##### 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 December 31, 2008
 OR
 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
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
  Title of each class
    

    Number of shares outstanding as of
January 29, 2009Class A Common Stock, $.01 par value
    
    
    90,958,872Class B Common Stock, $.01 par value
    
    
    6,599,372




---



##### 



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
  PAGENUMBERPART I. FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements:Consolidated
Balance Sheets (Unaudited) at December 31, 2008 andJune 30, 2008
    
    1Consolidated
Statements of Income (Unaudited) for the Three and SixMonths Ended December 31, 2008 and 2007
    
    2Consolidated
Statements of Cash Flows (Unaudited) for the SixMonths Ended December 31, 2008 and 2007
    
    3Notes
to Consolidated Financial Statements
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition andResults of Operations
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    47Item 4.
    
    Controls and Procedures
    
    47PART II.  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    48Item 1A.
    
    Risk Factors
    
    48Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    48Item 3.
    
    Defaults Upon Senior Securities
    
    48Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    48Item 5.
    
    Other Information
    
    48Item 6.
    
    Exhibits
    
    48EX-31.1EX-31.2EX-32.1EX-32.2




---



##### Table of Contents



PART I
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 
 AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
 December 31,
    
    
    June 30,2008
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    567,217
    
    
    $
    461,883Accounts receivable, net
    
    
    1,493,314
    
    
    
    1,378,285Income taxes receivable
    
    
    
    
    
    
    7,076Prepaid expenses and other current assets
    
    
    259,557
    
    
    
    255,872Total current assets
    
    
    2,320,088
    
    
    
    2,103,116Property, equipment and software, net
    
    
    912,085
    
    
    
    920,637Goodwill
    
    
    2,760,023
    
    
    
    2,785,164Other intangibles, net
    
    
    414,983
    
    
    
    444,479Other assets
    
    
    187,096
    
    
    
    216,003Total assets
    
    $
    6,594,275
    
    
    $
    6,469,399LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    241,338
    
    
    $
    198,191Accrued compensation and benefits
    
    
    201,473
    
    
    
    244,888Other accrued liabilities
    
    
    370,277
    
    
    
    338,861Income taxes payable
    
    
    11,472
    
    
    
    Deferred taxes
    
    
    81,070
    
    
    
    82,017Current portion of long-term debt
    
    
    50,160
    
    
    
    47,373Current portion of unearned revenue
    
    
    196,012
    
    
    
    173,809Total current liabilities
    
    
    1,151,802
    
    
    
    1,085,139Senior Notes, net of unamortized discount
    
    
    499,569
    
    
    
    499,529Other long-term debt
    
    
    1,821,548
    
    
    
    1,858,012Deferred taxes
    
    
    427,872
    
    
    
    411,836Other long-term liabilities
    
    
    310,930
    
    
    
    306,509Total liabilities
    
    
    4,211,721
    
    
    
    4,161,025Commitments and contingencies (See Note 14)Stockholders equity:Class A common stock, $.01 par value, 500,000 shares
authorized, 111,957 and 111,660 shares issued, respectively
    
    
    1,119
    
    
    
    1,116Class B convertible common stock, $.01 par value, 14,000 shares
authorized, 6,600 shares issued and outstanding
    
    
    66
    
    
    
    66Additional paid-in capital
    
    
    1,721,657
    
    
    
    1,702,340Accumulated other comprehensive income (loss), net
    
    
    (85,462
    )
    
    
    18,830Retained earnings
    
    
    1,801,142
    
    
    
    1,641,990Treasury stock at cost, 21,002 shares
    
    
    (1,055,968
    )
    
    
    (1,055,968
    )Total stockholders equity
    
    
    2,382,554
    
    
    
    2,308,374Total liabilities and stockholders equity
    
    $
    6,594,275
    
    
    $
    6,469,399
  1




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    1,612,070
    
    
    $
    1,511,442
    
    
    $
    3,216,524
    
    
    $
    3,004,525Operating expenses:Cost of revenues:Wages and benefits
    
    
    731,948
    
    
    
