##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the period from  to
 Commission file number 001-12665
 AFFILIATED COMPUTER SERVICES, INC.
  Delaware
    
    51-0310342(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 2828 North Haskell, Dallas, Texas
    
    75204(Address of principal executive offices)
    
    (Zip Code)
  Not Applicable
  þ o
 (Check one):
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ
  Number of shares outstanding as ofTitle of each class
    

May
11, 2006Class A Common Stock, $.01 par value
    
    111,972,827Class B Common Stock, $.01 par value
    
    6,599,372




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##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
   
 PAGEPART I.
    
    
    
    FINANCIAL INFORMATION
    
    NUMBERItem 1.
    
    Consolidated Financial Statements:Consolidated Balance Sheets at March 31, 2006 and June 30, 2005
    
    
    1Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2006 and 2005
    
    
    2Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2006 and 2005
    
    
    3Notes to Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4.
    
    Controls and Procedures
    
    
    46PART II.
    
    
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    47Item 1A.
    
    Risk Factors
    
    
    49Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    53Item 6.
    
    Exhibits
    
    
    54Form of Stock Option AgreementForm of Stock Option AgreementCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Rule 13a-14(b)Certification of CFO Pursuant to Rule 13a-14(b)




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PART I
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 
 AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
 March 31,
    
    
    June 30,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    174,877
    
    
    $
    62,685Accounts receivable, net
    
    
    1,167,374
    
    
    
    1,061,590Prepaid expenses and other current assets
    
    
    174,741
    
    
    
    119,822Assets held for sale
    
    
    6,173
    
    
    
    Total current assets
    
    
    1,523,165
    
    
    
    1,244,097Property, equipment and software, net
    
    
    818,247
    
    
    
    677,241Goodwill
    
    
    2,395,320
    
    
    
    2,334,655Other intangibles, net
    
    
    465,757
    
    
    
    466,312Other assets
    
    
    185,254
    
    
    
    128,533Total assets
    
    $
    5,387,743
    
    
    $
    4,850,838LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    102,969
    
    
    $
    62,788Accrued compensation and benefits
    
    
    158,390
    
    
    
    175,782Other accrued liabilities
    
    
    445,449
    
    
    
    471,577Income taxes payable
    
    
    5,267
    
    
    
    2,310Deferred taxes
    
    
    25,552
    
    
    
    34,996Current portion of long-term debt
    
    
    22,285
    
    
    
    6,192Current portion of unearned revenue
    
    
    106,697
    
    
    
    84,469Total current liabilities
    
    
    866,609
    
    
    
    838,114Senior Notes, net of unamortized discount
    
    
    499,348
    
    
    
    499,288Other long-term debt
    
    
    865,960
    
    
    
    251,067Deferred taxes
    
    
    299,800
    
    
    
    240,210Other long-term liabilities
    
    
    203,700
    
    
    
    183,731Total liabilities
    
    
    2,735,417
    
    
    
    2,012,410Commitments
and contingencies (See Notes 14 and 17)Stockholders equity:Class A common stock
    
    
    1,404
    
    
    
    1,379Class B common stock
    
    
    66
    
    
    
    66Additional paid-in capital
    
    
    1,914,384
    
    
    
    1,792,629Accumulated other comprehensive loss, net
    
    
    (15,983
    )
    
    
    (10,910
    )Retained earnings
    
    
    2,291,392
    
    
    
    2,016,197Treasury stock at cost, 28,509 and 19,255 shares, respectively
    
    
    (1,538,937
    )
    
    
    (960,933
    )Total stockholders equity
    
    
    2,652,326
    
    
    
    2,838,428Total liabilities and stockholders equity
    
    $
    5,387,743
    
    
    $
    4,850,838
  1




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    1,314,455
    
    
    $
    1,063,299
    
    
    $
    3,972,959
    
    
    $
    3,136,767Cost of revenues:Wages and benefits
    
    
    643,651
    
    
    
    452,794
    
    
    
    1,904,659
    
    
    
    1,320,612Services and supplies
    
    
    272,990
    
    
    
    251,825
    
    
    
    869,651
    
    
    
    777,893Rent, lease and maintenance
    
    
    156,489
    
    
    
    124,047
    
    
    
    475,202
    
    
    
    364,164Depreciation and amortization
    
    
    72,891
    
    
    
    57,801
    
    
    
    211,415
    
    
    
    167,706Other
    
    
    20,303
    
    
    
    4,893
    
    
    
    32,061
    
    
    
    13,038Cost of revenues
    
    
    1,166,324
    
    
    
    891,360
    
    
    
    3,492,988
    
    
    
    2,643,413Gain on sale of business
    
    
    (2,717
    )
    
    
    
    
    
    
    (32,482
    )
    
    
    Other operating expenses
    
    
    12,430
    
    
    
    6,127
    
    
    
    43,278
    
    
    
    17,577Total operating expenses
    
    
    1,176,037
    
    
    
    897,487
    
    
    
    3,503,784
    
    
    
    2,660,990Operating income
    
    
    138,418
    
    
    
    165,812
    
    
    
    469,175
    
    
    
    475,777Interest expense
    
    
    14,967
    
    
    
    3,688
    
    
    
    40,428
    
    
    
    10,512Other non-operating (income) expense, net
    
    
    589
    
    
    
    (466
    )
    
    
    (5,786
    )
    
    
    (1,808
    )Pretax profit
    
    
    122,862
    
    
    
    162,590
    
    
    
    434,533
    
    
    
    467,073Income tax expense
    
    
    44,986
    
    
    
    47,924
    
    
    
    159,337
    
    
    
    162,105Net income
    
    $
    77,876
    
    
    $
    114,666
    
    
    $
    275,196
    
    
    $
    304,968Earnings per share:Basic
    
    $
    0.63
    
    
    $
    0.90
    
    
    $
    2.20
    
    
    $
    2.38Diluted
    
    $
    0.62
    
    
    $
    0.88
    
    
    $
    2.17
    
    
    $
    2.33Shares used in computing earnings per share:Basic
    
    
    124,347
    
    
    
