
<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                      -------------------------------------


                                    FORM 10-Q
          (Mark One)

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


For the quarterly period ended         September 30,1999
                              --------------------------------------------------

                                                          OR

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


For the transition period from       Not Applicable     to
                              --------------------------   ---------------------


Commission file number          0-25890
                      ----------------------------------------------------------


                         CENTURY BUSINESS SERVICES, INC.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                Delaware                                    22-2769024
---------------------------------------------           -------------------
(State or Other Jurisdiction of Incorporation            (I.R.S. Employer
            or Organization)                            Identification No.)


6480 Rockside Woods Boulevard South, Suite 330, Cleveland, Ohio      44131
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                           (Zip Code)


(Registrant's Telephone Number, Including Area Code)        216-447-9000
                                                    ----------------------------

--------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed since Last Report

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 proceeding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

                                                       Yes  X   No
                                                          -----   -----

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

                                                  Outstanding at
         Class of Common Stock                   October 31, 1999
         ---------------------                   ----------------

         Par value $.01 per share                   91,278,979
                                                    ----------

Exhibit Index is on page 16 of this report.

                                       1

<PAGE>   2



                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


PART I.    FINANCIAL INFORMATION:                                                        Page

<S>                                                                                     <C>
           Item 1.    Financial Statements

                      Condensed Consolidated Balance Sheets -
                      September  30, 1999 and December 31, 1998                            3

                      Condensed Consolidated Statements of Income -
                      Three and Nine Months Ended September  30, 1999 and 1998             4

                      Condensed Consolidated Statements of Cash Flows -
                      Nine Months Ended September  30, 1999 and 1998                       5

                      Notes to the Condensed Consolidated Financial Statements           6-9

           Item 2.    Management's Discussion and Analysis of Financial Condition
                      and Results of Operations                                        10-13

           Item 3.    Quantitative and Qualitative Information about Market Risk          13



PART II.   OTHER INFORMATION :

           Item 1.    Legal Proceedings                                                   14

           Item 2.    Changes in Securities                                            14-15

           Item 6.    Exhibits and Reports on Form 8-K                                    15

           Signature                                                                      15

           Exhibit Index                                                                  16

</TABLE>


                                       2



<PAGE>   3



                         PART I - FINANCIAL INFORMATION
                         ------------------------------

ITEM 1. FINANCIAL STATEMENTS

                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>

                                                    September 30,  DECEMBER 31,
                                                        1999           1998
                                                     ---------      ---------
                             ASSETS
<S>                                                <C>            <C>
Cash and cash equivalents                            $  44,638      $  43,593
Restricted cash                                         20,877              -
Accounts receivable, less allowance for doubtful
   accounts of $8,327 and $5,378                       190,424        128,377
Notes receivable - current                               3,087         15,563
Other current assets                                    14,195          9,235
Net assets of discontinued operations                   40,238         45,883
                                                     ---------      ---------
     Total current assets                              313,459        242,651

Goodwill, net of accumulated amortization of
    $12,001 and $5,838                                 355,632        293,553
Fixed assets, net of accumulated depreciation of
   $19,919 and $14,490                                  53,097         29,207
Notes receivable - non-current                          14,350          3,116
Other assets                                            13,982          9,396
                                                     ---------      ---------
     Total non-current assets                          437,061        335,272
                                                     ---------      ---------

TOTAL  ASSETS                                        $ 750,520      $ 577,923
                                                     =========      =========

                           LIABILITIES
Accounts payable                                     $  41,904      $  38,690
Income taxes - current                                       -          3,783
Notes payable and capitalized leases - current           7,198         35,230
Accrued expenses and other liabilities                  36,041         37,129
                                                     ---------      ---------
     Total current liabilities                          85,143        114,832

Bank debt                                              115,000         44,000
Notes payable and capitalized leases - long term         2,303          6,741
Income taxes - deferred                                  8,436          7,009
Accrued expenses and other liabilities                  21,965            592
                                                     ---------      ---------
     Total non-current liabilities                     147,704         58,342

                                                     ---------      ---------
TOTAL LIABILITIES                                      232,847        173,174
                                                     =========      =========

                      STOCKHOLDERS' EQUITY
Common stock                                               881            795
Additional paid-in capital                             411,743        336,743
Retained earnings                                      109,505         69,715
Unearned ESOP                                           (1,794)        (2,549)
Treasury stock                                            (754)           (74)
Accumulated other comprehensive income (loss)           (1,908)           119
                                                     ---------      ---------

TOTAL STOCKHOLDERS' EQUITY                             517,673        404,749
                                                     ---------      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 750,520      $ 577,923
                                                     =========      =========

</TABLE>

See the accompanying notes to the condensed consolidated financial statements.

