in
CBSIs IT professional workforce and average U.S. billing
rates. Gross profit as a percentage of revenues decreased to
32.3% for fiscal 1999 from 33.9% in fiscal 1998. This decrease in
 gross profit margin as a percentage of revenues is primarily
attributable to a decrease in offshore utilization resulting from
 the continuing transition from Year 2000 related services to
emerging technology services, including e-business services.

Selling, General and Administrative Expenses. 
Selling, general and administrative expenses consist primarily of
 costs associated with CBSIs direct selling and marketing
efforts, human resource and recruiting departments,
administration and indirect facility costs. Selling and
administrative expenses increased 19.0% to $101.7 million in
fiscal 1999 from $85.5 million in fiscal 1998. This increase
resulted from the continued expansion of CBSIs direct
selling and marketing effort, further investments in
infrastructure, and other general overhead cost increases
necessary to support CBSIs continued revenue growth. As a
percentage of revenues, selling, general and administrative
expenses decreased in fiscal 1999 to 22.0% from 22.7% in fiscal
1998 as CBSI continued to leverage its existing infrastructure.

Other Expense (Income).  Other expense (income)
represents interest earned on cash equivalents, net of interest
expense on borrowings. Other expense (income) for fiscal 1999 was
 $3.7 million compared to $2.9

12



---





1998 Compared to 1997

Revenues.  CBSIs revenues increased 44.1% to
$376.6 million for fiscal 1998 from $261.3 million in
fiscal 1997. This growth in revenues is primarily attributable to
 increases in CBSIs IT professional workforce, increases in
 average billing rates, further expansion of CBSIs
international operations and additional services provided to
existing clients. CBSIs IT professional workforce increased
 33% for 1998 compared to 1997. Revenues from international
operations, principally offshore development centers, increased
147% to $45.8 million in fiscal 1998 from $18.6 million in
fiscal 1997.

Gross Profit.  Gross profit increased 54.5% to
$127.5 million in fiscal 1998 from $82.5 million in fiscal
1997. This increase is primarily attributable to increases in
CBSIs IT professional workforce and average U.S. billing
rates, as well as the continued expansion of CBSIs offshore
 development centers. Gross profit as a percentage of revenues
increased to 33.9% for fiscal 1998 from 31.6% in fiscal 1997.
This increase in gross profit margin as a percentage of revenues
is primarily attributable to CBSIs continued strategic
shift of its business toward higher service offerings and the
increasing utilization and expansion of CBSIs offshore
development centers which operate at higher gross profit and
operating margins. For fiscal 1998, 11% of revenues were
generated from contract programming services as compared to 17%
in fiscal 1997.

Selling, General and Administrative Expenses. 
Selling, general and administrative expenses increased 32.3% to
$85.5 million in fiscal 1998 from $64.6 million in fiscal
1997. This increase resulted from the continued expansion of
CBSIs direct selling and marketing effort, further
investments in infrastructure, and other general overhead cost
increases necessary to support CBSIs continued revenue
growth. As a percentage of revenues, selling, general and
administrative expenses decreased to 22.7% in fiscal 1998 from
24.8% in fiscal 1997 as CBSI continued to leverage its existing
infrastructure.

Other Expense (Income).  Other expense (income) for
fiscal 1998 was $2.9 million compared to $.8 million in
 fiscal 1997. This change is primarily due to reduced interest
expense, resulting from the repayment of CBSIs outstanding
debt in 1997, the repayment of Costellos and
Claremonts debt in 1998 and interest earned from the
investment of net proceeds from CBSIs and Claremonts
public offerings of common stock in 1997.

Liquidity and Capital Resources

CBSI generally funds its operations and working capital needs
through internally generated funds, periodically supplemented by
borrowings under CBSIs revolving credit facilities with a
commercial bank. CBSIs cash provided by operating
activities was $11.8 million, $14.4 million and
$12.9 million for the years ended December 31, 1999,
1998 and 1997, respectively.

The principal use of cash for investing activities during the
three years ended December 31, 1999 was for the purchase of
property and equipment, primarily as part of the development and
enhancement of CBSIs offshore software development centers,
 the investment in internally developed computer software, and
business acquisitions.

To facilitate future cash flow needs, CBSI has an arrangement
with a commercial bank, where CBSI may borrow an amount not to
exceed $21.0 million with interest at the banks prime
interest rate, or the LIBOR rate plus 1  1/4%. Borrowings
under this facility are short-term, payable on demand and are
secured by trade accounts receivable and equipment of CBSI.

Net cash provided by financing activities for the years ended
December 31, 1999 and 1997 of $63.2 million and $71.4
million, respectively, was primarily due to CBSI and Claremont
realizing net proceeds of $64.2 million and $88.5 million from
issuances of their common stock in fiscal 1999 and 1997,
respectively, principally in their initial public and follow-on
offerings.

13



---



Significant uses of cash by financing activities were for the
repurchase of CBSI Common Stock and the partial distributions of
previously undistributed S corporation earnings following the
terminations of the companies S corporation status.
During the year ended December 31, 1999, CBSI repurchased
354,000 shares of its Common Stock, for cash, at a total of
$5.2 million. Partial distributions of S corporation
earnings were $1.1 million and $11.1 million for the years
ended December 31, 1998 and 1997, respectively.

The international operations of CBSI, principally the offshore
development centers, accounted for 9.9%, 12.2%, and 7.1% of
CBSIs total revenues for the years ended December 31,
1999, 1998 and 1997, respectively. Most of CBSIs revenues
are billed in U.S. dollars. CBSI recognizes transaction gains and
 losses in the period of occurrence. Foreign currency
fluctuations in 1999, 1998 and 1997 did not have a material
impact on income from operations as currency fluctuations on
revenue denominated in a foreign currency were offset by currency
 fluctuations on expenses denominated in a foreign currency.
There were no material operating trends or effects on liquidity
as a result of fluctuations in the functional currency. CBSI does
 not generally use any types of derivatives to hedge against
foreign currency fluctuations, nor does it speculate in foreign
currency.

Inflation did not have a material impact on CBSIs revenues
or income from operations in fiscal years 1999, 1998 and 1997.

On March 17, 2000, the Company entered into an agreement
with a fund managed by Clayton, Dubilier & Rice, Inc.
(CDR) whereby CDR will purchase, in two transactions, from the
Company 200,000 shares of convertible Preferred Stock for
$200,000 and will be issued warrants to purchase 5,300,000 shares
 of the Companys Common Stock.

The Preferred Stock is convertible at any time subsequent to
issuance at a price of $23 per share, subject to certain
adjustments, and may be redeemed, at CDRs option, if not
converted within ten years of the date of issuance. The warrants
consist of seven-year warrants to purchase 3,500,000 shares at
$25 per share and ten-year warrants to purchase 1,800,000 shares
at $31 per share. All of the warrants become exercisable upon the
 earlier of the third anniversary of the date of issuance or the
Companys stock price exceeding a predetermined price for
twenty consecutive trading days.

The Company also entered into an agreement with CDR whereby CDR
will provide the Company financial and management advisory
services.

CBSI has not experienced any material failures in its primary
technology infrastructure related to the Year 2000 changeover.
CBSI does not expect to incur any material additional expense to
modify its primary technology infrastructure as a result of the
Year 2000 changeover.

Factors That May Affect Future Results

Failure to Recruit, Train and Retain Skilled IT Professionals
Could Increase Costs or Limit Growth

We need to recruit and retain highly trained professionals in
order to deliver our IT services to our clients. Our continued
success depends upon our ability to attract, develop, motivate
and retain highly skilled IT professionals and project managers
with the technical skills and experience necessary to deliver our
 services to our clients. The qualified IT professionals we
require are in high demand worldwide and are likely to remain a
limited resource for the foreseeable future. We cannot be certain
 that we will be able to attract or retain the IT professionals
that we seek.

Failure to Properly Manage Mergers, Acquisitions and Strategic
 Investments Could Adversely Affect Our Business

We have expanded, and plan to continue to expand our operations
through mergers with or acquisitions of additional businesses
that complement our core skills and that have the potential to
increase our overall value. We have also undertaken a strategy to
 identify and make investments in start-up companies that have
the potential to be successful and to complement our current
business. We may not be able to continue to identify and merge
with or acquire businesses with which we are compatible. In
addition, we may not be able to

14



---





Mergers and acquisitions involve a number of special risks,
including:

  Diversion of managements attention;

  Failure to retain key personnel of the acquired
business;

  Assumption of unanticipated legal liabilities and
other problems;

  Difficulties in integrating systems, operations and
cultures;

  Amortization of acquired intangible assets; and

  Potential dilution of earnings per share.

Our reputation is a valuable asset and performance problems and
client dissatisfaction with a firm which we acquire or merge with
 could adversely affect our reputation. In addition, we cannot be
 certain that businesses we acquire or merge with will achieve
anticipated revenues and earnings. Failure to successfully manage
 our merger and acquisition strategy could have a material
adverse effect on our business.

Variability of Quarterly Operating Results

Our revenues and operating results can vary from quarter to
quarter depending on a number of factors, including:

  The timing and number of client projects commenced
and completed during a quarter;

  The number of working days in a quarter;

  Employee hiring, attrition and utilization rates;

  Progress on fixed-price projects during a quarter;

  The consummation of mergers and acquisitions;

  The ability of clients to terminate engagements
without penalty;

  The size and scope of assignments; and

  General economic conditions.

Because a high percentage of our expenses are fixed, such as
personnel and facilities costs, a variation in revenues may cause
 a significant variation in our quarterly operating results and
could result in losses. Also, our costs periodically increase due
 to the hiring of new employees and the making of strategic
investments in infrastructure in anticipation of future
opportunities for revenue growth.

Impact of Government Regulation of Immigration Could Limit
Growth

We recruit IT professionals globally to create a workforce that
can be deployed wherever required by our clients. As a result, we
 must comply with the immigration laws in the countries in which
we operate, particularly the United States. As of
December 31, 1999, approximately 25% of our worldwide
workforce was working under H-1B temporary work permits in the
United States. Government regulation limits the number of new
H-1B permits that may be approved in a fiscal year. If the limit
is reached in any year, we may not be able to recruit enough IT
professionals to meet our personnel requirements. This could
materially affect our business. Congress and administrative
agencies with jurisdiction over immigration matters have
periodically expressed concern over the level of legal and
illegal immigration into the United States. These concerns have
often resulted in proposals aimed at reducing the number of work
permits that may be issued. Any change

15



---





Our Fixed-Price Projects Expose us to Cost Overrun Risks

We undertake certain projects on a fixed-price basis, as
distinguished from billing on a time-and-materials basis. We
realized approximately 18% of our revenues from fixed-price
projects during the year ended December 31, 1999.
Significant cost overruns can occur if we fail to:

  Adequately estimate the resources required to
complete a project;

  Properly determine the scope of an engagement; or

  Complete our contractual obligation in a manner
consistent with the project plan.

The potential for cost overruns may be heightened if we act as a
subcontractor on a fixed-price project, because we have a limited
 ability to control project variables and to negotiate directly
with the ultimate client. We cannot be certain that any of our
existing or future fixed-price projects will be profitable.

Increasing Significance and Risks of Non-U.S. Operations

Our international consulting and offshore software development
operations accounted for approximately 10% of our total revenues
for the year ended December 31, 1999. Our international
operations and international business activities are subject to
the following risks:



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Unexpected changes in regulatory environments;                                                                                                                           
|
| |  | Foreign currency fluctuations;                                                                                                                                           
|
| |  | Tariffs and other trade barriers;                                                                                                                                        
|
| |  | Difficulty in managing international operations;                                                                                                                         
|
| |  | Potential foreign tax consequences, including repatriation of
	earnings;                                                                                                 
|
| |  | Burden of complying with a wide variety of foreign laws and
	regulations;                                                                                                
|
| |  | Unexpected changes in the local and regional political climate
	and the possible reaction to those changes by the international
	community, including economic sanctions;
|
| |  | Risk of increased duties, taxes and governmental royalties; and                                                                                                          
|
| |  | Changes in laws and policies governing operations of
	foreign-based companies.                                                                                           

Our international operations greatly depend upon business and
technology transfer laws and related restrictions and upon
continued development of technology infrastructure. We cannot be
certain that our international operations will continue to be
profitable or support our growth strategy.