    717,047
    
    
    
    1,465,964
    
    
    
    1,416,996Services and supplies
    
    
    403,365
    
    
    
    326,457
    
    
    
    776,870
    
    
    
    668,223Rent, lease and maintenance
    
    
    196,491
    
    
    
    185,203
    
    
    
    398,634
    
    
    
    370,121Depreciation and amortization
    
    
    95,616
    
    
    
    94,358
    
    
    
    193,222
    
    
    
    185,182Other
    
    
    9,686
    
    
    
    6,982
    
    
    
    20,034
    
    
    
    13,897Cost of revenues
    
    
    1,437,106
    
    
    
    1,330,047
    
    
    
    2,854,724
    
    
    
    2,654,419Other operating expenses
    
    
    6,425
    
    
    
    23,501
    
    
    
    20,513
    
    
    
    46,811Total operating expenses
    
    
    1,443,531
    
    
    
    1,353,548
    
    
    
    2,875,237
    
    
    
    2,701,230Operating income
    
    
    168,539
    
    
    
    157,894
    
    
    
    341,287
    
    
    
    303,295Interest expense
    
    
    35,896
    
    
    
    43,049
    
    
    
    71,104
    
    
    
    87,019Other non-operating expense (income), net
    
    
    3,200
    
    
    
    (5,509
    )
    
    
    6,900
    
    
    
    (6,189
    )Pretax profit
    
    
    129,443
    
    
    
    120,354
    
    
    
    263,283
    
    
    
    222,465Income tax expense
    
    
    53,926
    
    
    
    38,758
    
    
    
    104,131
    
    
    
    74,725Net income
    
    $
    75,517
    
    
    $
    81,596
    
    
    $
    159,152
    
    
    $
    147,740Earnings per share:Basic
    
    $
    0.77
    
    
    $
    0.82
    
    
    $
    1.63
    
    
    $
    1.48Diluted
    
    $
    0.77
    
    
    $
    0.81
    
    
    $
    1.62
    
    
    $
    1.47Shares used in computing earnings per share:Basic
    
    
    97,548
    
    
    
    99,505
    
    
    
    97,428
    
    
    
    99,613Diluted
    
    
    97,811
    
    
    
    100,310
    
    
    
    97,951
    
    
    
    100,648
  2




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Six Months EndedDecember 31,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    159,152
    
    
    $
    147,740Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    193,222
    
    
    
    185,182Stock-based compensation expense
    
    
    12,389
    
    
    
    14,316Excess tax benefit on stock-based compensation
    
    
    (1,447
    )
    
    
    (2,026
    )Deferred income tax expense
    
    
    28,003
    
    
    
    61,472Impairment charges
    
    
    
    
    
    
    1,560(Gain) loss on long-term investments
    
    
    18,945
    
    
    
    (367
    )Gain on sale of business units
    
    
    (1,849
    )
    
    
    (2,430
    )Other non-cash activities
    
    
    22,151
    
    
    
    11,879Changes in assets and liabilities, net of effects from acquisitions:Accounts receivable
    
    
    (103,015
    )
    
    
    (85,004
    )Prepaid expenses and other current assets
    
    
    (9,600
    )
    
    
    (1,899
    )Other assets
    
    
    (4,112
    )
    
    
    (135
    )Accounts payable
    
    
    31,937
    
    
    
    60,130Accrued compensation and benefits
    
    
    (47,676
    )
    
    
    (60,948
    )Other accrued liabilities
    
    
    (8,034
    )
    
    
    (33,025
    )Income taxes receivable/payable
    
    
    16,570
    
    
    
    4,929Other long-term liabilities
    
    
    (15,118
    )
    
    
    10,565Unearned revenue
    
    
    17,207
    
    
    
    18,682Total adjustments
    
    
    149,573
    
    
    
    182,881Net cash provided by operating activities
    
    
    308,725
    
    
    
    330,621Cash flows from investing activities:Purchases of property, equipment and software, net
    
    
    (148,596
    )
    