    127,568
    
    
    
    124,879
    
    
    
    128,048Diluted
    
    
    126,319
    
    
    
    130,229
    
    
    
    126,806
    
    
    
    131,081
  2




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Nine Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    275,196
    
    
    $
    304,968Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    211,415
    
    
    
    167,706Stock-based compensation expense
    
    
    25,364
    
    
    
    Excess tax benefits from stock-based compensation arrangements
    
    
    (17,302
    )
    
    
    Tax benefit on stock options
    
    
    
    
    
    
    20,612Gain on sale of business
    
    
    (32,482
    )
    
    
    (70
    )Provision for uncollectible accounts receivable
    
    
    7,986
    
    
    
    773Deferred income tax expense
    
    
    50,397
    
    
    
    56,523Asset impairments
    
    
    14,450
    
    
    
    Contract inducement amortization
    
    
    11,627
    
    
    
    10,086Gain on investments
    
    
    (5,441
    )
    
    
    (1,860
    )Loss on early extinguishment of long-term debt
    
    
    4,104
    
    
    
    Other non-cash activities
    
    
    4,131
    
    
    
    794Changes in assets and liabilities, net of effects from acquisitions:Increase in accounts receivable
    
    
    (41,591
    )
    
    
    (16,633
    )Increase in prepaid expenses and other current assets
    
    
    (15,399
    )
    
    
    (17,660
    )(Increase) decrease in other assets
    
    
    5,959
    
    
    
    (1,436
    )Increase (decrease) in accounts payable
    
    
    25,841
    
    
    
    (14,606
    )Decrease in accrued compensation and benefits
    
    
    (20,387
    )
    
    
    (28,557
    )Decrease in other accrued liabilities
    
    
    (106,214
    )
    
    
    (49,217
    )Increase in income taxes payable
    
    
    32,837
    
    
    
    3,774Increase in unearned revenue
    
    
    40,513
    
    
    
    26,457Increase (decrease) in other long-term liabilities
    
    
    (2,544
    )
    
    
    10,319Total adjustments
    
    
    193,264
    
    
    
    167,005Net cash provided by operating activities
    
    
    468,460
    
    
    
    471,973Cash flows from investing activities:Purchases of property, equipment and software, net
    
    
    (290,108
    )
    
    
    (170,185
    )Payments for acquisitions, net of cash acquired
    
    
    (155,229
    )
    
    
    (213,322
    )Additions to other intangible assets
    
    
    (28,386
    )
    
    
    (29,444
    )Proceeds from divestitures, net of transaction costs
    
    
    67,664
    
    
    
    87Intangible assets acquired in subcontract termination
    
    
    (16,530
    )
    
    
    Proceeds from investments
    
    
    1,903
    
    
    
    46Purchases of investments
    
    
    (25,456
    )
    
    
    (6,604
    )Proceeds received on notes receivable
    
    
    
    
    
    
    425Net cash used in investing activities
    
    
    (446,142
    )
    
    
    (418,997
    )Cash flows from financing activities:Proceeds from issuance of long-term debt, net
    
    
    3,334,917
    
    
    
    1,341,163Repayments of long-term debt
    
    
    (2,759,272
    )
    
    
    (1,342,456
    )Proceeds from stock options exercised
    
    
    82,010
    
    
    
    28,868Executive stock option settlement
    
    
    (18,353
    )
    
    
    Excess tax benefits from stock-based compensation arrangements
    
    
    17,302
    
    
    
    Purchase of shares in tender offer
    
    
    (466,071
    )
    
    
    Purchase of treasury shares
    
    
    (115,804
    )
    
    
    (131,121
    )Proceeds from issuance of treasury shares
    
    
    15,145
    
    
    
    20,203Net cash provided by (used in) financing activities
    
    
    89,874
    
    
    
    (83,343
    )Net increase (decrease) in cash and cash equivalents
    
    
    112,192
    
    
    
    (30,367
    )Cash and cash equivalents at beginning of period
    
    
    62,685
    
    
    
    76,899Cash and cash equivalents at end of period
    
    $
    174,877
    
    
    $
    46,532
  3




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. BASIS OF PRESENTATION
     2. STOCK-BASED COMPENSATION
    Three Months Ended
    
    Nine Months EndedMarch 31, 2005
    
    March 31, 2005Net IncomeAs reported
    
    $
    114,666
    
    
    $
    304,968Less: Pro forma cost
of employee stock-based
compensation plans, net
of income taxes of
$3,241 and $9,577,
respectively
    
    
    (5,759
    )
    
    
    (17,074
    )Pro forma
    
    $
    108,907
    
    
    $
    287,894Basic earnings per shareAs reported
    
    $
    0.90
    
    
    $
    2.38Pro forma
    
    $
    0.85
    
    
    $
    2.25Diluted earnings per shareAs reported
    
    $
    0.88
    
    
    $
    2.33Pro forma
    
    $
    0.84
    
    
    $
    2.21
 4




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
       5




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Nine Months endedMarch 31, 2006Expected volatility
    
    
    22.20
    %Expected term
    
    4.21 yearsRisk-free interest rate
    
    
    3.49
    %Expected dividend yield
    
    
    0
    %
  Three Months ended
    
    
    Nine Months endedMarch 31, 2005
    
    
    March 31, 2005Expected volatility
    
    
    22.95
    %
    
    
    25.24
    %Expected term
    
    4.50 years
    
    4.92 yearsRisk-free interest rate
    
    
    4.01
    %
    
    
    3.97
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
   Weighted-AverageWeighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual
    
    
    Intrinsic ValueOptions
    
    
    Exercise Price
    
    
    Term
    
    
    (in thousands)Outstanding at December 31, 2005
    
    
    13,746,960
    
    
    $
    41.76Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,477,250
    )
    