Exposure to Regulatory, Political and General Economic
Conditions in India

A significant element of our business strategy is to expand our
offshore software development centers in India and the
Philippines. As of December 31, 1999, approximately 24% of
our workforce was located in India. We benefit directly from
certain incentives provided by the Indian government to encourage
 foreign investment, including tax holidays (temporary exemptions
 from taxation on operating income) and liberalized import and
export duties. If the Indian government changes any of these
incentives, it could negatively impact the profitability of our
Indian operations.

Although wage costs in India are significantly lower than in the
United States and elsewhere for comparably skilled IT
professionals, wages in India are increasing at a faster rate
than in the United States. In the past, India has experienced
significant inflation and shortages of foreign exchange, and has
been subject to civil unrest and acts of terrorism. Changes in
interest rates, inflation rates, tax rates and policies, or other

16



---





We Operate in Highly Competitive Markets

The IT services industry is highly competitive, undergoing
consolidation and is served by many national, regional and local
firms, all of which are either existing or potential competitors.
 Our primary competitors include:

  Large accounting firms;

  Implementation firms;

  Software applications firms;

  Service groups of computer equipment companies;

  General management consulting firms; and

  Programming companies and temporary staffing firms.

Many of these competitors have substantially greater resources
and greater name recognition than we do. In addition, there are
relatively few barriers to entry into our markets. We have faced,
 and we expect to continue to face, additional competition from
new entrants into our markets. In addition, clients may increase
their use of internal IT resources to satisfy their applications
solutions needs instead of engaging us. Each of these competitive
 factors may limit our ability to increase prices commensurate
with increases in labor costs which could result in reduced
margins. We cannot be certain that we will be able to compete
successfully with existing or new competitors.

Our Contracts are Short-Term and Contain Termination
Provisions

A typical contract with our clients has a term of one-to-three
years. A client may choose not to renew its contract when it
terminates. Under our contracts, clients may unilaterally reduce
the use of our services with little or no notice and without
penalty. If we are unable to retain our existing clients, our
business could be adversely affected. An unanticipated
termination of a major project could result in a loss of revenues
 and could require us to pay a number of unassigned IT
professionals until new engagements can be obtained. In the
alternative, we could also be forced to terminate unassigned IT
professionals.

Failure to Properly Manage Growth Could Adversely Affect Our
Business

As a result of our internal growth and acquisition strategy, we
have experienced a rapid increase in the number of branch
locations, the number of employees and revenues. This rapid
growth has placed significant demands on our managerial,
administrative and operational resources. Effective management of
 our growth will require us to continue to improve our
operational, financial and other management processes and systems
 and to quickly and efficiently integrate businesses we merge
with or acquire. We cannot be sure that we will continue to grow
or that we will be able to manage our growth.

Possible Write-Off of Computer Software Development Costs
Could Adversely Affect Our Business

Prior to its merger with CBSI, Claremont wrote off approximately
$8.3 million of capitalized software development costs
related to their Premost and Clarety software modules. We have
remaining net capitalized software development costs relating to
the Clarety module of $3.5 million as of December 31,
1999. If, in subsequent periods, remaining capitalized software
development costs exceed the potential revenue that can be
derived from the software, we would be required under generally
accepted accounting principles to immediately write-down the
asset to its realizable value. The amount of the write-down in
any particular period may be as much as the total amount of
capitalized software development costs carried on our balance
sheet and could have an adverse effect on our results of
operations and financial condition.

17



---



Limited Protection of Intellectual Property Rights

Our success depends in part upon certain methodologies we utilize
 in providing IT services to our clients. We have not registered
copyrights to such methodologies, which may impair our ability to
 protect these methodologies. We rely upon a combination of
nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect our proprietary
rights and the proprietary rights of third parties from whom we
license intellectual property.

We enter into confidentiality agreements with our employees and
limit the distribution of proprietary information. However, we
cannot be sure that these steps will be adequate to deter
misappropriation of proprietary information or that we will be
able to detect unauthorized use of and take appropriate steps to
enforce our intellectual property rights.

The laws of certain foreign countries in which our products are,
or may be, developed or sold may not protect our products or
intellectual property rights to the same extent as do the laws of
 the U.S. This lack of protection may impair our ability to
adequately protect our intellectual property.

Although we do not believe that our products infringe on the
rights of third parties, third parties may nevertheless make
infringement claims against us in the future. Such claims may
result in costly litigation or require us to obtain a license for
 such intellectual property rights.

Potential Liability to Clients

Many of our engagements involve projects that are critical to the
 operation of our clients businesses and provide benefits
that may be difficult to quantify. We attempt to contractually
limit our liability for damages arising from errors, mistakes,
omissions or negligent acts in rendering our services. We cannot
be sure that our attempts to limit liability will be successful.
If we fail to meet a clients expectations in the execution
of our services, it could result in an adverse change to our
clients operations. This could give rise to claims against
us or damage our reputation, which could adversely affect our
business.

18



---



Item 8.  Financial Statement and Supplementary Data

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Complete Business Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of
Complete Business Solutions, Inc. (a Michigan corporation) and
subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, shareholders
equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the 1997
financial statements of Claremont Technology Group, Inc. and
c.w. Costello & Associates, inc., companies that
Complete Business Solutions, Inc. merged with during 1998, in
transactions accounted for as poolings of interests, as discussed
 in Note 1. Such statements are included in the related
consolidated financial statements of Complete Business Solutions,
 Inc. and reflect total revenues and net income of 53% and 24%,
respectively in 1997, of the related consolidated totals. These
statements were audited by other auditors whose reports have been
 furnished to us and our opinion, insofar as it relates to
amounts included for Claremont Technology Group, Inc. and
c.w. Costello & Associates, inc., is based solely
upon the reports of the other auditors.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. 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 and the reports of the other auditors
provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other
auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of
Complete Business Solutions, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Detroit, Michigan,











19



---



REPORT OF INDEPENDENT AUDITORS

The Board of Directors of





We have audited the consolidated statements of operations,
shareholders equity, and cash flows of Claremont Technology
 Group, Inc. and subsidiaries for the year ended June 30,
1997 not presented separately herein. These consolidated
financial statements are the responsibility of the Companys
 management. Our responsibility is to express an opinion on these
 consolidated financial statements based upon our audit.

We conducted our audit in accordance with generally accepted
auditing standards. 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
 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
 above present fairly, in all material respects, the results of
Claremont Technology Group, Inc. and subsidiaries operations and
their cash flows for the year ended June 30, 1997 in
conformity with generally accepted accounting principles.

KPMG LLP

Portland, Oregon



20



---



REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Shareholders





We have audited the statements of operations, shareholders
equity and of cash flows of c.w. Costello & Associates, inc.
for the year ended December 31, 1997 not presented
separately herein. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted
auditing standards. 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
 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the results of
operations and cash flows of c.w. Costello &
Associates, inc. (an S Corporation) for the year
ended December 31, 1997, in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

Hartford, Connecticut



21



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |         |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------- | ------- |  | ------ | ------- | ------- | 
|                                     |                                                                                                                                                                               |                                           
|                                     |                                                                                                                                                                               | December 31,                              
|                                     |                                                                                                                                                                               |                                           
|                                     |                                                                                                                                                                               | 1999                                       |        | 1998   
|                                     |                                                                                                                                                                               |                                           
|                                     |                                                                                                                                                                               | (Dollars in thousands)                    
|                                     |                                                                                                                                                                               | (Note 1)                                  
|                                    
|                                    
|                                    
|                                    
|ASSETS                               |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|Current assets:                      |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                                                     |                                            | $      | 90,551  |         |  | $      | 60,732  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net                                                                                                                                                      |                                            |        | 93,182  |         |  |        | 72,007  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Revenue earned in excess of billings, net                                                                                                                                     |                                            |        | 18,152  |         |  |        | 11,597  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred and refundable income taxes                                                                                                                                          |                                            |        | 5,253   |         |  |        | 8,459   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other                                                                                                                                                    |                                            |        | 4,296   |         |  |        | 3,311   |        
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                     |                                                                                                                                                                               | Total current assets                       |        |         | 211,434 |  |        |         | 156,106 | 
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|Property and equipment, net          |                                                                                                                                                                               |                                            | 30,096 |         |         |  | 17,846 |        
|                                    
|                                    
|                                    
|                                    
|Computer software, net               |                                                                                                                                                                               |                                            | 5,936  |         |         |  | 4,425  |        
|                                    
|                                    
|                                    
|                                    
|Goodwill, net                        |                                                                                                                                                                               |                                            | 25,209 |         |         |  | 10,383 |        
|                                    
|                                    
|                                    
|                                    
|Other assets, net                    |                                                                                                                                                                               |                                            | 5,146  |         |         |  | 2,285  |        
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                     |                                                                                                                                                                               | Total assets                               |        | $       | 277,821 |  |        | $       | 191,045 | 
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                                                                                                                                                              |                                            | $      | 8,849   |         |  | $      | 6,113   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued payroll and related costs                                                                                                                                             |                                            |        | 26,511  |         |  |        | 26,479  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other accrued liabilities                                                                                                                                                     |                                            |        | 2,799   |         |  |        | 12,954  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred revenue                                                                                                                                                              |                                            |        | 982     |         |  |        | 1,703   |        
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                     |                                                                                                                                                                               | Total current liabilities                  |        |         | 39,141  |  |        |         | 47,249  | 
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|Deferred taxes                       |                                                                                                                                                                               |                                            | 2,095  |         |         |  | 1,025  |        
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |                                                                                                                                                                               |                                            | 168    |         |         |  | 1,616  |        
|Commitments and contingencies        |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|Shareholders equity:                |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, no par value, 1,000,000 shares authorized, none
	issued (Note 17)                                                                                            |                                            |        |        |         |  |        |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, no par value, 200,000,000 shares authorized,
	37,494,446 and 34,862,642 shares issued and outstanding as of
	December 31, 1999 and 1998, respectively (Note 16) |                                            |        |        |         |  |        |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                                    |                                            |        | 182,816 |         |  |        | 117,590 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                                                                                             |                                            |        | 60,709  |         |  |        | 30,912  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Stock subscriptions receivable                                                                                                                                                |                                            |        | (5,599  | )       |  |        | (6,079  | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Currency translation adjustment (other comprehensive income
	(loss))                                                                                                          |                                            |        | (1,509  | )       |  |        | (1,268  | )      
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                     |                                                                                                                                                                               | Total shareholders equity                 |        |         | 236,417 |  |        |         | 141,155 | 
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        
|                                     |                                                                                                                                                                               | Total liabilities and shareholders equity |        | $       | 277,821 |  |        | $       | 191,045 | 
|                                     |                                                                                                                                                                               |                                            |        |         |         |  |        |        