                                       3

<PAGE>   4


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                      (In thousands, except per share data)


<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED,           NINE MONTHS ENDED,
                                                              SEPTEMBER 30,                SEPTEMBER 30
                                                          1999           1998           1999           1998
                                                       ---------      ---------      ---------      ---------
<S>                                                   <C>            <C>            <C>            <C>
Business service fee and commission revenue            $ 138,119      $  91,118      $ 408,743      $ 247,417

Expenses:
     Operating                                           106,414         70,793        312,460        194,238
     Corporate general and administrative                  3,101          1,518          8,841          3,884
     Merger - Related                                      2,595          2,015          5,280          2,968
     Depreciation and amortization                         4,857          2,733         13,487          7,212
     Interest expense (income), net                          410            (33)           471           (145)
                                                       ---------      ---------      ---------      ---------
         Total expenses                                  117,377         77,026        340,539        208,157

Income from continuing operations before                  20,742         14,092         68,204         39,260
   income tax expense

Income tax expense                                         7,661          4,908         25,460         13,726

                                                       ---------      ---------      ---------      ---------
Income from continuing operations                         13,081          9,184         42,744         25,534

Income (loss) from discontinued operations, net of
  income tax expense                                      (1,417)         2,091           (548)         5,432
                                                       ---------      ---------      ---------      ---------

Net income                                             $  11,664      $  11,275      $  42,196      $  30,966
                                                       =========      =========      =========      =========

Basic earnings (loss) per share:

     Continuing operations                             $    0.15      $    0.13      $    0.51      $    0.40
     Discontinued operations                               (0.02)          0.03          (0.01)          0.08
                                                       ---------      ---------      ---------      ---------
     Net income                                        $    0.13      $    0.16      $    0.50      $    0.48
                                                       =========      =========      =========      =========

Diluted earnings (loss) per share:
     Continuing operations                             $    0.14      $    0.11      $    0.47      $    0.32
     Discontinued operations                               (0.02)          0.03          (0.01)          0.07
                                                       ---------      ---------      ---------      ---------
     Net income                                        $    0.12      $    0.14      $    0.46      $    0.39
                                                       =========      =========      =========      =========

Pro forma income data from continuing operations:
   Net income as reported                              $  13,081      $   9,184      $  42,744      $  25,534
   Pro forma adjustment for income tax expense               389            372          1,762          1,243
                                                       ---------      ---------      ---------      ---------
   Pro forma net income                                $  12,692      $   8,812      $  40,982      $  24,291
                                                       =========      =========      =========      =========
   Pro forma earnings per share:
     Basic                                             $    0.15      $    0.13      $    0.48      $    0.38
                                                       =========      =========      =========      =========
     Diluted                                           $    0.14      $    0.11      $    0.45      $    0.31
                                                       =========      =========      =========      =========

Weighted average common shares                            87,014         68,969         84,557         64,093
                                                       =========      =========      =========      =========
Weighted average common shares and dilutive
   potential common shares                                94,011         82,538         91,249         78,531
                                                       =========      =========      =========      =========

</TABLE>


See the accompanying notes to the condensed consolidated financial statements.

                                       4

<PAGE>   5


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                 ------------------------
                                                                    1999          1998
                                                                 ---------      ---------
<S>                                                             <C>            <C>
NET CASH PROVIDED BY (USED IN) CONTINUING                        $  (4,047)     $   4,379
OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from (additions to) notes receivable                       926          5,599
   Business acquisitions, net of cash acquired                     (31,009)       (59,725)
   Purchases of property and equipment                             (27,614)        (9,096)
   Proceeds from dispositions of property and equipment                337            424
                                                                 ---------      ---------
     Net cash used in investing activities                         (57,360)       (62,798)
                                                                 ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from bank debt                                         197,000         68,500
   Proceeds from notes payable                                      12,933          5,718
   Payment of bank debt                                           (126,000)       (47,700)
   Payment of notes payable and capitalized leases                 (53,169)       (14,537)
   Proceeds from stock issuances, net                               24,572         47,695
   Proceeds from exercise of stock options and warrants, net         9,479         20,999
   Pre-merger equity transactions                                   (2,363)        (3,352)
                                                                 ---------      ---------
     Net cash provided by financing activities                      62,452         77,323
                                                                 ---------      ---------

Net increase in cash and cash equivalents                            1,045         18,904
Cash and cash equivalents at beginning of period                    43,593         23,502
                                                                 =========      =========

Cash and cash equivalents at end of period                       $  44,638      $  42,406
                                                                 =========      =========

</TABLE>



See the accompanying notes to the condensed consolidated financial statements.


                                       5



<PAGE>   6


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         In the opinion of management, the accompanying unaudited condensed
         consolidated interim financial statements reflect all adjustments
         (consisting of only normal and recurring adjustments) necessary to
         present fairly the financial position of Century Business Services,
         Inc. and Subsidiaries ("Century") as of September 30, 1999 and December
         31, 1998, and the results of their operations for the three and
         nine-month periods ended September 30, 1999 and 1998, and cash flows
         for the nine-month periods ended September 30, 1999 and 1998. The
         results of operations for such interim periods are not necessarily
         indicative of the results for the full year. The accompanying unaudited
         condensed consolidated interim financial statements have been prepared
         in accordance with generally accepted accounting principles for interim
         financial reporting and with instructions to Form 10-Q and accordingly
         do not include all disclosures required by generally accepted
         accounting principles. The 1998 condensed consolidated balance sheet
         was derived from Century's audited consolidated balance sheet which has
         been restated to include the results of acquisitions accounted for
         under the pooling-of-interests method of accounting and gives effect to
         the planned divestiture of its specialty insurance segment, which is
         being accounted for as a discontinued operation. For further
         information, refer to the consolidated financial statements and
         footnotes thereto included in the Company's annual report on Form 10-K
         for the year ended December 31, 1998.

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the amounts reported in the financial
         statements and accompanying notes. Actual results could differ from
         those estimates. Certain reclassifications have been made to the 1998
         financial statements to conform to the 1999 presentation.