    
    34.67Canceled
    
    
    (316,100
    )
    
    
    50.34Outstanding as of March 31, 2006
    
    
    11,953,610
    
    
    $
    42.41
    
    
    
    7.22
    
    
    $
    206,247Outstanding at June 30, 2005
    
    
    15,356,700
    
    
    $
    39.61Granted
    
    
    1,588,500
    
    
    
    53.05Exercised
    
    
    (2,504,690
    )
    
    
    32.81Canceled (1)
    
    
    (2,486,900
    )
    
    
    41.57Outstanding as of March 31, 2006
    
    
    11,953,610
    
    
    $
    42.41
    
    
    
    7.22
    
    
    $
    206,247Vested and exercisable at March 31, 2006
    
    
    4,037,160
    
    
    $
    33.17
    
    
    
    5.60
    
    
    $
    106,946
 
 (1)
    
    Includes the purchase of 610,000 vested options and the cancellation of 640,000
unvested options related to the departure of our former Chief Executive Officer. 6




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   3. REVIEW OF STOCK OPTION GRANT PROCEDURES
     7




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
      8




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 4. ACQUISITIONS
     5. SALE OF GOVERNMENT WELFARE-TO-WORKFORCE SERVICES BUSINESS
  9




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   6. TENDER OFFER
       10




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  7. RESTRUCTURING AND OTHER ACTIVITIES
      Balance at December 31, 2005
    
    $
    2,783Accrual recorded
    
    
    2,348Payments
    
    
    (1,860
    )Balance at March 31, 2006
    
    $
    3,271Balance at June 30, 2005
    
    $
    Accrual recorded
    
    
    7,019Payments
    
    
    (3,748
    )Balance at March 31, 2006
    
    $
    3,271
 11




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   8. ASSETS HELD FOR SALE
  Assets held for saleIntangible assets related to welfare-to-workforce
services business, net
    
    $
    906Goodwill related to welfare-to-workforce
services business
    
    
    1,567Corporate aircraft
    
    
    3,700Total assets held for sale
    
    $
    6,173
 9. GOODWILL AND OTHER INTANGIBLE ASSETS
  Commercial
    
    
    Government
    
    
    TotalBalance as of June 30, 2005
    
    $
    1,217,727
    
    
    $
    1,116,928
    
    
    $
    2,334,655Acquisition activity
    
    
    5,065
    
    
    
    73,352
    
    
    
    78,417Divested business
    
    
    
    
    
    
    (16,185
    )
    
    
    (16,185
    )Assets held for sale
    
    
    
    
    
    
    (1,567
    )
    
    
    (1,567
    )Balance as of March 31, 2006
    
    $
    1,222,792
    
    
    $
    1,172,528
    
    
    $
    2,395,320
  12




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  March 31, 2006
    
    
    June 30, 2005Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortized intangible assets:Acquired customer-related
intangibles
    
    $
    364,379
    
    
    $
    (95,424
    )
    
    $
    377,314
    
    
    $
    (76,515
    )Customer-related intangibles
    
    
    215,777
    
    
    
    (83,548
    )
    
    
    175,571
    
    
    
    (74,336
    )All other
    
    
    15,052
    
    
    
    (5,367
    )
    
    
    12,708
    
    
    
    (3,318
    )Total
    
    $
    595,208
    
    
    $
    (184,339
    )
    
    $
    565,593
    
    
    $
    (154,169
    )Unamortized intangible assets:Title plant
    
    $
    51,045
    
    
    
    
    
    
    $
    51,045Trade name
    
    
    3,843
    
    
    
    
    
    
    
    3,843Total
    
    $
    54,888
    
    
    
    
    
    
    $
    54,888Aggregate Amortization:For the quarter ended March 31, 2006
    
    
    
    
    
    
    
    
    
    $
    17,613For the quarter ended March 31, 2005
    
    
    
    
    
    
    
    
    
    
    14,018For the nine months ended March 31, 2006
    
    
    
    
    
    
    
    
    
    
    53,714For the nine months ended March 31, 2005
    
    
    
    
    
    
    
    
    
    
    41,270Estimated amortization for the years ended June 30,2006
    
    
    
    
    
    
    
    
    
    $
    73,7602007
    
    
    
    
    
    
    
    
    
    
    68,6142008
    
    
    
    
    
    
    
    
    
    
    65,6252009
    
    
    
    
    
    
    
    
    
    
    56,7622010
    
    
    
    
    
    
    
    
    
    
    44,112
   10. PENSION AND OTHER POST-EMPLOYMENT PLANS
 U.S. Pension Plan
 13




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Multi-employer Pension Plan
 Net periodic benefit cost
 Three Months ended
    
    
    Nine Months endedMarch 31, 2006
    
    
    March 31, 2006U.S. Plan
    
    
    Non-U.S. Plans
    
    
    U.S. Plan
    
    
    Non-U.S. PlansComponents of net periodic benefit cost:Defined benefit plans:Service cost
    
    $
    1,035
    
    
    $
    1,140
    
    
    $
    1,380
    
    
    $
    3,705Interest cost
    
    
    30
    
    
    
    1,024
    
    
    
    40
    
    
    
    3,351Expected return on assets
    
    
    (45
    )
    
    
    (1,096
    )
    
    
    (60
    )
    
    
    (3,541
    )Amortization of prior service cost
    
    
    60
    
    
    
    
    
    
    
    80
    
    
    
    Net periodic benefit cost for defined benefit plans
    
    $
    1,080
    
    
    $
    1,068
    
    
    $
    1,440
    
    
    $
    3,515
  11. CREDIT AGREEMENT
    14




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
       12. EQUITY
  15




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 13. COMPREHENSIVE INCOME
   Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    77,876
    
    
    $
    114,666
    
    
    $
    275,196
    
    
    $
    304,968Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    (2,703
    )
    
    
    (1,150
    )
    
    
    (6,314
    )
    