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

22



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |        |         |         | 
|---------------------------------------------------- | ------------------------------------------- | ------------------------------------- | -------------------------------------------------------------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                     |                                             |                                      
|                                                     |                                             | Year Ended December 31,              
|                                                     |                                             |                                      
|                                                     |                                             | 1999                                  |                                                                | 1998   |         | 1997   
|                                                     |                                             |                                      
|                                                     |                                             | (In thousands, except per share data)
|                                                     |                                             | (Note 1)                             
|                                                    
|                                                    
|                                                    
|                                                    
|Revenues                                             |                                             | $                                     | 462,070                                                        |        |         | $       | 376,567 |        |         | $       | 261,282 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Cost of revenues:                                    |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                             | Salaries, wages and employee benefits |                                                                |        | 256,145 |         |         |        | 195,237 |         |         |        | 145,947 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                             | Contractual services                  |                                                                |        | 31,952  |         |         |        | 34,678  |         |         |        | 19,951  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                             | Project travel and relocation         |                                                                |        | 20,438  |         |         |        | 15,334  |         |         |        | 10,695  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                             | Depreciation and amortization         |                                                                |        | 4,143   |         |         |        | 3,850   |         |         |        | 2,187   |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             |                                       | Total cost of revenues                                         |        |         | 312,678 |         |        |         | 249,099 |         |        |         | 178,780 | 
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             |                                       | Gross profit                                                   |        |         | 149,392 |         |        |         | 127,468 |         |        |         | 82,502  | 
|                                                    
|                                                    
|                                                    
|                                                    
|Selling, general and administrative expenses         |                                             |                                       | 101,692                                                        |        |         |         | 85,468  |        |         |         | 64,618  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Merger costs and other                               |                                             |                                       | 5,367                                                          |        |         |         | 28,250  |        |         |         | 1,559   |       
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             |                                       | Income from operations                                         |        |         | 42,333  |         |        |         | 13,750  |         |        |         | 16,325  | 
|                                                    
|                                                    
|                                                    
|                                                    
|Other expense (income)                               |                                             |                                       | (3,737                                                         | )      |         |         | (2,927  | )      |         |         | (842    | )     
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             |                                       | Income before provision for income taxes and minority interest |        |         | 46,070  |         |        |         | 16,677  |         |        |         | 17,167  | 
|                                                    
|                                                    
|                                                    
|                                                    
|Provision for income taxes                           |                                             |                                       | 16,273                                                         |        |         |         | 9,986   |        |         |         | 7,278   |       
|                                                    
|                                                    
|                                                    
|                                                    
|Minority interest                                    |                                             |                                       |                                                               |        |         |         |        |        |         |         | 82      |       
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             |                                       | Net income                                                     |        | $       | 29,797  |         |        | $       | 6,691   |         |        | $       | 9,807   | 
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|Basic earnings per share                            |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Weighted average shares outstanding         |                                       |                                                                | 37,267 |         |         |         | 34,414 |         |         |         | 29,126 |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     | Basic earnings per share                    |                                       | $                                                              | 0.80   |         |         | $       | 0.19   |         |         | $       | 0.34   |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|Diluted earnings per share                          |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Weighted average shares outstanding         |                                       |                                                                | 37,267 |         |         |         | 34,414 |         |         |         | 29,126 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Dilutive effect of stock options            |                                       |                                                                | 945    |         |         |         | 1,797  |         |         |         | 2,903  |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     | Diluted weighted average shares outstanding |                                       |                                                                | 38,212 |         |         |         | 36,211 |         |         |         | 32,029 |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     | Diluted earnings per share                  |                                       | $                                                              | 0.78   |         |         | $       | 0.18   |         |         | $       | 0.31   |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|Pro forma information:                               |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|Net income as reported                               |                                             | $                                     | 29,797                                                         |        |         | $       | 6,691   |        |         | $       | 9,807   |       
|                                                    
|                                                    
|                                                    
|                                                    
|Pro forma incremental income tax provision (benefit) |                                             |                                       |                                                               |        |         |         | (1,417  | )      |         |         | (764    | )     
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|Pro forma net income                                 |                                             | $                                     | 29,797                                                         |        |         | $       | 8,108   |        |         | $       | 10,571  |       
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|Earnings per share                                  |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                             | Pro forma basic earnings per share    |                                                                | $      | 0.80    |         |         | $      | 0.24    |         |         | $      | 0.36    |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       
|                                                     |                                             | Pro forma diluted earnings per share  |                                                                | $      | 0.78    |         |         | $      | 0.22    |         |         | $      | 0.33    |        
|                                                     |                                             |                                       |                                                                |        |         |         |         |        |         |         |         |       

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

23



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |         |  
|--------------------------- | ------------------------------------------- | ------------------------------- | ---------- | ---------- | - | -------- | ------- | ------------- | - | ----------- | ------ | ------------- | - | - | ------ | ------ | - | - | ------ | ---- | - | - | ------- | ------- | -
|                            |                                             | Common                          |            | Additional |   |          |         | Stock         |   | Currency    |        | Total        
|                            |                                             | Shares                          |            | Paid-in    |   | Retained |         | Subscriptions |   | Translation |        | Shareholders
|                            |                                             | Outstanding                     |            | Capital    |   | Earnings |         | Receivable    |   | Adjustment  |        | Equity       
|                            |                                             |                                
|                            |                                             | (Dollars in thousands) (Note 1)
|                           
|                           
|                           
|                           
|Balance  December 31, 1996 |                                             |                                 | 21,181,509 |            |   | $        | 5,189   |               |   | $           | 25,869 |               |   | $ | (2,125 | )      |   | $ | (209   | )    |   | $ | 28,724  |        
|                           
|                           
|                           
|                           
|                            | Net income                                  |                                 |            |           |   |          |         |              |   |             |        | 9,807         |   |   |        |       |   |   |        |     |   |   |         | 9,807   |  
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment             |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        |       |   |   |        | (378 | ) |   |         | (378    | )
|                           
|                           
|                           
|                           
|                            | Stock options and warrants exercised        |                                 |            | 1,397,472  |   |          |         | 6,395         |   |             |        |              |   |   |        | (685   | ) |   |        |     |   |   |         | 5,710   |  
|                           
|                           
|                           
|                           
|                            | Repayment of stock subscriptions receivable |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        | 307    |   |   |        |     |   |   |         | 307     |  
|                           
|                           
|                           
|                           
|                            | Conversion of minority
	shareholder         |                                 |            | 1,105,264  |   |          |         | 4,593         |   |             |        |              |   |   |        |       |   |   |        | (77  | ) |   |         | 4,516   |  
|                           
|                           
|                           
|                           
|                            | Issuances of common stock, net              |                                 |            | 9,372,514  |   |          |         | 88,860        |   |             |        |              |   |   |        |       |   |   |        |     |   |   |         | 88,860  |  
|                           
|                           
|                           
|                           
|                            | Distributions to shareholders               |                                 |            |           |   |          |         |              |   |             |        | (12,220       | ) |   |        |       |   |   |        |     |   |   |         | (12,220 | )
|                           
|                           
|                           
|                           
|                            | Recapitalizations                           |                                 |            |           |   |          |         | 3,634         |   |             |        | (3,634        | ) |   |        |       |   |   |        |     |   |   |         |        |  
|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |        
|Balance  December 31, 1997 |                                             |                                 | 33,056,759 |            |   |          | 108,671 |               |   |             | 19,822 |               |   |   | (2,503 | )      |   |   | (664   | )    |   |   | 125,326 |        
|                           
|                           
|                           
|                           
|                            | Net income                                  |                                 |            |           |   |          |         |              |   |             |        | 6,691         |   |   |        |       |   |   |        |     |   |   |         | 6,691   |  
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment             |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        |       |   |   |        | (433 | ) |   |         | (433    | )
|                           
|                           
|                           
|                           
|                            | Stock options exercised                     |                                 |            | 1,598,768  |   |          |         | 9,541         |   |             |        |              |   |   |        | (5,015 | ) |   |        |     |   |   |         | 4,526   |  
|                           
|                           
|                           
|                           
|                            | Repayment of stock subscriptions receivable |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        | 1,439  |   |   |        |     |   |   |         | 1,439   |  
|                           
|                           
|                           
|                           
|                            | Issuances of common stock                   |                                 |            | 21,769     |   |          |         | 389           |   |             |        |              |   |   |        |       |   |   |        |     |   |   |         | 389     |  
|                           
|                           
|                           
|                           
|                            | Distributions to shareholders               |                                 |            |           |   |          |         |              |   |             |        | (133          | ) |   |        |       |   |   |        |     |   |   |         | (133    | )
|                           
|                           
|                           
|                           
|                            | Recapitalization                            |                                 |            |           |   |          |         | (3,484        | ) |             |        | 3,484         |   |   |        |       |   |   |        |     |   |   |         |        |  
|                           
|                           
|                           
|                           
|                            | Adjustment for pooling of interests         |                                 |            | 185,346    |   |          |         | 2,473         |   |             |        | 1,048         |   |   |        |        |   |   |        | (171 | ) |   |         | 3,350   |  
|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |        
|Balance  December 31, 1998 |                                             |                                 | 34,862,642 |            |   |          | 117,590 |               |   |             | 30,912 |               |   |   | (6,079 | )      |   |   | (1,268 | )    |   |   | 141,155 |        
|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |        
|                            | Net income                                  |                                 |            |           |   |          |         |              |   |             |        | 29,797        |   |   |        |       |   |   |        |     |   |   |         | 29,797  |  
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment             |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        |       |   |   |        | (241 | ) |   |         | (241    | )
|                           
|                           
|                           
|                           
|                            | Stock options exercised                     |                                 |            | 683,741    |   |          |         | 6,753         |   |             |        |              |   |   |        | (3,702 | ) |   |        |     |   |   |         | 3,051   |  
|                           
|                           
|                           
|                           
|                            | Repayment of stock subscriptions receivable |                                 |            |           |   |          |         |              |   |             |        |              |   |   |        | 4,182  |   |   |        |     |   |   |         | 4,182   |  
|                           
|                           
|                           
|                           
|                            | Issuances of common stock                   |                                 |            | 2,302,063  |   |          |         | 63,686        |   |             |        |              |   |   |        |       |   |   |        |     |   |   |         | 63,686  |  
|                           
|                           
|                           
|                           
|                            | Repurchases of common stock                 |                                 |            | (354,000   | ) |          |         | (5,213        | ) |             |        |              |   |   |        |       |   |   |        |     |   |   |         | (5,213  | )
|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |        
|Balance  December 31, 1999 |                                             |                                 | 37,494,446 |            |   | $        | 182,816 |               |   | $           | 60,709 |               |   | $ | (5,599 | )      |   | $ | (1,509 | )    |   | $ | 236,417 |        
|                            |                                             |                                 |            |            |   |          |         |               |   |             |        |               |   |   |        |        |   |   |        |      |   |   |         |        