2.       ACQUISITIONS

         During the third quarter 1999, the Company continued its strategic
         acquisition program, acquiring the businesses of thirteen complementary
         companies. These acquisitions comprised of the following: five
         accounting, tax, valuation and advisory firms, six benefits
         administration and insurance firms, one information technology firm,
         and one performance consulting firm.

         Century exchanged approximately 4.7 million shares of its common stock,
         with a fair value of $59.2 million, for all of the common stock of two
         acquisitions accounted for under the pooling-of-interests method of
         accounting for business combinations. Accordingly, Century's financial
         statements have been restated to include the results of the pooled
         entities for all periods presented.

         Eleven of the acquisitions were accounted for as purchases, and
         accordingly, the operating results of the acquired companies have been
         included in the accompanying condensed consolidated financial
         statements since the dates of acquisition. The aggregate purchase price
         of these acquisitions was approximately $27.9 million, comprised of
         $13.5 million in cash and 1.9 million shares of restricted common
         stock, fair value of $14.5 million. The aggregate purchase prices
         exclude future contingent consideration of up to $4.3 million,
         comprised of $2.1 million in cash and 0.3 million shares of restricted
         common stock, estimated fair value of $2.2 million at acquisition,
         which is based on the acquired companies' ability to meet or exceed
         certain performance goals. Goodwill is being amortized over periods not
         exceeding forty years. As a result of the nature of the assets and
         liabilities of the businesses acquired, there were no material
         identifiable intangible assets. The aggregate purchase price, excluding
         future contingent consideration, has been allocated to the net assets
         of the companies acquired based upon their respective fair values.
         Future contingent consideration is recorded when earned as additional
         purchase price.

                                       6

<PAGE>   7


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited) - (continued)



2.       ACQUISITIONS (continued)

         The unaudited pro forma information for the periods set forth below
         give effect to 1999 acquisitions accounted for under the purchase
         method of accounting as if they had occurred on January 1, 1999 and
         January 1, 1998. The pro forma information is presented for
         informational purposes only and is not necessarily indicative of the
         results of operations that actually would have been achieved had these
         transactions been consummated at the beginning of the periods presented
         (in thousands, except per share data):

<TABLE>
<CAPTION>

                                  THREE MONTHS ENDED              NINE MONTHS ENDED
                             SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                1999            1998            1999            1998
                             -------------   -------------   -------------   -------------
Pro forma from continuing
operations:

<S>                        <C>             <C>             <C>             <C>
Revenue                     $   141,401     $   105,582     $   434,084     $   290,808

Net income                  $    13,388     $    11,129     $    45,671     $    31,368

Earnings per share

 Basic                      $      0.15     $      0.15     $      0.53     $      0.46

 Diluted                    $      0.14     $      0.13     $      0.49     $      0.38


</TABLE>


3.       CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

         Cash and cash equivalents consist of funds held on deposit and
         short-term highly liquid investments with a maturity of three months or
         less at the date of purchase. At various times during the year, Century
         had deposits with financial institutions in excess of the $100,000
         federally insured limit.

         Restricted cash represents funds on deposit from clients for which
         the Company is administering and settling claims. A related liability
         for these funds is recorded in accrued expenses and other liabilities
         in the balance sheet.

4.       CONTINGENCIES

         Century is involved in litigation, arising in the normal course of
         business. While it cannot be predicted with certainty, management
         believes that the outcome will not have a material adverse effect on
         Century's financial condition or results of operations. See "Part II -
         Other Information, Item 1. Legal Proceedings" for information regarding
         proceedings initiated during the current period.

5.       COMPREHENSIVE INCOME

         Statement of Financial Accounting Standards No. 130, "Reporting
         Comprehensive Income", requires reporting the accumulated balance of
         other comprehensive income separately from retained earnings and
         additional paid-in capital in the equity section of the Balance Sheet.
         Items considered other comprehensive income are the adjustments made
         for unrealized holding gains and losses on available-for-sale
         securities (primarily held by the discontinued operations) and foreign
         currency translation adjustments. Comprehensive income for the three
         months ended September 30, 1999 and 1998 was $11.3 million and $10.8
         million, respectively. Comprehensive income for the nine months ended
         September 30, 1999 and 1998 was $40.2 million and $29.8 million,
         respectively.

                                       7
<PAGE>   8


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited) - (continued)

6.       EARNINGS PER SHARE

         For the periods presented, Century presents both basic and diluted
         earnings per share. The following data shows the amounts (in thousands)
         used in computing earnings per share and the effect on the weighted
         average number of dilutive potential common shares. Included in
         potential dilutive common shares are contingent shares, which represent
         shares issued and placed in escrow that will not be released until
         certain performance goals have been met.

