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                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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

                   For the fiscal year ended December 31, 1999

                                       OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                          ACT OF 1934 [NO FEE REQUIRED]

           For the transition period from ___________ to___________.

                         Commission File Number 0-21040

                          CAMBRIDGE TECHNOLOGY PARTNERS
                              (MASSACHUSETTS), INC.
             (Exact name of registrant as specified in its charter)


              Delaware                                  06-132-0610
  (State or other jurisdiction of             (IRS Employer Identification No.)
    incorporation or organization)

      Eight Cambridge Center
     Cambridge, Massachusetts                              02142
(Address of principal executive offices)                 (Zip Code)

       Registrant's telephone number, including area code: (617) 374-9800

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

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

                          Common Stock, $.01 Par Value
                  Series A Junior Participating Preferred 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 was approximately $771,275,552 based on the last reported sale price
of $14.938 on The Nasdaq National Market on March 22, 2000, as reported by
Nasdaq.

     As of March 22, 2000, there were 62,810,077 shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The registrant intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 31,
1999. Portions of such proxy statement are incorporated by reference into Part
III of this report.

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                                                                          PART I

ITEM 1.  BUSINESS.

Introduction

Cambridge Technology Partners (Massachusetts), Inc. ("Cambridge" or the
"Company") performs technology and consulting services to help its clients
develop and accelerate their transition to Internet-based e-business solutions
and processes - the information technology that defines the "New Economy."
Founded in 1991, the Company combines electronic business and digital (Internet)
strategy consulting and cross-enterprise, software integration services to
"Global 1000" organizations worldwide, delivering rapid end-to-end business
solutions, usually on a fixed-time, fixed-price basis. Cambridge's services
include digital business strategies, e-commerce technical solutions consulting,
Internet user experience design, advanced software application integration,
custom software solutions, network solutions, enterprise resource solutions,
change management consulting, and integrated management consulting across
various industrial sectors and the entire scope of the value chain of the
Company's clients.

Electronic commerce business solutions delivered to clients have become and will
likely continue to become more integrated with clients' value chains and legacy
systems. This market trend represents a growth opportunity for Cambridge.
Cambridge groups its services into three lines of business, "eBusiness,"
"eIntegration" and "Change Management Consulting." Prior to this realignment,
the Company's services had been organized in six service lines since October
1998: Cambridge Management Consulting, Customer Management Solutions,
Interactive Solutions, Custom Software Solutions, Enterprise Resource Solutions,
and Network Services.

The Company's largest business unit, the North America Business Unit, is
responsible for all eBusiness and eIntegration service offerings in North
America; outside of North America, country and regional managers have
responsibility for the same service offerings in their respective geographic
areas. Responsibility for the Company's worldwide Change Management Consulting
group is centralized in the United Kingdom, where it was based when Cambridge
acquired it. By organizing responsibility for its services outside of North
America according to culturally similar regions, the Company can operate more
effectively within the cultural, economic and technological differences among
countries where its customers do business. In 1999, 1998 and 1997, 37%, 30% and
31%, respectively, of the Company's total revenues derived from sources outside
the United States.

The Company provides the majority of its services on a fixed-time, fixed-price
model, with client involvement at all stages of the process. In performing its
services, the Company brings together key client users, executives, and IT
professionals in interactive sessions to achieve consensus on the business case,
strategic objectives, and functionality of a business solution. In many cases,
the Company employs a rapid deployment methodology that features an iterative
approach. The Company believes that these techniques permit the delivery of
results in rapid time frames - typically within three to twelve months.



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The Company holds investments in new and existing companies through its
investment in the Cambridge Technology Capital Fund I, L.P. The Company also
makes strategic investments in new and existing companies through the
recently-announced NEWCO Investment Strategy, which will make its first
investments in 2000. See "Cambridge Technology Capital Fund I, L.P." and "NEWCO
Investment Strategy."

The Company's headquarters are located in Cambridge, Massachusetts. The Company
has a total of 55 offices worldwide, with regional sales and operations
facilities across the United States and in Western Europe, Latin America and
Asia/Pacific.

Cambridge's Services

The Company combines its service offerings to rapidly deliver end-to-end
business systems that are designed to create immediate, improved financial
results for clients. To achieve these objectives, the Company often uses its
rapid deployment methodologies. The Company believes that, where applicable,
this approach enables it to deliver results in time frames significantly shorter
than those of its competitors, typically within three to twelve months. The
Company offers a comprehensive set of services which can be deployed
individually or in a combination.

eBusiness Service Offerings

Cambridge's eBusiness group addresses its clients' internal and external online
business needs and bring together many of the Company's existing skills and
competencies in order to respond to the market opportunity presented by the use
of the Internet as a value exchange mechanism. The eBusiness group is organized
to accelerate Cambridge's clients' transition to the New Economy by defining new
digital strategies and deploying advanced interactive solutions that incorporate
strategy, technology and user experience design. The skills needed to deliver
these services include the cognitive and creative elements of user interface
design; the management, localization and personalization of content; the
integration of user interface and transaction processing systems; the management
and administration of web based e-commerce solutions; and the creation and
operation of trading exchanges and blended media service centers that put the
power of the Internet at the disposal of our clients' customers. The Company's
eBusiness services address marketing strategy, user experience, creative design,
and technical infrastructure integration. These solutions include e-commerce,
extranet, intranet, online communities, online procurement, interactive
marketing, interactive service web sites and knowledge management systems and
permit clients to build cyber-relationships with their customers, consumers, and
channels. In 1999 and 1998, eBusiness services comprised 39% and 31%,
respectively, of the Company's total revenues.

     DIGITAL BUSINESS STRATEGY. Cambridge's Digital Business Strategy services
comprise elements of the Company's former IT Strategy and Interactive Solutions
groups. In a Digital Business Strategy assignment, the Company works with the
client to identify and prioritize the e-commerce initiative best suited for the
client's business goals. The Company uses a Strategy Workshop to address the
client's internal factors that could contribute to or impede the success of an
e-commerce endeavor and conducts an external assessment through which it focuses
on competition and e-commerce best practices from other industries. Typically, a
strategy and work plan is developed from this workshop that serves as the
foundation for product definition and the



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implementation of a technical solution. During the product definition phase, the
Company defines the scope of the engagement. The team interacts with the
client's customers to understand the design context and considers available
technology choices. The team also develops the processes and corresponding
changes in organizational structure that will be required and begins executing
the communications and other plans developed during the Strategy Workshop.

     ELECTRONIC COMMERCE. The Company deploys its e-commerce technical solutions
- customer, commerce and e-Market solutions for the New Economy - using
Cambridge's strategic and architectural expertise. Cambridge deploys these
solutions using its Customer-Oriented Rapid Application Development ("CoRAD")
methodology. The CoRAD methodology is a balanced approached that brings together
a multi-disciplinary team drawn from four critical disciplines for an electronic
business solution's success: technical, business, creative, and cognitive.
Cambridge's Electronic Commerce group is comprised of elements of the Company's
former Interactive Solutions group.

Cambridge's electronic Customer Management Solutions ("e-CMS") services provide
innovative, Internet-based, customer-focused solutions that enable the Company's
clients to attract and retain profitable customers and cultivate customer
loyalty. Customer Management solutions can include: customer loyalty programs,
customer service and support solutions, sales force automation, computer
telephony integration, training and assimilation solutions, and enterprise
marketing solutions. These solutions are typically delivered using packages from
leading front office vendors, including Siebel, Clarify, and Vantive.

     UXDESIGN. Cambridge's Uxdesign service delivers well-crafted online
experiences that encompass all areas of user-facing design. The Uxdesign service
was formed in August 1999. It adds user-facing design to Cambridge's other
services and offerings. With centers in Atlanta, New York, and San Francisco,
this new group focuses on designing and developing online experiences that are
sensitive to users' needs and clients' brands. This approach helps clients
translate or establish their e-commerce businesses, thereby easing and
increasing business transactions, partners, and stakeholders benefits, while
improving overall processes in their business models. The Uxdesign group's
collective expertise in cognitive design, interactive content, visual design,
and user interface development contributes to the Company's ability to provide
its clients with end-to-end eBusiness solutions.

     eMARKETS. Cambridge's eMarkets service is being organized to offer a new
offering aimed at building free-standing Internet-based trade exchanges.
Cambridge intends to target selectively industries and companies that seek to
build free-standing, value-exchanging entities between sellers and buyers of
goods and services. Such entities, known as e-markets, will require significant
business and systems integration services to operate. Cambridge intends to offer
such services, along with other capabilities, to individual companies and
consortiums participating in and building e-markets.

eIntegration Service Offerings

Cambridge's eIntegration group encompasses the Company's system integration
services that were formerly offered under the names "Custom Software Solutions,"
"Enterprise Resource



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Solutions," "Customer Relationship Management Solutions," "Network Services" and
"Assimilation Solutions." These services address the growing market opportunity
of transforming the Company's clients to network-based businesses. Cambridge's
eIntegration services offerings leverage the Company's traditional experience in
designing custom systems, implementing package solutions, and structuring change
management. These services are structured to accelerate Cambridge's clients'
transition to new technologies through extra-enterprise integration of advanced
technologies, architectures and services and through intra-enterprise
development and deployment of mission-critical systems in selected sectors. In
1999 and 1998, eIntegration services comprised 42% and 49%, respectively, of the
Company's total revenues.

     e-SECTOR SOLUTIONS. The Company's e-Sector Solutions service develops and
leverages Cambridge's industry-specific knowledge, skills and technologies to
provide New Economy integrated solutions to customers in selected industries,
including financial services, energy/utility services, high technology
manufacturing and telecommunications services.

     ADVANCED APPLICATION INTEGRATION. The Company's Advanced Application
Integration ("AAI") service (formerly called "Custom Software Solutions")
implements and integrates custom solutions for clients looking to integrate
their systems or achieve a competitive strategic advantage by automating their
proprietary and unique business processes. AAI delivers its services to clients
across industries using object-oriented, and enterprise application integration
technologies. AAI has particular expertise in the areas of meta data,
identification, security, semantics, processes, information exchange, data
warehousing and money management and trading solutions.

The Network Solutions service (formerly "Network Services") offers a combination
of network assessment, design, and deployment services with a comprehensive set
of integration skills to support a client's open systems. The Company believes
that network performance and reliability are critical in a distributed computing
environment and the Network Solutions group provides clients with expertise that
helps ensure applications perform as planned. The Company offers its client's
these services using a rapid facilitated workshop approach, led by technical
consultants with access to the Company's depth and breadth of application and
technology expertise. Network Solutions services are offered on an integrated
basis with other service offerings, as well as on a stand-alone basis.

     e-ENTERPRISE. The Company's e-Enterprise service (formerly called
"Enterprise Resource Solutions") supports customers in the implementation,
modification, integration, and extension of Enterprise Resource Planning ("ERP")
solutions throughout an organization. Many organizations use ERP applications to
manage information across the enterprise, in areas such as finance, human
resources, distribution, manufacturing or supply chain management. e-Enterprise
provides customization and implementation services for software products
supplied by PeopleSoft. e-Enterprise also provides business process design and
consulting services that leverage the capabilities of the major ERP and supply
chain management applications, such as those developed by PeopleSoft. The
Company's clients may purchase services for a full e-Enterprise deployment or
elect to purchase only a portion of these services.

The e-Enterprise service also includes the Company's supply chain implementation
groups of the former Enterprise Resource Solutions service offering. Supply
chain management is the



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coordination of material, information and financial flows between and among
participating enterprises. In the New Economy, the supply chain consists of
multiple companies that function as efficiently and effectively as a single
company, with full information visibility and accountability. The Company is
working to integrate its supply chain service offerings with its enterprise
resource planning and customer relationship management services. These combined
services will allow the Company's clients to leverage the technologies of the
New Economy as they manage their inbound and outbound logistics, enterprise
operations, marketing and sales activities, and customer service and support.

     ASSIMILATION AND POST-LAUNCH SERVICES. The Assimilation and Post-Launch
Services offering (formerly "Assimilation Solutions") is designed to assist
clients in realizing the benefits of technology solutions through organizational
change management and production support for New Economy solutions. The
Company's Assimilation and Post-Launch Services service offers a comprehensive
suite of education services, technical training, and technology assimilation
tools that provide end users and IT professionals with the skills to use
technology solutions that the client has implemented.

Through its rapid roll-out assimilation and support services, the Company
identifies and creates an assimilation plan that is consistent with the client's
business objectives, resources and time constraints. To encourage use of and
generate excitement for the new technology, the Company creates and targets
messages to the client's organization. The Company also studies the client's
day-to-day functions to develop employee training courses, curricula, materials
and exercises that are based on real-life business scenarios. The Company
conducts instructor-lead training and offers creative delivery methods including
computer-based training, Internet-based training, and distance learning. To
ensure that the assimilation solution delivers anticipated results, the Company
conducts regular quality reviews, conducts focus groups to determine training
effectiveness, and evaluates usage of the new technology.

Within Assimilation and Post-Launch Services, the Company's Application
Management Services ("AMS") group provides enterprise application support and
management solutions. These services are designed to improve clients' return on
their technology investments and increase overall user satisfaction with new
applications. AMS services are separated into two major categories - Roll-out
Planning and Delivery services and Production Support and Maintenance services.
Roll-out Planning and Delivery services address a client's readiness to
implement an application. In delivering these services, the Company works with
the client to identify hardware and software needs, resource and skill
requirements, and the processes required to support the application. Production
Support and Maintenance services are comprised of code maintenance, application
support and technology support for existing applications. Currently, AMS
provides application maintenance methodologies and services for solutions the
Company has developed and implemented. The Company anticipates extending this
service offering to include supporting applications that have been developed by
other systems integrators.

     EXCELL DATA CORPORATION. Excell Data Corporation ("Excell") is a
wholly-owned subsidiary of the Company. Excell is a consulting firm and systems
integrator of Microsoft-centric solutions, providing staff augmentation and
project delivery services on a contract basis



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for hourly fees. Excell extends the Company's capabilities in the network
services market to include implementation of multi-vendor applications,
messaging systems, and network systems in heterogeneous network environments.

Change Management Consulting

     The Cambridge Management Consulting ("CMC") organization provides
integrated change management consulting services to support clients across
various industrial sectors, and across the entire scope of the value chain, in
the rapid implementation of sustainable improvements capable of transforming
their businesses. In 1999 and 1998, CMC services comprised 19% and 20%,
respectively, of the Company's total revenues.

CMC helps its clients achieve rapid, tangible, high-payback operational
improvements through the implementation of major change programs, known as
Change Implementation. These programs impact key business processes, management
and decision-making systems, and roles and responsibilities and deliver
financial and operational improvements identified at the commencement of an
engagement. The improvements delivered are sustained by behavioral change in the
client's management and staff, at all levels of their business.

Change Implementation focuses on improvements to operational performance such as
reducing time from design to market, increasing operating capacity, reducing
operating costs, shortening of product cycle times, reducing inventory and
improving customer acquisition and retention. A successful Change Implementation
solution is dependent upon the full participation of the client. The Company's
implementation process involves the Company's consultants working full-time, on
site with the client at all levels of their business to develop and implement
the required changes in the business. Change Implementation programs harness the
knowledge, skills and enthusiasm within a client's business, and leverage these
with Cambridge's industry and process knowledge and implementation expertise.
Where appropriate, CMC utilizes the Company's systems integration capabilities
to provide a leading-edge technology platform for the improvement program.

CMC provides services for major organizations across a range of industries,
building focused practices in specific sectors including Oil and Gas, Chemicals,
Engineering, Automotive, Financial Services and Consumer Goods. To support its
ability to add significant value to clients across the value chain, the Company
has developed specific approaches and capabilities in the areas of asset
management, supply chain management, product and process leadership, customer
loyalty and knowledge management.

Cambridge Technology Capital Fund I, L.P.

Cambridge Technology Capital Fund I, L.P. (the "Fund") was formed in October
1997 as a limited partnership with committed capital of approximately $25.3
million. The Fund is intended to invest in expansion-stage, private companies
for the purpose of capital appreciation. A wholly-owned subsidiary of the
Company acts as the general partner of the Fund's general partner. The Company's
capital commitment to the Fund is approximately $6.0 million, of which
approximately $4.9 million has been contributed as of December 31, 1999. The
balance



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of the Fund's capital has been provided by institutional investors, directors of
the Company and other individuals. The Company's investment in the Fund resulted
in a net gain of approximately $29.6 million for the year ended December 31,
1999 and $798,000 for the year ended December 31, 1998. At December 31, 1999,
the Company has received approximately $2.2 million of common stock
distributions from the Fund. See Note N of the Notes to the Consolidated
Financial Statements. In early 2000, a successor venture capital fund, Cambridge
Technology Capital Fund II, L.P., commenced fund raising with a target committed
capital of $150 million.

NEWCO Investment Strategy

In December 1999, Cambridge announced its "NEWCO" investment strategy. The
Company intends to finance and develop new and existing New Economy companies,
using a combination of the knowledge and skills of Cambridge's employees,
capital from internal sources, and relationships with venture capital firms. The
goals for the NEWCO investment strategy are to increase shareholder value, to
supplement Cambridge's e-business services consultancy model, and to attract and
retain high-competency employees. The focus of NEWCO investments is primarily
strategic in nature, specifically to strengthen Cambridge's core business and to
enable expansion into new services, e-technologies, infrastructures and markets.
The NEWCO management team began in January 2000 to identify potential
investments, with the goal of building an extended network of companies that
compliment Cambridge's existing service offerings and help Cambridge penetrate
new markets and industries. The NEWCO management team will initially target
investments in Internet services, Internet technology and infrastructure, and
Internet-based markets. Its investment criteria are based on traditional venture
capital practices, with the additional requirement that the investment support
Cambridge's strategic intent. The NEWCO management team also plans to
collaborate with the Cambridge Technology Capital Fund I in identifying joint
investment opportunities. The Company made no NEWCO investments and had no NEWCO
operations in 1999. The Company does not hold itself out as an "investment
company," as that term is defined in the Investment Company Act of 1940, as
amended.