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

24



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |         |       |         |         |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------------------------------------- | -------------------------------------------------------------------------- | ----------------------------------------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ----- | ------- | ------- | -
|                                                                                   |                                                              |                                       
|                                                                                   |                                                              | Year Ended December 31,               
|                                                                                   |                                                              |                                       
|                                                                                   |                                                              | 1999                                   |                                                                            | 1998                                      |        | 1997   
|                                                                                   |                                                              |                                       
|                                                                                   |                                                              | (Dollars in thousands)                
|                                                                                   |                                                              | (Note 1)                              
|Cash flows from operating activities                                              |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Net income                                                                         |                                                              | $                                      | 29,797                                                                     |                                           |        | $       | 6,691   |         |        | $       | 9,807   |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Adjustments to reconcile net income to net cash provided by
	operating activities: |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Depreciation and amortization          |                                                                            |                                           | 10,323 |         |         |         | 7,450  |         |         |         | 5,960 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Provision for doubtful accounts        |                                                                            |                                           | 1,144  |         |         |         | 1,100  |         |         |         | 903   |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Minority interest                      |                                                                            |                                           |       |         |         |         |       |         |         |         | 82    |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Writedown of other assets and other    |                                                                            |                                           |       |         |         |         | 15,649 |         |         |         |      |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Provision (benefit) for deferred taxes |                                                                            |                                           | 6,319  |         |         |         | (8,343 | )       |         |         | (958  | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Equity in loss of investee and other   |                                                                            |                                           |       |         |         |         |       |         |         |         | 279   |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Stock option expense                   |                                                                            |                                           |       |         |         |         |       |         |         |         | 592   |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Change in assets and liabilities:      |                                                                            |                                           |        |         |         |         |        |         |         |         |       |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              |                                        | Accounts receivable                                                        |                                           |        | (20,735 | )       |         |        | (22,739 | )       |         |       | (14,016 | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              |                                        | Prepaid expenses and other assets                                          |                                           |        | 1,771   |         |         |        | (925    | )       |         |       | (3,552  | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              |                                        | Accounts payable, accrued payroll and related costs and other
	liabilities |                                           |        | (14,679 | )       |         |        | 13,852  |         |         |       | 14,077  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              |                                        | Deferred revenue                                                           |                                           |        | (2,169  | )       |         |        | 1,674   |         |         |       | (300    | )      
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                   |                                                              |                                        |                                                                            | Net cash provided by operating activities |        |         | 11,771  |         |        |         | 14,409  |         |       |         | 12,874  |  
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Cash flows from investing activities                                              |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Investment in property, equipment and other                  |                                        |                                                                            | (15,702                                   | )      |         |         | (10,531 | )      |         |         | (8,359  | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Investment in computer software                              |                                        |                                                                            | (8,395                                    | )      |         |         | (1,510  | )      |         |         | (6,901  | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Business acquisitions, net of cash acquired                  |                                        |                                                                            | (17,998                                   | )      |         |         | (4,241  | )      |         |         | (291    | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Investment in affiliate and other                            |                                        |                                                                            | (3,050                                    | )      |         |         |        |        |         |         | (405    | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net repayments on notes receivable                           |                                        |                                                                            |                                          |        |         |         |        |        |         |         | (31     | )    
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                   |                                                              |                                        |                                                                            | Net cash used in investing activities     |        |         | (45,145 | )       |        |         | (16,282 | )       |       |         | (15,987 | )
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Cash flows from financing activities                                              |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net payments on revolving credit facility and long-term debt |                                        |                                                                            |                                          |        |         |         | (4,471  | )      |         |         | (12,390 | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net proceeds from issuances of common stock                  |                                        |                                                                            | 61,186                                    |        |         |         |        |        |         |         | 88,510  |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | S corporation distributions                                  |                                        |                                                                            |                                          |        |         |         | (1,093  | )      |         |         | (11,092 | )    
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net proceeds from exercise of stock options and other, net   |                                        |                                                                            | 7,233                                     |        |         |         | 6,354   |        |         |         | 6,367   |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Repurchase of common stock                                   |                                        |                                                                            | (5,213                                    | )      |         |         |        |        |         |         |        |      
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                   |                                                              |                                        |                                                                            | Net cash provided by financing activities |        |         | 63,206  |         |        |         | 790     |         |       |         | 71,395  |  
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Effect of exchange rate changes on cash                                            |                                                              |                                        | (13                                                                        | )                                         |        |         | (46     | )       |        |         | (47     | )      
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Increase (decrease) in cash and cash equivalents                                   |                                                              |                                        | 29,819                                                                     |                                           |        |         | (1,129  | )       |        |         | 68,235  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Cash and cash equivalents at beginning of period                                   |                                                              |                                        | 60,732                                                                     |                                           |        |         | 61,861  |         |        |         | 4,463   |        
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Cash and cash equivalents at end of period                                         |                                                              | $                                      | 90,551                                                                     |                                           |        | $       | 60,732  |         |        | $       | 72,698  |        
|                                                                                   |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|Supplemental disclosures of cash flow information:                                 |                                                              |                                        |                                                                            |                                           |        |         |         |         |        |         |         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cash paid during the period for:                             |                                        |                                                                            |                                           |        |         |         |         |        |         |         |         |      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Interest                               |                                                                            | $                                         |       |         |         | $       | 128    |         |         | $       | 1,049 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   |                                                              | Income taxes                           |                                                                            | $                                         | 17,594 |         |         | $       | 12,153 |         |         | $       | 6,378 |        

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

25



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per share data)

1.  Organization and Summary of Significant Accounting
Policies

Operations

Complete Business Solutions, Inc. (CBSI) was founded in 1985.
CBSI and its subsidiaries (the Company) provide information
technology (IT) services worldwide to large and mid-size
organizations. The Company offers its clients a broad range of IT
 services, from advising clients on IT business strategy and
 strategic technology plans to developing and implementing
appropriate IT solutions.

Principles of
Consolidation and Organization

The consolidated financial statements include the accounts of
CBSI and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in the accompanying
consolidated financial statements.

In April 1999, the Company closed a Stock Purchase Agreement for
the purchase of all of the outstanding common stock of E-Business
 Solutions.com, Inc. (EBS), formerly Impact
Innovations Group, Inc. from Medaphis Corporation. The
acquisition of EBS was accounted for by the purchase method of
accounting, and accordingly, the operating results of EBS have
been included in the consolidated statements of income,
shareholders equity and cash flows since the date of the
acquisition.

In July 1998, the Company closed an Agreement and Plan of Merger
with Claremont Technology Group, Inc. (Claremont), a publicly
held Oregon corporation. The merger with Claremont was accounted
for by the pooling of interests method of accounting, and
accordingly, the accompanying consolidated balance sheets and
statements of income, shareholders equity and cash flows
have been retroactively restated. Claremont had a fiscal year end
 of June 30. The consolidated statements of income,
shareholders equity and cash flows for the year ended
December 31, 1997 combine, CBSIs results for the year
ended December 31, 1997 with Claremonts results for
the year ended June 30, 1997. The consolidated statements of
 income, shareholders equity and cash flows for the year
ended December 31, 1998 combine CBSIs and
Claremonts results for the year ended December 31,
1998. All footnote information stated as of and for the year
ended December 31, 1997 combines CBSIs information as
of and for the year ended December 31, 1997 with
Claremonts information as of and for the year ended
June 30, 1997. Footnote information stated as of and for the
 year ended December 31, 1998 combines CBSIs and
Claremonts information as of and for the year ended
December 31, 1998. As a result of these pooling of interests
 period combinations, an adjustment has been included in the
consolidated statements of shareholders equity to adjust
all components of shareholders equity to their respective
balances as of December 31, 1998.

In January 1998, the Company closed an Agreement and Plan of
Merger with c.w. Costello & Associates, inc. (Costello),
 a privately held Delaware corporation. The merger with Costello
was accounted for by the pooling of interests method of
accounting, and accordingly, the accompanying consolidated
balance sheets and statements of income, shareholders
equity and cash flows have been retroactively restated.

Foreign Currency

For significant foreign operations, the local currencies have
been designated as the functional currencies. The financial
statements of these subsidiaries are translated into U.S. dollars
 using exchange rates in effect at year end for assets and
liabilities and at the average exchange rate during the year for
revenues and expenses. The resulting foreign currency translation
 adjustment (other comprehensive income (loss)) is reflected as a
 separate component of shareholders equity as of
December 31, 1999 and 1998.

Transaction gains and losses, which were not significant in the
years presented, are reflected in the consolidated statements of
income.

26



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


Cash and Cash Equivalents

Cash and cash equivalents include investments in highly liquid
money market funds and commercial paper.

Financial Instruments

The fair values and carrying amounts of certain of the
Companys financial instruments, primarily accounts
receivable and payable, and accrued liabilities are approximately
 equivalent.

Goodwill

Goodwill represents the excess of cost over the net tangible and
identifiable intangible assets related to businesses acquired and
 the acquisition of shares of a subsidiary. Goodwill is carried
at cost, less accumulated amortization, and is amortized on a
straight-line basis over periods ranging from 20 to 30 years. The
 Company continually evaluates whether events and circumstances
have occurred that indicate the remaining estimated useful life
of goodwill may warrant revision or that the remaining balance
may not be recoverable. When factors indicate that goodwill
should be evaluated for possible impairment, the Company uses an
estimate of the related businesss undiscounted cash flow
over the remaining life of the goodwill in measuring whether the
goodwill is recoverable.

Property and Equipment

Property and equipment are stated at cost. Depreciation is
provided primarily using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are
amortized over the expected life of the asset or term of the
lease, whichever is shorter.

The American Institute of Certified Public Accountants has issued
 Statement of Position (SOP) 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal
Use, which requires entities to capitalize and amortize
certain costs and currently expense certain other costs incurred
for software developed or obtained for internal use. Internally
developed computer software is recorded at cost and includes
purchased, internally developed and externally developed software
 to be used in CBSIs operations.

Revenue Recognition

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

Revenues on fixed-priced contracts are recognized using the
percentage of completion method. The percentage of completion is
determined by relating the actual cost of work performed to date
to the estimated total cost for each contract. If the estimate
indicates a loss on a particular contract, a provision is made
for the entire estimated loss without reference to the percentage
 of completion. Retainages, which are not material for any of the
 years presented, are included in accounts receivable in the
accompanying consolidated balance sheets. Revenue earned in
excess of billings is comprised of revenue recognized on certain
contracts in excess of contractual billings on such contracts.
Billings in excess of revenue earned are classified as deferred
revenue.

Computer Software

The Company performs research to develop software for various
business applications. The costs of such research are charged to
expense when incurred. When the technological feasibility of the
product is established, subsequent costs are capitalized.
Capitalized software costs are amortized on a product-by-product
basis. Amortization is recorded on the straight-line method over
the estimated economic life of the product, generally three years
 to five years, commencing when such product is available. The
establishment of technological feasibility and the ongoing
assessment of the recoverability of these costs requires
considerable

27



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


judgment by management with respect to certain external factors,
including, but not limited to, anticipated future gross product
revenue, estimated economic product lives and changes in software
 and hardware technology. These assumptions are reevaluated and
adjusted as necessary at the end of each accounting period. On an
 ongoing basis, management reviews the valuation and amortization
 of capitalized development costs. As part of this review, the
Company considers the value of future cash flows attributable to
the capitalized development costs in evaluating potential
impairment of the asset. The amortization of software development
 costs was $1,076, $1,583 and $860 for the years ended
December 31, 1999, 1998 and 1997, respectively.

In Claremonts third and fourth quarters of fiscal 1998,
management determined that certain of the Companys computer
 software products were no longer realizable and recorded a
charge of approximately $8,300.

Accumulated amortization on computer software amounted to $6,103
and $5,027 as of December 31, 1999 and 1998, respectively.

Amounts capitalized were $2,387, $1,510 and $6,901 for the years
ended December 31, 1999, 1998 and 1997, respectively.

Amounts charged to expense for research and development of
computer software were not material in the periods presented.

Use of Estimates in the
Preparation of Financial Statements

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
 the reported amounts of assets and liabilities and disclosure of
 contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.

Income 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 bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
 date.

Reclassifications

Certain reclassifications have been made to the 1998 and 1997
consolidated financial statements to conform with the 1999
presentation.

2.  Common Stock Offerings

In February 1999, CBSI completed an offering of 5,400,000 shares
of its Common Stock at a price of $31 per share. This offering
consisted of 2,135,000 shares of newly issued Common Stock and
3,265,000 shares sold by selling shareholders. After underwriting
 discounts, commissions and other issuance costs, net proceeds to
 the Company from the sale of the newly issued shares in this
offering were approximately $60,000.

In August 1997, CBSI completed a secondary offering of 5,200,000
shares of its Common Stock at a price of $14 1/8 per share.
This offering consisted of 2,900,000 shares of newly issued
Common Stock and 2,300,000 shares sold by selling shareholders.
After underwriting discounts, commissions and other issuance
costs, net proceeds to the Company from this offering were
approximately $38,000.