    
    (132,402
    )Additions to other intangible assets
    
    
    (17,818
    )
    
    
    (17,416
    )Payments for acquisitions, net of cash acquired
    
    
    (18,960
    )
    
    
    (23,832
    )Proceeds from divestitures, net of transaction costs
    
    
    10,338
    
    
    
    4,035Purchases of investments
    
    
    (7,596
    )
    
    
    Proceeds from sale of investments
    
    
    12,603
    
    
    
    961Other
    
    
    
    
    
    
    (6,500
    )Net cash used in investing activities
    
    
    (170,029
    )
    
    
    (175,154
    )Cash flows from financing activities:Proceeds from issuance of long-term debt, net
    
    
    30,687
    
    
    
    197,077Payments of long-term debt
    
    
    (72,764
    )
    
    
    (193,229
    )Purchase of treasury shares
    
    
    
    
    
    
    (200,000
    )Excess tax benefit on stock-based compensation
    
    
    1,447
    
    
    
    2,026Proceeds from stock options exercised
    
    
    7,406
    
    
    
    29,337Other, net
    
    
    (138
    )
    
    
    (173
    )Net cash used in financing activities
    
    
    (33,362
    )
    
    
    (164,962
    )Net increase (decrease) in cash and cash equivalents
    
    
    105,334
    
    
    
    (9,495
    )Cash and cash equivalents at beginning of period
    
    
    461,883
    
    
    
    307,286Cash and cash equivalents at end of period
    
    $
    567,217
    
    
    $
    297,791
  3




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. BASIS OF PRESENTATION
     2. BUSINESS COMBINATIONS
   4




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 3. GLOBAL PRODUCTION INITIATIVE
  Commercial
    
    
    Government
    
    
    Corporate
    
    
    TotalSeverance costs
    
    $
    12,000 - $13,000
    
    
    $
    2,000 - $3,000
    
    
    $
    
    
    
    $
    14,000 - $16,000Transition and other expenses
    
    
    18,000 -   19,000
    
    
    
    4,000 -   5,000
    
    
    
    2,000 -   2,000
    
    
    
    24,000 -   26,000Total costs
    
    $
    30,000 - $32,000
    
    
    $
    6,000 - $8,000
    
    
    $
    2,000 - $2,000
    
    
    $
    38,000 - $42,000As of December 31, 2008, we have added approximately 2,000 positions outside the United States and
reduced corresponding positions in the United States and Europe as a result of this initiative. We
accrued severance costs of $12.9 million ($8.0 million, net of income tax) and incurred $3.8
million ($2.3 million, net of income tax) for transition and other expenses in cost of revenues in
our Consolidated Statement of Income during the three months ended December 31, 2008. The
following table reflects charges recorded during the period in each of our segments (in thousands):Three Months Ended December 31, 2008Commercial
    
    
    Government
    
    
    Corporate
    
    
    TotalAccrued severance costs
    
    $
    10,849
    
    
    $
    2,043
    
    
    $
    
    
    
    $
    12,892Transition and other expenses
    
    
    3,180
    
    
    
    540
    
    
    
    62
    
    
    
    3,782Total costs
    
    $
    14,029
    
    
    $
    2,583
    
    
    $
    62
    
    
    $
    16,674
   Balance at September 30, 2008
    
    $
    Accruals
    
    
    12,892Payments
    
    
    (1,189
    )Balance at December 31, 2008
    
    $
    11,703
 5




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
  Commercial
    
    
    Government
    
    
    TotalBalance as of June 30, 2008
    
    $
    1,546,870
    
    
    $
    1,238,294
    
    
    $
    2,785,164Acquisition activity during the period
    
    
    19,799
    
    
    
    2,891
    
    
    
    22,690Divestiture activity during the period
    
    
    
    
    
    
    (2,834
    )
    
    
    (2,834
    )Foreign currency translation adjustments
    
    
    (37,491
    )
    
    
    (7,506
    )
    