Concentration of Revenues

No customer accounted for more than 5% of the Company's net revenues in 1999,
1998, or 1997. In many cases the Company's consulting and software development
and implementation services are delivered in connection with a major information
technology project initiated by a client's senior management, board of
directors, line of business executive or information systems department. Since
the implementation of a strategic business solution may result in fees to the
Company exceeding $1,000,000, most customers undertake these projects on an
irregular basis. Accordingly, the Company expects that the existence and
identity of its largest customers may change from year to year. The Company does
not believe that any service line is seasonal.

Sales and Marketing

The Company has a dedicated sales and marketing organization to market and sell
its services. The Company's sales and marketing organization consists of 114
North America Business Unit employees and 25 CMC employees operating in North
America and 112 employees operating in



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Europe, Latin America and the Pacific Rim. These employees address markets and
client opportunities on a geographic and service-line basis.

This organization is comprised of a dedicated sales force, field marketing and
business development staff, and relationship-marketing specialists termed
"managing partners." These managing partners are responsible for driving
longer-term relationships and demand among the Company's primary clients and act
as the central point of contact for these clients. Together, these functions
work towards identifying, building and maintaining client relationships for the
Company.

The Company's vendor relationships provide a highly-leveraged approach to
building marketing awareness. Cambridge is working closely with strategic
partners, integrating technology and service companies to provide unique
solutions that provide added value to our clients. These partners are selected
for their market leadership and the Company's expectation of a cultural match
with Cambridge. The Company has built strong relationships with many of the
industry's leading hardware and software providers, including Broadvision,
Clarify, Commerce One, E.piphany, GTE Inetworking, Hewlett-Packard, Interworld,
Interwoven, Microsoft, Netscape, PeopleSoft, Siebel, Sun Microsystems and
Vantive. Those vendors provide a source of leads for the Company in addition to
providing joint funding on occasion, content expertise and additional name
recognition for marketing events and programs. The vendors are not contractually
obligated to continue to participate in any of those programs and are not
prohibited from entering into similar arrangements with the Company's
competitors.

Since December 1998, the Company has maintained a strategic alliance with
Microsoft Corporation. Under this agreement, the Company delivers scalable,
replicable solutions based on the Microsoft(R) enterprise platform, with
emphasis on e-commerce, customer loyalty, data warehousing and investment
trading platforms, and on Microsoft COM+ technology and the Microsoft Visual
Studio(R) development system. The Company is also committed to increasing its
number of Microsoft Certified Systems Engineers (MCSEs) and Microsoft Certified
Solution Developers (MCSDs).

The Company holds marketing seminars and sponsors industry conferences to
promote its service offerings and to provide clients with insight on key
business and technology issues. The Company also conducts on-site educational
events for senior management in client organizations, hosts marketing events
geared toward client needs, and takes additional steps to build relationships
with its key clients. In addition, this approach allows the Company to
cross-sell its services and solutions so that clients can take advantage of the
full breadth of its offerings.

The Management Lab

The Management Lab is the Company's research and education arm, chartered with
providing intellectual guidance and thought leadership to clients facing the
issues associated with adopting advanced information technology. Its programs
include: the Lyceum, Executive Education Programs, Customized Learning Programs,
and The Directors Institute on Information Technology.



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Markets and Clients

The Company markets its services to a wide variety of industries, and its
clients include a diverse group of business organizations seeking to achieve
competitive advantage. To date, the Company's marketing efforts have been
directed toward clients on the basis of business needs rather than industry
group and the Company believes that no single industry has been material to the
Company's success. The projects described below are representative of the types
of projects undertaken by the Company's clients. Because of the costs involved
in implementing a strategic solution, clients may undertake projects on an
irregular basis and level of services performed for individual clients varies
from year to year.

Since its inception, the Company has utilized client/server technology, and,
increasingly since 1998, the Internet, to deliver innovative IT solutions for
clients. The Company believes that these solutions have helped provide clients
with competitive advantages by focusing on high value-added areas such as
distribution, sales and marketing, and customer management.

Competition

The markets in which the Company competes include a large number of
participants, is subject to rapid changes, and is highly competitive. The market
includes participants from a variety of market segments, including systems
consulting and integration firms, contract programming companies, application
software firms, the professional service groups of computer equipment companies
such as Compaq Computer Corporation, Hewlett-Packard Company, and IBM;
facilities management and MIS outsourcing companies, "Big Five" accounting
firms, and general management consulting firms. The Company's competitors also
include companies such as American Management Systems, Andersen Consulting,
AnswerThink, Cap Gemini America, the consulting division of Computer Sciences
Corporation, Consulting Group Incorporated, Electronic Data Systems Corporation,
Gen3 Partners, Razorfish, Renaissance Worldwide Incorporated, Sapient
Corporation, Scient, Technology Solutions Corporation, Viant, and numerous
smaller consulting companies, including those established or staffed by former
employees of the Company. The Company also faces competition from information
services organizations within potential clients.

Some participants in the e-commerce consulting and software development markets
have significantly greater financial, technical and marketing resources and
greater name recognition than the Company, and generate greater systems
consulting and integration revenues than does the Company. In addition, the
Internet consulting, custom software development and systems integration markets
are highly fragmented and served by numerous firms, many of which serve only
their respective local markets. However, the Company believes that its rapid
development methodology, coupled with its high quality standards, open systems
philosophy, client/server and Internet architecture approach, and fixed-price
contracting practices, distinguish it from its competitors. The Company believes
that the principal competitive factors in the consulting and information
technology industry include responsiveness to client needs, speed of application
software development, speed and effectiveness of business solution development
and implementation, quality of service, price, project management capability,
technical expertise, and identifiable results. The Company believes it competes
favorably with respect to these factors.



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The Company believes that its ability to compete also depends in part on a
number of competitive factors outside its control, including the ability of its
competitors to hire, retain and motivate senior project managers, the ownership
by competitors of software used by potential clients, the development by others
of software that is competitive with the Company's products and services, the
price at which others offer comparable services, and the extent of its
competitors' responsiveness to customer needs.

Human Resources

As of December 31, 1999, the Company had a total staff of 4,200 employees,
including 3,375 project personnel, 254 in sales and marketing and 571 in the
general and administrative staff.

A project manager oversees all phases of a client assignment. Project managers
are typically responsible for a single client assignment. At any one time,
clients may be involved with the Company on the implementation of more than one
strategic business solution. Client partners are responsible for coordinating
all of the Company's services to a client, ensuring the solution meets the
client's business needs and maintaining client relationships.

The Company's success will depend in large part upon its ability to attract,
retain and motivate highly skilled employees, particularly project managers and
client partners and other senior technical personnel. Qualified project managers
are in particularly great demand and are likely to remain a limited resource for
the foreseeable future. In 1999, the Company suffered from a historically high
employee turnover rate of 30%. The Company believes, however, that its new
strategies for attracting, developing and retaining high-quality professionals
will support present operations and anticipated future growth. In addition to
Cambridge's traditional emphasis on training, its policy of promoting from
within, and its methodology (which allows associates to progress with one client
through multiple phases of a project, thereby maximizing the learning process
and maintaining the professional challenge), the Company has committed
substantial capital in 2000 to increasing employee compensation, training and
personal development. Although the Company expects to continue to attract
sufficient numbers of highly skilled employees and to retain its existing
project managers and other senior personnel for the foreseeable future, there
can be no assurance that the Company will be able to do so. Failure to do so
could have a material adverse effect on the Company's future results of
operations.

None of the Company's employees is subject to a collective bargaining agreement.
The Company believes that its relations with its employees are good.

Intellectual Property Rights

The Company's success is partially dependent upon its software deployment and
consulting methodologies and other proprietary intellectual property rights. The
Company relies upon a combination of trade secret, nondisclosure and other
contractual arrangements and technical measures, and copyright and trademark
laws, to protect its proprietary rights. The Company holds no patents or
registered copyrights. The Company generally enters into confidentiality
agreements with its employees, consultants, clients and potential clients and
limits access to and



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distribution of its proprietary information. There can be no assurance that the
steps taken by the Company in this regard will be adequate to deter
misappropriation of its proprietary information or that the Company will be able
to detect unauthorized use and take appropriate steps to enforce its
intellectual property rights.

The Company's business includes the development of custom software applications
in connection with specific client engagements. Ownership of such software is
generally assigned to the client. In addition, the Company also develops
object-oriented software components that can be reused in software application
development and certain foundation and application software products, or
software "tools," most of which remain the property of the Company.

Although the Company believes that its services and products do not infringe on
the intellectual property rights of others, the Company cannot give assurance
that such a claim will not be asserted against the Company in the future.


ITEM 2.  PROPERTIES.

The Company's headquarters and principal administrative and sales and marketing
operations are located in approximately 177,000 square feet of leased space in
Cambridge, Massachusetts. The Company also maintains offices and leases office
space in the various locations in which it maintains branches and in which its
subsidiaries operate. The Company has regional sales and operations facilities
in the United States located in: Atlanta (GA), Bridgewater (NJ), Cambridge (MA),
Chicago (IL), Columbus (OH), Dallas (TX), Denver (CO), Detroit (MI), Houston
(TX), Los Angeles (CA), Miami (FL), Minneapolis (MN), New York (NY), Newport
Beach (CA), Philadelphia (PA), Phoenix (AZ), Pittsburgh (PA), Red Bank (NJ), San
Francisco (CA), San Juan (PR), San Mateo (CA), San Ramon (CA), Seattle (WA), and
Washington D.C. In Canada, the Company has an office in Toronto. European
regional sales and operations facilities are located in: Vienna, Austria;
Brussels, Belgium; Copenhagen, Denmark; Paris and Versailles, France; Frankfurt
and Munich, Germany; Dublin, Ireland; Milan, Italy; Amsterdam and Woerden,
Netherlands; Oslo, Norway; Malmo and Stockholm, Sweden; Geneva and Zurich,
Switzerland; London, Manchester, Reading and Richmond, United Kingdom. Other
offices include: Melbourne and Sydney, Australia; Sao Paolo, Brazil; Bangalore,
Mumbai and Deli, India; Tokyo, Japan; Mexico City, Mexico; and Caracas,
Venezuela.

Management of the Company believes that its facilities are suitable and adequate
for its near term needs.


ITEM 3.  LEGAL PROCEEDINGS.

On August 31, 1998, the Company acquired Excell Data Corporation ("Excell"). On
November 19, 1998, certain of the former shareholders of Excell filed a lawsuit
against the Company in the United States District Court for the District of
Massachusetts. The complaint alleged breach of contract, violation of federal
securities laws, common law fraud, and negligent misrepresentation in connection
with the Excell acquisition and sought unspecified damages. In February 1999,
the



                                       11
<PAGE>

Company filed a counterclaim against such former stockholders of Excell which
alleges breach of contract. On March 2, 2000, the United States District Court
for the District of Massachusetts granted Cambridge's motion for summary
judgment, dismissing the complaints of the former shareholders of Excell in
their entirety.

In March and April 1999, certain stockholders of the Company filed ten separate
class action lawsuits against the Company and certain of the Company's officers
in the United States District Court for the District of Massachusetts. These
suits have since been consolidated by the court. The suits allege
misrepresentations and omissions regarding the Company's future growth prospects
and progress of the Company's reorganization in violation of federal securities
laws. The suits seek unspecified damages. The Company believes that the
plaintiffs' claims are without merit and intends to vigorously defend the
lawsuits.

The Company is involved in litigation and various other legal matters, which
have arisen in the ordinary course of business. The Company does not believe
that the ultimate resolution of any existing matter will have a material adverse
effect on its 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 the Company's security holders during the
fourth quarter of the fiscal year ended December 31, 1999.



                                       12
<PAGE>

                                    PART II

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

                           Price Range of Common Stock

The Company's Common Stock is currently quoted on the Nasdaq National Market
("Nasdaq") system under the symbol CATP. The following table sets forth, on a
per share basis for the periods shown, the range of high and low sales prices of
the Company's Common Stock as reported by Nasdaq.

<TABLE>
<CAPTION>

                                                   High                Low
                                                   ----                ---
<S>                                                <C>                  <C>
Fiscal Year
1998:
First Quarter                                      50.88                35.25
Second Quarter                                     57.88                45.56
Third Quarter                                      58.38                19.06
Fourth Quarter                                     24.50                13.38
1999:
First Quarter                                      32.25                10.63
Second Quarter                                     20.75                11.50
Third Quarter                                      21.06                12.50
Fourth Quarter                                     27.00                10.81
</TABLE>


                                 Dividend Policy

The Company has never paid any cash dividends on its Common Stock. The Company's
current borrowing arrangements prohibit the payment of dividends without the
lender's prior consent. The Company currently intends to retain future earnings
for use in its business and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.

                                  Stockholders

As of March 22, 2000, there were approximately 2,786 stockholders of record of
the Company's common stock.

                     Recent Sales of Unregistered Securities

On August 27, 1999, the Company awarded 300,000 shares of restricted common
stock to Jack L. Messman in connection with his election as President and Chief
Executive Officer of the Company. The closing price of the Company's common
stock on that date was $14.438, and Mr. Messman is required to pay the Company
the par value of the shares, $.01 per share. The Company's right to repurchase
the shares of restricted stock expires as follows: (i) 33.33% on December 31,
2000, (ii) 33.33% on the earlier to occur of either July 31, 2002 or the first
date on which the closing price of the Company's common stock equals or exceeds
$28.876, and (iii) 33.33% on the earlier to occur of either January 31, 2003 or
the first date on which the closing



                                       13
<PAGE>

price of the Company's common stock equals or exceeds $36.095. Dividends would
be paid on the restricted stock in the event that dividends are paid on common
stock. The shares of restricted common stock were issued to Mr. Messman pursuant
to the exemption from registration afforded by Section 4(2) of the Securities
Act of 1933, as amended, because the issuance did not involve any public
offering. The proceeds of the $3,000 par value purchase price will be used for
general corporate purposes.



                                       14
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data presented below as of and for the fiscal years ended
December 31, 1999, 1998, 1997, 1996, and 1995, have been derived from the
Company's consolidated financial statements, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. This data should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations, the Company's Consolidated Financial Statements and Notes
thereto, and other financial information appearing elsewhere in this Form 10-K.

<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
                                                          -------------------------------------------------------------------------
(in thousands, except per share data)                        1999            1998            1997            1996            1995
                                                          ---------       ---------       ---------       ---------       ---------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Consolidated Statement of Operations Data:
Revenues                                                  $ 628,111       $ 612,041       $ 438,329       $ 294,527       $ 194,094
Costs and expenses:
      Project personnel                                     316,931         272,263         203,928         138,706          92,924
      General and administration                             94,590          66,454          47,445          34,239          24,348
      Sales and marketing                                    66,042          56,947          40,668          25,270          20,041
      Other costs                                           182,497         126,970          84,582          55,544          30,739
      Business combination costs                                 --           8,400           4,760           1,195           1,333
                                                          ---------       ---------       ---------       ---------       ---------
            Total operating expenses                        660,060         531,034         381,383         254,954         169,385
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) from operations                               (31,949)         81,007          56,946          39,573          24,709
Other income (expense):
      Interest income, net                                    2,727           2,233           1,824             877             364
      Gain on equity investments                             29,556             798             188              --             909
      Gain on sale of marketable
         equity securities                                    2,228              --              --              --              --
      Foreign exchange (loss) gain                              856            (934)           (122)           (141)             92
                                                          ---------       ---------       ---------       ---------       ---------
            Total other income                               35,367           2,097           1,890             736           1,365
                                                          ---------       ---------       ---------       ---------       ---------

Income before income taxes                                    3,418          83,104          58,836          40,309          26,074
Provision for income taxes                                    1,299          31,164          25,054          16,317          10,145
                                                          ---------       ---------       ---------       ---------       ---------
Net income                                                $   2,119       $  51,940       $  33,782       $  23,992       $  15,929
                                                          =========       =========       =========       =========       =========
Basic net income per share                                $     .04       $     .90       $     .62       $     .46       $     .32
                                                          =========       =========       =========       =========       =========
Diluted net income per share                              $     .03       $     .83       $     .55       $     .40       $     .28
                                                          =========       =========       =========       =========       =========
Weighted average number of common
      shares outstanding                                     60,004          58,079          54,632          52,054          49,992
                                                          =========       =========       =========       =========       =========
Weighted average number of common
      and common equivalent shares
      outstanding                                            61,745          63,301          60,775          59,573          56,798
                                                          =========       =========       =========       =========       =========

<CAPTION>

Consolidated Balance Sheet Data:                                                         December 31,
                                                          -------------------------------------------------------------------------
                                                             1999            1998            1997            1996            1995
                                                          ---------       ---------       ---------       ---------       ---------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Cash and cash equivalents                                 $  62,288       $  80,051       $  39,649       $  26,456       $  11,176
Investments held to maturity                                 28,659          24,918          15,824          12,727           8,544
Working capital                                             179,147         177,929         108,301          72,334          37,657
Total assets                                                367,674         351,206         242,421         150,588          90,235
Stockholders' equity                                        277,036         242,150         150,867          98,796          56,007
</TABLE>



                                       15
<PAGE>

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


OVERVIEW

Cambridge Technology Partners (Massachusetts), Inc. ("Cambridge" or the
"Company") performs technology and consulting services to help its clients
develop and accelerate their transition to Internet-based e-business solutions
and processes - the information technology that defines the "New Economy."
Founded in 1991, the Company combines electronic business and digital (Internet)
strategy consulting and cross-enterprise, software integration services to
"Global 1000" organizations worldwide, delivering rapid end-to-end business
solutions, usually on a fixed-time, fixed-price basis. Cambridge's services
include digital business strategies, e-commerce technical solutions consulting,
Internet user experience design, advanced software application integration,
custom software solutions, network solutions, enterprise resource solutions,
change management consulting, and integrated management consulting across
various industrial sectors and the entire scope of the value chain of the
Company's clients.