28



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


In March 1997, CBSI completed its initial public offering of
5,000,000 shares of its Common Stock at a price of $6 per share.
This offering consisted of 4,600,000 shares of newly issued
Common Stock and 400,000 shares sold by a selling shareholder.
After underwriting discounts, commissions and other issuance
costs, net proceeds to the Company from this offering were
approximately $23,600.

In July 1996, Claremont completed its initial public offering of
2,171,417 shares of its common stock at a price of $19 3/8
per share. This offering consisted of 1,357,136 shares of newly
issued common stock and 814,281 shares sold by selling
shareholders. After underwriting discounts, commissions and other
 issuance costs, net proceeds to Claremont from this offering
were approximately $26,900.

3.  Common Stock Repurchase Program

In August 1999, CBSIs board of directors authorized the
repurchase of up to 2,000,000 shares of CBSIs Common Stock
over a twenty-four month period. During the year ended
December 31, 1999, CBSI repurchased 354,000 shares of its
Common Stock, for cash, at a total cost of $5,213.

4.  Mergers and Acquisitions

On April 20, 1999, the Company acquired all of the outstanding
capital stock of EBS for approximately $15,000. The aggregate
purchase price, which was funded through available working
capital, has been allocated to the assets based upon their
respective fair values. The excess of purchase price over assets
acquired is being amortized over 30 years.

For the year ended December 31, 1998, assuming the
acquisition of EBS occurred at the beginning of the period,
proforma revenues, income from continuing operations and diluted
earnings per share from operations would have been $420,976,
$2,347 and $.06 respectively. These results include certain
adjustments, primarily to eliminate the businesses of EBS that
were not acquired, amortization of goodwill and income taxes, and
 are not necessarily indicative of what the results would have
been had the transaction actually occurred at the beginning of
the period. The proforma impact of the acquisition on results of
operations was not significant for the year ended
December 31, 1999.

On July 24, 1998, the Company closed a merger agreement with
Claremont. This merger agreement provided for all of the
outstanding Claremont common stock to be exchanged for
approximately 7,235,000 shares of CBSIs common stock. See
Note 11.

Unaudited summarized results of operations and other changes in
shareholders equity of the previously separate entities for
 the six month period ended June 30, 1998 are as follows:

|                                                                                          |  |                   |         |            |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ----------------- | ------- | ---------- |  | - | ------- | -
|                                                                                          |  | Complete Business |         |           
|                                                                                          |  | Solutions, Inc.   |         | Claremont 
|                                                                                          |  | (including        |         | Technology
|                                                                                          |  | Costello)         |         | Group Inc.
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Revenues                                                                                  |  | $                 | 127,549 |            |  | $ | 46,317  |  
|                                                                                          |  |                   |         |            |  |   |         |  
|Gross profit                                                                              |  | $                 | 38,979  |            |  | $ | 19,017  |  
|                                                                                          |  |                   |         |            |  |   |         |  
|Income (loss) from operations                                                             |  | $                 | 10,933  |            |  | $ | (13,160 | )
|                                                                                          |  |                   |         |            |  |   |         |  
|Net (loss) income                                                                         |  | $                 | 6,282   |            |  | $ | (10,056 | )
|                                                                                          |  |                   |         |            |  |   |         |  
|Other significant changes to shareholders equity S 
	Corporation distributions and other |  | $                 | 133     |            |  | $ |        |  
|                                                                                          |  |                   |         |            |  |   |         |  

The activity for Claremont for the period from July 1, 1997 to
December 31, 1997, has not been reflected in the
consolidated statements of income for CBSI as a result of the
periods combined. (See Note 1).

29



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


Unaudited summarized results of operations for the six month
period ended December 31, 1997 for Claremont are as follows:

|                       |  |   |        | 
|---------------------- |  | - | ------ | 
|                      
|                      
|                      
|                      
|Revenue                |  | $ | 43,975 | 
|                       |  |   |        | 
|Gross profit           |  | $ | 18,381 | 
|                       |  |   |        | 
|Income from operations |  | $ | 1,785  | 
|                       |  |   |        | 
|Net income             |  | $ | 1,048  | 
|                       |  |   |        | 

On January 27, 1998, the Company closed a merger agreement
with Costello. This merger agreement provided for all of the
outstanding Costello common stock to be exchanged for
approximately 3,363,000 shares of CBSIs common stock. See
Note 11.

Audited summarized results of operations and other changes in
shareholders equity of the previously separate entities for
 the year ended December 31, 1997 are as follows:

|                                                                                            |  |                   |         |                  |  |   |        |  
|------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ---------------- |  | - | ------ | -
|                                                                                            |  | Complete Business |         | c.w. Costello & 
|                                                                                            |  | Solutions, Inc.   |         | Associates, inc.
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Revenues                                                                                    |  | $                 | 123,775 |                  |  | $ | 70,175 |  
|                                                                                            |  |                   |         |                  |  |   |        |  
|Gross profit                                                                                |  | $                 | 34,175  |                  |  | $ | 16,821 |  
|                                                                                            |  |                   |         |                  |  |   |        |  
|Income (loss) from operations                                                               |  | $                 | 10,442  |                  |  | $ | (1,034 | )
|                                                                                            |  |                   |         |                  |  |   |        |  
|Net income (loss)                                                                           |  | $                 | 7,501   |                  |  | $ | (1,940 | )
|                                                                                            |  |                   |         |                  |  |   |        |  
|Other significant changes to shareholders
	equity  S  Corporation distributions and other |  | $                 | 12,220  |                  |  | $ |       |  
|                                                                                            |  |                   |         |                  |  |   |        |  

On November 20, 1997, the Company closed a merger agreement
with Synergy Software, Inc. (Synergy). The merger agreement
provided for all of the outstanding Synergy common stock to be
exchanged for approximately 1,391,000 shares of CBSIs
common stock. See Note 11.

Accounting policies of CBSI, Synergy, Costello and Claremont were
 substantially the same. There were no significant intercompany
transactions requiring elimination in any period presented.

5.  Accounts Receivable and Credit Risk

The allowance for doubtful accounts is as follows:

|                                     |  |      |       |      |  |      |       |   |  |   |       |  
|------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                     |  | 1999 |       | 1998 |  | 1997
|                                    
|                                    
|                                    
|                                    
|Balance  beginning of period        |  | $    | 2,245 |      |  | $    | 1,155 |   |  | $ | 704   |  
|                                    
|                                    
|                                    
|                                    
|Provision                            |  |      | 1,144 |      |  |      | 1,100 |   |  |   | 903   |  
|                                    
|                                    
|                                    
|                                    
|Charge-offs                          |  |      | (592  | )    |  |      | (10   | ) |  |   | (486  | )
|                                    
|                                    
|                                    
|                                    
|Allowance related to EBS acquisition |  |      | 1,407 |      |  |      |      |   |  |   |      |  
|                                     |  |      |       |      |  |      |       |   |  |   |       |  
|Balance  end of period              |  | $    | 4,204 |      |  | $    | 2,245 |   |  | $ | 1,121 |  
|                                     |  |      |       |      |  |      |       |   |  |   |       |  

The Company grants credit to clients based upon managements
 assessment of their creditworthiness. Substantially all of the
Companys revenues (and the resulting accounts receivable)
are from large and mid-size companies, major systems integrators
and governmental agencies.

30



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


6.  Property and Equipment

As of December 31, 1999 and 1998, property and equipment
consisted of the following:

|                                       |  |              |         |           |  |       |         |   |  |  |           | 
|-------------------------------------- |  | ------------ | ------- | --------- |  | ----- | ------- | - |  |  | --------- | 
|                                       |  |              |         |          
|                                       |  | December 31, |         | Estimated
|                                       |  |              |         | Useful   
|                                       |  | 1999         |         | 1998      |  | Lives
|                                      
|                                      
|                                      
|                                      
|Equipment and purchased software       |  | $            | 37,221  |           |  | $     | 26,408  |   |  |  | 3-5 years | 
|                                      
|                                      
|                                      
|                                      
|Internally developed computer software |  |              | 5,808   |           |  |       |        |   |  |  | 10 years  | 
|                                      
|                                      
|                                      
|                                      
|Furniture and fixtures                 |  |              | 5,967   |           |  |       | 4,565   |   |  |  | 5-7 years | 
|                                      
|                                      
|                                      
|                                      
|Leasehold improvements                 |  |              | 4,179   |           |  |       | 1,951   |   |  |  | 5-7 years | 
|                                      
|                                      
|                                      
|                                      
|Automobiles                            |  |              | 834     |           |  |       | 832     |   |  |  | 5 years   | 
|                                      
|                                      
|                                      
|                                      
|Buildings                              |  |              | 683     |           |  |       | 698     |   |  |  | 31 years  | 
|                                       |  |              |         |           |  |       |         |   |  |  |           | 
|                                       |  |              | 54,692  |           |  |       | 34,454  |   |  |  |           | 
|                                      
|                                      
|                                      
|                                      
|Accumulated depreciation               |  |              | (24,596 | )         |  |       | (16,608 | ) |  |  |           | 
|                                       |  |              |         |           |  |       |         |   |  |  |           | 
|Property and equipment, net            |  | $            | 30,096  |           |  | $     | 17,846  |   |  |  |           | 
|                                       |  |              |         |           |  |       |         |   |  |  |           | 

7.  Related Party Transactions

Costello made interest bearing loans to an affiliate of a
shareholder for the purchase of real estate. As of
December 31, 1998, $219 of these loans were outstanding.
During 1999 these loans were repaid. Through December 31,
1997, Costello leased this real estate from the affiliate for
various marketing and administrative purposes. During 1997
Costello incurred rent expense of $150. These leases were
cancelled during 1998.

CBSI paid approximately $856, $654 and $551 for the years ended
December 31, 1999, 1998 and 1997, respectively, for
consulting services provided by an affiliate of an outside
director.

In August 1997, in connection with CBSIs secondary
offering, a related party paid the Company approximately $300 as
required under Section 16(b) of the Exchange Act of 1934.
This amount has been included in additional paid-in capital in
the accompanying consolidated balance sheets.

8.  Revolving Credit Facility

Under a credit arrangement with a commercial bank, the Company
may borrow an amount not to exceed $21,000 at the banks
prime interest rate, or LIBOR plus 1 1/4%. Borrowings under
the facility are short-term, payable on demand and are secured by
 trade accounts receivable and equipment of the Company. There
were no amounts outstanding under this agreement at
December 31, 1999 and 1998. The credit agreement contains
various restrictive covenants which, among other items, require
the Company to maintain certain levels of tangible net worth, a
debt to earnings ratio, and a funded debt to capitalization
ratio.

9.  Self-Insurance

CBSI is self-insured for health and dental benefits up to $100,
per occurrence. Insurance coverage is carried for risks in excess
 of this amount. The Company recognized health and dental
benefits expense of approximately $10,478, $6,475 and $5,855 for
the years ended December 31, 1999, 1998 and 1997,
respectively. Estimated claims incurred but not reported were
$2,250 and $1,850 as of December 31, 1999 and 1998,
respectively, and are included in other accrued liabilities in
the accompanying consolidated balance sheets.

10.  Leases

The Company leases its headquarters, regional offices, equipment
and certain automobiles under noncancelable, long-term operating
leases.