    
    (44,997
    )Balance as of December 31, 2008
    
    $
    1,529,178
    
    
    $
    1,230,845
    
    
    $
    2,760,023
   As of December 31, 2008
    
    
    As of June 30, 2008Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortizable intangible assets:Acquired customer-related intangibles
    
    $
    419,310
    
    
    $
    (186,399
    )
    
    $
    445,753
    
    
    $
    (184,400
    )Customer contract costs
    
    
    256,818
    
    
    
    (136,675
    )
    
    
    251,837
    
    
    
    (130,319
    )All other
    
    
    17,868
    
    
    
    (10,827
    )
    
    
    19,121
    
    
    
    (12,401
    )$
    693,996
    
    
    $
    (333,901
    )
    
    $
    716,711
    
    
    $
    (327,120
    )Non-amortizable intangible assets:Title plant
    
    $
    51,045
    
    
    
    
    
    
    $
    51,045Tradename
    
    
    3,843
    
    
    
    
    
    
    
    3,843$
    54,888
    
    
    
    
    
    
    $
    54,888
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Amortization:Contract inducements
    
    $
    3,790
    
    
    $
    3,381
    
    
    $
    7,662
    
    
    $
    7,109Acquired customer-related intangibles
    
    
    10,655
    
    
    
    10,945
    
    
    
    21,860
    
    
    
    21,979All other intangibles
    
    
    7,640
    
    
    
    6,975
    
    
    
    15,853
    
    
    
    13,338Total amortization
    
    $
    22,085
    
    
    $
    21,301
    
    
    $
    45,375
    
    
    $
    42,426
  6




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  2009
    
    $
    88,9232010
    
    
    75,0392011
    
    
    63,7272012
    
    
    44,3742013
    
    
    30,296
 5. TRADING SECURITIES
   6. PENSION AND OTHER POST-EMPLOYMENT PLANS
 Net periodic benefit cost
  Three Months Ended December 31,2008
    
    
    2007Non-U.S.
    
    
    U.S.
    
    
    Non-U.S.
    
    
    U.S.Defined benefit plans:Service cost
    
    $
    1,480
    
    
    $
    894
    
    
    $
    1,570
    
    
    $
    926Interest cost
    
    
    1,693
    
    
    
    191
    
    
    
    1,680
    
    
    
    123Expected return on assets
    
    
    (1,497
    )
    
    
    (240
    )
    
    
    (1,844
    )
    
    
    (173
    )Recognized net actuarial gain
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    54Net periodic benefit cost for defined benefit plans
    
    $
    1,677
    
    
    $
    900
    
    
    $
    1,406
    
    
    $
    930
 Six Months Ended December 31,2008
    
    
    2007Non-U.S.
    
    
    U.S.
    
    
    Non-U.S.
    
    
    U.S.Defined benefit plans:Service cost
    
    $
    3,212
    
    
    $
    1,788
    
    
    $
    3,098
    
    
    $
    1,852Interest cost
    
    
    3,687
    
    
    
    382
    
    
    
    3,312
    
    
    
    246Expected return on assets
    
    
    (3,283
    )
    
    
    (480
    )
    
    
    (3,644
    )
    
    
    (346
    )Recognized net actuarial gain
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    108Net periodic benefit cost for defined benefit plans
    
    $
    3,618
    
    
    $
    1,800
    
    
    $
    2,766
    
    
    $
    1,860
 Contributions
  7




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Supplemental Executive Retirement Agreement
  7. EQUITY
  8. EARNINGS PER SHARE
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net Income
    
    $
    75,517
    
    
    $
    81,596
    
    
    $
    159,152
    
    
    $
    147,740Denominator:Basic weighted average shares
    
    
    97,548
    
    
    
    99,505
    
    
    
    97,428
    
    
    
    99,613Effect of dilutive securities:Stock options
    
    
    263
    
    
    
    805
    
    
    
    523
    
    
    
    1,035Total potential common shares
    
    
    263
    
    
    
    805
    
    
    
    523
    
    
    
    1,035Diluted weighted average shares
    
    
    97,811
    
    
    