Electronic commerce business solutions delivered to clients have become and will
likely continue to become more integrated with clients' value chains and legacy
systems. This market trend represents a growth opportunity for Cambridge.
Cambridge groups its services into three lines of business, "eBusiness,"
"eIntegration" and "Change Management Consulting." Prior to this realignment,
the Company's services had been organized in six service lines since October
1998: Cambridge Management Consulting, Customer Management Solutions,
Interactive Solutions, Custom Software Solutions, Enterprise Resource Solutions,
and Network Services.

The Company provides the majority of its services on a fixed-time, fixed-price
model, with client involvement at all stages of the process. For software
development services, the Company and its clients generally agree on a
contractually fixed price for each phase of a project. The Company only includes
in backlog that stage of the software deployment process for which it has
obtained a signed contract. Accordingly, backlog does not reflect revenues
expected in future periods.

In performing its services, the Company brings together key client users,
executives, and IT professionals in interactive sessions to achieve consensus on
the business case, strategic objectives, and functionality of a business
solution. In many cases, the Company employs a rapid deployment methodology that
features an iterative approach. The Company believes that these techniques
permit the delivery of results in rapid time frames - typically within three to
twelve months. Revenues for 1999 increased 3% to $628.1 million compared to
$612.0 million in 1998. Net income for the year ended December 31, 1999
decreased 96% to $2.1 million, or $.03 (diluted), compared to $51.9 million or
$.83 (diluted), for the same period in 1998.



                                      16
<PAGE>

eBusiness revenues increased 27% to $243.3 million, or 39% of revenues, for 1999
compared to $190.9 million, or 31% of revenues, for 1998. eIntegration revenues
decreased 13% to $261.3 million, or 42% of revenues, for 1999 compared to $299.0
million, or 49% of revenues for 1998. Change Management increased 1% to $123.5
million, or 19% of revenues, for 1999 compared to $122.1 million, or 20% of
revenues, for 1998. The dollar and percentage increase in eBusiness revenues was
due to increased demand resulting from the adoption of eBusiness and Internet
business models globally. The dollar and percentage decrease in eIntegration
revenues is attributed to lowered demand for the Company's client server
solutions and ERP package software implementations due to an increased number of
clients opting to defer or cancel strategic information technology initiatives
in favor of completing Year 2000 prevention and remediation activities. Revenues
for Change Management increased slightly.

North American revenues decreased 4% in 1999 compared to 1998, while
international revenues grew 17% in 1999 compared to 1998. North American
revenues for 1999 represent 64% of total revenues while international revenues
represent 36% of total revenues for the same period. For 1998, North American
revenues represent 69% of total revenues while international revenues represent
31% of total revenues for the same period. The international revenue growth
resulted from increased demand for the Company's services in Europe, Latin
America, and Asia Pacific. The decrease in North American revenues is attributed
to lowered demand for the Company's client server solutions and ERP package
software implementations due to an increased number of clients opting to defer
or cancel technology initiatives in favor of completing Year 2000 remediation
activities and higher than expected employee turnover.

Employee turnover was approximately 30%, excluding forced turnover, for 1999
compared to approximately 22%, excluding forced turnover, for 1998. The Company,
along with the rest of the technology industry, continues to be challenged by
employee turnover as companies compete for employees with the skill sets
required to fulfill client demand. Company headcount was approximately 4,200 at
December 31, 1999 compared to approximately 4,400 December 31, 1998. The Company
continues to assess the skill sets necessary to address the changing market
dynamics and focuses on training, hiring, and assimilating appropriate personnel
to service its clients.



                                      17
<PAGE>

RESULTS OF OPERATIONS

To facilitate comparisons, the following table sets forth selected statements of
operations data as a percentage of revenues and the period-to-period percentage
changes for revenues, costs and expenses, and income from operations.


<TABLE>
<CAPTION>

                                        Years Ended December 31,         Percentage Increase (Decrease)
                                    ------------------------------      -------------------------------
                                     1999       1998        1997          `98 to `99     `97 to `98
                                    -------    --------    -------      --------------  ---------------
<S>                                   <C>        <C>        <C>                <C>           <C>
Revenues                              100%       100%       100%               3%            40%
Costs and expenses:
  Project personnel                    50         45         47               16             34
  General and administration           15         11         11               42             40
  Sales and marketing                  11          9          9               16             40
  Other costs                          29         21         19               44             50
  Business combination costs           --          1          1             (100)            76
                                     -----      -----      -----
   Total operating expenses           105         87         87               24             39
                                     -----      -----      -----
Income from operations                 (5)        13         13             (139)%           42%
Other income, net                       6          1         --
                                     -----      -----      -----
Income before income taxes              1%        14%        13%
                                     =====      =====      =====
</TABLE>


Historically, a majority of the Company's revenues have been recognized using
the percentage of completion method, which requires revenues to be recorded over
the term of a client contract based on the percentage of expenses incurred to
total project expenses. The cumulative impact of any revision in estimates of
the percentage of work completed is reflected in the fiscal quarter in which the
revision becomes known. The Company's operating results may be adversely
affected by inaccurate estimates of contract completion costs. Although the
Company from time to time is required to make revisions to its work completion
estimates, to date, none of these revisions has had a material adverse effect on
the Company's operating results. Inaccuracies in future work completion
estimates could result in a material adverse effect on the Company's operating
results. Losses expected to be incurred on projects in progress are recognized
when known. Revenues related to time and materials engagements are recognized
when services are performed.

A major portion of the Company's services are provided on a fixed-price basis
and, therefore, the Company bears the risk of cost overruns. Client project
margins and personnel utilization are critical components of the Company's
financial performance. The Company regularly reviews staff compensation and
overhead costs to ensure that its services are properly priced. In addition,
management continuously monitors the progress of client projects. The Company
attempts to manage its personnel utilization rates by closely monitoring project
timetables and staffing requirements for new projects. Because the Company's
client engagements are generally terminable without substantial client penalty,
an unanticipated termination of a client project could require the Company to
maintain or terminate under-utilized employees, resulting in a higher than
expected number of unassigned employees or severance expenses. While the level
of professional staff may be adjusted to reflect active projects, the Company
must maintain a



                                      18
<PAGE>

sufficient number of senior professionals to oversee existing client projects
and participate with the Company's sales force in securing new client
assignments.

Recent Developments

The Company announced that it will continue to transition the organization to a
provider of eBusiness solutions. However, the skill sets required to deliver
e-Business solutions are in high demand, and the issues surrounding turnover and
slowdown in the ERP implemenation services are expected to continue. The Company
announced that it therefore expects to continue to incur losses in the first
half of 2000 based on flat revenue compared to the first half of the prior year,
and the need to make strategic investments to fund the Company's growth. Even
with total revenues expected to be flat in the first half of 2000, Cambridge
expects continued growth in its e-Business revenues. These estimates are
forward-looking statements and are subject to various risks and uncertainties
that could cause the Company's actual results to differ materially from these
estimates. The factors described below under "Forward-Looking Statements" are
some of the factors that could cause a material difference in the Company's
actual results.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Revenues increased 3% to $628.1 million in 1999 as compared to the prior fiscal
year. North American revenues decreased 4% to $404.8 million from $421.6 million
in 1998. Revenues from international operations increased by 17% to $223.3
million in 1999 from $190.4 million in 1998. This increase is primarily due to
the increased demand for Company's services in Europe, Latin America and Asia
Pacific. The decrease in the growth rate of revenues in 1999 of 3% compared to
40% in 1998 was primarily attributable to a decrease in the revenues in North
America. This decrease in North America revenue was primarily attributed to
lower demand for the Company's client server solutions and ERP package software
implementations due to an increased number of clients opting to defer or cancel
technology initiatives in favor of completing Year 2000 remediation activities
and higher than expected employee turnover.

During the second quarter of 1999, the Company recorded incremental costs of
$8.9 million resulting from a human resources repositioning and retention
programs to enable the Company to retain, retrain, relocate and strategically
redeploy employees into its eBusiness service offerings due to changing market
dynamics which resulted in decreased demand for Enterprise Resource Planning
(ERP) services and increased demand for e-business solutions. The program
included employee retention bonuses, staff reductions, and the retraining,
relocation and redeployment of certain employees. The $8.9 million of
repositioning costs included $5.9 million of employee retention bonuses, $1.3
million of severance costs, and $1.7 million of costs to retrain, relocate and
redeploy certain employees. Of the $8.9 million of repositioning and retention
costs, $6.6 million was charged to project personnel costs, $1.9 million to
general and administrative expenses, $.2 million to sales and marketing
expenses, and $.2 million to other costs. These costs were paid during
1999. Staff reductions included approximately 55 professional staff and 17
administrative personnel.



                                      19
<PAGE>

Project personnel costs consist principally of payroll and payroll-related
expenses for personnel dedicated to client assignments and are directly
associated with, and vary with, the level of client services being delivered.
Project personnel costs were $316.9 million, or 50% of revenues in 1999,
compared to $272.3 million, or 45% of revenues, in 1998. The dollar and
percentage increase resulted from additional compensation and benefit costs
resulting from the competitive market environment for technical skills and a
change in the skill mix of personnel. Worldwide project personnel headcount
decreased 6% to 3,375 employees at December 31, 1999, from 3,596 employees at
December 31, 1998. Competition for personnel with IT skills is intense and the
Company expects salaries and wages to continue to increase. The Company
periodically reviews and updates its billing rates in an attempt to mitigate the
expected increase in project personnel costs.

General and administration expenses were $94.6 million, or 15% of revenues in
1999, compared to $66.5 million, or 11% of revenues in 1998. The dollar and
percentage increase reflects costs for client receivables determined to be
uncollectable and additional compensation and benefit costs associated with
personnel to support the Company's business. The increase was also caused by
increased recruiting costs associated with adding senior leadership positions as
well as maintaining current staff levels. General and administration headcount
increased 18% to 571 employees at December 31, 1999, from 482 at December 31,
1998.

Sales and marketing expenses were $66.0 million, or 11% of revenues in 1999,
compared to $56.9 million, or 9% of revenues in 1998. The dollar and percentage
increase was primarily attributable to additional compensation and benefit
costs, an increase in travel related expenses and increased use of marketing
publications in order to provide existing and potential clients with essential
information about the Company and its service offerings. Sales and marketing
headcount decreased 17% to 254 at December 31, 1999, from 304 at December 31,
1998. The Company continued its investment in marketing initiatives and
educational and training programs through those conducted by its Management Lab.
The Management Lab enables clients to participate in both physical and virtual
interactive forums to discuss issues associated with adopting IT, as well as key
business, technology, and career management issues.

Other costs consist of non-billable expenses directly incurred for client
projects and other associated business costs, including facilities costs and
related expenses, non-billable staff costs, and staff training. Other costs were
$182.5 million or 29% of revenues in 1999 compared to $127.0 million or 21% of
revenues in 1998. The dollar and percentage increase from 1998 resulted
principally from a decrease in project personnel utilization and billability, a
provision for uncollectable project expenses due from clients, and increased
facility, travel, and employee training costs. The decrease in project personnel
utilization was primarily caused by costs associated with higher than expected
turnover and changes in market demand for the Company's traditional services
caused by customer concerns regarding Year 2000 and this shift in market demand
toward eBusiness solutions. The decrease in billability was primarily caused by
costs associated with project overruns and changes in the Company's project
management model that resulted in an increase in non-billable resources.



                                       20
<PAGE>

Interest income net of interest expense increased to $2.7 million in 1999 from
$2.2 million in 1998. This increase is principally due to higher interest rates
received on cash balances and short-term investments in 1999 compared to 1998.
The Company's cash and short-term investments consist primarily of tax exempt
investment grade municipal bonds which mature within one year from the date of
purchase, overnight repurchase agreements, and short-term commercial paper.

Gain on equity investments, which consists primarily of the Company's investment
in Cambridge Technology Capital Fund I L.P. (the "Fund"), was $29.6 million in
1999 compared to $798,000 in 1998. The increase is due to investment gains
generated primarily by the Fund's unrealized appreciation of its portfolio of
securities (see Note N of Notes to Consolidated Financial Statements).

Foreign exchange gain was $856,000 in 1999 compared to a loss of $934,000 in
1998 related to foreign currency exchange rate fluctuations associated with
intercompany balances. The gain in 1999 was primarily due to a favorable
fluctuation in foreign exchange rates and the monthly foreign exchange forward
contracts to hedge against the risk of changes in foreign exchange rates
associated with intercompany balances. This risk coverage is dependent upon
forecasted intercompany activities at the beginning of each month and the
exchange rate gains and losses are directly related to the accuracy of these
forecasted amounts. As of December 31, 1999, the Company held foreign exchange
contracts of approximately $10.2 million. As the Company grows its international
business, it becomes increasingly subject to the risks associated with
international operations, including changes in foreign currency exchange rates.
The Company continues to monitor the impact of foreign currency exchange rates
on revenues.

The Company's effective income tax rate in 1999 increased to 38.0% from 37.5% in
1998. This increase is primarily due to the statutory rates of foreign entities.
The Company's effective tax rate may vary from period to period based on the
Company's future expansion into areas with varying country, state, and local
statutory income tax rates (see Note J of Notes to Consolidated Financial
Statements).

Net income decreased 96% to $2.1 million or $.03 per share (diluted) for 1999
compared to $51.9 million or $.83 per share (diluted) for the same period in
1998.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Revenues increased 40% to $612.0 million in 1998 compared to $438.3 million in
1997 due principally to an increase in the volume of services delivered to new
clients, leveraging the existing client base by undertaking additional projects,
and continued demand for the Company's service offerings. North American
revenues for 1998 grew 37% to $421.6 million from $307.5 million in 1997.
Revenues from international operations increased by 46% to $190.4 million in
1998 from $130.8 million in 1997. This increase is primarily due to the
continued development of the Company's business in Europe and further expansion
into Latin America and the Pacific Rim. The decrease in the growth rate of total
revenues in 1998 (40%) compared to 1997 (49%) was primarily attributable to a
decrease in the revenue growth rate of the Company's North



                                       21
<PAGE>

American client server and ERP business. This decrease in the growth rate was
due to increased competition from the providers of application specific
solutions compared to the Company's generalist approach. The Company's new
business win rates and project transition rates declined as a result of the
increased competition. The lower rate of revenue growth was also due to an
increased number of clients opting to defer or cancel technology initiatives in
favor of completing Year 2000 remediation activities.

Project personnel costs were $272.3 million or 45% of revenues in 1998 compared
to $203.9 million or 47% of revenues in 1997. The dollar increase resulted from
the hiring of additional project personnel over 1997 staff levels and the
related increase in payroll and payroll-related expenses to support the
increased volume of services delivered to clients and an increase in
subcontractor costs. This dollar increase was partially offset by a decrease in
variable compensation related to the Company's bonus plan, which contributed to
the comparative decrease in project personnel costs as a percentage of revenues.
Worldwide project personnel headcount increased 25% to 3,596 employees at
December 31, 1998, from 2,867 employees at December 31, 1997.

General and administration expenses were $66.5 million in 1998 compared to $47.4
million in 1997, representing 11% of net revenues for both periods. The dollar
increase reflects increased payroll and payroll-related expenses associated with
increased staff headcount and increased company-wide relocation, travel,
telecommunications and facilities expenses to support the Company's continued
growth and geographic expansion in North America and internationally, partially
offset by a decrease in variable compensation. General and administration
headcount increased 25% to 482 employees at December 31, 1998, from 385 at
December 31, 1997.

Sales and marketing expenses were $56.9 million in 1998 compared to $40.7
million in 1997, reflecting 9% of net revenues for both periods. The dollar
increase was primarily attributable to an increase in payroll and
payroll-related expenses and facilities costs associated with the increase in
sales and marketing personnel from 244 at December 31, 1997, to 307 at December
31, 1998. The increased headcount enabled the Company to maximize potential
client lead generation through its regional field marketing staff with
subsequent services coordinated by its sales personnel. The dollar increase also
resulted from an increase in travel related expenses and increased use of
marketing publications in order to provide existing and potential clients with
essential information about the Company and its service offerings. The dollar
increase was partially offset by a decrease in variable compensation. The
Company continued its investment in marketing initiatives and educational and
training programs through those conducted by its Management Lab and the
Cambridge Information Network.

Other costs consist of non-billable expenses directly incurred for client
projects and other associated business costs, including facilities costs and
related expenses, non-billable staff costs, and staff training. Other costs were
$127.0 million or 21% of revenues in 1998 compared to $84.6 million or 19% of
revenues in 1997. The dollar increase is primarily attributable to a decrease in
project personnel utilization which results in increased non-billable project
personnel costs, and increased facility, travel, and employee training and
administrative costs, including costs related to maintaining newly opened and
expanded offices worldwide, as the Company



                                       22
<PAGE>

continues to expand globally. The increase as a percentage of revenues from 1997
resulted principally from the decrease in project personnel utilization which
resulted in increased non-billable project personnel costs. The decrease in
project personnel utilization was primarily due to the reduced growth rate of
the North American Rapid Application Deployment business.