    
    3,461Amortization of unrealized loss on
hedging instruments (net of income tax
of $0.2 million and $0.7 million,
respectively)
    
    
    397
    
    
    
    
    
    
    
    1,192
    
    
    
    Unrealized gains and losses on foreign
exchange forward agreements (net of
income tax of $(0.1) million and $0,
respectively)
    
    
    (228
    )
    
    
    
    
    
    
    49
    
    
    
    Comprehensive income
    
    $
    75,342
    
    
    $
    113,516
    
    
    $
    270,123
    
    
    $
    308,429
   As of
    
    
    As ofMarch 31, 2006
    
    
    June 30, 2005Foreign currency gains (losses)
    
    $
    (5,435
    )
    
    $
    879Unrealized loss on hedging instruments, net
    
    
    (10,597
    )
    
    
    (11,789
    )Unrealized gains on foreign exchange
forward agreements, net
    
    
    49
    
    
    
    Total
    
    $
    (15,983
    )
    
    $
    (10,910
    )
 16




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
   15. EARNINGS PER SHARE
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2006
    
    2005
    
    2006
    
    2005Numerator:Income available to common stockholders
    
    $
    77,876
    
    
    $
    114,666
    
    
    $
    275,196
    
    
    $
    304,968Denominator:Weighted average shares outstanding (basic)
    
    
    124,347
    
    
    
    127,568
    
    
    
    124,879
    
    
    
    128,048Effect of dilutive securities:Stock options
    
    
    1,972
    
    
    
    2,661
    
    
    
    1,927
    
    
    
    3,033Total potential common shares
    
    
    1,972
    
    
    
    2,661
    
    
    
    1,927
    
    
    
    3,033Denominator for earnings per share assuming dilution
    
    
    126,319
    
    
    
    130,229
    
    
    
    126,806
    
    
    
    131,081Earnings per share (basic)
    
    $
    0.63
    
    
    $
    0.90
    
    
    $
    2.20
    
    
    $
    2.38Earnings per share assuming dilution
    
    $
    0.62
    
    
    $
    0.88
    
    
    $
    2.17
    
    
    $
    2.33
   17




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 16. SEGMENT INFORMATION
  Commercial
    
    
    Government
    
    
    Corporate
    
    
    ConsolidatedThree months ended March 31, 2006Revenues(a)
    
    $
    790,278
    
    
    $
    524,177
    
    
    $
    
    
    
    $
    1,314,455Operating expenses (excluding
depreciation and amortization and
gain on sale of business) (b)
    
    
    676,697
    
    
    
    405,602
    
    
    
    23,564
    
    
    
    1,105,863Gain on sale of business
    
    
    
    
    
    
    (2,717
    )
    
    
    
    
    
    
    (2,717
    )Depreciation and amortization
    
    
    49,340
    
    
    
    23,196
    
    
    
    355
    
    
    
    72,891Operating income
    
    $
    64,241
    
    
    $
    98,096
    
    
    $
    (23,919
    )
    
    $
    138,418Three months ended March 31, 2005Revenues (a)
    
    $
    538,153
    
    
    $
    525,146
    
    
    $
    
    
    
    $
    1,063,299Operating expenses (excluding
depreciation and amortization)
(b)
    
    
    422,330
    
    
    
    403,655
    
    
    
    13,701
    
    
    
    839,686Depreciation and amortization
    
    
    35,850
    
    
    
    21,503
    
    
    
    448
    
    
    
    57,801Operating income
    
    $
    79,973
    
    
    $
    99,988
    
    
    $
    (14,149
    )
    
    $
    165,812Nine months ended March 31, 2006Revenues (a)
    
    $
    2,341,050
    
    
    $
    1,631,909
    
    
    $
    
    
    
    $
    3,972,959Operating expenses (excluding
depreciation and amortization and
gain on sale of business) (b)
    
    
    1,964,080
    
    
    
    1,277,377
    
    
    
    83,394
    
    
    
    3,324,851Gain on sale of business
    
    
    
    
    
    
    (32,482
    )
    
    
    
    
    
    
    (32,482
    )Depreciation and amortization
    
    
    141,970
    
    
    
    68,283
    
    
    
    1,162
    
    
    
    211,415Operating income
    
    $
    235,000
    
    
    $
    318,731
    
    
    $
    (84,556
    )
    
    $
    469,175Nine months ended March 31, 2005Revenues (a)
    
    $
    1,517,559
    
    
    $
    1,619,208
    
    
    $
    
    
    
    $
    3,136,767Operating expenses (excluding
depreciation and amortization)
(b)
    
    
    1,186,601
    
    
    
    1,268,201
    
    
    
    38,482
    
    
    
    2,493,284Depreciation and amortization
    
    
    104,802
    
    
    
    61,465
    
    
    
    1,439
    
    
    
    167,706Operating income
    
    $
    226,156
    
    
    $
    289,542
    
    
    $
    (39,921
    )
    
    $
    475,777
 
 (a)
    
    Revenues in our Government segment include revenues from operations divested of $2.9
million and $104.3 million for the three and nine months ended March 31, 2006,
respectively, and $51.3 million and $165.1 million for the three and nine months ended
March 31, 2005, respectively.(b)
    
    Corporate operating expenses for the three and nine months ended March 31, 2006 include
$8 million and $25.4 million, respectively, of stock-based compensation expense pursuant to
SFAS 123(R) and $0 for both the three and nine months ended March 31, 2005 under our
previous accounting method, APB 25. 18




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 17. COMMITMENTS AND CONTINGENCIES










19



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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   20




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
       21




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AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   18. DEPARTURE OF OUR FORMER CHIEF EXECUTIVE OFFICER
   19. NEW ACCOUNTING PRONOUNCEMENTS
  22




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   GENERAL
  New Business
  Review of Stock Option Grant Procedures
  23




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24




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Stock-based
Compensation
  25