31



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


Rent expense for the years ended December 31, 1999, 1998 and
 1997 amounted to approximately $7,845, $5,516, and $3,619,
respectively. The future minimum lease payments required under
these operating leases for the years ending December 31, are
 as follows:

|           |  |   |        | 
|---------- |  | - | ------ | 
|          
|          
|          
|          
|2000       |  | $ | 7,851  | 
|          
|          
|          
|          
|2001       |  |   | 7,660  | 
|          
|          
|          
|          
|2002       |  |   | 6,277  | 
|          
|          
|          
|          
|2003       |  |   | 4,305  | 
|          
|          
|          
|          
|2004       |  |   | 2,915  | 
|          
|          
|          
|          
|Thereafter |  |   | 8,396  | 
|           |  |   |        | 
|           |  | $ | 37,404 | 
|           |  |   |        | 

11.  Stock Options

CBSI maintains a Stock Option Plan (the Plan). Under the Plan,
eligible employees and directors may be granted either Incentive
Stock Options (ISOs) or Non-Incentive Stock Options (NISOs) at
the discretion of the Compensation Committee of the Board of
Directors. There are 7,247,454 shares of Common Stock authorized
for grant under the Plan. Options under the Plan are granted at
fair value on date of grant. The options vest over periods
determined by the Compensation Committee of the Companys
Board of Directors. As a result of the merger with Synergy, as
discussed in Note 4, outstanding Synergy stock options as of
 November 20, 1997 were converted into approximately 418,000
 options of CBSI. These options retained their original terms and
 vesting periods. As a result of the merger with Costello, as
discussed in Note 4, outstanding Costello stock options as
of January 27, 1998 were converted into approximately 57,000
 options of CBSI. These options retained their original terms and
 vesting periods. As a result of the merger with Claremont, as
discussed in Note 4, outstanding Claremont stock options as
of July 24, 1998 were converted into approximately 1,225,000
 options of CBSI. These options retained their original terms and
 vesting periods.

The Plan agreements provide for the option holder to exercise the
 options in exchange for cash, or a promissory note payable to
the Company over a period of up to five years for NISOs and up to
 two years for ISOs. These notes are full recourse and bear
interest at the prime rate of interest determined at the date of
exercise. Interest on the loans is payable every six months.

The Company has elected to provide the pro forma disclosures, as
permitted under the provisions of Statement of Financial
Accounting Standards No. 123, Accounting for
Stock-Based Compensation
(SFAS No. 123). Accordingly, no
additional compensation expense has been recognized for the Plan
within the accompanying consolidated statements of income. Had
compensation expense for the Plan been determined based on the
fair value at the grant date for awards in 1999, 1998 and 1997
consistent with the provisions of SFAS No. 123, the
Companys pro forma net income and pro forma diluted
earnings per common share would have been reduced to the amounts
indicated below:

|                             |                        |      |   |        |  |      |   |       |  |  |   |       | 
|---------------------------- | ---------------------- | ---- | - | ------ |  | ---- | - | ----- |  |  | - | ----- | 
|                             |                        | 1999 |   | 1998   |  | 1997
|Net income                  |                        |      |   |        |  |      |   |       |  |  |   |      
|                            
|                            
|                            
|                            
|                             | As reported            |      | $ | 29,797 |  |      | $ | 6,691 |  |  | $ | 9,807 | 
|                            
|                            
|                            
|                            
|                             | SFAS No. 123 pro forma |      | $ | 23,586 |  |      | $ | 1,659 |  |  | $ | 8,451 | 
|Diluted earnings per share  |                        |      |   |        |  |      |   |       |  |  |   |      
|                            
|                            
|                            
|                            
|                             | As reported            |      | $ | 0.78   |  |      | $ | 0.18  |  |  | $ | 0.31  | 
|                            
|                            
|                            
|                            
|                             | SFAS No. 123 pro forma |      | $ | 0.62   |  |      | $ | 0.05  |  |  | $ | 0.26  | 

32



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


A summary of option activity, restated to give effect to the
mergers with Costello and Claremont, is as follows:

|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|-------------------------- |  | ------------------- | ------ | ---------------- |  | ---------------- | ----- | --------------- |  |  | ----- |  |  | - | ----- | 
|                           |  |                     |        |                  |  |                 
|                           |  | Options Outstanding |        |                  |  |                 
|                           |  |                     |        |                  |  | Weighted Average
|                           |  |                     |        | Weighted Average |  | Options          |       | Fair Value of  
|                           |  | Shares              |        | Exercise Price   |  | Exercisable      |       | Options Granted
|                           |  | (in                 |        |                  |  |                  |       |                
|                           |  | thousands)          |        |                  |  |                  |       |                
|                          
|                          
|                          
|                          
|Balance, December 31, 1996 |  |                     | 3,752  |                  |  | $                | 2.33  |                 |  |  | 1,504 |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options granted            |  |                     | 2,300  |                  |  |                  | 13.51 |                 |  |  |       |  |  | $ | 5.37  | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options exercised          |  |                     | (1,397 | )                |  |                  | 1.46  |                 |  |  |       |  |  |   |       | 
|                          
|                          
|                          
|                          
|Options cancelled          |  |                     | (436   | )                |  |                  | 12.82 |                 |  |  |       |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Balance, December 31, 1997 |  |                     | 4,219  |                  |  | $                | 7.62  |                 |  |  | 1,114 |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options granted            |  |                     | 2,107  |                  |  |                  | 23.84 |                 |  |  |       |  |  | $ | 16.35 | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options exercised          |  |                     | (1,784 | )                |  |                  | 4.59  |                 |  |  |       |  |  |   |       | 
|                          
|                          
|                          
|                          
|Options cancelled          |  |                     | (515   | )                |  |                  | 18.62 |                 |  |  |       |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Balance, December 31, 1998 |  |                     | 4,027  |                  |  | $                | 16.53 |                 |  |  | 880   |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options granted            |  |                     | 2,393  |                  |  |                  | 15.22 |                 |  |  |       |  |  | $ | 10.08 | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Options exercised          |  |                     | (684   | )                |  |                  | 7.59  |                 |  |  |       |  |  |   |       | 
|                          
|                          
|                          
|                          
|Options cancelled          |  |                     | (1,085 | )                |  |                  | 19.97 |                 |  |  |       |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 
|Balance, December 31, 1999 |  |                     | 4,651  |                  |  | $                | 16.37 |                 |  |  | 975   |  |  |   |       | 
|                           |  |                     |        |                  |  |                  |       |                 |  |  |       |  |  |   |       | 

The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following assumptions used for the 1999 and 1998 grants:
risk-free rate of interest of 5.6% and 5.5%, in 1999 and 1998,
respectively, dividend yield of 0%, and expected lives of 4 to
5 years. A volatility factor of 87% and 93% was used in 1999
 and 1998, respectively.

A summary of options outstanding at December 31, 1999, is as
 follows:

|               |  |                     |       |                     |  |          |      |                |  |          |       |  |  |  |     |  |  |   |       | 
|-------------- |  | ------------------- | ----- | ------------------- |  | -------- | ---- | -------------- |  | -------- | ----- |  |  |  | --- |  |  | - | ----- | 
|               |  |                     |       |                    
|               |  | Options Outstanding |       | Options Exercisable
|               |  |                     |       |                    
|               |  |                     |       | Weighted            |  |          |      |               
|               |  | Number              |       | Average             |  | Weighted |      | Number         |  | Weighted
|               |  | Outstanding at      |       | Remaining           |  | Average  |      | Exercisable of |  | Average 
|Range of       |  | December 31,        |       | Contractual         |  | Exercise |      | December 31,   |  | Exercise
|Exercise Price |  | 1999                |       | Life                |  | Price    |      | 1999           |  | Price   
|              
|              
|              
|              
|$ 0.01 -  6.00 |  |                     | 395   |                     |  |          | 5.82 |                |  | $        | 4.01  |  |  |  | 288 |  |  | $ | 3.73  | 
|              
|              
|              
|              
|$ 6.01 - 14.99 |  |                     | 2,108 |                     |  |          | 9.20 |                |  | $        | 13.55 |  |  |  | 266 |  |  | $ | 13.04 | 
|              
|              
|              
|              
|$15.00 - 19.34 |  |                     | 1,011 |                     |  |          | 8.56 |                |  | $        | 17.48 |  |  |  | 111 |  |  | $ | 17.89 | 
|              
|              
|              
|              
|$19.35 - 22.89 |  |                     | 464   |                     |  |          | 8.84 |                |  | $        | 22.75 |  |  |  | 119 |  |  | $ | 22.75 | 
|              
|              
|              
|              
|$22.90 - 34.58 |  |                     | 673   |                     |  |          | 8.11 |                |  | $        | 26.43 |  |  |  | 191 |  |  | $ | 27.07 | 

12.  Benefit Plans

CBSI maintains the Complete Business Solutions, Inc. Incentive
Savings Plan and Trust (the 401(k) plan). All employees of CBSI
are eligible to participate in the 401(k) plan once they have
completed one year of service and have attained age 21. The
401(k) plan is a defined contribution plan, qualified as a profit
 sharing plan under Section 401(k) of the Internal Revenue
Code. The 401(k) plan allows eligible employees to contribute up
to 18% of their compensation with CBSI matching a percentage of
the contributions. For the years ended December 31, 1999,
1998 and 1997, CBSI matched 40% of the employees
contribution up to a maximum of 2.4% of the employees
compensation.

33



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


Matching contributions made by CBSI amounted to approximately
$2,184, $1,286 and $489 for the years ended December 31,
1999, 1998 and 1997, respectively. CBSI may also make an
additional contribution, at its discretion, to the 401(k) plan.
No such additional contributions have been made to date.

Through December 31, 1997, Synergy and Costello maintained
defined contribution 401(k) plans for substantially all of their
employees. Under the plans, eligible employees could elect to
contribute a portion of their base compensation. Synergy
contributed an additional 25% of the employees
contributions up to 1% of the employees aggregate base
compensation. Costello contributions were discretionary.
Contributions to these plans amounted to $454 for the year ended
December 31, 1997. In the first quarter of 1998, all
employees of Synergy and Costello became eligible to participate
in CBSIs 401(k) plan.

Claremont maintained a defined contribution 401(k) plan for
substantially all of its employees. Under the plan, eligible
employees could elect to contribute a portion of their base
compensation. Claremonts plan contributions amounted to
$247 and $117 for the years ended December 31, 1998 and
1997. In the third quarter of 1998, all employees of Claremont
became eligible to participate in CBSIs 401(k) plan.

The Company maintains various employee retention programs,
including bonus and deferred compensation. The expense related to
 these programs is recognized as the compensation is earned.

13. Income Taxes

Prior to CBSIs initial public offering and the date of the
merger with Synergy, the shareholders of the respective companies
 had elected, under the provisions of Subchapter S of the
United States Internal Revenue Code (Subchapter S), to have
income and related tax benefits of each company included in the
taxable income of the shareholders. The shareholders of Costello
also elected to be governed under the provisions of
Subchapter S through the date of its merger with CBSI in
1998. As a result, no provision for U.S. federal income taxes and
 only certain state income taxes have been included in the
consolidated statements of income prior to CBSIs initial
public offering and the date of the mergers with Synergy and
Costello.

Upon termination of the Subchapter S elections, future
income of the Company is subject to federal and state income
taxes at the corporate level. Accordingly, the application of the
 provisions of Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes, resulted
in the recognition of deferred tax assets and liabilities, and a
corresponding charge to the provision for income taxes of
approximately $1,400 and $920 for the years ended
December 31, 1998 and 1997, respectively.

Subsequent to the terminations, the Company has provided federal
and state income taxes in the consolidated statements of income
based on the effective tax rate. The unaudited pro forma net
income in the consolidated statements of income reflects
applicable pro forma adjustments to the provision for income
taxes to reflect net income as if the Subchapter S elections
 had been revoked prior to January 1, 1997. See
Note 19.

CBS Mauritius is incorporated in Mauritius and is not subject to
income taxes. CBS India is an Indian corporation subject to
income taxes and receives certain exemptions from Indian income
taxes under free trade zone and software exporters provisions of
Indian tax law. CBS Indias tax provision has been included
in the consolidated statements of income as part of the provision
 for income taxes. The Company considers all undistributed
earnings of its foreign subsidiaries to be permanently invested.
Therefore, no United States income taxes have been provided on
these earnings.