Business combination costs were $8.4 million in 1998 and $4.8 million in 1997.
Of these business combination costs, approximately $1.7 million and $4.8 million
in 1998 and 1997, respectively, related primarily to investment banking, legal,
accounting, and consulting fees incurred in connection with the acquisitions of
Excell Data Corporation ("Excell") in 1998 and Peter Chadwick Holdings Limited
in 1997 (see Note B of Notes to Consolidated Financial Statements). Business
combination costs for 1998 also included a charge to operations of $6.7 million,
recorded upon consummation of the Excell acquisition, representing amounts owed
to participants under the Excell Phantom Stock Plan. The Excell Phantom Stock
Plan, by its terms, terminated as a result of the Excell acquisition (see Note G
of Notes to Consolidated Financial Statements - Excell Phantom Stock Plan).

Interest income increased to $2.4 million in 1998 from $2.1 million in 1997.
This increase is principally due to increased cash and short-term investment
balances, partially offset by lower interest rates in 1998 compared to 1997. The
Company's cash and short-term investments consist primarily of tax exempt
investment grade municipal bonds which mature within one year from the date of
purchase, overnight repurchase agreements, and short-term commercial paper.

Interest expense in 1998 was $199,000 compared to $311,000 in 1997. The decrease
is primarily due to interest expense related to a loan obtained by Peter
Chadwick Holdings Limited in April 1997 to finance the purchase of a training
facility. This loan was repaid in full by the Company in March 1998.

Gain on equity investments, which consists primarily of the Company's investment
in Cambridge Technology Capital Fund I L.P. (the "Fund"), was $798,000 in 1998
compared to $188,000 in 1997. The increase is primarily due to investment gains
generated by the Fund which was formed in October 1997 (see Note N of Notes to
Consolidated Financial Statements).

Foreign exchange loss was $934,000 in 1998 compared to a loss of $122,000 in
1997 related to foreign currency exchange rate fluctuations associated with
intercompany balances. The 1998 foreign exchange loss consists primarily of
losses related to Japan, Ireland, Australia, and Mexico. As of December 31,
1998, the Company held foreign exchange contracts of approximately $9.4 million.

The Company's effective income tax rate in 1998 decreased to 37.5% from 42.6% in
1997. This decrease is primarily due to the non-deductible acquisition costs
incurred related to acquiring Peter Chadwick Holdings Limited in 1997, which
resulted in a 3.7% increase in the effective tax rate for 1997, compared to
non-deductible acquisition costs related to the acquisition of Excell in 1998,
which resulted in a 0.8% increase in the 1998 effective tax rate. The effective
tax rate before non-deductible acquisition costs was 36.7% in 1998 compared to
38.9% in 1997. The decrease is primarily due to a lower blended state income tax
rate in 1998 resulting from the



                                       23
<PAGE>

Company's state tax rate minimization initiatives put in place in the second
half of 1997 and continuing into 1998 and favorable effects of the Company's
global tax planning strategies. The Company's effective tax rate may vary from
period to period based on the Company's future expansion into areas with varying
country, state, and local statutory income tax rates (see Note J of Notes to
Consolidated Financial Statements).

Net income, excluding business combination costs, increased 50% to $57.7 million
or $.92 per share (diluted) for 1998 compared to $38.5 million or $.63 per share
(diluted) for the same period in 1997. Giving effect to the applicable business
combination costs, net income increased 54% to $51.9 million or $.83 per share
(diluted) for 1998 compared to $33.8 million or $.55 per share (diluted) for the
same period in 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company continued to operate primarily debt-free in 1999. Working capital
increased to $179.1 million at December 31, 1999, from $177.9 million at
December 31, 1998. This increase was primarily due to increases in unbilled
revenue on contracts, and prepaid expenses and other current assets, and a
decrease in income taxes payable, partially offset by a decrease in cash and
cash equivalents and accounts receivable. The increase in unbilled revenue on
contracts was caused by timing differences, including timing differences between
contractual billing terms and percentage of completion revenue recognition
requirements. The Company's days sales outstanding was 74 days at December 31,
1999 compared to 80 days at December 31, 1998. This decrease was primarily due
to a decrease in accounts receivable from 1999 to 1998 while revenue remained
essentially the same. The Company actively assesses and monitors the
collectability of its accounts receivable.

Net cash used in operating activities was $29.1 million in 1999, compared to net
cash provided by operating activities of $51.2 million for the same period in
1998. The difference in net cash used in operating activities in 1999 compared
to net cash provided by operating activities in 1998 was primarily caused by
lower net income in 1999, a decrease in tax benefits from a reduction in the
exercise of stock options during 1999, and a decrease in income taxes payable,
partially offset by lower accounts receivable in 1999 compared to 1998. In
addition, net income for 1999 includes non-cash gains from the Fund. The ability
of the Company to sustain tax benefits from the exercise of stock options is
dependent upon the market price of the Company's stock compared to the exercise
price.

Capital expenditures of $21.4 million in 1999 were used principally for computer
equipment to support the Company's operations, the consolidation of its
Northeast operations and corporate functions into a new facility, and employee
workstations, telecommunications equipment, and leasehold improvements. Capital
expenditures for 2000 are expected to approximate $22 million, principally for
leasehold improvements, personal computers, employee workstations,
telecommunication and video conferencing equipment, and other equipment to
support both current and anticipated levels of customer activities worldwide.
The actual amount of capital expenditures may vary from management's estimates
as capital needs arise and actual expenditures are made.



                                      24
<PAGE>

The Company maintains a $50.0 million unsecured senior revolving credit facility
(the "Facility") through a syndication arrangement committed equally by The
Chase Manhattan Bank ("Chase") and Fleet National Bank ("Fleet Bank"). The
Facility, which expires on September 10, 2001, is administered by Chase and
carries a commitment fee, payable quarterly in arrears, calculated based on the
unused portion of the Facility and a price grid as set forth in the credit
agreement. The Facility permits the Company to elect any one of three possible
interest rate formulas as defined in the credit agreement. Interest is payable
in arrears based on an interest period determined by the interest rate elected
by the Company. The Facility requires, among other things, the Company to
maintain certain financial ratios, including debt service coverage, debt to
capital, and net worth. For the year ended December 31, 1999, the Company was in
compliance with the debt to capital and net worth ratio requirements but, for
the quarter ended December 31, 1999, was not in compliance with the debt service
coverage ratio. The Company received a waiver through March 31, 2000 regarding
the non-compliance with the debt service coverage ratio. The Company is in the
process of renegotiating the terms of the Facility. As of December 31, 1999, the
Company had no balance outstanding under the Facility.

The Fund was formed in October 1997 as a limited partnership with committed
capital of approximately $25.3 million. The Fund's goal is capital appreciation
and is intended to invest in expansion-stage, private companies. A wholly owned
subsidiary of the Company acts as the general partner of the Fund's general
partner and the Company's investment is accounted for using the equity method of
accounting. The Company's capital commitment to the Fund is approximately $6.0
million. At December 31, 1999, the Company's cumulative capital contribution to
the Fund amounted to approximately $4.9 million. The Company's investment in the
Fund resulted in a net gain of approximately $29.6 million for the year ended
December 31, 1999.

The Company expects that cash flows from operations will provide the principal
source of future liquidity for the Company. However, the Company's strategy to
transition its business to internet oriented solutions could place a strain on
the Company's financial resources. The Company anticipates that existing cash
and investment balances combined with cash generated from operations and amounts
available under the Facility will be sufficient to meet the Company's working
capital requirements for at least the next 12 months and to fund the transition
of the Company's business. Operating results and liquidity may be adversely
affected if market demand and revenues do not increase as anticipated. As the
Company expands its international operations, a number of factors, including
market acceptance of the Company's services, significant fluctuations in
currency exchange rates, and changes in general economic, political, or
regulatory conditions could also adversely affect future results and liquidity.

The Year 2000 Issue

The Year 2000 issue results from computer programs written using two digits
rather than four to define the applicable year. Any computer programs that have
date-sensitive software may



                                       25
<PAGE>

recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.

In addition to the Company's internal systems, the Company relies on third party
relationships in the conduct of its business. For example, third party vendors
handle the payroll function for the Company, and the Company also relies on the
services of landlords of its facilities, telecommunication companies, banks,
utilities, and commercial airlines, among others. In addition, the failure on
the part of the accounting systems of the Company's clients due to the Year 2000
issue could result in a delay in the payment of invoices issued by the Company
for services and expenses.

The Company has recommended, implemented and customized various third-party
software packages for its clients, certain of which may not be Year 2000
compliant. Because the Company has designed, developed and implemented software
and systems for a large number of clients since 1991, there can be no way of
assuring that all such software programs and systems will be Year 2000
compliant. There also can be no assurance that the contractual protections, if
any, obtained by the Company will operate to protect the Company from, or limit
the amount of, any liability arising from claims asserted against the Company.

To date, the Company's software and services have not revealed any significant
year 2000 problems. As of March 15, 2000, the Company has not experienced any
significant issues as a result of Year 2000 problems and does not anticipate
incurring material incremental costs in future periods due to such issues.

New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The statement requires companies to
recognize all derivatives as either assets or liabilities, with the instruments
measured at fair value. The accounting for changes in fair value, recorded as a
gain or loss, depends on the intended use of the derivative and its resulting
designation. The statement initially was to be effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In July 1999, the Financial
Accounting Standards Board issued SFAS 137, "Accounting for Derivative
Instruments and Hedging Activites-deferral of the Effective Date of FASB
Statement No. 133, an amendment of FASB Statement No. 133." SFAS 137 defers the
implementation of SFAS 133 by one year. SFAS 133, as amended by SFAS 137, is
effective for the Company's fiscal quarters beginning after January 1, 2001. The
Company is evaluating if the adoption of SFAS 137 will have a material effect on
its financial position or results of operations.



                                       26
<PAGE>

Forward-looking Statements

This Form 10-K includes forward-looking statements (statements that are not
historical facts), including, without limitation: statements about future net
revenues and profits; capital expenditures; liquidity sources and needs; working
capital needs; e-business initiatives undertaken in response to customer demand
and anticipated market growth oppotunities; estimated costs for additional
retention programs; the Company's efforts to retain, retrain, relocate, and
strategically redeploy employees; the Company's hiring efforts; increases in
personnel and wages for the Company's personnel; the impact of varying
compensation arrangements; geographic expansion and opening additional offices;
and litigation involving the Company. These forward-looking statements are
subject to several risks and uncertainties. While it is impossible to identify
each factor and event that could affect the Company's results, there are a
number of important factors that could cause the Company's actual results to
differ materially from those indicated by the forward-looking statements and
that could have an impact on the Company's operating results. These factors
include, without limitation:

o    risks associated with the Company's transition to an e-Business company,
     including the orientation of new management teams within the new structure
     and the need to develop reliable forecasting tools for each e-Business
     service offering;

o    the success of the Company's human resources repositioning and retention
     programs;

o    employee hiring, retention, billability and utilization;

o    the number and significance of client engagements commenced and completed
     during a period;

o    the number of working days in a period;

o    the Company's ability to manage its growth;

o    the Company's ability to manage the cost of its engagements and operating
     costs;

o    changes in demand for the Company's services and third party products or
     solutions for which the Company performs integration services;

o    future initiatives in an attempt to adapt to changing market dynamics;

o    estimated costs for additional retention programs;

o    changes in market conditions that could impact the value of securities
     owned by the Company or the Company's investment in the Cambridge
     Technology Capital Fund I;

o    turnover in senior management;

o    competition;

o    risks associated with international operations;



                                       27
<PAGE>

o    the acceptance and profitability of the Company's services in new
     locations;

o    the integration of acquired businesses;

o    unanticipated negative outcomes of litigation involving the Company; and

o    misappropriation of, or lack or loss of protection of, the Company's
     intellectual property.

The timing of revenues is difficult to forecast because the Company's sales
cycle is relatively long in the case of new clients and may depend on factors
such as the size and scope of client assignments and general economic
conditions. Because a high percentage of the Company's expenses are relatively
fixed, a variation in the timing of the initiation or the completion of client
assignments, particularly at or near the end of any quarter, can cause
significant variations in operating results from period to period.


Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in interest rates and foreign
currency exchange rates due to investments in instruments made for non-trading
purposes. The interest rate risk relates primarily to the Company's portfolio of
short-term investment grade municipal securities. The Company is also subject to
risk relating to fluctuating interest rates to the extent that it incurs any
borrowings under its credit facility. The foreign exchange rate risk relates to
the Company's investment in foreign exchange contracts which are entered into in
order to mitigate the risk of changes in foreign exchange rates associated with
intercompany balances. The Company believes that interest rate risk and foreign
currency exchange rate risk are both immaterial to the Company.



                                       28
<PAGE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

<S>                                                                          <C>
Report of Independent Accountants                                            F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998                 F-3

Consolidated Statements of Operations for the Years Ended
   December 31, 1999, 1998, and 1997                                         F-4

Consolidated Statements of Stockholders' Equity for
   the Years Ended December 31, 1999, 1998, and 1997                         F-5

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 1999, 1998, and 1997                                         F-6

Notes to Consolidated Financial Statements                                   F-7
</TABLE>



                                      F-1
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
   of Cambridge Technology Partners (Massachusetts), Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and cash flows
present fairly, in all material respects, the financial position of Cambridge
Technology Partners (Massachusetts), Inc. (the "Company") at December 31, 1999
and 1998, and the results of its operations and its 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. 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
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.




PricewaterhouseCoopers LLP



Boston, Massachusetts
February 10, 2000, except for the first
paragraph of Note M, as to which the date is March 2, 2000



                                      F-2
<PAGE>

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                                                              December 31,
                                                                                                        1999                 1998
                                                                                                     ---------            ---------
<S>                                                                                                  <C>                  <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                                        $  62,288            $  80,051
    Investments held to maturity                                                                        28,659               24,918
    Accounts receivable, less allowance of $10,287 and $4,550
       at December 31, 1999 and 1998, respectively                                                     126,842              133,583
    Unbilled revenue on contracts                                                                       13,181               10,964
    Deferred income taxes                                                                                  247                2,179
    Prepaid expenses and other current assets                                                           38,465               33,284
                                                                                                     ---------            ---------
       Total current assets                                                                            269,682              284,979

Property and equipment, net                                                                             53,127               48,255
Deferred tax asset                                                                                       3,619                   --
Other assets                                                                                            41,246               17,972
                                                                                                     ---------            ---------
       Total assets                                                                                  $ 367,674            $ 351,206
                                                                                                     =========            =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                                                 $  13,845            $  15,804
    Accrued expenses                                                                                    54,971               49,603
    Deferred revenue                                                                                     9,594               10,861
    Income taxes payable                                                                                12,054               30,635
    Obligations under capital leases, current                                                               71                  147
                                                                                                     ---------            ---------
       Total current liabilities                                                                        90,535              107,050

Obligations under capital leases                                                                           103                  197
Deferred income taxes                                                                                       --                1,809

Commitments and contingencies

Stockholders' equity:
    Preferred stock, par value $.01 per share, 2,000,000 shares
       authorized and none issued and outstanding
       at December 31, 1999 and 1998, respectively                                                          --                   --
    Common stock, $.01 par value, authorized 250,000,000 shares at
       December 31, 1999 and 1998, respectively;
       issued and outstanding 62,065,028 and 58,856,401 shares
       at December 31, 1999 and 1998, respectively                                                         621                  589
    Additional paid-in capital                                                                         159,738              115,662
    Retained earnings                                                                                  129,670              127,551
    Accumulated other comprehensive loss                                                                (9,331)              (1,652)
    Deferred compensation                                                                               (3,662)                  --
                                                                                                     ---------            ---------
       Total stockholders' equity                                                                      277,036              242,150
                                                                                                     ---------            ---------
       Total liabilities and stockholders' equity                                                    $ 367,674            $ 351,206
                                                                                                     =========            =========
</TABLE>

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



                                      F-3
<PAGE>

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)


<TABLE>
<CAPTION>

                                                                                              Years Ended December 31,
                                                                              -----------------------------------------------------
                                                                                 1999                  1998                  1997
                                                                              ---------             ---------             ---------
<S>                                                                           <C>                   <C>                   <C>
Revenues                                                                      $ 628,111             $ 612,041             $ 438,329

Costs and expenses:
    Project personnel                                                           316,931               272,263               203,928
    General and administration                                                   94,590                66,454                47,445
    Sales and marketing                                                          66,042                56,947                40,668
    Other costs                                                                 182,497               126,970                84,582
    Business combination costs                                                       --                 8,400                 4,760
                                                                              ---------             ---------             ---------
       Total operating expenses                                                 660,060               531,034               381,383
                                                                              ---------             ---------             ---------

Income/(loss) from operations                                                   (31,949)               81,007                56,946

Other income (expense):
    Interest income, net                                                          2,727                 2,233                 1,824
    Gain on equity investments                                                   29,556                   798                   188
    Gain on sale of marketable
       equity securities                                                          2,228                    --                    --
    Foreign exchange gain/(loss)                                                    856                  (934)                 (122)
                                                                              ---------             ---------             ---------
       Total other income                                                        35,367                 2,097                 1,890
                                                                              ---------             ---------             ---------

Income before income taxes                                                        3,418                83,104                58,836
Provision for income taxes                                                        1,299                31,164                25,054
                                                                              ---------             ---------             ---------

Net income                                                                    $   2,119             $  51,940             $  33,782
                                                                              =========             =========             =========

Basic net income per share                                                    $     .04             $     .90             $     .62
                                                                              =========             =========             =========