    100,310
    
    
    
    97,951
    
    
    
    100,648Earnings per shareBasic
    
    $
    0.77
    
    
    $
    0.82
    
    
    $
    1.63
    
    
    $
    1.48Diluted
    
    $
    0.77
    
    
    $
    0.81
    
    
    $
    1.62
    
    
    $
    1.47
 8




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   9. COMPREHENSIVE INCOME
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    75,517
    
    
    $
    81,596
    
    
    $
    159,152
    
    
    $
    147,740Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    (45,559
    )
    
    
    3,814
    
    
    
    (81,893
    )
    
    
    15,556Unrealized gains (losses) on foreign exchange
forward agreements (net of income tax of
$(799), $23, $(1,493) and $(91), respectively)
    
    
    (1,158
    )
    
    
    34
    
    
    
    (2,303
    )
    
    
    (167
    )Amortization of unrealized loss on forward
interest rate agreements (net of income tax
of $240, $240, $480 and $480, respectively)
    
    
    396
    
    
    
    397
    
    
    
    792
    
    
    
    793Unrealized gains (losses) on interest rate swap
agreement (net of income tax of $(8,793),
$(4,685), $(8,633) and $(9,174), respectively)
    
    
    (14,552
    )
    
    
    (7,754
    )
    
    
    (14,288
    )
    
    
    (15,768
    )Unrealized gains (losses) on interest rate collar
agreements (net of income tax of $(3,824), $0,
$(4,031) and $0, respectively)
    
    
    (6,328
    )
    
    
    
    
    
    
    (6,670
    )
    
    
    Amortization of prior service costs
(net of income tax of $20, $20, $40 and $40,
respectively)
    
    
    35
    
    
    
    34
    
    
    
    70
    
    
    
    68Comprehensive income
    
    $
    8,351
    
    
    $
    78,121
    
    
    $
    54,860
    
    
    $
    148,222
 9




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  As of
    
    
    As ofDecember 31,
    
    
    June 30,2008
    
    
    2008Foreign currency gains (losses)
    
    $
    (39,891
    )
    
    $
    42,002Unrealized gains (losses) on foreign exchange forward agreements
(net of income tax of $(540) and $953)
    
    
    (648
    )
    
    
    1,655Unrealized loss on forward interest rate agreements
(net of income tax of $(3,732) and $(4,212))
    
    
    (6,237
    )
    
    
    (7,029
    )Unrealized gains (losses) on interest rate swap agreement
(net of income tax of $(14,811) and $(6,178))
    
    
    (24,512
    )
    
    
    (10,224
    )Unrealized gains (losses) on interest rate collar agreements
(net of income tax of $(3,252) and $779)
    
    
    (5,381
    )
    
    
    1,289Unrecognized prior service costs
(net of income tax of $(488) and $(528))
    
    
    (863
    )
    
    
    (933
    )Unrealized losses on funded status of pension and other benefit plans
(net of income tax of $(3,259) and $(3,259))
    
    
    (7,930
    )
    
    
    (7,930
    )Total
    
    $
    (85,462
    )
    
    $
    18,830
 10. DERIVATIVES AND HEDGING INSTRUMENTS
 Interest rate hedges
   Foreign currency forward agreements
  10




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    NotionalAmount in$US
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    Cumulative(Functional
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    Unrealizedcurrency in
    
    
    Functional
    
    
    Counter
    
    
    Contract
    
    
    Gain (Loss)Hedged Transaction
    
    $US)
    
    
    Currency
    
    
    Currency
    
    
    Rate
    
    
    in $USReceipt of revenue
    
    $
    638
    
    
    EUR
    452
    
    
    CAD
    623
    
    
    
    0.726
    
    
    $
    118Payment of operating expenses
    
    
    40,616
    
    
    USD
    40,616
    
    
    MXN
    550,000
    
    
    
    13.541
    
    
    
    (2,490
    )Payment of operating expenses
    
    
    11,104
    
    
    USD
    11,104
    
    
    PHP
    568,800
    
    
    