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Acquisitions
    Sale of Government welfare- to-workforce services business
 26




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##### Table of Contents



Restructuring and other activities
    27




---



##### Table of Contents



Balance at December 31, 2005
    
    $
    2,783Accrual recorded
    
    
    2,348Payments
    
    
    (1,860
    )Balance at March 31, 2006
    
    $
    3,271Balance at June 30, 2005
    
    $
    Accrual recorded
    
    
    7,019Payments
    
    
    (3,748
    )Balance at March 31, 2006
    
    $
    3,271
   Tender Offer
 Voting Rights of Our Chairman
    28




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Credit Agreement
     29




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Derivative instruments and hedging activities
  Departure of our former Chief Executive Officer
  30




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Government Healthcare Contract
 31




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REVENUE GROWTH
  Three months ended March 31,
    
    Nine months ended March 31,2006
    
    2005
    
    $ Growth
    
    Growth %
    
    2006
    
    2005
    
    $ Growth
    
    Growth %ConsolidatedTotal Revenues
    
    $
    1,314,455
    
    
    $
    1,063,299
    
    
    $
    251,156
    
    
    
    24
    %
    
    $
    3,972,959
    
    
    $
    3,136,767
    
    
    $
    836,192
    
    
    
    27
    %Less: Divestitures
    
    
    (2,907
    )
    
    
    (51,290
    )
    
    
    48,383
    
    
    
    
    
    
    
    (104,276
    )
    
    
    (165,121
    )
    
    
    60,845Adjusted
    
    $
    1,311,548
    
    
    $
    1,012,009
    
    
    $
    299,539
    
    
    
    30
    %
    
    $
    3,868,683
    
    
    $
    2,971,646
    
    
    $
    897,037
    
    
    
    30
    %Acquired revenues
    
    $
    256,855
    
    
    $
    17,475
    
    
    $
    239,380
    
    
    
    24
    %
    
    $
    710,755
    
    
    $
    21,830
    
    
    $
    688,925
    
    
    
    23
    %Internal revenues
    
    
    1,054,693
    
    
    
    994,534
    
    
    
    60,159
    
    
    
    6
    %
    
    
    3,157,928
    
    
    
    2,949,816
    
    
    
    208,112
    
    
    
    7
    %Total
    
    $
    1,311,548
    
    
    $
    1,012,009
    
    
    $
    299,539
    
    
    
    30
    %
    
    $
    3,868,683
    
    
    $
    2,971,646
    
    
    $
    897,037
    
    
    
    30
    %CommercialTotal Revenues
    
    $
    790,278
    
    
    $
    538,153
    
    
    $
    252,125
    
    
    
    47
    %
    
    $
    2,341,050
    
    
    $
    1,517,559
    
    
    $
    823,491
    
    
    
    54
    %Less: Divestitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted
    
    $
    790,278
    
    
    $
    538,153
    
    
    $
    252,125
    
    
    
    47
    %
    
    $
    2,341,050
    
    
    $
    1,517,559
    
    
    $
    823,491
    
    
    
    54
    %Acquired revenues
    
    $
    210,855
    
    
    $
    17,475
    
    
    $
    193,380
    
    
    
    36
    %
    
    $
    645,065
    
    
    $
    21,642
    
    
    $
    623,423
    
    
    
    41
    %Internal revenues
    
    
    579,423
    
    
    
    520,678
    
    
    
    58,745
    
    
    
    11
    %
    
    
    1,695,985
    
    
    
    1,495,917
    
    
    
    200,068
    
    
    
    13
    %Total
    
    $
    790,278
    
    
    $
    538,153
    
    
    $
    252,125
    
    
    
    47
    %
    
    $
    2,341,050
    
    
    $
    1,517,559
    
    
    $
    823,491
    
    
    
    54
    %GovernmentTotal Revenues
    
    $
    524,177
    
    
    $
    525,146
    
    
    $
    (969
    )
    
    
    
    
    
    $
    1,631,909
    
    
    $
    1,619,208
    
    
    $
    12,701
    
    
    
    1
    %Less: Divestitures
    
    
    (2,907
    )
    
    
    (51,290
    )
    
    
    48,383
    
    
    
    
    
    
    
    (104,276
    )
    
    
    (165,121
    )
    
    
    60,845Adjusted
    
    $
    521,270
    
    
    $
    473,856
    
    
    $
    47,414
    
    
    
    10
    %
    
    $
    1,527,633
    
    
    $
    1,454,087
    
    
    $
    73,546
    
    
    
    5
    %Acquired revenues
    
    $
    46,000
    
    
    $
    
    
    
    $
    46,000
    
    
    
    10
    %
    
    $
    65,690
    
    
    $
    188
    
    
    $
    65,502
    
    
    
    4
    %Internal revenues
    
    
    475,270
    
    
    
    473,856
    
    
    
    1,414
    
    
    
    
    
    
    
    1,461,943
    
    
    
    1,453,899
    
    
    
    8,044
    
    
    
    1
    %Total
    
    $
    521,270
    
    
    $
    473,856
    
    
    $
    47,414
    
    
    
    10
    %
    
    $
    1,527,633
    
    
    $
    1,454,087
    
    
    $
    73,546
    
    
    
    5
    %
 32




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##### Table of Contents



RESULTS OF OPERATIONS
  Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues:Wages and benefits
    
    
    49.0
    
    
    
    42.6
    
    
    
    47.9
    
    
    
    42.1Services and supplies
    
    
    20.8
    
    
    
    23.7
    
    
    
    21.9
    
    
    
    24.8Rent, lease and maintenance
    
    
    11.9
    
    
    
    11.7
    
    
    
    12.0
    
    
    
    11.6Depreciation and amortization
    
    
    5.5
    
    
    
    5.4
    
    
    
    5.3
    
    
    
    5.3Other
    
    
    1.5
    
    
    
    0.4
    
    
    
    0.8
    
    
    
    0.5Cost of revenues
    
    
    88.7
    
    
    