Diluted net income per share                                                  $     .03             $     .83             $     .55
                                                                              =========             =========             =========

Weighted average number of
    common shares outstanding                                                    60,004                58,079                54,632
                                                                              =========             =========             =========

Weighted average number of common and
    common equivalent shares outstanding                                         61,745                63,301                60,775
                                                                              =========             =========             =========
</TABLE>


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



                                      F-4
<PAGE>

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                                  Accumulated
                                                                       Additional    Other
                                                     Number of   Par     Paid-In  Comprehensive    Deferred     Retained
                                                       Shares   Value    Capital  Income (Loss)  Compensation   Earnings     Total
                                                    ----------  -----  ---------  -------------  -------------  --------    -------
<S>                                                 <C>          <C>     <C>           <C>       <C>             <C>        <C>
Balance, December 31, 1996                          53,367,636   $534    $49,532       $125      $      --       $48,605    $98,796

  Comprehensive income/(loss):
     Net income                                             --     --         --         --             --        33,782     33,782
     Other comprehensive income:
        Foreign currency translation adjustment             --     --         --     (2,586)            --            --     (2,586)
                                                                                                                            -------
  Total comprehensive income                                                                                                 31,196
  Exercise of stock options                          2,170,050     22     12,779         --             --            --     12,801
  Tax benefit related to stock option exercises             --     --      5,807         --             --            --      5,807
  Shares issued under employee stock purchase plan     211,734      2      4,934         --             --            --      4,936
  Exercise of stock warrants                           900,000      9      1,791         --             --            --      1,800
  Accretion of Peter Chadwick preferred stock               --     --        557         --             --          (557)        --
  Dividend distribution (Peter Chadwick)                    --     --         --         --             --        (4,085)    (4,085)
  Dividend distribution (Excell)                            --     --         --         --             --          (384)      (384)
                                                    ----------  -----  ---------  -------------  -------------  --------    -------
Balance, December 31, 1997                          56,649,420    567     75,400     (2,461)            --        77,361    150,867

  Comprehensive income/(loss):
     Net income                                             --     --         --         --             --        51,940     51,940
     Other comprehensive income/(loss):
        Foreign currency translation adjustment             --     --         --       (446)            --            --       (446)
        Unrealized gain on investment, net of taxes         --     --         --      1,255             --            --      1,255
                                                                                                                            -------
     Other comprehensive income                                                                                                 809
                                                                                                                            -------
  Total comprehensive income                                                                                                 52,749
  Exercise of stock options                          1,975,616     20     18,656         --             --            --     18,676
  Tax benefit related to stock option exercises             --     --     12,238         --             --            --     12,238
  Shares issued under employee stock purchase plan     231,365      2      7,618         --             --            --      7,620
  Excell conversion to C Corporation                        --     --      1,750         --             --        (1,750)        --
                                                    ----------  -----  ---------  -------------  -------------  --------    -------
Balance, December 31, 1998                          58,856,401    589    115,662     (1,652)            --       127,551    242,150

  Comprehensive income/(loss):
     Net income                                             --     --         --         --             --         2,119      2,119
     Other comprehensive income/(loss):
        Foreign currency translation adjustment             --     --         --     (6,489)            --            --     (6,489)
        Reclassification adjustment
           for gain on investment                           --     --         --     (1,255)            --            --     (1,255)
        Unrealized gain on investment, net of taxes         --     --         --         65             --            --         65
                                                                                                                            -------
     Other comprehensive income/(loss)                                                                                       (7,679)
                                                                                                                            -------
  Total comprehensive income/(loss)                                                                                          (5,560)
  Exercise of stock options                          2,462,864     25     29,767         --             --            --     29,792
  Tax benefit related to stock option exercises             --     --      1,690         --             --            --      1,690
  Shares issued under employee stock purchase plan     445,763      4      8,291         --             --            --      8,295
  Issuance of restricted stock to employee at par      300,000      3      4,328         --         (4,328)           --          3
  Amortization of deferred compensation                     --     --         --         --            666            --        666
                                                    ----------  -----  ---------  -------------  -------------  --------    -------
Balance, December 31, 1999                          62,065,028   $621   $159,738    $(9,331)       $(3,662)     $129,670   $277,036
                                                    ==========  =====  =========  =============  =============  ========    =======
</TABLE>


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



                                      F-5
<PAGE>

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                              Years Ended December 31,
                                                                              -----------------------------------------------------
                                                                                 1999                  1998                  1997
                                                                              ---------             ---------             ---------
<S>                                                                           <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $   2,119             $  51,940             $  33,782
Adjustments to reconcile net income to net cash
    (used in)/provided by operating activities:
    Depreciation and amortization                                                16,609                12,846                 8,762
    Stock based compensation                                                        666                    --                    --
    Tax benefit from exercise of stock options                                    1,690                12,238                 5,807
    Gain on equity investment in Cambridge
       Technology Capital Fund                                                  (29,556)                 (798)                   --
    Realized gain on sale of marketable equity securities                        (2,228)                   --                    --
    Change in deferred income taxes                                              (2,746)               (1,096)                 (337)
    Changes in assets and liabilities:
      Decrease/(increase) in accounts receivable                                  3,684               (27,574)              (45,346)
      Increase in unbilled revenue on contracts                                  (2,766)               (1,880)               (4,756)
      Increase in prepaid expenses and other current assets                      (5,957)               (5,214)              (10,533)
      Decrease/(increase) in other assets                                         7,515                (6,689)               (2,346)
      (Decrease)/increase in accounts payable                                    (1,640)               (3,422)                6,483
      Increase in accrued expenses                                                5,226                 8,331                13,680
      (Decrease)/increase in deferred revenue                                    (1,223)                1,359                 4,217
      (Decrease)/increase in income taxes payable                               (20,521)               11,165                12,741
      Other, net                                                                     --                    --                 1,129
                                                                              ---------             ---------             ---------
       Net cash (used in)/provided by operating activities                      (29,128)               51,206                23,283
                                                                              ---------             ---------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment                                             (21,377)              (24,048)              (23,089)
Purchase of investments held to maturity                                        (36,758)              (32,288)              (18,261)
Maturity of investments held to maturity                                         33,017                23,194                15,164
Proceeds from sale of Cambridge Technology
    Capital Fund distributions in kind                                              888                    --                    --
Investment in Cambridge Technology Capital Fund                                  (2,978)               (1,589)                 (300)
Proceeds from sale of marketable securities                                       2,324                    --                    --
                                                                              ---------             ---------             ---------
       Net cash used in investing activities                                    (24,884)              (34,731)              (26,486)
                                                                              ---------             ---------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term loan arrangement                                             --                    --                   875
Repayment of long-term debt and capital leases                                     (170)               (1,013)                 (250)
Dividend distributions                                                               --                (1,193)               (3,340)
Proceeds from employee stock purchase plan                                        8,295                 7,620                 4,936
Proceeds from exercise of stock options                                          29,792                18,676                12,801
Proceeds from exercise of warrants                                                   --                    --                 1,800
                                                                              ---------             ---------             ---------
    Net cash provided by financing activities                                    37,917                24,090                16,822
                                                                              ---------             ---------             ---------

Effect of foreign exchange rate changes on cash                                  (1,668)                 (163)                 (426)

Net (decrease)/increase in cash and cash equivalents                            (17,763)               40,402                13,193
Cash and cash equivalents at beginning of period                                 80,051                39,649                26,456
                                                                              ---------             ---------             ---------
Cash and cash equivalents at end of period                                    $  62,288             $  80,051             $  39,649
                                                                              =========             =========             =========
</TABLE>


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



                                      F-6
<PAGE>

               CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.   Summary of Significant Accounting Policies

Business Description

Cambridge Technology Partners (Massachusetts), Inc. ("Cambridge" or the
"Company") performs global technology and consulting services that accelerate
its clients' transition to the New Economy. Founded in 1991, the Company
combines electronic business and digital strategy consulting and
cross-enterprise, software integration services to "Global 1000" organizations
worldwide, delivering "end-to-end" business solutions usually on a fixed-time,
fixed-price basis. Cambridge's services include digital business strategies,
electronic commerce technical solutions consulting, Internet user experience
design, advanced software application integration, custom software solutions,
network solutions, enterprise resource solutions, change management consulting,
and integrated management consulting across various industrial sectors and the
entire scope of the value chain of the Company's clients.

Basis of Reporting

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All intercompany accounts and
balances have been eliminated in consolidation. On August 31, 1998, the Company
acquired all of the outstanding capital stock of Excell Data Corporation
("Excell"). The acquisition of Excell was accounted for using the pooling of
interests method of accounting (see Note B). All prior period historical
consolidated financial statements presented herein have been restated to include
the financial position, results of operations, and cash flows of Excell. Certain
prior period amounts have been reclassified to conform to current period
presentation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with
maturities of three months or less from the date of purchase and whose carrying
amount approximates market value due to the short maturity of the investments.

Investments

The Company holds investments in marketable securities which are classified as
held to maturity and all have remaining maturities of twelve months or less from
the balance sheet date. At December 31, 1999 and 1998, held to maturity
securities consist of investment grade municipal bonds of $28.7 million and
$24.9 million, respectively, which are reported at amortized cost which
approximates market value.

The Company also holds marketable equity securities which are classified as
available for sale within other assets and are recorded at fair value. At
December 31, 1999, the Company had marketable securities at fair value of $1.3
million with a cost of $1.2 million, and an unrealized gain of $65,000, net of
taxes. At December 31, 1998, the Company had marketable securities at fair value
of $2.1 million with a cost of $96,000, and an unrealized gain of $1.3 million,
net of taxes.



                                      F-7
<PAGE>

Property and Equipment

Property and equipment are stated at cost. Repairs and maintenance costs are
charged to operations when incurred, while betterments are capitalized.
Depreciation is computed using the straight-line method based on the estimated
useful lives of the assets. Estimated useful life of equipment is three to five
years, furniture and fixtures is five to seven years, motor vehicles is four
years and software is three to five years. Leasehold improvements are amortized
over the shorter of its useful life or the term of the lease. Buildings are
being depreciated over an estimated useful life of forty years. Upon retirement
or disposal, the cost of the asset disposed of and the related accumulated
depreciation is removed from the accounts and any gain or loss is reflected in
income.

Intangible Assets

Goodwill of approximately $4.8 million, related to the acquisition of IOS Group
AB (now CTP Scandinavia) in February 1994, is being amortized over six years on
a straight-line basis. The Company recorded amortization expense of $798,000 for
each of the years ended December 31, 1999, 1998, and 1997. As of December 31,
1999 and 1998, the accumulated amortization was $4.6 million and $3.9 million,
respectively. The carrying value of goodwill is subject to periodic review of
realizability.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on temporary
differences between the financial statement and tax bases of assets and
liabilities using the expected tax rates in the year in which the differences
are expected to reverse. The Company may provide a valuation allowance against
net deferred tax assets if, based on the available evidence, it is more likely
than not that some or all of the deferred tax assets will not be realized.

Equity Method Investments

The Company accounts for its investment in the Cambridge Technology Capital Fund
I L.P. (the "Fund") under the equity method whereby the Company's share of the
income or losses of the Fund is reflected in "Gain (loss) on equity investments"
in the consolidated statements of operations. The Company's carrying value for
its equity method investment in the Fund is included in "Other assets" in the
consolidated balance sheets (see Note N). The Company records distributions from
the Fund as a reduction in its investment in the Fund.

The Company owns both limited partner and general partner interests in the Fund.
To date the Company has recognized income or loss based on its approximately 24%
interest in the Fund. In 1999, the Fund's net income was primarily derived from
unrealized gains based on changes in the fair value of the securities it has
invested in, which are subject to market fluctuations (see Note N).

Revenue Recognition

The Company operates in one industry segment, the design, development, and
implementation of business solutions. Revenues from business solutions contracts
are recognized primarily on the percentage of completion method. The cumulative
impact of any revision in estimates of the


                                      F-8
<PAGE>

percent complete is reflected in the period in which the changes become known.
Losses on projects in progress are recognized when known. Net revenues exclude
reimbursable expenses charged to clients. Revenues from package software
evaluation and implementation services are recognized as service is provided,
principally on a time and materials basis.

Deferred revenue consists of amounts received or billed in advance of services
to be provided. Unbilled revenue represents amounts recognized based on services
performed in advance of billings in accordance with contract terms.

Earnings Per Share

Earnings per share ("EPS") is presented as basic and diluted EPS. Basic EPS is
computed by dividing net income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted EPS is
computed using the weighted average number of common shares outstanding plus the
dilutive effect of common stock equivalents (using the treasury stock method).

Translation of Foreign Currencies and Foreign Exchange Transactions

For non-U.S. operations, the functional currency is the applicable local
currency. The translation of the functional currencies into U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect at
the balance sheet date and for revenue and expense accounts using average rates
of exchange prevailing during the reporting period. Adjustments resulting from
the translation of foreign currency financial statements are accumulated in a
separate component of stockholders' equity until the entity is sold or
substantially liquidated. Gains or losses resulting from foreign currency
transactions are included in the results of operations.

Foreign Exchange Contracts

The Company maintains foreign exchange contracts to mitigate the risk of changes
in foreign exchange rates associated with intercompany balances. The contracts
generally have maturities of one month. The impact of exchange rate movements on
contracts is recorded in other income in the period in which the exchange rates
change, generally consistent with the term of the contract. As of December, 31,
1999 and 1998, the Company held foreign exchange forward contracts of
approximately $10.2 million and $9.4 million, respectively, and there were no
related deferred gains and losses. The Company does not hold foreign exchange
contracts for trading purposes.

Concentration of Credit Risk

The Company provides its services primarily to Global 1000 companies. The
Company performs ongoing credit evaluations of its major customers and maintains
reserves for potential credit losses. Such losses have been immaterial and have
been within management's expectation. No single customer accounted for 5% or
more of total net revenues for the years ended 1999, 1998, and 1997.

The Company may be exposed to credit-related losses in the event of
nonperformance by counterparties to hedging instruments. The counterparties to
these contracts are major financial



                                      F-9
<PAGE>

institutions. The Company continually monitors its positions and credit ratings
of its counterparties and limits the amount of contracts it enters into with any
one party.

Risks and Uncertainties

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to provide estimates and assumptions
that affect the amounts reported in the financial statements and the related
footnotes. Actual results could differ from those estimates and may impact
future results of operations and cash flows. Estimates are inherent in
determining revenue recognition and associated profits under the percentage of
completion method. The value of the Company's investments in marketable
securities and investment in the Fund may be subject to significant volatility
resulting from fluctuations in capital markets.

New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The statement requires companies to
recognize all derivatives as either assets or liabilities, with the instruments
measured at fair value. The accounting for changes in fair value, recorded as a
gain or loss, depends on the intended use of the derivative and its resulting
designation. The statement initially was to be effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In July 1999, the Financial
Accounting Standards Board issued SFAS 137, "Accounting for Derivative
Instruments and Hedging Activites-deferral of the Effective Date of FASB
Statement No. 133, an amendment of FASB Statement No. 133." SFAS 137 defers the
implementation of SFAS 133 by one year. SFAS 133, as amended by SFAS 137, is
effective for the Company's fiscal quarters beginning after January 1, 2001. The
Company is currently evaluating if the adoption of SFAS 137 will have a material
effect on its financial position or results of operations.


B.   Acquisitions

In August 1998, the Company acquired all of the outstanding capital stock of
Excell. This acquisition was accomplished through a merger of the Company's
acquisition subsidiary and Excell in an exchange of 1,680,416 shares of the
Company's common stock for all outstanding shares of capital stock of Excell.
The acquisition has been accounted for using the pooling of



                                     F-10
<PAGE>

interests method of accounting. Transaction costs related to this acquisition
which consist primarily of investment banking fees, accounting fees, legal fees
and business integration costs were approximately $1.7 million and are included
in business combination costs in the accompanying Consolidated Statements of
Operations (also see Note G - "Excell Phantom Stock Plan").

In November 1997, the Company acquired all of the outstanding capital stock of
Peter Chadwick Holdings Limited ("Peter Chadwick"). This acquisition was
accomplished through an exchange of 3,255,731 shares of the Company's common
stock for all outstanding shares of capital stock and options to purchase
ordinary shares of Peter Chadwick. The acquisition has been accounted for using
the pooling of interests method of accounting. Founded in 1987 and based in the
United Kingdom, Peter Chadwick specialized in change implementation strategies
and performance improvement programs. Peter Chadwick was renamed Cambridge
Management Consulting Holdings Limited in July 1998.

The accompanying consolidated financial statements of the Company have been
prepared to give retroactive effect to the acquisitions of Excell and Peter
Chadwick in accordance with the pooling of interests requirements. All prior
period historical consolidated financial statements presented herein have been
restated to include the financial position, results of operations, and cash
flows of these acquisitions. Costs related to these acquisitions have been
charged to business combination costs in the consolidated statements of
operations for the period in which the transaction was consummated.


                                     F-11
<PAGE>

The following information presents certain statement of operations data (in
thousands) of the Company, Peter Chadwick, and Excell for the periods prior to
the acquisitions. Peter Chadwick and Excell information are presented through
September 30, 1997 and June 30, 1998, respectively, which represent the interim
period ends nearest to the dates of these acquisitions.