<TABLE>
<CAPTION>

                                          THREE MONTHS ENDED    NINE MONTHS ENDED
                                            SEPTEMBER 30,         SEPTEMBER 30,
                                           1999       1998       1999       1998
                                          ------     ------     ------     ------
         <S>                              <C>        <C>        <C>       <C>
         Denominator
            Basic
              Weighted average common
               shares                     87,014     68,969     84,557     64,093
                                          ------     ------     ------     ------

            Diluted
              Warrants                     6,359     12,478      6,164     13,721
              Options                        397        630        287        517
              Contingent shares              241        461        241        200
                                          ------     ------     ------     ------
                   Total                  94,011     82,538     91,249     78,531
                                          ======     ======     ======     ======

</TABLE>


7.       DISCONTINUED OPERATIONS

         In April 1999, Century adopted a formal plan to divest its risk-bearing
         specialty insurance segment, which is no longer part of Century's
         strategic long-term growth objectives. The risk-bearing specialty
         insurance segment, which includes Century Surety Company, Evergreen
         National Indemnity, and Continental Heritage Insurance Company, is
         reported as a discontinued operation and its net assets and results of
         operations are reported separately in the unaudited condensed
         consolidated financial statements. Revenues from the discontinued
         operations for the three-month periods ended September 30, 1999 and
         1998 were $12.4 million and $14.1 million, respectively, and for the
         nine-month periods ended September 30, 1999 and 1998 were $37.1 million
         and $40.1 million, respectively. The divestiture of the specialty
         insurance segment is not expected to result in a loss, and the Company
         expects to enter into a definitive agreement, subject to regulatory
         approval, prior to December 31, 1999.

8.       SUBSEQUENT EVENTS

         Acquisitions

         Since September 30, 1999, Century completed the acquisition of two
         accounting, tax, valuation and advisory firms. The aggregate purchase
         price of these acquisitions was approximately $4.9 million, comprised
         of $2.8 million in cash and 0.3 million shares of restricted common
         stock, fair value of $2.1 million. The aggregate purchase prices
         exclude future contingent consideration of up to $4.3 million,
         comprised of $2.6 million in cash and 0.2 million shares of restricted
         common stock, estimated fair value of $1.7 million at acquisition,
         which is based on the acquired companies' ability to meet or exceed
         certain performance goals. All of the aforementioned acquisitions will
         be accounted for under the purchase method of accounting.

         Strategic Alternatives

         On October 5, 1999, Century announced that it has retained Merrill
         Lynch & Co. to assist the Company in exploring alternatives to enhance
         shareholder value. Under consideration are a number of alternatives,
         including an alliance with a financial or strategic partner(s) and
         merging or selling the company.

                                       8

<PAGE>   9


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited) - (continued)


8.       SUBSEQUENT EVENTS (continued)

         Planned Divestitures

         In the fourth quarter of 1999, Century decided to and plans to divest
         itself of four or five smaller underperforming non-core operations
         acquired in early 1997. These divestitures are not expected to have a
         material effect on the results of operations or financial condition of
         the Company.


9.       SEGMENT REPORTING

         Century adopted SFAS No. 131, "Disclosures about Segments of an
         Enterprise and Related Information," in 1998. As previously reported,
         Century's business units have been aggregated into two reportable
         segments: specialty insurance and business services. The planned
         divestiture of the specialty insurance segment has reduced the number
         of segments to one, and therefore there is no segment information to
         report.

                                       9



<PAGE>   10


                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Century Business Services, Inc. ("Century") is a diversified services company,
which acting through its subsidiaires provides professional outsourced business
services to small and medium-sized companies, as well as individuals, government
entities, and not-for-profit enterprises predominantly throughout the United
States. Century provides integrated services in the following areas: accounting,
advisory, tax, and valuation; litigation advisory services; benefits
administration and insurance; human resources and payroll; and information
technology through its CBIZ Interactive division.

RESULTS OF OPERATIONS
---------------------

Revenues

         Business service fees and commissions increased to $138.1 million for
the three-month period ended September 30, 1999, from $91.1 million for the
comparable period in 1998, an increase of $47.0 million, or 51.6%. The $47.0
million increase was primarily attributable to (i) Century's acquisitions
completed subsequent to the third quarter of 1998 that were accounted for under
the purchase method of accounting, which increased total revenues in 1999 by
$30.4 million, and (ii) internal growth. For the nine-month period ended
September 30, 1999, revenues increased to $408.7 million from $247.4 million
for the comparable period in 1998, an increase of $161.3 million, or 65.2%. The
$161.3 million increase was primarily attributable to (i) Century's
acquisitions completed subsequent to the third quarter of 1998 that were
accounted for under the purchase method of accounting, which increased total
revenues in 1999 by $60.0 million, and (ii) internal growth.

         For the companies with a full period of operations for the three-month
periods ended September 30, 1999 and 1998, Century achieved an internal growth
rate of 17.5%. For the companies with a full period of operations in for the
nine-month periods ended September 30, 1999 and 1998, Century achieved an
internal growth rate of 15.6%. Internal growth rate is based on the increase in
revenues of companies that have a full period of operations for the three and
nine-month periods ended September 30, 1999, including companies that are
accounted for as pooling of interests, as compared to the comparable periods in
1998.

Expenses

         Total expenses increased to $117.4 million and $340.5 million for the
three and nine-month periods ended September 30, 1999, from $77.0 million and
$208.2 million for the comparable periods in 1998. Such increase was primarily
attributable to the increase in operating expenses, which reflects the impact of
Century's acquisitions made subsequent to the third quarter of 1998. As a
percentage of revenue, total expenses were 85.0% and 83.3% for the three and
nine-month periods ended September 30, 1999, compared to 84.5% and 84.1% for the
three and nine-month periods ended September 30, 1998. Excluding merger-related
expenses, total expenses as a percentage of revenue were 83.1% and 82% for the
three and nine month periods ended September 30, 1999, compared to 82.3% and
82.9% for the three and nine month periods ended September 30, 1998.