    83.8
    
    
    
    87.9
    
    
    
    84.3Gain on sale of business
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    Other operating expenses
    
    
    1.0
    
    
    
    0.6
    
    
    
    1.1
    
    
    
    0.5Total operating expenses
    
    
    89.5
    
    
    
    84.4
    
    
    
    88.2
    
    
    
    84.8Operating income
    
    
    10.5
    
    
    
    15.6
    
    
    
    11.8
    
    
    
    15.2Interest expense
    
    
    1.1
    
    
    
    0.3
    
    
    
    1.0
    
    
    
    0.3Other non-operating (income)
expense, net
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )
    
    
    Pretax profit
    
    
    9.3
    
    
    
    15.3
    
    
    
    10.9
    
    
    
    14.9Income tax expense
    
    
    3.4
    
    
    
    4.5
    
    
    
    4.0
    
    
    
    5.2Net income
    
    
    5.9
    %
    
    
    10.8
    %
    
    
    6.9
    %
    
    
    9.7
    %
 COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2006 TO THE THREE MONTHS ENDED MARCH 31, 2005
 Revenues
   33




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##### Table of Contents



Operating Expenses
     Government segment:Provision for uncollectible accounts
receivable retained in connection with the sale of the majority
of our Federal business in fiscal year 2004
    
    $
    2,400Corporate:Legal costs associated with the review of certain recapitalization options
related to our dual class structure and an unsolicited offer regarding a
potential sale of the Company
    
    
    1,307Aircraft impairment
    
    
    300Total
    
    $
    4,007
 Operating Income
 34




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##### Table of Contents



Interest Expense
 Other non-operating (income) expense, net
 Income tax expense
 COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2006 TO THE NINE MONTHS ENDED MARCH 31, 2005
 Revenues
   Operating Expenses
 35




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##### Table of Contents



Commercial segment:Provision for doubtful accounts for an assessment of risk related to the
bankruptcies of certain airline clients
    
    $
    3,000Legal settlement and related costs
    
    
    53Government segment:Provisions for estimated legal settlement and uncollectible accounts
receivable
related to the welfare-to-workforce services business
    
    
    3,267Provision for uncollectible accounts
receivable retained in connection with the sale of the majority
of our Federal business in fiscal year 2004
    
    
    2,400Asset impairments
    
    
    276Legal settlements and related costs
    
    
    464Corporate:Aircraft impairment
    
    
    4,392Legal settlements and related costs
    
    
    2,658Legal costs associated with the review of certain recapitalization options
related to our dual class structure and an unsolicited offer regarding a
potential sale of the Company
    
    
    3,963Total
    
    $
    20,473
 Operating Income
 36




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##### Table of Contents



Interest Expense
 Other non-operating (income) expense, net
 Income tax expense
 LIQUIDITY AND CAPITAL RESOURCES
  Cash Flow
   37




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##### Table of Contents



Nine
months ended March 31,2006
    
    
    2005Net cash provided by operating activities
    
    $
    468,460
    
    
    $
    471,973Purchases of property, equipment and software, net
    
    
    (290,108
    )
    
    
    (170,185
    )Additions to other intangible assets
    
    
    (28,386
    )
    
    
    (29,444
    )Free cash flow
    
    $
    149,966
    
    
    $
    272,344
    Tender Offer
 Credit Agreement
 38




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##### Table of Contents



39




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##### Table of Contents



Derivative instruments and hedging activities
  Share Repurchase Program
 40




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##### Table of Contents



Other
  DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS  AS OF MARCH 31, 2006 (IN THOUSANDS):
 Payments Due by PeriodLess thanContractual Obligations
    
    Total
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    After 5 YearsSenior Notes, net of unamortized
discount (1)
    
    $
    499,348
    
    
    $
    
    
    
    $
    
    
    
    $
    249,929
    
    
    $
    249,419Long-term debt (1)
    
    
    861,109
    
    
    
    10,147
    
    
    
    16,060
    
    
    
    16,209
    
    
    
    818,693Capital lease obligations (1)
    
    
    27,136
    
    
    
    12,138
    
    
    
    14,748
    
    
    
    250
    
    
    
    Operating leases
    
    
    1,319,342
    
    
    
    327,115
    
    
    
    528,173
    
    
    
    362,312
    
    
    
    101,742Purchase obligations
    
    
    34,841
    
    
    
    19,452
    
    
    
    14,563
    
    
    
    826
    
    
    
    Total Contractual Cash Obligations
    
    $
    2,741,776
    
    
    $
    368,852
    
    
    $
    573,544
    
    
    $
    629,526
    
    
    $
    1,169,854
 Amount of Commitment Expiration per PeriodTotalAmounts
    
    Less thanOther Commercial Commitments
    
    Committed
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    After 5 YearsStandby letters of credit
    
    $
    113,978
    
    
    $
    109,278
    
    
    $
    4,700
    
    
    $
    
    
    
    $
    Surety bonds
    
    
    450,025
    
    
    
    399,389
    
    
    
    48,764
    
    
    
    10
    
    
    
    1,862Total Commercial Commitments
    
    $
    564,003
    
    
    $
    508,667
    
    
    $
    53,464
    
    
    $
    10
    
    
    $
    1,862
 
 (1)
    
    Excludes accrued interest aggregating $10.2 million at March 31, 2006.    41




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
   Revenue recognition
  42




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##### Table of Contents



Cost of revenues
 43




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##### Table of Contents



Contingencies
  Valuation of goodwill and intangibles
 Share-Based Compensation
 
    
    Expected volatility of our stock price based on historical monthly volatility over the
expected term based on daily closing stock prices.
    
    Expected term of the option based on historical employee stock option exercise behavior,
the vesting term of the respective option and the contractual term.
    
    Risk-free interest rate for periods within the expected term of the option.
    