<TABLE>
<CAPTION>

                              Cambridge
                             Technology              Peter                                      Combined
                               Partners             Chadwick                 Excell               Total
                               --------             --------                 ------               -----
<S>                          <C>                   <C>                      <C>                 <C>
Net revenues for the:
  Nine months ended
   September 30, 1997        $  250,501            $ 36,841                 $ 22,217            $ 309,559
  Year ended
    December 31, 1997        $  406,672                                     $ 31,657            $ 438,329
  Six months ended
   June 30, 1998             $  238,018                                     $ 18,588            $ 256,606

Net income for the:
  Nine months ended
    September 30, 1997       $   24,623            $  2,365                 $    962           $   27,950
 Year ended
    December 31, 1997        $   32,929                                     $    853            $  33,782
Six months ended
   June 30, 1998             $   41,798                                     $    397            $  42,195
</TABLE>


C.   Accounts Receivable

Accounts receivable consists of the following (in thousands):

<TABLE>
<CAPTION>

                                                                                 December 31,
                                                                         --------------------------
                                                                              1999           1998
                                                                         --------------------------
           <S>                                                           <C>            <C>
           Contracts in process                                          $    69,229    $    78,767
           Completed contracts                                                67,900         59,366
                                                                         -----------    -----------
                                                                             137,129        138,133
           Less: Allowance for doubtful accounts                              10,287          4,550
                                                                         -----------    -----------
                                                                         $   126,842    $   133,583
                                                                         ===========    ===========
</TABLE>

The Company does not include client reimbursable expenses or other non-trade
receivables as a component of net revenues. At December 31, 1999 and 1998,
approximately $22.4 million and $19.2 million, respectively, of client
reimbursable expenses and other non-trade receivables are included in prepaid
expenses and other current assets.



                                     F-12
<PAGE>

D.   Property and Equipment

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>

                                                              December 31,
                                                       -------------------------
                                                         1999             1998
                                                       --------         --------
              <S>                                      <C>              <C>
              Building                                 $  1,414         $  1,406
              Equipment                                  66,912           54,591
              Furniture and fixtures                     14,662           11,693
              Leasehold improvements                     16,569           11,312
              Motor vehicles                                690              880
              Software and other                            897            1,443
                                                       --------         --------
                   Total cost                           101,144           81,325
              Less accumulated depreciation              48,017           33,070
                                                       --------         --------
                                                       $ 53,127         $ 48,255
                                                       ========         ========
</TABLE>

Depreciation expense for 1999, 1998, and 1997 was $15.6 million, $11.9 million,
and $7.2 million, respectively.

E.   Accrued Expenses and Other Current Liabilities

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                                                 December 31,
                                                                           ----------------------
                                                                               1999         1998
                                                                           ----------    --------
         <S>                                                               <C>           <C>
         Accrued payroll and payroll related expenses                      $   21,562    $ 20,776
         Contract reserve                                                       4,786       5,082
         Other accrued expenses                                                23,898      17,877
         Accrued value added tax                                                4,725       5,868
                                                                           ----------    --------
                                                                           $   54,971    $ 49,603
                                                                           ==========     ========
</TABLE>


F.   Revolving Credit Facility

In September 1998, the Company obtained a $50.0 million unsecured senior
revolving credit facility (the "Facility") through a syndication arrangement
committed equally by The Chase Manhattan Bank ("Chase") and Fleet National Bank
("Fleet Bank"). The Facility expires on September 10, 2001 and replaces the
Company's previously maintained $20.0 million revolving credit facility that
expired on June 30, 1998. The Facility is administered by Chase and carries a
commitment fee, payable quarterly in arrears, calculated based on the unused
portion of the Facility and a price grid as set forth in the credit agreement.
The Facility permits the Company to elect any of three possible interest rate
formulas as defined in the credit agreement. Interest is payable in arrears
based on an interest period determined by the interest rate elected by the
Company. The Facility requires, among other things, the Company to maintain
certain financial ratios, including debt service coverage, debt to capital, and
net worth. For the year ended



                                     F-13
<PAGE>

December 31, 1999, the Company was in compliance with the debt to capital and
net worth ratio requirements but was not in compliance with the debt service
coverage ratio. The Company received a waiver through March 31, 2000 regarding
the non-compliance with the debt service coverage ratio. The Company is in the
process of renegotiating the terms of the Facility. For the year ended December
31, 1998, the Company was in compliance with these financial ratio requirements.
As of December 31, 1999 and 1998, the Company had no balance outstanding under
the Facility.

G.   Stockholders' Equity and Other Stock-Related Information

Authorized Shares

On May 13, 1998, the stockholders of the Company voted to amend to the Company's
corporate charter to increase the number of authorized shares of common stock
from 120 million shares to 250 million shares.

Stock Option Plans

Under the Company's amended 1991 Stock Option Plan (the "1991 Option Plan"), the
Company may grant incentive stock options to employees and nonqualified stock
options to employees, directors, officers, and other key individuals. The
Management Resource Committee (the "MRC") of the Board of Directors administers
the 1991 Option Plan, subject to approval by the Board of Directors with respect
to certain matters. Options granted under the 1991 Option Plan prior to 1997
generally vest ratably over a 48 month period and expire ten years from the date
of grant. Options granted under the 1991 Option Plan in 1997 and thereafter
generally vest ratably over a 48 month period and expire in installments five to
eight years from the date of grant. At December 31, 1999, 1998, and 1997, there
were 9,939,985, 13,204,447, and 11,677,140 options outstanding, respectively,
under the 1991 Option Plan. At December 31, 1999, 1998, and 1997, options to
purchase 4,906,435, 4,725,224, and 4,063,342 shares, respectively, were
exercisable under the 1991 Option Plan. In December 1997 the Company's Board of
Directors amended the 1991 Option Plan, with subsequent stockholder approval, to
increase the number of shares of common stock authorized for issuance under the
1991 Option Plan from 19 million to 23 million.

During 1995, the Company established the 1995 Non-employee Director Stock Option
Plan ("Non-employee Director Option Plan"). The Non-employee Director Option
Plan authorizes the grant of nonqualified options for up to 150,000 shares of
the Company's common stock. Each member of the Company's Board of Directors who
was neither (i) an employee nor an officer of the Company or Safeguard
Scientific, Inc. ("Safeguard") nor (ii) an affiliate of Technology Leaders II
L.P. or any related entity, and was serving on the Company's Board of Directors
on March 21, 1995, was granted an option to purchase 30,000 shares of the
Company's common stock. Each person who is neither (i) an employee nor an
officer of the Company or Safeguard nor (ii) an affiliate of Technology Leaders
II L.P. or any related entity, and who is first elected to the Board of
Directors after March 21, 1995, is automatically granted, on the date of such
election without further action by the Board of Directors, an option to purchase
30,000 shares of the Company's common stock. Options granted under the
Non-employee Director Option Plan generally vest ratably over a 48 month period
and expire ten years from the date of grant. At


                                     F-14
<PAGE>

December 31, 1999 and 1998 there were 103,000 options outstanding, and at
December 31, 1997 there were 120,000 options outstanding under the 1995 Option
Plan. At December 31, 1999, 1998 and 1997, options to purchase 103,000, 95,136,
and 73,121 shares, respectively, were exercisable under the Non-employee
Director Option Plan.

In November 1997, the Board of Directors adopted the 1997 Stock Option Plan (the
"1997 Option Plan") under which the Company may grant nonqualified stock options
to purchase up to 450,000 shares of common stock to employees (other than
officers) and consultants of the Company. The MRC administers the 1997 Option
Plan, subject to approval by the Board of Directors with respect to certain
matters. Options granted under the 1997 Option Plan generally vest ratably over
a 48 month period and expire in installments five to eight years from the date
of grant. At December 31, 1999, 1998, and 1997, there were 130,680, 139,095, and
260,000 options outstanding, respectively, under the 1997 Option Plan. At
December 31, 1999, 1998 and 1997, options to purchase 64,882, 34,773 and zero
shares, respectively, were exercisable under the 1997 Option Plan.

In October 1998, the Board of Directors adopted the 1998 Stock Option Plan (the
"1998 Option Plan") under which the Company may grant nonqualified stock options
to purchase up to 5.0 million shares of the Company's common stock to employees
of the Company and other key individuals other than members of the Board of
Directors or officers of the Company. In December 1999 the Company's Board of
Directors amended the 1998 Option Plan to increase the number of shares of
common stock authorized for issuance under the 1998 Option Plan from 5.0 million
to 11.5 million. The MRC administers the 1998 Option Plan. Unless otherwise
provided by the MRC at the time of grant, options granted under the 1998 Option
Plan vest ratably over a 48 month period and expire four years from the last
vesting date in each year. At December 31, 1999 and 1998, there were 6,886,401
and 1,905,182 options outstanding, respectively, under the 1998 Option Plan. At
December 31, 1999 and 1998, options to purchase 1,203,854 and 31,732 shares,
respectively, were exercisable under the 1998 Option Plan.



                                     F-15
<PAGE>

Stock option activity under the Company's stock option plans is summarized as
follows:

<TABLE>
<CAPTION>

                                                                        Weighted Average
                                                        Option           Exercise Price
                                                        Shares              Per Share
                                                      ----------           ---------
<S>                                                   <C>                      <C>
  Outstanding at December 31, 1996                    10,713,955               13.27
      Granted                                          6,281,988               29.89
      Exercised                                        2,170,050                5.86
      Canceled                                         2,768,753               26.31
                                                      ----------           ---------
  Outstanding at December 31, 1997                    12,057,140               20.16
      Granted                                         12,189,805               22.14
      Exercised                                        1,975,616                9.39
      Canceled                                         6,919,605               33.65
                                                      ----------           ---------
  Outstanding at December 31, 1998                    15,351,724               17.39
      Granted                                          8,512,910               18.72
      Exercised                                        2,462,864               12.10
      Canceled                                         4,341,704               18.86
                                                      ----------           ---------
  Outstanding at December 31, 1999                    17,060,066           $   18.44
                                                      ==========           =========
</TABLE>


In October of 1998, in order to re-establish the incentive nature of outstanding
stock options with exercise prices greater than the then current fair market
value of the Company's common stock, the Company offered to holders of
outstanding stock options granted on or after April 24, 1997 the opportunity to
exchange those options for options covering an equivalent number of shares with
an exercise price of $15.50 per share, the then current fair market value. The
Chief Executive Officer and directors of the Company were not eligible to
participate in the exchange. The table above reflects the cancellation and
re-issuance of options to purchase 5,236,670 shares of common stock in 1998 in
connection with the option exchange. The new options vest in accordance with the
vesting schedule of the options they replaced, but cannot be exercised until
October 15, 1999, in the case of the Company's executive vice presidents, senior
vice presidents, vice presidents, and associate vice presidents, and until April
15, 1999, in the case of all other employees who participated in the option
exchange.

The above table also reflects the cancellation and re-issuance of options to
purchase 2,051,286 shares of common stock in 1997 under the 1991 Option Plan.
These re-issued options were granted in April 1997 at fair market value in
exchange for options granted from October 1996 through March 1997 with exercise
prices above April 1997 fair market values. Vesting schedules for these options
re-started at April 1997 and option lives were shortened compared to the
original grants.



                                     F-16
<PAGE>

The following summarizes information about the Company's stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>

                                   Options Outstanding                                             Options Exercisable
-------------------------------------------------------------------------------------------------------------------------
                                                  Weighted Average           Weighted                             Weighted
                               Number                 Remaining               Average            Number           Average
       Range of              Outstanding             Contractual             Exercise         Exercisable         Exercise
    Exercise Price           at 12/31/99                Life                   Price          at 12/31/99          Price
-------------------------------------------------------------------------------------------------------------------------
<S>       <C>                        <C>                <C>                   <C>              <C>                <C>
$ .16  -  $ 1.67                     240,792            2.4 Years             $  .69           240,792            $  .69
 3.09  -    6.32                     364,957            4.2 Years             $ 5.53           364,957            $ 5.53
10.00  -   14.44                   2,237,880            7.3 Years             $13.75           313,790            $11.03
15.34  -   22.88                   9,921,216            5.9 Years             $17.68         4,924,354            $17.71
23.19  -   34.00                   3,863,927            7.7 Years             $23.53           224,085            $25.48
35.00 -    49.60                     431,294            5.9 Years             $35.57           210,193            $35.58
-------------------------------------------------------------------------------------------------------------------------
$ .16 -  $ 49.60                  17,060,066            6.4 Years             $18.44         6,278,171            $16.89
=========================================================================================================================
</TABLE>


The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations in accounting for its
option plans. Accordingly, no compensation expense has been recognized. Had
compensation expense for the Company's stock option plans and employee stock
purchase plan been determined based on the fair value at the grant date for
awards under these plans consistent with the methodology required under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), the Company's consolidated net income and net income
per share would have been reduced to the pro forma amounts indicated as follows
for the years ended December 31, 1999, 1998, and 1997 (in thousands except per
share data):

<TABLE>
<CAPTION>

                                                                1999               1998             1997
                                                            -----------         ---------       ----------
<S>                                                          <C>                <C>             <C>
As reported net income                                       $    2,119         $  51,940       $   33,782
Pro forma net income (loss) for SFAS 123                     $  (15,046)        $  24,133       $   27,092

Net income (loss) per share:
    As reported basic net income per share                   $      .04         $     .90       $      .62
    Pro forma basic net income (loss) per
        share for SFAS 123                                   $     (.25)        $     .42       $      .50

    As reported diluted net income (loss) per share          $      .03         $     .83       $      .55
    Pro forma diluted net income (loss) per
        share for SFAS 123                                   $     (.25)        $     .38       $      .45
</TABLE>


The effects of applying SFAS 123 in this disclosure are not indicative of future
amounts. Additional grants in future years are anticipated.



                                     F-17
<PAGE>

The following weighted average assumptions were used by the Company to determine
the fair value of stock options granted using the Black-Scholes options-pricing
model:

<TABLE>
<CAPTION>

                                                     1999       1998       1997
                                                    ------     ------     -------
<S>                                                <C>        <C>        <C>
Expected volatility                                    73%        52%        45%
Average expected option life                       4 Years    4 Years    5 Years
Average expected life for employee
    stock purchase plan shares                     .5 Year    .5 Year    .5 Year
Risk-free interest rate                               5.8%       4.5%       6.2%
Dividend yield                                          0%         0%         0%
</TABLE>

The weighted average grant date fair value of options granted under the stock
option plans was $11.13 in 1999, $8.80 in 1998, and $12.59 in 1997. The weighted
average fair value of shares issued under the employee stock purchase plan was
$7.83 in 1999, $13.40 in 1998, and $4.81 in 1997. The pro forma expense amounts
assume that the fair value assigned to the option grants was amortized over the
vesting period of the options, which is approximately four years, while the fair
value assigned to grants under the Employee Stock Purchase Plan was recognized
in full at the various dates of grant.

Employee Stock Purchase Plan

On December 14, 1994, the Board of Directors adopted the Company's 1994 Employee
Stock Purchase Plan (the "Stock Purchase Plan"), which was subsequently approved
by stockholders at the annual meeting of stockholders in May 1995. The Company
has authorized 1,500,000 shares of the Company's common stock for purchases
under the Stock Purchase Plan. The Stock Purchase Plan permits eligible
employees to purchase shares of common stock, subject to limitations provided by
Section 423(b) of the Internal Revenue Code, through accumulated payroll
deductions. Each participating employee may purchase up to 1,500 shares per
payment period and purchases by any one employee may not exceed $25,000 in fair
market value of the stock purchased in any one year. The purchases are made
twice per year at a price equal to the lesser of (i) 85% of the average market
price of the Company' common stock on the first business day of the payment
period and (ii) 85% of the average market price of the Company's common stock on
the last day of the payment period. Annual payment periods consist of two
six-month periods, January 15 through July 14 and July 15 through January 14.
For the years ended December 31, 1999, 1998, and 1997, 445,763, 231,365, and
211,734 shares of common stock, respectively, were issued under the Stock
Purchase Plan. At December 31, 1999 457,365 shares were available for future
grant.

Restricted Stock

On August 27, 1999 the Board of Directors approved the issuance of 300,000
shares of restricted stock to the Chief Executive Officer at par value. The
restricted stock will vest as follows: (i) 100,000 shares on December 31, 2000,
(ii) 100,000 shares on the earlier to occur of either July 31, 2002 or the first
date on which the closing price of the Company's common stock equals or exceeds
$28.876, and (iii) 100,000 shares on the earlier to occur of either January 31,
2003 or the first date on which the closing price of the Company's common stock
equals or exceeds $36.095.



                                     F-18
<PAGE>

The Company recorded deferred compensation of $4.3 million related to the hiring
of its Chief Executive Officer and compensation expense of $666,000 was
recognized for the year ended December 31, 1999.

Preferred Stock

The Company's certificate of incorporation was amended and restated, in December
1992, to increase the number of authorized shares of capital stock to include
two million shares of preferred stock, par value $.01 per share, in one or more
series. The Board of Directors is authorized, subject to certain limitations
prescribed by law, to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series.
The Company has not issued and, except pursuant to the preferred stock purchase
rights described in the Rights Plan section of this note, has no present plans
to issue any shares of preferred stock.

Warrants

In December 1992, the Company issued warrants to Safeguard Scientifics, Inc. for
the purchase of 900,000 shares of common stock at a price of $2.00 per share.
The warrants vested immediately and were exercisable for a five-year period from
the date of issuance. In December 1997, all warrants were exercised for common
stock.

Dividends

The Facility prohibits the Company from paying any dividends or making any
distributions either in cash or in kind on any class of its capital stock
without prior consent of Chase as administrator of the Facility (see Note F).
The Company currently intends to retain future earnings for use in its business
and, therefore, does not expect to pay dividends in the foreseeable future.

Dividends may also be restricted by the inability to liquidate ownership
interests in the Fund to pay cash dividends. At December 31, 1999, approximately
$17.1 million of consolidated retained earnings relates to undistributed gains
on the Company's equity method investment in the Fund.