         Operating expenses increased to $106.4 million and $312.5 million for
the three and nine-month periods ended September 30, 1999, from $70.8 million
and $194.2 million for the comparable periods in 1998, primarily due to
acquisitions completed subsequent to the third quarter of 1998 that were
accounted for under the purchase method of accounting. As a percentage revenue,
operating expenses for the three and nine-month periods ended September 30, 1999
were 77.0% and 76.4%, representing a slight decrease from 77.7% and 78.5% for
the comparable periods. The primary components of operating expenses are
compensation expense and occupancy expense. Compensation expense increased as a
percentage of revenue to 52.0% and 51.0% for the three and nine-month periods
ended September 30, 1999, from 49.0% and 46.0% in the comparable periods in
1998, due to purchase acquisitions, staff build up in connection with internal
growth, and general increases for cost of living raises and incentives.
Occupancy expense increased primarily due to additional expense from purchase
acquisitions, but remained consistent as a percentage of revenue, representing
4.0% of revenue for the three and nine-month periods ended September 30, 1999,
compared to 4.0% for the comparable periods in 1998.

         Corporate general and administrative expenses increased to $3.1 million
and $8.8 million for the three and nine-month periods ended September 30, 1999,
from $1.5 million and $3.9 million for the comparable periods in 1998. Such
increase was attributable to the expansion of the corporate function to
accommodate Century's infrastructure and corporate initiatives, such as the
enterprise-wide solution to integrate back office operations, combining
functions like general ledger, accounts receivable, accounts payable, and
commission accounting. This solution will form the necessary high-level
technical infrastructure to support subsequent phases of implementation,
reducing the cost of a customer-relationship management system, e-procurements,
payroll/human resources, and benefits. Corporate general and administrative
expenses represented 2.2% of total revenues for the three and nine-month
periods ended September 30, 1999, up from 1.7% and 1.6% for the comparable
periods in 1998, respectively.

                                       10

<PAGE>   11

         For the three-month period ended September 30, 1999, merger-related
expenses were $2.6 million ($1.9 million after-tax), up from $2.0 million ($1.3
million after-tax) for the comparable period in 1998. The increase in
merger-related expenses for the three-month period is due to the increase in
transaction and merger-related transactions costs incurred on two significant
pooling transactions. The shareholders of one of the pooled transactions paid a
$1.0 million investment banking fee ($1.0 million after tax) which was
reflected on Century's income statement in the third quarter of 1999. Excluding
this significant transaction fee that Century has not incurred in prior
periods, merger-related expenses would have decreased by $0.4 million. For the
nine-month periods ended September 30, 1999 and 1998, merger-related expenses
were $5.3 million ($3.6 million after tax) and $3.0 million ($1.8 million
after-tax), respectively, due to the aforementioned increase in transactions
costs, and the build out of the mergers and acquisitions department throughout
1998, resulting in the full utilization of the department in 1999.
Merger-related expenses are comprised primarily of professional fees incurred
in transactions accounted for as poolings-of-interests and the salaries of
professional employees dedicated to those merger activities, which the Company
is in the process of scaling down.

         Depreciation and amortization expenses increased to $4.9 million and
$13.5 million for the three and nine-month periods ended September 30, 1999,
from $2.7 million and $7.2 million for the comparable periods in 1998. The
increase is primarily a result of the increase in goodwill amortization
resulting from the acquisitions completed by Century subsequent to the third
quarter of 1998, as well as additional depreciation expense associated with
purchases. As a percentage of total revenues, depreciation and amortization
expense was 3.5% and 3.3% for the three and nine-month periods ended September
30, 1999, compared to 3.0% and 2.9% for the comparable periods in 1998.

         Century recorded income taxes from continuing operations of $8.1
million on a pro forma basis ($7.7 million actual) and $27.2 million on a pro
forma basis ($25.5 million actual) for the three and nine-month periods ended
September 30, 1999 compared to $5.3 million on a pro forma basis ($4.9 million
actual) and $15.0 million on a pro forma basis ($13.7 million actual) for the
comparable periods in 1998. The effective tax rate increased to 38.8% on a pro
forma basis (36.9% actual) and 39.9% on a pro forma basis (37.3% actual) for
the three and nine-month periods ended September 30, 1999, from 37.5% on a pro
forma basis (34.8% actual) and 38.1% on a pro forma basis (35.0% actual) for
the comparable periods in 1998. Income taxes are provided based on Century's
anticipated annual effective rate.

OTHER
-----

         Total assets increased to $750.5 million at September 30, 1999, from
$577.9 million at December 31, 1998, primarily attributable to purchase
acquisitions completed during 1999. Total assets increased $172.6 million,
primarily due to increases in cash held in trust of $20.9 million, accounts
receivable of $62.0 million, goodwill of $62.1 million and fixed assets of $23.9
million. Total liabilities increased approximately $59.7 million, primarily due
to the increase in bank debt of $71.0 million, and an increase in accrued
expenses and other liabilities of $20.3 million, offset by the decrease in total
notes payable and capitalized leases of $32.5 million. Total stockholders'
equity increased $112.9 million due to net income for the first nine months of
1999 of $42.2 million, proceeds from the investment of $25 million by an outside
investor, the proceeds from the exercise of options and warrants, and business
acquisitions.