    51.223
    
    
    
    663Payment of operating expenses
    
    
    26,132
    
    
    USD
    26,132
    
    
    INR
    1,290,000
    
    
    
    49.364
    
    
    
    (394
    )Receipt of revenue
    
    
    3,328
    
    
    CHF
    3,514
    
    
    NOK
    17,683
    
    
    
    0.199
    
    
    
    795Receipt of revenue
    
    
    411
    
    
    CHF
    434
    
    
    EUR
    269
    
    
    
    1.613
    
    
    
    31Payment for equipment
    
    
    976
    
    
    USD
    976
    
    
    CHF
    1,136
    
    
    
    1.163
    
    
    
    89Total
    
    $
    83,205
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,188
    )
  11




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)
 11. FAIR VALUE MEASUREMENTS
    Level 1:
    
    Observable inputs such as quoted prices in active markets for identical assets or
liabilities.Level 2:
    
    Inputs other than quoted prices that are observable for the asset or liability,
either directly or indirectly; these include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.Level 3:
    
    Unobservable inputs reflecting managements own assumptions about the inputs used
in pricing the asset or liability.
 12




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Description
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalASSETSOther current assetsEquity securities (a)
    
    $
    9,661
    
    
    $
    
    
    
    $
    
    
    
    $
    9,661Foreign currency derivatives (b)
    
    
    
    
    
    
    1,970
    
    
    
    
    
    
    
    1,970Other assetsDeferred compensation investments in cash surrender
life insurance (c)
    
    
    
    
    
    
    47,260
    
    
    
    
    
    
    
    47,260Deferred compensation investments in mutual funds (d)
    
    
    
    
    
    
    24,156
    
    
    
    
    
    
    
    24,156Total assets
    
    $
    9,661
    
    
    $
    73,386
    
    
    $
    
    
    
    $
    83,047LIABILITIESOther current liabilitiesForeign currency derivatives (b)
    
    $
    
    
    
    $
    2,915
    
    
    $
    
    
    
    $
    2,915Interest rate swap (e)
    
    
    
    
    
    
    19,422
    
    
    
    
    
    
    
    19,422Other long-term liabiltiesDeferred compensation plan liabilities (f)
    
    
    
    
    
    
    67,890
    
    
    
    
    
    
    
    67,890Interest rate swap and collar (e)
    
    
    
    
    
    
    28,534
    
    
    
    
    
    
    
    28,534Total liabilities
    
    $
    
    
    
    $
    118,761
    
    
    $
    
    
    
    $
    118,761
 
 (a)
    
    The fair value of the equity securities is determined using quoted prices in active
markets for identical instruments.(b)
    
    Foreign currency derivatives consist of foreign currency forward agreements. Fair
value is determined using observable market inputs such as the forward pricing curve,
currency volatilities, currency correlations and interest rates, and considers
nonperformance risk of the Company and that of its counterparties.(c)
    
    Fair value is reflected as the cash surrender value of company owned life insurance.(d)
    
    Fair value is based on quoted market prices for actively traded assets similar to those
held by the deferred compensation plan.(e)
    
    The fair values of the interest rate swap and collar are determined using prices
obtained from pricing agencies and financial institutions that develop values based on
inputs observable in active markets, including interest rates, with consideration given to
the nonperformance risk of the Company and that of its counterparties.(f)
    
    Fair value of the deferred compensation liability is based on the fair value of
investments corresponding to employees investment selections, based on quoted prices for
similar assets in actively traded markets. 13




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 12. SEGMENT INFORMATION
  Commercial
    
    
    Government
    
    
    Corporate
    
    
    ConsolidatedThree Months Ended December 31, 2008Revenues (a)
    
    $
    963,354
    
    
    $
    648,716
    
    
    $
    
    
    
    $
    1,612,070Operating expenses (excluding depreciation and
amortization)
    
    
    813,541
    
    
    
    515,907
    
    
    
    18,467
    
    
    
    1,347,915Depreciation and amortization expense
    
    
    68,607
    
    
    