    Dividend yield.
   44




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##### Table of Contents



Pension and post-employment benefits
    U.S. Plan
    
    Non-U.S. PlansAs ofDecember 1, 2005 (date of
    
    As ofplan adoption)
    
    June 30, 2005Discount rate
    
    
    5.75
    %
    
    
    5.00% - 5.25
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    4.25% - 4.40
    %
  U.S. Plan
    
    Non-U.S. PlansDiscount rate
    
    
    5.75
    %
    
    
    5.00% - 5.25
    %Long-term rate of return on assets
    
    
    8.00
    %
    
    
    7.00% - 7.50
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    4.25% - 4.40
    %
  U.S. Plan
    
    Non-U.S. PlansPlus .25%
    
    Less .25%
    
    Plus .25%
    
    Less .25%Effect on pension benefit obligation
    
    $
    (105
    )
    
    $
    100
    
    
    $
    (4,490
    )
    
    $
    4,692Effect on service and interest cost
    
    $
    15
    
    
    $
    (15
    )
    
    $
    380
    
    
    $
    (399
    )
  Allowance for doubtful accounts
 Income taxes
 45




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##### Table of Contents



NEW ACCOUNTING PRONOUNCEMENTS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
       
 ITEM 4. CONTROLS AND PROCEDURES
   46




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##### Table of Contents



PART II
 
 ITEM 1. LEGAL PROCEEDINGS










47



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##### Table of Contents



48




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##### Table of Contents



ITEM 1A. RISK FACTORS
   Leverage position
 Reduction of credit rating
 Loss of or reduction of business from, significant clients
 Impairment of investments made to attract clients
 Competition
  49




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##### Table of Contents



Difficulties in executing our acquisition strategy
 Failure to properly manage our operations and our growth
 Government clients  termination rights, audits and investigations
 Government clients  protests of contract awards
 Exercise of contract termination provisions and service level penalties
 Pricing risks
 50




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##### Table of Contents



Actuarial consulting services and benefit plan management  potential claims
 Loss of significant software vendor relationships
 Intellectual property infringement claims
 Rapid technological changes
 United States and foreign jurisdiction laws relating to individually identifiable information
 Breaches of our physical security systems and data privacy
 51




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##### Table of Contents



Budget deficits at or fluctuations in the number of requests for proposals issued by, state
and local governments and their agencies
 International risks
 Armed hostilities and terrorist attacks
 Failure to attract and retain necessary technical personnel, skilled management and qualified
subcontractors
 Servicing Risks
 Disruption in Utility or Network Services
 52




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##### Table of Contents



Indemnification Risk
 Other Risks
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Maximum number (orTotal number of
    
    approximate dollarshares purchased
    
    value) of shares thatTotal number
    
    Average
    
    as part of publicly
    
    may yet be purchasedshares of
    
    price paid per
    
    announced plans
    
    under the plans orPeriod
    
    purchased
    
    share
    
    or programs
    
    programsInception through December 31, 2005
    
    
    22,075,914
    
    
    $
    50.27
    
    
    
    22,075,914
    
    
    $
    640,206,270January 1  January 25, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares repurchased pursuant to
Tender Offer (1)
    
    
    7,365,110
    
    
    $
    63.00
    
    
    
    7,365,110
    
    
    
    Inception through March 31, 2006
    
    
    29,441,024
    
    
    $
    53.46
    
    
    
    29,441,024
    
    
    $
    
 (1) Tender Offer
 53




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##### Table of Contents



ITEM 6. EXHIBITS
 a.)
    
    ExhibitsReference is made to the Index to Exhibits beginning on
page 55 for a list of all exhibits
filed as part of this report.
 SIGNATURES
  AFFILIATED COMPUTER SERVICES, INC.By:
    /s/ Warren D. EdwardsWarren D. EdwardsExecutive Vice President and

Chief Financial Officer 54




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Exhibit
Name2.1
    
    Purchase Agreement, dated as of March 15, 2005, among Mellon Financial Corporation, Mellon
Consultants European Holdings Limited, Affiliated Computer Services, Inc., ACS Business Process
Solutions Limited and Affiliated Computer Services of Germany GmbH (filed as Exhibit 2.1 to our
Current Report on Form 8-K, filed March 17, 2005 and incorporated herein by reference).2.2
    
    Amendment No. 1 to Purchase Agreement, dated as of May 25, 2005, among Mellon Financial
Corporation, Mellon Consultants European Holdings Limited, Affiliated Computer Services, Inc.,
ACS Business Process Solutions Limited and Affiliated Computer Services of Germany GmbH (filed
as Exhibit 2.1 to our Current Report on Form 8-K, filed June 1, 2005 and incorporated herein by
reference).2.3
    
    Amendment No. 2 to Purchase Agreement, dated as of November 11, 2005, among Mellon Financial
Corporation, Mellon Consultants European Holdings Limited, Affiliated Computer Services, Inc.,
ACS Business Process Solutions Limited and Affiliated Computer Services of Germany GmbH (filed
as Exhibit 2.1 to our Current Report on Form 8-K, filed November 16, 2005 and incorporated
herein by reference).3.1
    
    Certificate of Incorporation of Affiliated Computer Services, Inc. (filed as Exhibit 3.1 to our
Registration Statement on Form S-3, filed March 30, 2001, File No. 333-58038 and incorporated
herein by reference).3.2
    
    Certificate of Correction to Certificate of Amendment of Affiliated Computer Services, Inc.,
dated August 30, 2001 (filed as Exhibit 3.2 to our Annual Report on Form 10-K, filed September
17, 2003 and incorporated herein by reference).3.3
    
    Bylaws of Affiliated Computer Services, Inc., as amended and in effect on September 11, 2003
(filed as Exhibit 3.3 to our Quarterly Report on Form 10-Q, filed February 17, 2004 and
incorporated herein by reference).4.1
    
    Form of New Class A Common Stock Certificate (filed as Exhibit 4.3 to our Registration
Statement on Form S-1, filed May 26, 1994, File No. 33-79394 and incorporated herein by
reference).4.2
    