         In 1997, Century sold its Environmental Services business, which had
been classified as a discontinued operation, for cash and notes, resulting in a
loss of $0.6 million. At September 30, 1999, the outstanding balance of these
notes was approximately $11.3 million in principal and $0.9 million in accrued
interest. These notes became past due during the third quarter of 1999 and
therefore were reclassified from current notes receivable to non-current notes
receivable. The borrower was current on interest due until the note became past
due, and Century is in the process of pursuing collection on the outstanding
principal and accrued interest on these notes. Although these notes are past due
and therefore impaired, a reserve is not required at this time as the Company
reasonably expects to collect the entire amount of principal, as well as any
accrued interest.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         During the nine-month period ended September 30, 1999, cash and cash
equivalents increased $1.0 million to $44.6 million, from $43.6 million at
December 31, 1998, as cash provided by financing activities of $62.5 million
exceeded cash used by continuing operating activities of $4.0 million and cash
used in investing activities of $57.4 million.

         Cash used in investing activities consisted primarily of cash used in
business acquisitions and purchases of property and equipment. Significant
purchases of property and equipment in the first nine months of 1999 are
primarily attributable to the purchase of software from Oracle and related
capital costs incurred to implement the enterprise-wide solution to integrate
back office operations.

                                       11

<PAGE>   12

         During the nine months ended September 30, 1999, cash provided by
financing activities consisted primarily of proceeds of $34.1 million from stock
issuances and exercise of stock options and warrants, proceeds from the
revolving credit facility of $197.0 million, and repayment of bank debt, notes
payable, and capital leases. The primary source of cash from stock issuances
resulted from the $25.0 million investment in Century by an outside investor, in
exchange for 1.8 million restricted shares of common stock and 900,000 warrants.
Fifty percent of the common stock is subject to a one-year lock-up restriction,
while the remaining common stock is subject to a two-year lock-up restriction,
and the warrants to purchase shares of common stock may be exercised under the
following terms: 300,000 shares at $20 per share for 3 years; 300,000 shares at
$25 per share for 4 years; and 300,000 shares at $30 per share for 5 years. The
proceeds from these financing activities were used for general corporate
purposes, working capital requirements, repayment of debt, and the cash portion
of business acquisitions.

         Earnings before interest, taxes, depreciation and amortization
(EBITDA) increased to $26.0 million for the three-month period ended September
30, 1999, from $16.8 million for the comparable period in 1998, an increase of
$9.2 million, or 54.9%. EBITDA increased to $82.2 million for the nine-month
period ended September 30, 1999, from $46.3 million, for the comparable period
in 1998, an increase of $35.9 million, or 77.4%. Such increases are primarily
attributable to Century's acquisitions completed subsequent to the third
quarter of 1998 that were accounted for under the purchase method of
accounting.

         During 1998, Century received net proceeds of $47.7 million from a
private placement of 3.8 million shares. Cash provided by financing activities
consisted primarily of net proceeds received from this private placement, which
together with warrants exercised, raised approximately $68.7 million during the
nine months ended September 30, 1998. The proceeds from stock issuances,
together with the proceeds from the revolving credit facility of $68.5 million,
were used for repayment of debt and notes payable.

      During the third quarter of 1999, Century completed an amendment to its
bank line of credit agreement with Bank of America, LLC, to increase its
revolving credit facility from $100 million to $250 million. The increased
borrowing capacity will be used to fund Century's rapid growth and to some
extent, its acquisition program, which is expected to be funded with a larger
cash  component going forward. Although the existing debt covenants have been
modified to conform to the increased line of credit, there have not been any
significant changes in the nature or type of debt covenants as a result of the
increased line of credit.

YEAR 2000
---------

         To minimize or eliminate the effect of the Y2K risk on our business
systems and applications, we are continually identifying, evaluating,
implementing and testing our computer systems, applications and software in
order to achieve Y2K compliance. Century implemented a Y2K Compliance Project in
March 1998 that has been adopted by all of our subsidiaries. As part of this
initiative, we have identified key contact individuals within each subsidiary to
identify, evaluate and implement a plan to bring all of our business systems and
applications into Y2K compliance by June 30, 1999. We have achieved this goal
with limited exceptions. These exceptions, such as telephone PBX replacements
and less-critical internal reporting systems, are largely an effort to maintain
an efficient schedule of deployment in conjunction with office consolidation
strategies.

         Century's Y2K Compliance Project consists of four phases: (i) inventory
and assessment of all business systems and applications subject to Y2K risk;
(ii) identification of such business systems and applications to determine the
method of correcting any Y2K problems (ready now, repair, reconcile, replace or
retire); (iii) remediation and testing of all business systems and applications
that have Y2K problems; and (iv) implementation of corrective measures and
certification of Y2K compliance through internal and external audits. We have
completed the inventory and assessment phase and have identified and assessed
seven areas of risk: a) internally developed business applications; b) third
party vendor software, such as business applications, operating systems and
special function software; c) computer hardware components; d) networks and
network related equipment; e) telecommunications systems and associated
equipment, such as phones and PBX switches; f) Century's own products and
services that are software based; and g) embedded technology, such as microchips
and security systems. Although we cannot be certain, we believe substantially
that all our systems, applications and related software that are subject to Y2K
compliance risk have been identified and that actions were or are currently
being taken to complete the remediation on time. The initial implementation and
verification phase has been completed. Our planned schedule of inter-dependency
testing concluded in October. We continue to allow strategic testing and
additional audit reviews to ensure against re-introducing potential exposures,
to validate readiness of new acquisitions, and to remain current with industry
best practices.