    26,191
    
    
    
    818
    
    
    
    95,616Operating income (loss)
    
    $
    81,206
    
    
    $
    106,618
    
    
    $
    (19,285
    )
    
    $
    168,539Three Months Ended December 31, 2007Revenues (a)
    
    $
    903,022
    
    
    $
    608,420
    
    
    $
    
    
    
    $
    1,511,442Operating expenses (excluding depreciation and
amortization)
    
    
    748,147
    
    
    
    464,808
    
    
    
    46,235
    
    
    
    1,259,190Depreciation and amortization expense
    
    
    69,456
    
    
    
    24,513
    
    
    
    389
    
    
    
    94,358Operating income (loss)
    
    $
    85,419
    
    
    $
    119,099
    
    
    $
    (46,624
    )
    
    $
    157,894Six Months Ended December 31, 2008Revenues (b)
    
    $
    1,922,771
    
    
    $
    1,293,753
    
    
    $
    
    
    
    $
    3,216,524Operating expenses (excluding depreciation and
amortization)
    
    
    1,611,766
    
    
    
    1,027,102
    
    
    
    43,147
    
    
    
    2,682,015Depreciation and amortization expense
    
    
    139,226
    
    
    
    52,543
    
    
    
    1,453
    
    
    
    193,222Operating income (loss)
    
    $
    171,779
    
    
    $
    214,108
    
    
    $
    (44,600
    )
    
    $
    341,287Six Months Ended December 31, 2007Revenues (b)
    
    $
    1,781,901
    
    
    $
    1,222,624
    
    
    $
    
    
    
    $
    3,004,525Operating expenses (excluding depreciation and
amortization)
    
    
    1,478,401
    
    
    
    945,518
    
    
    
    92,129
    
    
    
    2,516,048Depreciation and amortization expense
    
    
    135,352
    
    
    
    49,027
    
    
    
    803
    
    
    
    185,182Operating income (loss)
    
    $
    168,148
    
    
    $
    228,079
    
    
    $
    (92,932
    )
    
    $
    303,295
 
 (a)
    
    Revenues in our Commercial segment include revenues from operations divested through
December 31, 2008 of $3.5 million for the three months ended December 31, 2007. Revenues
in our Government segment include revenues from operations divested through December 31,
2008 of $5.5 million for the three months ended December 31, 2007.(b)
    
    Revenues in our Commercial segment include revenues from operations divested through
December 31, 2008 of $6.4 million for the six months ended December 31, 2007. Revenues in
our Government segment include revenues from operations divested through December 31, 2008
of $0.3 million and $10.7 million for the six months ended December 31, 2008 and 2007,
respectively. 14




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 13. DIVESTITURES
 Sale of bindery business
   Sale of Unclaimed Property Reporting and Recovery Business
   Sale of our decision support business
   14. COMMITMENTS AND CONTINGENCIES
 Regulatory Agency Investigations Relating to Stock Option Grant Practices
    15




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
       16




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    Lawsuits Related to Stock Option Grant Practices
  Dallas County Texas State District Court
 
    
    Merl Huntsinger, Derivatively on Behalf of Nominal Defendant Affiliated Computer
Services, Inc., Plaintiff, v. Darwin Deason, Mark A. King, J. Livingston Kosberg, Dennis
McCuistion, Joseph P. ONeill, Jeffrey A. Rich and Frank A. Rossi, Defendants, and Affiliated
Computer Services, Inc., Nominal Defendant, Cause No. 06-03403 in the District Court of
Dallas County, Texas, 193rd Judicial District filed on April 7, 2006.
    
    Robert P. Oury, Derivatively on Behalf of Nominal Defendant Affiliated Computer Services,
Inc., Plaintiff, v. Darwin Deason, Mark A. King, J. Livingston Kosberg, Dennis McCuistion,
Joseph P. ONeill, Jeffrey A. Rich and Frank A. Rossi, Defendants, and Affiliated Computer
Services, Inc., Nominal Defendant, Cause No. 06-03872 in the District Court of Dallas
County, Texas, 193rd Judicial District filed on April 21, 2006.
    