34



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


The provision for income taxes consists of:

|           |                 |                         |        |       |   |      |        |        |   |   |       |       |  
|---------- | --------------- | ----------------------- | ------ | ----- | - | ---- | ------ | ------ | - | - | ----- | ----- | -
|           |                 |                        
|           |                 | Year Ended December 31,
|           |                 |                        
|           |                 | 1999                    |        | 1998  |   | 1997
|Current   |                 |                         |        |       |   |      |        |        |   |   |       |      
|          
|          
|          
|          
|           | Federal         |                         | $      | 8,721 |   |      | $      | 17,047 |   |   | $     | 7,551 |  
|          
|          
|          
|          
|           | State and local |                         |        | 1,115 |   |      |        | 988    |   |   |       | 685   |  
|          
|          
|          
|          
|           | Foreign         |                         |        | 118   |   |      |        | 294    |   |   |       |      |  
|           |                 |                         |        |       |   |      |        |        |   |   |       |      
|           |                 |                         | 9,954  |       |   |      | 18,329 |        |   |   | 8,236 |      
|Deferred  |                 |                         |        |       |   |      |        |        |   |   |       |      
|          
|          
|          
|          
|           | Federal         |                         |        | 6,598 |   |      |        | (8,164 | ) |   |       | (744  | )
|          
|          
|          
|          
|           | State and local |                         |        | (108  | ) |      |        | (459   | ) |   |       | 433   |  
|          
|          
|          
|          
|           | Foreign         |                         |        | (171  | ) |      |        | 280    |   |   |       | (647  | )
|           |                 |                         |        |       |   |      |        |        |   |   |       |      
|           |                 |                         | 6,319  |       |   |      | (8,343 | )      |   |   | (958  | )    
|           |                 |                         |        |       |   |      |        |        |   |   |       |      
|           |                 | $                       | 16,273 |       |   | $    | 9,986  |        |   | $ | 7,278 |      
|           |                 |                         |        |       |   |      |        |        |   |   |       |      

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are presented below:

|                           |                                             |                                      |                         |        |        |       |   |        |        |       | 
|-------------------------- | ------------------------------------------- | ------------------------------------ | ----------------------- | ------ | ------ | ----- | - | ------ | ------ | ----- | 
|                           |                                             |                                     
|                           |                                             | December 31,                        
|                           |                                             |                                     
|                           |                                             | 1999                                 |                         | 1998  
|Deferred tax assets       |                                             |                                      |                         |        |        |       |   |       
|                          
|                          
|                          
|                          
|                           | Accrued expenses                            |                                      | $                       | 3,593  |        |       | $ | 8,421  |       
|                          
|                          
|                          
|                          
|                           | Allowance for doubtful accounts             |                                      |                         | 1,890  |        |       |   | 1,231  |       
|                          
|                          
|                          
|                          
|                           | Federal net operating loss carryforward     |                                      |                         | 2,552  |        |       |   |       |       
|                          
|                          
|                          
|                          
|                           | Alternative minimum tax credit carryforward |                                      |                         |       |        |       |   | 220    |       
|                          
|                          
|                          
|                          
|                           | Foreign net operating losses                |                                      |                         | 568    |        |       |   | 397    |       
|                          
|                          
|                          
|                          
|                           | Other                                       |                                      |                         | 205    |        |       |   | 325    |       
|                           |                                             |                                      |                         |        |        |       |   |       
|                           |                                             | Total gross deferred tax assets      |                         |        | 8,808  |       |   |        | 10,594 |      
|Deferred tax liabilities  |                                             |                                      |                         |        |        |       |   |       
|                          
|                          
|                          
|                          
|                           | Capitalized software development costs      |                                      |                         | (4,163 | )      |       |   | (1,974 | )     
|                          
|                          
|                          
|                          
|                           | S to C Corporation conversion               |                                      |                         | (741   | )      |       |   | (1,301 | )     
|                          
|                          
|                          
|                          
|                           | CBS Mauritius                               |                                      |                         | (237   | )      |       |   | (210   | )     
|                          
|                          
|                          
|                          
|                           | Other                                       |                                      |                         | (509   | )      |       |   | (184   | )     
|                           |                                             |                                      |                         |        |        |       |   |       
|                           |                                             | Total gross deferred tax liabilities |                         |        | (5,650 | )     |   |        | (3,669 | )    
|                           |                                             |                                      |                         |        |        |       |   |       
|                           |                                             |                                      | Net deferred tax assets |        | $      | 3,158 |   |        | $      | 6,925 | 
|                           |                                             |                                      |                         |        |        |       |   |       

35



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


The items accounting for the difference between income taxes
 computed at the federal statutory rate and the consolidated
effective rate are as follows:

|                       |                                                                  |                         |    |      |   |      |    |     |   |  |    |    |  
|---------------------- | ---------------------------------------------------------------- | ----------------------- | -- | ---- | - | ---- | -- | --- | - |  | -- | -- | -
|                       |                                                                  |                        
|                       |                                                                  | Year Ended December 31,
|                       |                                                                  |                        
|                       |                                                                  | 1999                    |    | 1998 |   | 1997
|                      
|                      
|                      
|                      
|Federal statutory rate |                                                                  |                         | 35 | %    |   |      | 35 | %   |   |  | 35 | % 
|Effect of             |                                                                  |                         |    |      |   |      |    |     |   |  |    |   
|                      
|                      
|                      
|                      
|                       | Tax rate differences on foreign earnings not subject to U.S. tax |                         |    | (5   | ) |      |    | (10 | ) |  |    | (4 | )
|                      
|                      
|                      
|                      
|                       | Nondeductible merger costs                                       |                         |    |     |   |      |    | 26  |   |  |    |   |  
|                      
|                      
|                      
|                      
|                       | State income taxes, net of federal tax effect                    |                         |    | 4    |   |      |    | 2   |   |  |    | 2  |  
|                      
|                      
|                      
|                      
|                       | Other, net                                                       |                         |    | 1    |   |      |    | 3   |   |  |    | 3  |  
|                       |                                                                  |                         |    |      |   |      |    |     |   |  |    |   
|                       |                                                                  |                         | 35 | %    |   |      | 56 | %   |   |  | 36 | % 
|                      
|                      
|                      
|                      
|                       | S Corporation earnings and terminations                          |                         |    |     |   |      |    | 4   |   |  |    | 6  |  
|                       |                                                                  |                         |    |      |   |      |    |     |   |  |    |   
|                       |                                                                  |                         | 35 | %    |   |      | 60 | %   |   |  | 42 | % 
|                       |                                                                  |                         |    |      |   |      |    |     |   |  |    |   

14. Segment Information

The Company is a provider of IT services, and is organized into
office locations throughout North America, Europe and Asia. The
chief operating decision-makers evaluate each locations
performance based primarily on their revenues, gross margin and
operating income. Under this organization, the operating segments
 have been aggregated into one reportable segment. The accounting
 policies of the operating segments are the same as those
described in the summary of significant accounting policies.

The following table summarizes selected financial information of
the Companys operations by geographic location. Revenues
are attributed to countries based on the location of the
customer.

|                    |                     |                         |       |         |         |      |       |         |         |   |       |         |         |  
|------------------- | ------------------- | ----------------------- | ----- | ------- | ------- | ---- | ----- | ------- | ------- | - | ----- | ------- | ------- | -
|                    |                     |                        
|                    |                     | Year Ended December 31,
|                    |                     |                        
|                    |                     | 1999                    |       | 1998    |         | 1997
|Revenues           |                     |                         |       |         |         |      |       |         |         |   |       |        
|                   
|                   
|                   
|                   
|                    | United States       |                         | $     | 451,518 |         |      | $     | 362,469 |         |   | $     | 254,514 |        
|                   
|                   
|                   
|                   
|                    | India               |                         |       | 37,200  |         |      |       | 33,877  |         |   |       | 13,644  |        
|                   
|                   
|                   
|                   
|                    |                     | Less intersegment       |       |         | (35,156 | )    |       |         | (31,751 | ) |       |         | (11,847 | )
|                    |                     |                         |       |         |         |      |       |         |         |   |       |        
|                    |                     |                         | 2,044 |         |         |      | 2,126 |         |         |   | 1,797 |        
|                   
|                   
|                   
|                   
|                    | Other international |                         |       | 8,508   |         |      |       | 11,972  |         |   |       | 4,971   |        
|                    |                     |                         |       |         |         |      |       |         |         |   |       |        
|                    |                     |                         |       | $       | 462,070 |      |       | $       | 376,567 |   |       | $       | 261,282 |  
|                    |                     |                         |       |         |         |      |       |         |         |   |       |        
|Long-Lived Assets  |                     |                         |       |         |         |      |       |         |         |   |       |        
|                   
|                   
|                   
|                   
|                    | United States       |                         | $     | 31,164  |         |      | $     | 18,337  |         |   | $     | 20,911  |        
|                   
|                   
|                   
|                   
|                    | India               |                         |       | 8,788   |         |      |       | 5,558   |         |   |       | 3,970   |        
|                   
|                   
|                   
|                   
|                    | Other international |                         |       | 1,226   |         |      |       | 661     |         |   |       | 161     |        
|                    |                     |                         |       |         |         |      |       |         |         |   |       |        
|                    |                     | Total                   |       | $       | 41,178  |      |       | $       | 24,556  |   |       | $       | 25,042  |  
|                    |                     |                         |       |         |         |      |       |         |         |   |       |        

15.  Commitments, Contingencies and Potential Liability
to Clients

In April 1999, CBSI signed a Mutual Settlement and Release
Agreement (the Agreement) with Network Six, Inc.
(NSI) to settle all claims relating to the litigation
 between CBSI and NSI in the Superior Court for the State of
Rhode Island and the Circuit Court for the State of Hawaii
arising from a software development project for the State of
Hawaii. The settlement did not have a material effect on
CBSIs financial condition, results of operations or cash
flows.

36



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


The Company is also, from time to time, a party to ordinary,
routine litigation incidental to the Companys business.
After discussion with its legal counsel, the Company does not
believe that the ultimate resolution of any other existing matter
 will have a material adverse effect on its financial condition,
results of operations or cash flows.

In addition, many of the Companys engagements involve
projects that are critical to the operations of its clients
 businesses and provide benefits that may be difficult to
quantify. The Company attempts to contractually limit its
liability for damages arising from errors, mistakes, omissions or
 negligent acts in rendering its services.

16.  Stock Dividend

On February 18, 1998, the Board of Directors declared a
two-for-one split of the Companys common stock, effected in
 the form of a stock dividend payable on March 19, 1998 to
shareholders of record on March 5, 1998. All agreements
concerning stock options provide for the issuance of additional
shares due to the declaration of the stock split. All references
to number of shares, except shares authorized, the number of
options and to per share information in the consolidated
financial statements and related notes have been adjusted to
reflect the stock split on a retroactive basis.

17.  Subsequent Event

On March 17, 2000, the Company entered into an agreement
with a fund managed by Clayton, Dubilier & Rice, Inc. (CDR)
whereby CDR will purchase, in two transactions, from the Company
200,000 shares of convertible Preferred Stock for $200,000 and
will be issued warrants to purchase 5,300,000 shares of the
Companys Common Stock.

The Preferred Stock is convertible at any time subsequent to
issuance at a price of $23 per share, subject to certain
adjustments, and may be redeemed, at CDRs option, if not
converted within ten years of the date of issuance. The warrants
consist of seven-year warrants to purchase 3,500,000 shares at
$25 per share and ten-year warrants to purchase 1,800,000
shares at $31 per share. All of the warrants become exercisable
upon the earlier of the third anniversary of the date of issuance
 or the Companys stock price exceeding a predetermined
price for twenty consecutive trading days.