    Amended and Restated Rights Agreement, dated April 2, 1999, between Affiliated Computer
Services, Inc. and First City Transfer Company, as Rights Agent (filed as Exhibit 4.1 to our
Current Report on Form 8-K, filed May 19, 1999 and incorporated herein by reference).4.3
    
    Amendment No. 1 to Amended and Restated Rights Agreement, dated as of February 5, 2002, by and
between Affiliated Computer Services, Inc. and First City Transfer Company (filed as Exhibit
4.1 to our Current Report on Form 8-K, filed February 6, 2002 and incorporated herein by
reference).4.4
    
    Form of Rights Certificate (included as Exhibit A to the Amended and Restated Rights Agreement
(Exhibit 4.3)).4.5
    
    Indenture, dated as of June 6, 2005, by and between Affiliated Computer Services, Inc. as
Issuer and The Bank of New York Trust Company, N.A. as Trustee (filed as Exhibit 4.1 to our
Current Report on Form 8-K, filed June 6, 2005 and incorporated herein by reference).4.6
    
    First Supplemental Indenture, dated as of June 6, 2005, by and between Affiliated Computer
Services, Inc. as Issuer and The Bank of New York Trust Company, N.A. as Trustee, relating to
our 4.70% Senior Notes due 2010 (filed as Exhibit 4.2 to our Current Report on Form 8-K, filed
June 6, 2005 and incorporated herein by reference).4.7
    
    Second Supplemental Indenture, dated as of June 6, 2005, by and between Affiliated Computer
Services, Inc. as Issuer and The Bank of New York Trust Company, N.A. as Trustee, relating to
our 5.20% Senior Notes due 2015 (filed as Exhibit 4.3 to our Current Report on Form 8-K, filed
June 6, 2005 and incorporated herein by reference).4.8
    
    Specimen Note for 4.70% Senior Notes due 2010 (filed as Exhibit 4.4 to our Current Report on
Form 8-K, filed June 6, 2005 and incorporated herein by reference).4.9
    
    Specimen Note for 5.20% Senior Notes due 2015 (filed as Exhibit 4.5 to our Current Report on
Form 8-K, filed June 6, 2005 and incorporated herein by reference).9.1
    
    Voting Agreement dated February 9, 2006 by and between Affiliated Computer Services, Inc. and
Darwin Deason. (filed as Exhibit 9.1 to our Quarterly Report on Form 10-Q filed November 9,
2005 and incorporated herein by reference).10.1
    
    Amendment No. 1 to Affiliated Computer Services, Inc. 1997 Stock Incentive Plan, dated as of
October 28, 2004 (filed as Exhibit 4.6 to our Registration Statement on Form S-8, filed
December 6, 2005 and incorporated herein by reference).10.2
    
    Credit Agreement, dated March 20, 2006, by and among Affiliated Computer Services, Inc., and
certain subsidiaries parties thereto, as Borrowers, Citicorp USA, Inc., as Administrative
Agent, Citigroup Global Markets.
 55




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##### Table of Contents



ExhibitNumber
    
    Exhibit
NameInc., as Sole Lead Arranger and Book Runner, and various other
agents, lenders and issuers (filed as Exhibit 10.1 on Form 8-K, filed March 21, 2006 and
incorporated herein by this reference).10.3
    
    Pledge and Security Agreement, dated March 20, 2006, by and among Affiliated Computer Services
and certain of its subsidiaries, and Citicorp USA, Inc., as agent Administrative Agent (filed
as Exhibit 10.2 on Form 8-K, filed March 21, 2006 and incorporated herein by this reference).10.4
    
    Deed of Assignment, dated March 20, 2006, by and among the companies listed on Schedule
thereto, as Assignors, and Citicorp USA, Inc., as Security Agent (filed as Exhibit 10.3 on Form
8-K, filed March 21, 2006 and incorporated herein by this reference).10.5
    
    Assignment of Receivables, dated March 20, 2006, by and among the entities listed in Schedule 1
thereto, as Assignors, and Citicorp USA, Inc. as Security Agent (filed as Exhibit 10.4 on Form
8-K, filed March 21, 2006 and incorporated herein by this reference).10.6
    
    Agreement and Deed of the Creation of a First Ranking Right of Pledge of Shares in Affiliated
Computer Services International B.V., dated March 20, 2006 (filed as Exhibit 10.5 on Form 8-K,
filed March 21, 2006 and incorporated herein by this reference).10.7
    
    Agreement and Deed of the Creation of a First Ranking Right of Pledge of Receivables of
Affiliated Computer Services International B.V., dated March 20, 2006 (filed as Exhibit 10.6 on
Form 8-K, filed March 21, 2006 and incorporated herein by this reference).10.8*
    
    Form of Stock Option Agreement (Switerland, Canton of Fribourg).10.9*
    
    Form of Stock Option Agreement (Switerland, Cantons of Aargau, Basel-Landschaft, Bern & Zurich).31.1*
    
    Certification of Chief Executive Officer of Affiliated Computer Services, Inc. pursuant to Rule
13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.31.2*
    
    Certification of Chief Financial Officer of Affiliated Computer Services, Inc. pursuant to Rule
13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.32.1*
    
    Certification of Chief Executive Officer of Affiliated Computer Services, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended and Section 1350 of
Chapter 63 of Title 18 of the United States Code. Pursuant to SEC Release 34-47551, this
Exhibit is furnished to the SEC and shall not be deemed to be filed.32.2*
    
    Certification of Chief Financial Officer of Affiliated Computer Services, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended and Section 1350 of
Chapter 63 of Title 18 of the United States Code. Pursuant to SEC Release 34-47551, this
Exhibit is furnished to the SEC and shall not be deemed to be filed.
 
 *
    
    Filed herewith.
    
    Management contract or compensatory plan or arrangement. 56