         We have sought compliance verification for 100% of vendor supported
technology inventoried, local public utilities and services, banking and
financial institutions, telecommunications services, property management
companies (where our facilities are leased), and other material third parties on
whom or on whose systems we rely. Significant business customers and clients are
presently being contacted for compliance status and to coordinate Y2K
contingency strategies. We received a written or verbal response on
approximately 75% of our requests from vendors, approximately 80% of which
stated they are Y2K compliant, and 20% of which stated that they had a plan for
compliance in place. None of the responses indicated that they had not yet
addressed the Y2K issue. Vendors that had not responded or did not provide
compliant upgrades or patches were removed from our configuration standards and
replaced by compliant systems or other vendors. Some property management
companies, however, have delayed in responding. In many cases, we have made four
written requests for compliance. We intend to

                                       12
<PAGE>   13


continue requesting Y2K compliance status responses from these property
management companies.

         We rely on third-party service providers for services such as
telecommunications, internet service and components for our business systems and
other key services. Interruption of those services due to Y2K issues could
affect our operations. Thus, we have initiated an evaluation of the status of
such third-party service providers' efforts to determine alternative and
contingency requirements. Development of a template for contingency planning was
completed and disseminated to the subsidiaries of Century in April 1999. The
subsidiaries and the corporate office have begun to consolidate contingency
plans and will continue to modify and enhance these plans as industry expertise
and situational conditions warrant. Century's Y2K Contingency Plan supplements
disaster recovery plans already in place. While approaches to reducing risks of
interruption of business operations vary by subsidiary, options in Century's Y2K
Contingency Plan include measures such as identification of alternative service
providers, new channels of distribution, and backup manual procedures.

         We are continuing to review the potential overall impact of Y2K risks
on our business, financial condition and results of operations. To date, we have
not encountered any material Y2K problems with our computer systems, networks,
and other related equipment. We expect to incur $3 to $4 million in capital
expenditures in 1999 with respect to system upgrades and/or replacements, which
are designed in part to address specific Y2K requirements. One of the reasons
that the number of Y2K remediation has increased is due to our continued growth
through acquisitions. We do not expect expenditures after 1999 for Y2K
compliance to be significant.

         We cannot assure you that our systems or the systems of other companies
on which our systems rely on or are interconnected will be timely installed or
converted. Major efforts are in place to ensure that our own systems, the
systems of our key partners and suppliers and our strategic customers are Y2K
compliant, along with the communication links between all of them. Although we
are not certain of the impact on us of the failure of our significant customers,
partners, or vendors to achieve Y2K compliance in a timely or effective manner,
such failure could adversely affect our business and results of operations.

FORWARD-LOOKING STATEMENTS
--------------------------

         Statements included in the Form 10-Q, which are not historical in
nature, are forward-looking statements made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward looking statements
are commonly identified by the use of such terms as "intends", "estimates",
"expects", "projects", "anticipates", "foreseeable future," "seeks", "believes",
and words and phrases of similar import. Such statements are subject to certain
risks, uncertainties or assumptions. Should one or more of these risks or
assumptions materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Although the Company believes that the assumptions upon which such
forward-looking statements are based are reasonable, it can give no assurance
that such assumptions will prove to be correct. Factors that could cause actual
results to differ materially from the Century's expectations ("Cautionary
Statements") include: (i) Century's ability to acquire and finance additional
businesses; (ii) Century's ability to adequately manage growth; (iii) Century's
dependence on the current trend of outsourcing business services; (iv) Century's
dependence on the services of key employees; (v) Century's ability to realize
the full value of goodwill; (vi) risk of professional errors and omissions;
(vii) the nature of the competitive and fragmented outsourcing industry; (viii)
year 2000 noncompliance may cause operational problems; (ix) market fluctuations
in the values or returns on assets in Century's investment portfolios; (x)
government regulations and interpretations are subject to changes; (xi)
Century's principal shareholders have substantial control over its operations;
(xii) shares eligible for future sale could adversely affect the price of
Century's common stock; (xiii) Century may not pay dividends; and (xiv)
Century's ability to manage risks associated with its discontinued specialty
insurance business, such as risk of inadequate insurance premiums,
underestimating reserves, and the risk that reinsurers may fail. All
forward-looking statements in this Form 10-Q are expressly qualified by the
Cautionary Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

         The Company's exposure to market risk, including interest rate risk, is
immaterial. If market interest rates were to increase or decrease immediately
and uniformly by 100 basis points from the levels at September 30, 1999, in each
case the impact on the Company's financial condition and results of operations
would be immaterial. The Company does not engage in trading market risk
sensitive instruments and does not purchase hedging instruments or "other than
trading" instruments that are likely to expose the Company to market risk,
whether interest rate, foreign currency exchange, commodity price or equity
price risk. The Company has not issued debt instruments, entered into forward or
futures contracts, purchased options or entered into swaps. The Company's
primary market risk exposure is that of interest rate risk. A change in the
Federal Funds Rate, or the Reference Rate set by the Bank of America (San
Francisco), would affect the rate at which the Company could borrow funds under
its Credit Facility.

                                       13

<PAGE>   14


                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1. LEGAL PROCEEDINGS

A lawsuit was filed on September 16, 1999 (the "Initial Suit") in the United
States District Court for the Northern District of Ohio on behalf of purchasers
of the common stock of Century within the inclusive period of February 6, 1998
through November 23, 1998 alleging ,among other things, false and misleading
statements concerning Century's acquisition costs, revenue run rates and
goodwill amortization periods. Two additional complaints were filed in the same
court on September 29, 1999 and October 14, 1999, respectively, that contain
allegations that are identical to the allegations contained in the Initial Suit.
Century believes the lawsuits are without merit and intends defend them
vigorously. It is the opinion of management that the ultimate resolution of the
matters will not have a materially adverse effect on Century's financial
position or results of operations.