Upon closing of the transactions, the proceeds will be allocated
to the convertible Preferred Stock and the warrants based on
their relative fair values, with the convertible Preferred Stock
classified outside of stockholders equity and the warrants
as additional paid-in capital on the consolidated balance sheet.
Any difference between the fair value allocated to the
convertible Preferred Stock and the fair value of the
Companys Common Stock is considered a beneficial conversion
 feature. The beneficial conversion feature, which does not
affect net income, will be accounted for as a dividend on the
convertible Preferred Stock in the period it is issued and is a
reduction of income available to common shareholders in the
computation of basic and fully diluted earnings per share.

The Company also entered into an agreement with CDR whereby CDR
will provide the Company financial and management advisory
services.

37



---



COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


18.  Supplemental Quarterly Information (Unaudited)

The following quarterly information is unaudited and has been
restated to give effect to the mergers with Costello and
Claremont which were accounted for by the poolings of interests
method of accounting.

|                                      |  |               |         |         |  |              |         |             |  |   |         |  |  |   |         | 
|------------------------------------- |  | ------------- | ------- | ------- |  | ------------ | ------- | ----------- |  | - | ------- |  |  | - | ------- | 
|                                      |  |              
|1999                                  |  | Quarter Ended
|                                      |  |              
|                                      |  | March 31      |         | June 30 |  | September 30 |         | December 31
|                                     
|                                     
|                                     
|                                     
|Revenues                              |  | $             | 112,027 |         |  | $            | 119,618 |             |  | $ | 119,207 |  |  | $ | 111,218 | 
|                                     
|                                     
|                                     
|                                     
|Gross profit                          |  |               | 38,801  |         |  |              | 41,486  |             |  |   | 38,305  |  |  |   | 30,800  | 
|                                     
|                                     
|                                     
|                                     
|Income from operations                |  |               | 14,570  |         |  |              | 10,063  |             |  |   | 12,510  |  |  |   | 5,190   | 
|                                     
|                                     
|                                     
|                                     
|Net income                            |  |               | 10,235  |         |  |              | 7,261   |             |  |   | 8,244   |  |  |   | 4,057   | 
|                                     
|                                     
|                                     
|                                     
|Net income per weighted-average share |  | $             | 0.27    |         |  | $            | 0.19    |             |  | $ | 0.22    |  |  | $ | 0.11    | 

|                                             |  |               |        |         |  |              |        |             |  |   |        |  |  |   |         | 
|-------------------------------------------- |  | ------------- | ------ | ------- |  | ------------ | ------ | ----------- |  | - | ------ |  |  | - | ------- | 
|                                             |  |              
|1998                                         |  | Quarter Ended
|                                             |  |              
|                                             |  | March 31      |        | June 30 |  | September 30 |        | December 31
|                                            
|                                            
|                                            
|                                            
|Revenues                                     |  | $             | 83,161 |         |  | $            | 90,705 |             |  | $ | 98,688 |  |  | $ | 104,013 | 
|                                            
|                                            
|                                            
|                                            
|Gross profit                                 |  |               | 27,195 |         |  |              | 30,801 |             |  |   | 34,055 |  |  |   | 35,417  | 
|                                            
|                                            
|                                            
|                                            
|Income (loss) from operations                |  |               | (4,148 | )       |  |              | 1,921  |             |  |   | 3,106  |  |  |   | 12,871  | 
|                                            
|                                            
|                                            
|                                            
|Net income (loss)                            |  |               | (6,637 | )       |  |              | 2,863  |             |  |   | 1,270  |  |  |   | 9,195   | 
|                                            
|                                            
|                                            
|                                            
|Net income (loss) per weighted-average share |  | $             | (0.20  | )       |  | $            | 0.08   |             |  | $ | 0.03   |  |  | $ | 0.25    | 
|                                            
|                                            
|                                            
|                                            
|Pro forma net income                         |  |               | (5,220 | )       |  |              | 2,863  |             |  |   | 1,270  |  |  |   | 9,195   | 
|                                            
|                                            
|                                            
|                                            
|Pro forma diluted earnings per share         |  | $             | (0.16  | )       |  | $            | 0.08   |             |  | $ | 0.03   |  |  | $ | 0.25    | 

19.  Pro Forma Statement of Income Information
(Unaudited)

The pro forma adjustments for the incremental income tax
provision (benefit) included in the accompanying consolidated
statements of income reflects the additional provision (benefit)
for Federal and state income taxes at the effective income tax
rate as if the companies Subchapter S elections had
been revoked prior to January 1, 1997 and the companies had
been taxed as C corporations. The differences between the
United States Federal statutory rate and the consolidated
effective rate are as follows:

|                                                                  |  |              |      |      |  |  |    |  
|----------------------------------------------------------------- |  | ------------ | ---- | ---- |  |  | -- | -
|                                                                  |  |             
|                                                                  |  | Year Ended  
|                                                                  |  | December 31,
|                                                                  |  |             
|                                                                  |  | 1998         |      | 1997
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Statutory Federal income tax rate                                 |  |              | 35   | %    |  |  | 35 | %
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|State income taxes, net of Federal tax effect                     |  |              | 2    |      |  |  | 4  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Tax rate differences on foreign earnings not subject to
	U.S. tax |  |              | (10) |      |  |  | (4 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Non-deductible merger costs                                       |  |              | 26   |      |  |  | 2  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Other                                                             |  |              | (2   | )    |  |  | 1  |  
|                                                                  |  |              |      |      |  |  |    |  
|                                                                  |  |              | 51   | %    |  |  | 38 | %
|                                                                  |  |              |      |      |  |  |    |  

The Company considers all undistributed earnings of foreign
subsidiaries to be permanently invested. Therefore, no United
States income taxes have been provided on these earnings.

38



---



Item 9.  Changes in and Disagreements with Accountants on
 Accounting and Financial Disclosure

None

39



---



PART III

Item 10.  Directors and Executive Officers of the Company

The information required by this item is included in our Proxy
Statement for our 2000 Annual Meeting of Shareholders under the
caption Directors and Executive Officers and is incorporated
herein by reference.

Item 11.  Executive Compensation

The information required by this item is included in our Proxy
Statement for our 2000 Annual Meeting of Shareholders under the
caption Executive Compensation and is incorporated herein by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners
 and Management

The information required by this item is included in our Proxy
Statement for our 2000 Annual Meeting of Shareholders under the
caption Director and Executive Officer Ownership of CBSI Common
Stock and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

The information required by this item is included in our Proxy
Statement for our 2000 Annual Meeting of Shareholders under the
caption Certain Relationships and Related Transactions and is
incorporated herein by reference.

40



---



PART IV

Item 14.  Exhibits, Financial Statement Schedules and
Reports on Form 8-K



|    |                                         
|--- | ----------------------------------------
|(a) | Documents filed as a part of the report:



|   |                                  
|-- | ---------------------------------
|1. | Consolidated Financial Statements



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | The following consolidated financial statements of the Company
	and its subsidiaries are filed herewith:

|                                                                                                              |  |      |    | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                              |  | Page
|                                                                                                              |  |     
|Report of Independent Public Accountants                                                                      |  |      | 19 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Consolidated Balance Sheets as of December 31, 1999 and 1998                                                  |  |      | 22 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Consolidated Statements of Income for each of the years ended
	December 31, 1999, 1998 and 1997               |  |      | 23 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Consolidated Statements of Shareholders Equity for each of
	the years ended December 31, 1999, 1998 and 1997 |  |      | 24 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Consolidated Statements of Cash Flows for each of the years ended
	 December 31, 1999, 1998 and 1997          |  |      | 25 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Notes to Consolidated Financial Statements                                                                    |  |      | 26 | 

2.  Financial Statement Schedules

None

3.  Exhibits

|        |      |             |  |                                                                                                                                                                                      
|------- | ---- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        | 3.1* |             |  | Restated Articles of Incorporation of the Company, as amended.                                                                                                                       
|        | 3.2* |             |  | Bylaws of the Company.                                                                                                                                                               
|        | 4.1* |             |  | See Exhibits 3.1 and 3.2 for provisions of the Restated Articles
	of Incorporation and Restated Bylaws of the Company defining
	rights of the holders of Common Stock of the Company.
|        | 4.2* |             |  | Specimen Stock Certificate.                                                                                                                                                          
|        | 21.1 |             |  | Subsidiaries of Registrant. (Filed Herein)                                                                                                                                           
|        | 23.1 |             |  | Consent of Arthur Andersen LLP. (Filed Herein)                                                                                                                                       
|        | 23.2 |             |  | Consent of KPMG Peat Marwick LLP. (Filed Herein)                                                                                                                                     
|        | 23.3 |             |  | Consent of Deloitte & Touche LLP. (Filed Herein)                                                                                                                                     
|        | 27.1 |             |  | Financial Data Schedule.(Filed Herein)                                                                                                                                               




|  |                                                                                                                                                                                                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Incorporated herein by reference to exhibit of the same number in
	 the Form S-1 Registration Statement of the Registrant
	(Registration No. 333-18413) dated as of December  20,
	1996, as amended.

41



---



SIGNATURES

Pursuant to the requirements of Sections 13 and 15(d) of the
 Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                                  
| | ---------------------------------
| | COMPLETE BUSINESS SOLUTIONS, INC.



| |     |                          
| | --- | -------------------------
| | By: | /s/ RAJENDRA B. VATTIKUTI

| |                                                
| | -----------------------------------------------
| |                                                
| | Rajendra B. Vattikuti                          
| | President, Chief Executive Officer and Director
| | March 29, 2000                                 

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

|                                               |  |                                                                                                                                 |  |               
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|/s/ RAJENDRA B. VATTIKUTIRajendra B. Vattikuti |  | President, Chief Executive Officer, Director, (Principal
	Executive Officer)                                                    |  | March 29, 2000
|/s/ TIMOTHY S. MANNEYTimothy S. Manney         |  | Executive Vice President of Finance and Administration, Treasurer
	 and Director (Principal Financial and Accounting 
	Officer) |  | March 29, 2000
|/s/ FRANK D. STELLAFrank D. Stella             |  | Director                                                                                                                        |  | March 29, 2000
|/s/ DOUGLAS S. LANDDouglas S. Land             |  | Director                                                                                                                        |  | March 29, 2000
|John A. Stanley                                |  | Director                                                                                                                        |  | March 29, 2000
|William Brooks                                 |  | Director                                                                                                                        |  | March 29, 2000
|/s/ RONALD K. MACHTLEYRonald K. Machtley       |  | Director                                                                                                                        |  | March 29, 2000

42



---



EXHIBIT INDEX

|        |      |             |  |                                                                                                                                                                                      
|------- | ---- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|No.     |      | Description
|        |      |            
|        | 3.1  | *           |  | Restated Articles of Incorporation of the Company, as amended.                                                                                                                       
|        | 3.2  | *           |  | Bylaws of the Company.                                                                                                                                                               
|        | 4.1  | *           |  | See Exhibits 3.1 and 3.2 for provisions of the Restated Articles
	of Incorporation and Restated Bylaws of the Company defining
	rights of the holders of Common Stock of the Company.
|        | 4.2  | *           |  | Specimen Stock Certificate.                                                                                                                                                          
|        | 21.1 |             |  | Subsidiaries of Registrant. (Filed Herein)                                                                                                                                           
|        | 23.1 |             |  | Consent of Arthur Andersen LLP. (Filed Herein)                                                                                                                                       
|        | 23.2 |             |  | Consent of KPMG Peat Marwick LLP. (Filed Herein)                                                                                                                                     
|        | 23.3 |             |  | Consent of Deloitte & Touche LLP. (Filed Herein)                                                                                                                                     
|        | 27.1 |             |  | Financial Data Schedule.(Filed Herein)                                                                                                                                               

43