Dividend distributions made by Peter Chadwick were made in accordance with the
Peter Chadwick shareholder agreements in effect prior to the acquisition, and
amounted to $1.2 million and $3.0 million for the years ended December 31, 1998
and 1997, respectively. At December 31, 1997, the $1.2 million of dividend
distribution paid in the first quarter of 1998 was included in other current
liabilities reflecting Peter Chadwick's dividend obligations up to the date of
acquisition in accordance with the Peter Chadwick shareholder agreements in
effect prior to the acquisition.

Dividend distributions made by Excell prior to the acquisition were principally
for reimbursement of income tax liabilities of its former stockholders due to
Excell's S-Corporation tax status prior to the acquisition.





                                     F-19
<PAGE>
Rights Plan

On June 23, 1997, the Board of Directors of the Company approved and adopted a
Rights Plan pursuant to a Rights Agreement which was amended on September 30,
1998, and in connection therewith, declared a dividend of one preferred stock
purchase right for each outstanding share of the Company's common stock, which
dividend was paid on July 3, 1997 to holders of record of the Company at the
close of business on July 3, 1997. One preferred stock purchase right is also
attached to each share of the Company's common stock issued after July 3, 1997.
The rights are not presently transferable separate from the share of common
stock with respect to which they were issued. The rights are subject to
adjustment and become exercisable upon the occurrence of certain events
described in the Rights Agreement. In general, the Company is entitled to redeem
the rights at $.01 per right. The rights will expire on June 23, 2007, unless
earlier redeemed or exchanged. As part of the Rights Plan, the Company
designated 100,000 shares of its preferred stock as Series A Junior
Participating Preferred Stock and reserved such shares for issuance upon
exercise of the rights.

Excell Phantom Stock Plan

Excell maintained a 1996 Class I Phantom Stock Plan ("Phantom Plan") under which
Excell granted nonqualified phantom stock units to qualifying employees. The
Phantom Plan entitled a holder to surrender the units for cash equal to the
defined per-unit amount derived from net income of Excell over the holding
period of the units. The Phantom Plan also provided for a five-year vesting
period along with other restrictions regarding redemption. The Phantom Plan also
contained provisions related to payments to holders of units based on a defined
market value if Excell was sold or a major change in ownership (collectively a
"change in control") occurred, as defined under the Phantom Plan agreement. The
acquisition of Excell by the Company qualified as a change in control under the
Phantom Plan. As a result, upon consummation of the acquisition, the Company
recorded a charge to operations of $6.7 million for the year ended December 31,
1998, which is included in business combination costs, representing amounts owed
to Phantom Plan participants as of the closing date of the Excell acquisition.
In accordance with the Phantom Plan, as a result of the acquisition, the Phantom
Plan was terminated.


H.   Lease Commitments

In January 1998, the Company entered into a lease for an approximately 177,000
square foot building, which is located in Cambridge, Massachusetts, and houses
the Company's Northeast operations, new employee training facility, and
corporate departments. The lease agreement is for a ten-year period, which
commenced in June 1999, and is renewable for two additional five-year terms.

On June 4, 1992, the Company entered into, among other building and equipment
leases, a lease for a building in Cambridge, Massachusetts. This facility
previously housed part of its Northeast operations and corporate departments.
The building is owned by a trust, the sole beneficiary of which is the Chairman
of the Board of Directors of the Company. The initial lease term expires in
August 2007. Beginning in 1999, this facility is being subleased through its
remaining lease term. The Company's lease for its Allston, Massachusetts
facility, which housed the remainder of its Northeast operations, terminated
effective June 30, 1999.



                                     F-20
<PAGE>

Minimum future lease commitments under non-cancelable operating leases for
buildings and equipment in effect at December 31, 1999, are presented as follows
(in thousands):

<TABLE>
<CAPTION>

         <S>                                                         <C>
         2000                                                        $   18,943
         2001                                                            17,149
         2002                                                            15,115
         2003                                                            12,472
         2004                                                             9,855
         Thereafter                                                      27,629
                                                                    -----------
              Total minimum lease payments                            $ 101,163
                                                                    ===========
</TABLE>

For the years ended December 31, 1999, 1998, and 1997, rental expense under all
leases was approximately $17.0 million, $15.6 million and $11.0 million,
respectively, of which approximately $833,000, $814,000 and $765,000,
respectively, were paid to the trust described above.


I.   Other Costs

Other costs consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                                  1999          1998         1997
                                                             ------------   -----------   ----------
<S>                                                          <C>            <C>           <C>
         Facility costs and related expenses                 $     81,801   $    58,881   $   43,920
         Non-billable project expenses                             38,617        34,597       19,080
         Non-billable staff costs                                  39,115        21,412       15,479
         Education and training                                    22,964        12,080        6,103
                                                              -----------    ----------   ----------
                                                             $    182,497   $   126,970   $   84,582
                                                             ============   ===========   ==========
</TABLE>



                                     F-21
<PAGE>

J.   Income Taxes

The components of income (loss) before income taxes and the related provision
for income taxes for the years ended December 31, 1999, 1998, and 1997 are
presented below (in thousands):

<TABLE>
<CAPTION>

                                                 1999        1998        1997
                                               --------    --------    --------
<S>                                            <C>         <C>         <C>
Income (loss) before income taxes:
         Domestic                              $(25,435)   $ 57,071    $ 49,340
         Foreign                                 28,853      26,033       9,496
                                               --------    --------    --------
                                               $  3,418    $ 83,104    $ 58,836
                                               ========    ========    ========
Provision (benefit) for income taxes:
         Current:
              Federal                          $ (7,098)   $ 19,955    $ 17,769
              Foreign                            11,143       9,682       3,881
              State                                  --       2,623       3,741
                                               --------    --------    --------
                                                  4,045      32,260      25,391
         Deferred:
              Federal                            (2,530)     (1,009)       (308)
              Foreign                                --          --          10
              State                                (216)        (87)        (39)
                                               --------    --------    --------
                                                 (2,746)     (1,096)       (337)
                                               --------    --------    --------
         Total                                 $  1,299    $ 31,164    $ 25,054
                                               ========    ========    ========
</TABLE>

The Company's deferred tax assets and (liabilities) are comprised of the
following as of December 31, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>

                                                               1999      1998
                                                             --------  --------
<S>                                                          <C>       <C>
         Net operating losses                                $  7,677  $     --
         Bad debt reserves                                      1,196       838
         Vacation accrual                                       1,493       631
         Contract reserves                                      1,353        --
         Research credits                                       5,570        --
         Fixed asset depreciation                              (1,567)     (485)
         Cash to accrual adjustments                             (615)   (1,174)
         Unrealized gain on investment                        (11,505)   (1,033)
         Other accruals                                           264     1,593
                                                             --------  --------
                                                             $  3,866  $    370
                                                             ========  ========
</TABLE>

Included in unrealized gain on investment at December 31, 1999 and 1998 is a
deferred tax liability of $29,000 and $753,000, respectively, related to an
increase in the basis of an investment recorded as part of comprehensive income
reflected in the Consolidated Statements of Stockholders' Equity. In accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," this deferred tax liability amount is not included in the provision for
income taxes.



                                     F-22
<PAGE>

The table below reconciles the expected U.S. federal statutory income tax rate
to the recorded income tax rate:

<TABLE>
<CAPTION>
                                             1999          1998          1997
                                           --------      --------      --------
<S>                                        <C>           <C>           <C>
U.S. statutory tax rate @ 35%              $  1,196      $ 29,086      $ 20,593
State income taxes, net of
    federal income tax benefit                  149         1,829         2,931
Goodwill amortization                           251           249           235
Meals and entertainment                       1,049         1,662           530
Foreign tax credits                             420            --          (824)
Research credits                             (1,735)       (1,662)           --
Non-taxable S-Corporation income                 --          (416)         (353)
Other, net                                      (31)         (332)         (235)
                                           --------      --------      --------
Effective tax rate before non-
    deductible pooling costs                  1,299        30,416        22,877
Non-deductible pooling costs                     --           748         2,177
                                           --------      --------      --------
    Effective tax rate                     $  1,299      $ 31,164      $ 25,054
                                           ========      ========      ========
</TABLE>


At December 31, 1999 the Company has a $ 26.0 million net operating loss
carryover of which $14.7 million relates to employee stock option deductions
which do not benefit the tax provision. Any future benefit will be recorded as
an increase to additional paid in capital.

During the period from April 1, 1996 through August 31, 1998 (the date of the
Company's acquisition of Excell), Excell elected to be treated as an
S-Corporation for income tax reporting purposes. Under this election, Excell's
individual stockholders are deemed to have received a pro rata distribution of
taxable income of Excell (whether or not an actual distribution was made), which
is included in each stockholder's taxable income. Accordingly, Excell did not
provide for income taxes during the period from April 1, 1996 through August 31,
1998. Excell's S-Corporation tax reporting status was terminated on the date of
acquisition and therefore, the undistributed earnings of Excell, as of the date
of acquisition, were reclassified to additional paid-in-capital as of August 31,
1998. Pro forma net income per share data is presented below to reflect the pro
forma increase to historical income taxes related to Excell as if Excell was a
C-Corporation for tax reporting purposes during those periods.

<TABLE>
<CAPTION>

                                                               1998        1997
                                                             -------     -------
<S>                                                          <C>         <C>
Pro forma data (unaudited):
   Historical income before income taxes                     $83,104     $58,836
   Provision for income taxes:
      Historical income taxes                                 31,164      25,054
      Pro forma increase to historical income taxes              195         437
                                                             -------     -------
   Pro forma net income                                      $51,745     $33,345
                                                             =======     =======

   Pro forma basic net income per share                      $   .90     $   .62
                                                             =======     =======
   Pro forma diluted net income per share                    $   .83     $   .55
                                                             =======     =======
</TABLE>



                                     F-23
<PAGE>

K.   Net Income Per Share

The following table presents the calculation of per share earnings for the years
ended December 31, 1999, 1998, and 1997 (in thousands except per share data):

<TABLE>
<CAPTION>

                                                       1999      1998      1997
                                                     -------   -------   -------
<S>                                                  <C>       <C>       <C>
Net income                                           $ 2,119   $51,940   $33,782
                                                     =======   =======   =======

Basic:
    Weighted average common shares outstanding        60,004    58,079    54,632
                                                     =======   =======   =======
    Net income per common share                      $   .04   $   .90   $   .62
                                                     =======   =======   =======

Diluted:
    Weighted average common shares outstanding        60,004    58,079    54,632
    Dilutive effects of stock options,
         restricted stock, and warrants                1,741     5,222     6,143
                                                     -------   -------   -------
    Weighted average common and common
        equivalent shares outstanding                 61,745    63,301    60,775
                                                     =======   =======   =======
    Net income per common and common
        equivalent share                             $   .03   $   .83   $   .55
                                                     =======   =======   =======
</TABLE>

At December 31, 1999, 1998 and 1997 outstanding options to purchase
approximately 7,015,174, 4,906,686, and 2,825,606 shares, respectively, were
excluded from the computation of diluted EPS because the effects of these option
shares were anti-dilutive.


L.   Employee Benefit Plans

In 1992, the Company established a savings and profit-sharing plan (the "401(k)
Plan") covering substantially all of the Company's employees. The 401(k) Plan is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended.
The Company may elect to make contributions under the 401(k) Plan. Starting in
1994, the Company elected to make matching contributions based on a percentage
of employees' contributions, subject to limitations as defined in the 401(k)
Plan. Company matching contributions made under the 401(k) Plan amounted to $2.9
million, $2.3 million, and $1.3 million in 1999, 1998, and 1997, respectively.

Cambridge-Switzerland sponsors a defined contribution retirement plan (the
"Switzerland Plan") for its employees. Under the Switzerland Plan, employees can
contribute between 5% to 11% of salary depending on age and other factors. All
employee contributions are matched by Cambridge-Switzerland. Employer matching
contributions amounted to $504,000, $225,000, and $188,000 for the years ended
December 31, 1999, 1998, and 1997, respectively.

In 1992, Enterprise Resource Solutions, Inc. ("ERS"), a subsidiary of the
Company, established a savings and profit-sharing plan (the "ERS Profit-sharing
Plan") covering substantially all of



                                     F-24
<PAGE>

ERS' employees. The ERS Profit-sharing Plan was qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended. ERS could elect to make
contributions under the ERS Profit-sharing Plan. ERS elected to make matching
contributions based on a percentage of employees' contributions. The Company
completed the rollover of assets held under the ERS Profit-sharing Plan to the
401(k) Plan in January 1998. ERS' matching contributions amounted to $538,000
for the year ended December 31, 1997.

Excell maintains a qualified deferred compensation plan under Section 401(a) of
the Internal Revenue Code of 1986, as amended. Under this plan, employees may
elect to defer a portion of their compensation subject to Internal Revenue Code
defined limitations. Employees are eligible to participate in the plan after
they have worked for Excell for 90 days. Excell did not provide any matching
based on employee contributions.

M.   Commitments and Contingencies

On August 31, 1998, the Company acquired Excell Data Corporation ("Excell"). On
November 19, 1998, certain of the former shareholders of Excell filed a lawsuit
against the Company in the United States District Court for the District of
Massachusetts. The complaint alleged breach of contract, violation of federal
securities laws, common law fraud, and negligent misrepresentation in connection
with the Excell acquisition and sought unspecified damages. In February 1999,
the Company filed a counterclaim against such former stockholders of Excell
which alleges breach of contract. On March 2, 2000, the United States District
Court for the District of Massachusetts granted Cambridge's motion for summary
judgment, dismissing the complaints of the former shareholders of Excell in
their entirety.

In March and April 1999, certain stockholders of the Company filed ten separate
class action lawsuits against the Company and certain of the Company's officers
in the United States District Court for the District of Massachusetts. These
suits have since been consolidated by the court. The suits allege
misrepresentations and omissions regarding the Company's future growth prospects
and progress of the Company's reorganization in violation of federal securities
laws. The suits seek unspecified damages. The Company believes that the
plaintiffs' claims are without merit and intends to vigorously defend the
lawsuits.

The Company is involved in litigation and various other legal matters, which
have arisen in the ordinary course of business. The Company does not believe
that the ultimate resolution of any such existing matter will have a material
adverse effect on its financial condition, results of operations, or cash flows.

N.   Cambridge Technology Capital Fund I L.P.

The Fund was formed in October 1997 as a limited partnership with committed
capital of approximately $25.3 million. The Fund's goal is capital appreciation
and is intended to invest in expansion-stage, private companies providing
products and services within the technology industry. A wholly owned subsidiary
of the Company acts as the general partner of the Fund's general partner. The
Company's ownership interest in the Fund, of approximately 24%, is



                                     F-25
<PAGE>

accounted for using the equity method of accounting. The Company's total capital
commitment to the Fund is approximately $6.0 million, of which $4.9 million has
been contributed through December 31, 1999. The carrying value of the Company's
investment in the fund was approximately $33.2 million and $2.7 million
respectively at December 31, 1999 and 1998 and is included in other assets in
the consolidated balance sheet. The increase in the carrying value of the
Company's investment in the Fund in 1999 is primarily a result of unrealized
changes in the fair value of securities in the Fund's investment portfolio.
During 1999, the Company has received approximately $2.2 million of
distributions from the Fund in the form of securities.


Summarized financial information of the Fund is presented as follows (in
thousands):

<TABLE>
<CAPTION>

                                                              December 31,
                                                        1999              1998
                                                      --------          --------
<S>                                                   <C>               <C>
Current assets                                        $139,472          $ 11,141
Non-current assets                                          --                --
                                                      --------          --------
Total assets                                          $139,472          $ 11,141
                                                      ========          ========

Current liabilities                                   $     20          $     22
Non-current liabilities                                     --                --
                                                      --------          --------
Total liabilities                                     $     20          $     22
                                                      ========          ========
</TABLE>


<TABLE>
<CAPTION>

                                                                 Years Ended December 31,
                                                        1999              1998              1997
                                                      --------          --------          ---------
<S>                                                   <C>               <C>               <C>
Net realized gains                                    $  7,399          $     --          $      --
Net increase in unrealized
     appreciation of investments                       118,336             4,012                 --
Net loss from operations                                 (656)              (685)              (129)
Cumulative effect of
     accounting change                                   (151)                --                 --
                                                      --------          --------          ---------
Net increase in partners' capital                     $124,928          $  3,327          $    (129)
                                                      ========          ========          =========
</TABLE>



                                     F-26
<PAGE>

O.   Supplemental Cash Flow Information

Supplemental disclosures of cash flow information are presented as follows (in
thousands):

<TABLE>
<CAPTION>

                                                        1999       1998       1997
                                                      --------   -------    ------
Cash paid during the year for:
<S>                                                   <C>        <C>        <C>
     Interest                                         $   118    $   199    $  232
     Income taxes                                      16,990     11,171     5,503
</TABLE>


P.   Operating Segment and Geographic Information

In the fourth quarter of 1998, the Company adopted Statement of Financial
Accounting Standard No. 131, "Disclosure About Segments of an Enterprise and
Related Information." The Company is managed in two operating segments: North
America and International. The North American operating segment consists of
e-business, systems integration, and consulting services in the United States
and Canada, while the International operating segment consists of e-business,
systems integration, and consulting services outside of North America.

The Company evaluates each segment's performance based on revenues and income
from operations. For 1999 segment reporting purposes, total corporate revenues,
depreciation/amortization expense, income from operations, fixed asset additions
and assets have been included in North America. The investment in the Fund of
$33.2 million, $2.7 million and $295,000 is included in total assets for North
America at December 31, 1999, 1998, and 1997, respectively. For segment
reporting purposes in prior periods, corporate revenues, depreciation/
amortization expense and income from operations had been allocated
to each segment based on the proportionate operating income of each segment.
Prior period revenues, depreciation/amortization expense, and income from
operations have been reclassified to conform with current period presentation.