ITEM 2. CHANGES IN SECURITIES

(c) Issuance of unregistered shares during the three months ended September 30,
1999, were as follows:

All transactions listed below involve the issuance of shares of Common Stock by
Century in reliance upon Section 4(2) of the Securities Act of 1933, as amended.

On July 26, 1999, in connection with the acquisition of Gordon, Zucarelli &
Handley Insurance, Ltd., Century paid cash and issued 207,692 shares of Common
Stock in exchange for all the outstanding shares of Gordon, Zucarelli & Handley
Insurance, Ltd.

On July 30, 1999, in connection with the acquisition of Broker Benefit
Consultants, Inc., Century paid cash and issued 67,083 shares of Common Stock in
exchange for all the outstanding shares of Broker Benefit Consultants, Inc.

On July 30, 1999, in connection with the acquisition of CMG Consulting, Inc.,
Century paid cash and issued 466,667 shares of Common Stock in exchange for all
the outstanding shares of CMG Consulting, Inc.

On August 2, 1999, in connection with the acquisition of GS&A, Inc., Century
paid cash and issued 24,836 shares of Common Stock in exchange for all the
outstanding shares of GS&A, Inc.

On August 2, 1999, in connection with the acquisition of Karling & Associates,
LLP, Century paid cash and issued 45,796 shares of Common Stock in exchange for
all the outstanding shares of Karling & Associates, LLP.

On August 6, 1999, in connection with the acquisition of Employee Benefit
Specialists, Inc., Century paid cash and issued 111,415 shares of Common Stock
in exchange for all the outstanding shares of Employee Benefit Specialists, Inc.

On August 16, in connection with the acquisition of PR & Company Certified
Public Accountants, Inc., Century paid cash and issued 138,000 shares of Common
Stock in exchange for all the outstanding shares of PR & Company Certified
Public Accountants, Inc.

On August 17, 1999, in connection with the acquisition of Halbert Katz & Co.,
P.C. Century paid cash and issued 274,050 shares of Common Stock in exchange for
all the outstanding shares of Halbert Katz & Co, P.C.

On August 18, 1999, in connection with the acquisition of Competitive
Technologies International, Inc., Century paid cash and issued 185,322 shares of
Common Stock in exchange for all the outstanding shares of Competitive
Technologies International, Inc.

On August 18, 1999, in connection with the acquisition of Steven A. Lake &
Associates, Inc., Century paid cash and issued 176,538 shares of Common Stock in
exchange for all the outstanding shares of Steven A. Lake & Associates, Inc.

On August 31, 1999, in connection with the acquisition of Tri-Tek Information
Services, Inc., Century issued 2,394,582 shares of Common Stock in exchange for
all the outstanding shares of Tri-Tek Information Services, Inc.

On September 15, 1999, in connection with the acquisition of The Benefit
Marketing Group, Century issued 2,266,667 shares of Common Stock in exchange for
all the outstanding shares The Benefit Marketing Group.

                                       14

<PAGE>   15

On September 16, 1999, in connection with the acquisition of Schmidt, Raines,
Trieste, Dickenson & Adams, P.L., Century paid cash and issued 197,920 shares of
Common Stock in exchange for all the outstanding shares of Schmidt, Raines,
Trieste, Dickenson & Adams, P.L.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

             27.1 Financial Data Schedule

             99.9 Amended and Restated Credit Agreement

        (b)  Reports on Form 8-K

             The following Current Reports on Form 8-K were filed during the
             three months ended September 30, 1999:

             (i)  On September 16, 1999, the Company filed a Current Report on
                  Form 8-K, announcing that a lawsuit was filed on September 16,
                  1999 on behalf of purchasers of the common stock of Century
                  Business Services, Inc. within the inclusive period of
                  February 6, 1998 through November 23, 1998.

            (ii)  On September 24, 1999, the Company filed a Current Report on
                  Form 8-K/A, to amend Item 2 of its Current Report on Form 8-K,
                  dated March 31, 1998, and Item 7 of its Current Report on Form
                  8-K/A, dated June 10, 1998, which was filed for the purpose of
                  amending its Current Report on Form 8-K, dated March 31, 1998,
                  to include the financial statements for The Continuous
                  Learning Group, Envision Development Group, Inc., and Multi
                  Dimensional International.


                                    SIGNATURE
                                    ---------


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                               Century Business Services, Inc.
                                               -------------------------------
                                                         (Registrant)



Date: November 15, 1999                        By: /s/ Charles D. Hamm, Jr.
      -------------------                          ----------------------------
                                                   Charles D. Hamm, Jr.
                                                   Chief Financial Officer


                                       15

<PAGE>   16



                CENTURY BUSINESS SERVICES, INC. AND SUBSIDIARIES
                ------------------------------------------------
                                  EXHIBIT INDEX
                                  -------------




Exhibit Number:
---------------

27.1  Financial Data Schedule (SEC only).................................... 17


99.9  Amended and Restated Credit Agreement, dated as of October 3, 1997,
      and as Amended and Restated August 24, 1999, by and Among Century
      Business Services, Inc. and Bank of America, N.A...................... 18


                                    16