                                     F-27
<PAGE>

Information about the Company's operating segments is presented as follows (in
thousands):

<TABLE>
<CAPTION>

                                                                                      1999                1998               1997
                                                                                    ---------           ---------          ---------
         <S>                                                                        <C>                 <C>                <C>
         Revenues:
            North America                                                           $ 404,808           $ 421,608          $ 307,512
            International                                                             223,303             190,433            130,817
                                                                                    ---------           ---------          ---------
         Consolidated                                                               $ 628,111           $ 612,041          $ 438,329
                                                                                    =========           =========          =========

         Depreciation and amortization:
            North America                                                           $  13,130           $   9,386          $   6,547
            International                                                               3,479               3,460              2,215
                                                                                    ---------           ---------          ---------
         Consolidated                                                               $  16,609           $  12,846          $   8,762
                                                                                    =========           =========          =========

         Income (loss) from operations:
            North America                                                           $ (48,556)          $  54,184          $  46,150
            International                                                              16,607              26,823             10,796
                                                                                    ---------           ---------          ---------
             Consolidated income (loss)
               from operations                                                        (31,949)             81,007             56,946
            Other income                                                               35,367               2,097              1,890
                                                                                    ---------           ---------          ---------
         Consolidated income before income taxes                                    $   3,418           $  83,104          $  58,836
                                                                                    =========           =========          =========

         Fixed asset additions:
            North America                                                           $  16,788           $  18,082          $  17,745
            International                                                               4,589               5,966              5,344
                                                                                    ---------           ---------          ---------
         Consolidated                                                               $  21,377           $  24,048          $  23,089
                                                                                    =========           =========          =========
         Total assets :
            North America                                                           $ 270,749           $ 257,617          $ 185,845
            International                                                              96,925              93,589             56,576
                                                                                    ---------           ---------          ---------
         Consolidated                                                               $ 367,674           $ 351,206          $ 242,421
                                                                                    =========           =========          =========
</TABLE>



                                     F-28
<PAGE>

Geographic information of the Company is as follows (in thousands):

<TABLE>
<CAPTION>

                                           1999                  1998                  1997
                                        ---------             ---------             ---------
<S>                                     <C>                   <C>                   <C>
Revenues:
   North America                        $ 404,808             $ 421,608             $ 307,512
   Europe                                 192,711               172,650               121,630
   Latin America                           15,679                11,795                 8,852
   Asia Pacific                            14,913                 5,988                   335
                                        ---------             ---------             ---------
Consolidated                            $ 628,111             $ 612,041             $ 438,329
                                        =========             =========             =========
Income (loss) from operations:
   North America                        $ (48,556)            $  54,184             $  46,150
   Europe                                  17,093                28,402                13,470
   Latin America                           (2,409)               (1,778)                 (827)
   Asia Pacific                             1,923                   199                (1,847)
                                        ---------             ---------             ---------
Consolidated                            $ (31,949)            $  81,007             $  56,946
                                        =========             =========             =========

Total long-lived assets:
   North America                        $  84,799             $  53,214             $  34,176
   Europe                                  10,275                11,158                 9,336
   Latin America                            1,030                 1,249                   322
   Asia Pacific                             1,888                   606                    32
                                        ---------             ---------             ---------
Consolidated                            $  97,992             $  66,227             $  43,866
                                        =========             =========             =========
</TABLE>

Revenues to external customers are based on the location of the customer.
North American operations consist of services provided in the United States and
Canada. European operations consist of services provided primarily in the United
Kingdom, the Netherlands, Switzerland, Sweden, Norway, Denmark, Ireland,
Germany, France, Austria, and Italy which have similar business environments.
Latin American operations consist of services provided primarily in Mexico,
Puerto Rico, Brazil, Venezuela, and Columbia. Asia Pacific operations consist of
services provided primarily in Japan, Australia, and India. There are no
intraenterprise sales for the periods presented. Corporate revenue, income
from operations and long-lived assets have been included in North America. No
customer of the Company accounted for 5% or more of the Company's revenues for
any of the periods presented.


                                     F-29
<PAGE>

Q.   Quarterly Financial Information (unaudited)

The following table presents unaudited quarterly financial information for the
years ended 1999 and 1998 (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                                            Quarters Ended
                                            March 31,                June 30,             September 30,            December 31,
                                     ---------------------   ----------------------   ---------------------   ----------------------
                                        1999        1998        1999         1998        1999        1998        1999         1998
                                     ---------   ---------   ---------    ---------   ---------   ---------   ---------    ---------
<S>                                  <C>         <C>         <C>          <C>         <C>         <C>         <C>          <C>
Revenues                             $ 151,373   $ 142,223   $ 163,496    $ 156,578   $ 168,235   $ 153,074   $ 145,007    $ 160,166

Income (loss) from operations           11,138      20,117      (1,538)      22,078      11,450      13,831     (52,999)      24,981

Income (loss) before
  income taxes                          12,031      20,529       1,917       22,577      17,317      14,821     (27,847)      25,177

Net income (loss)                        7,459      12,480       1,189       13,534      10,736       9,675     (17,265)      16,251

Basic net income (loss)
  per share                                .13         .22         .02          .23         .18         .17        (.28)         .28

Diluted net income (loss)
   per share                               .12         .20         .02          .21         .18         .16        (.28)         .26
</TABLE>



                                     F-30
<PAGE>

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

There have been no changes in or disagreements with accountants on accounting or
financial disclosure matters during the Company's two most recent fiscal years.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required under this item may be found under the sections
captioned "Election of Directors," "Election of Directors - Directors and
Executive Officers," and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement pursuant to Regulation
14A (the "2000 Proxy Statement"), which the Company intends to file with the
Securities and Exchange Commission not later than 120 days after the close of
the Company's fiscal year ended December 31, 1999, and is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this item may be found under the sections
captioned "Compensation and Other Information Concerning Executive Officers and
Directors" in the 2000 Proxy Statement, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this item may be found under the sections
captioned "Principal Holders of Voting Securities" and "Election of Directors -
Stock Ownership of Directors and Executive Officers" in the 2000 Proxy
Statement, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required under this item may be found under the section
captioned "Election of Directors - Certain Relationships and Related
Transactions" in the 2000 Proxy Statement, and is incorporated herein by
reference.



<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  1. Consolidated Financial Statements.

          For the following consolidated financial information included herein,
          see Index to Item 8 on Page F-1:

               Report of Independent Accountants.

               Consolidated Balance Sheets as of December 31, 1999 and 1998.

               Consolidated Statements of Operations for the years ended
               December 31, 1999, 1998 and 1997.

               Consolidated Statements of Stockholders' Equity for the years
               ended December 31, 1999, 1998 and 1997.

               Consolidated Statements of Cash Flows for the years ended
               December 31, 1999, 1998 and 1997.

               Notes to Consolidated Financial Statements.

     2.   Financial Statement Schedules.

     The following consolidated financial statement schedule is included in Item
     8 of this Form 10-K:

          II -- Valuation and Qualifying Accounts

     Schedules other than those listed above have been omitted since they are
     either not required or the information is otherwise included.

     3.   List of Exhibits.

<TABLE>
<CAPTION>

Exhibit No.       Description

<S>               <C>
   3.1(i)(2)      Amended and Restated Certificate of Incorporation of the Company, as amended.
   3.1(ii)(3)     Amended and Restated By-laws of the Company.
   4.1(4)         Rights Agreement dated June 23, 1997 by and between the Company and ChaseMellon Shareholders
                       Services, LLC (the "Rights Agreement").
   4.2(4)         Amendment No. 1 to the Rights Agreement dated September 30, 1998 by and between the Company
                       and ChaseMellon Shareholder Services, LLC.
  10.1(4)         Lease dated June 4, 1992, as amended, between 304 Vassar Street Realty Trust and the
                       Company, for 304 Vassar Street, Cambridge, Massachusetts.
  10.2(5)*        Amended and Restated 1991 Stock Option Plan as amended.
  10.3(6)*        Form of Non-Qualified Stock Option Agreement of the Company for Executive Officers.
</TABLE>



<PAGE>

<TABLE>
<CAPTION>

<S>               <C>
  10.4(6)*        Form of Non-Qualified Stock Option Agreement of the Company for Non-Executive Officers.
  10.5(5)*        Form of Incentive Stock Option Agreement of the Company for Executive Officers.
  10.6(5)*        Form of Incentive Stock Option Agreement of the Company for Non-Executive Employees.
  10.7(3)*        Agreement dated December 1992 between the Company and James K. Sims.
  10.8(7)*        Amendment to Agreement between the Company and James K. Sims dated December 15,1994.
  10.9(8)         Credit Agreement, dated as of September 10, 1998, by and among the Company, certain of its
                       subsidiaries, The Chase Manhattan Bank and Fleet National Bank.
  10.10(8)        Guaranty dated September 10, 1998 by certain subsidiaries of the Company in favor of The
                       Chase Manhattan Bank and Fleet National Bank.
  10.11(5)*       Description of 1997 Executive Bonus Plan.
  10.12(5)*       Form of Split-Dollar Life Insurance Agreement for Executive Officers and Vice Presidents
  10.13*          Employment Agreement between the Company and Jack L. Messman, dated as of August 27, 1999.
  10.14*          Restricted Stock Award Agreement between the Company and Jack L. Messman, dated as of August 27, 1999.
  10.15*          Form of non-qualified stock agreement awarded to Jack L. Messman, dated August 27, 1999.
  10.16(9)*       Amended and Restated Service Agreement between the Company and Gerard Van Kemmel, dated July 12, 1999.
  10.17(5)*       Service Agreement with Quentin Baer, as amended.
  10.18(5)*       Service Agreement with Ian Clarkson, as amended.
  10.19(9)*       Agreement between the Company and James K. Sims, dated as of September 1, 1999.
  10.20(10)       Promissory Note, dated December 31, 1998, from Arthur M. Toscanini to the Company.
  10.21(10)       Promissory Note, dated November 13, 1998, from H. Carvel Moore to the Company.
  10.22(10)       Promissory Note, dated December 21, 1998, from Theo Schnitfink to the Company.
  10.23(10)       Promissory Note, dated November 2, 1998, from Theo Schnitfink to the Company.
  10.24           Secured Recourse Promissory Note, dated February 24, 2000, from Theo Schnitfink to the Company.
  10.25           Pledge Agreement, dated February 24, 2000, between Theo Schnitfink and the Company.
  10.26*          H. Carvel Moore Letter of Understanding, dated March 3, 2000.
  11              Statement Regarding Computation of Per Share Earnings.
  21              Subsidiaries of the Company.
  23              Consent of PricewaterhouseCoopers LLP.
</TABLE>



<PAGE>

<TABLE>
<CAPTION>

<S>               <C>
  24              Power of Attorney (included on Signature Page to this report)
  27.1            Financial Data Schedule
  99.1            Cambridge Technology Capital Fund I, L.P. Financial Statements

(1)      Incorporated herein by reference to the exhibits to the Company's Current Report on Form 8-K dated
         August 31, 1998.
(2)      Incorporated herein by reference to the exhibits to the Company's
         Quarterly Report on Form 10-Q for the three-month period ended June 30, 1998.
(3)      Incorporated herein by reference to the exhibits to the Company's Registration Statement on Form S-1
         (File No. 33-56338).
(4)      Incorporated herein by reference to the exhibits to the Company's
         Registration Statement on Form 8-A/A filed on September 30, 1998.
(5)      Incorporated herein by reference to the exhibits to the Company's
         Annual Report on Form 10-K for the twelve-month period ended December 31, 1997.
(6)      Incorporated herein by reference to the exhibits to the Company's Current Report on Form 8-K dated
         October 16, 1995.
(7)      Incorporated herein by reference to the exhibits to the Company's
         Quarterly Report on Form 10-Q for the three-month period ended June 30, 1994.
(8)      Incorporated herein by reference to the exhibits to the Company's
         Quarterly Report on Form 10-Q for the three-month period ended September 30, 1998.
(9)      Incorporated herein by reference to the exhibits to the Company's
         Quarterly Report on Form 10-Q/A for the three-month period ended September 30, 1999.
(10)     Incorporated herein by reference to the exhibits to the Company's
         Annual Report on Form 10-K for the twelve-month period ended December 31, 1998.
</TABLE>

*    Indicates a management contract or any compensatory plan, contract or
     arrangement.

     (b)  Reports on Form 8-K.

The Company filed no current reports on Form 8-K during the quarter ended
December 31, 1999.

     (c)  Exhibits.

     The Company hereby files as part of this Form 10-K the exhibits listed in
Item 14(a)(3) above. Exhibits which are incorporated herein by reference can be
inspected and copied at the public reference facilities maintained by the
Commission, 450 Fifth Street, N.W., Washington, D.C., 20549 and at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048, and at the Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition the Company is
required to file electronic versions of these documents with the Commission
through the Commission's Electronic Data Gathering, Analysis and Retrieval
(EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The Common Stock of the Company is traded on the Nasdaq National
Market. Certain reports and other information



<PAGE>

concerning the Company may be inspected at the National Association of
Securities Dealers, Inc. 1735 K Street, N.W., Washington, D.C. 20006.

     (d) Financial Statement Schedules and Separate Financial Statements of
Subsidiaries Not Consolidated.

     The Company hereby files as part of this Form 10-K the consolidated
financial statement schedules listed in Item 14(a)(2) above, which are attached
hereto. In addition, refer to Item 14(a)(3) and Exhibit 99.1 for the financial
statements of Cambridge Technology Capital Fund I, L.P. as of December 31, 1999
and 1998 and for the years ended December 31, 1999 and 1998 and for the period
from October 17, 1997 (date of inception) to December 31, 1997, which are filed
as part of this report.



<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 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, in the City of
Cambridge, Commonwealth of Massachusetts, on the 21st day of March, 2000.

                                     Cambridge Technology Partners
                                     (Massachusetts), Inc.



                                     By: /s/ Jack L. Messman
                                         -------------------------
                                         Jack L. Messman
                                         President

                        POWER OF ATTORNEY AND SIGNATURES

     We, the undersigned officers and directors of Cambridge Technology's
Partners (Massachusetts), Inc., hereby severally constitute and appoint Jack L.
Messman and Joseph A. LaSala, Jr., and each of them singly, our true and lawful
attorneys, with full power to them and each of them singly, to sign for us in
our names in the capacities indicated below, amendments to this report, and
generally to do all things in our names and on our behalf in such capacities to
enable Cambridge Technology Partners (Massachusetts), Inc. to comply with the
provisions of the Securities Exchange Act of 1934, as amended, and all
requirements of the Securities and Exchange Commission.

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

<TABLE>
<CAPTION>

Signature                            Title                                         Date
---------                            -----                                         ----
<S>                                  <C>                                           <C>
/s/ Jack L. Messman                  Chief Executive Officer, President            March 21, 2000
------------------------             and Director (Principal Executive Officer)
Jack L. Messman

/s/ John J. Gavin, Jr.               Executive Vice President - Finance,           March 21, 2000
------------------------             Chief Financial Officer and
John J. Gavin, Jr.                   Treasurer (Principal Financial  and
                                     Accounting Officer)

/s/ Warren V. Musser                 Director                                      March 21, 2000
------------------------
Warren V. Musser

                                     Director
------------------------
John W. Poduska, Sr.

/s/ Robert E. Keith, Jr.             Director                                      March 21, 2000
------------------------
Robert E. Keith, Jr.

                                     Director
------------------------
James I. Cash, Jr.

/s/ James D. Robinson III            Director                                      March 21, 2000
------------------------
James D. Robinson III
</TABLE>
<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS
                        ON FINANCIAL STATEMENT SCHEDULE


To the Board of Directors and Stockholders
of Cambridge Technology Partners (Massachusetts), Inc.:

Our audits of the consolidated financial statements referred to in our report
dated February 10, 2000, except for the first paragraph of Note M, as to which
the date is March 2, 2000, appearing in the 1999 Annual Report of Cambridge
Technology Partners (Massachusetts), Inc. (which report and consolidated
financial statements are included in this Annual Report on Form 10-K) also
included an audit of the financial statement schedule listed in Item 14(a)(2) of
this Form 10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.


PricewaterhouseCoopers LLP

Boston, Massachusetts
March 27, 2000


                                      S-1

<PAGE>

                                                                     SCHEDULE II


              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                           VALUATION AND QUALIFYING
                                   ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999
                                (in thousands)


<TABLE>
<CAPTION>
                                                                                    (2)
                                                                                 Charged to
                                                Balance at           (1)           other                          Balance at
          Allowances for                         Beginning        Charged to      accounts -                        End of
        Doubtful Accounts                        of Period   cost and expenses     describe       Deductions        Period
----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>             <C>             <C>             <C>
Year ended December 31, 1997                       $1,756           $1,001         $   --          $    --           $ 2,757
Year ended December 31, 1998                        2,757            1,793             --               --             4,550
Year ended December 31, 1999                        4,550            5,737             --               --            10,287


<CAPTION>
                                                                                    (2)
                                                                                 Charged to
                                                Balance at           (1)           other                          Balance at
                                                 Beginning        Charged to      accounts -                        End of
        Contract Reserve                         of Period   cost and expenses     describe       Deductions        Period
----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>             <C>             <C>             <C>
Year ended December 31, 1997                       $3,816           $1,212         $   --           $   --           $ 5,028
Year ended December 31, 1998                        5,028               54             --               --             5,082
Year ended December 31, 1999                        5,082             (296)            --               --             4,786

</TABLE>


                                      S-2