    Anchorage Police & Fire Retirement System, derivatively on behalf of nominal defendant
Affiliated Computer Services Inc., Plaintiff v. Jeffrey Rich; Darwin Deason; Mark King; Joseph
ONeill; Frank Rossi; Dennis McCuistion; J. Livingston Kosberg; Gerald Ford; Clifford Kendall;
David Black; Henry Hortenstine; Peter Bracken; William Deckelman; and Affiliated Computer
Services Inc. Cause No. 06-5265-A in the District Court of Dallas County, Texas,
14th Judicial District filed on June 2, 2006.
 Huntsinger Oury Anchorage In Re Affiliated Computer Services, Inc. Derivative
Litigation rd
 17




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    Court of Chancery for the State of Delaware
 
    
    Jan Brandin, in the Right of and for the Benefit of Affiliated Computer Services, Inc.,
Plaintiff, v. Darwin Deason, Jeffrey A. Rich, Mark A. King, Joseph ONeill and Frank Rossi,
Defendants, and Affiliated Computer Services, Inc., Nominal Defendant, Civil Action No.
2123-VCL, pending before the Court of Chancery of the State of Delaware in and for New Castle
County, filed on May 2, 2006.
   United States District Court for the Northern District of Texas
 
    
    Alaska Electrical Fund, derivatively on behalf of Affiliated Computer Services Inc. v.
Jeffrey Rich; Joseph ONeill; Frank A. Rossi; Darwin Deason; Mark King; Lynn Blodgett; J.
Livingston Kosberg; Dennis McCuistion; Warren Edwards; John Rexford and John M. Brophy,
Defendants, and Affiliated Computer Services, Inc., Nominal Defendant, Cause No.
3-06CV1110-M, in the United States District Court for the Northern District of Texas, Dallas
Division, filed on June 22, 2006.
 
    
    Bennett Ray Lunceford and Ann M. Lunceford, derivatively on behalf of Affiliated Computer
Services Inc. v. Jeffrey Rich; Joseph ONeill; Frank A. Rossi; Darwin Deason; Mark King; Lynn
Blodgett; J. Livingston Kosberg; Dennis McCuistion; Warren Edwards; John Rexford and John M.
Brophy, Defendants, and Affiliated Computer Services, Inc., Nominal Defendant, Cause No.
3-06CV1212-M, filed on July 7, 2006, in the United States District Court for the Northern
District of Texas, Dallas Division.
 Alaska Electrical Lunceford In Re Affiliated Computer Services Federal Derivative
Litigation
 18




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
      Regarding the Texas State Derivative Action and the Delaware Chancery Case
      19




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 United States District Court of Texas for the Northern District of Texas
  
    
    Terri Simeon, on behalf of Herself and All Others Similarly Situated, Plaintiff, vs.
Affiliated Computer Services, Inc., Darwin Deason, Mark A. King, Lynn R. Blodgett, Jeffrey A.
Rich, Joseph ONeill, Frank Rossi, J. Livingston Kosberg, Dennis McCuistion, The Retirement
Committee of the ACS Savings Plan, and John Does 1-30, Civil Action No. 306-CV-1592P, in
the United States District Court for the Northern District of Texas, Dallas Division, filed
August 31, 2006.
 
    
    Kyle Burke, Individually and on behalf of All Others Similarly Situated, Plaintiff, vs.
Affiliated Computer Services, Inc., the ACS Administrative Committee, Lora Villarreal, Kellar
Nevill, Gladys Mitchell, Meg Cino, Mike Miller, John Crysler, Van Johnson, Scott Bell, Anne
Meli, David Lotocki, Randall Booth, Pam Trutna, Brett Jakovac, Jeffrey A. Rich, Mark A. King,
Darwin Deason, Joseph P. ONeill and J. Livingston Kosberg, Case No. 306-CV-02379-M,
United States District Court for the Northern District of Texas, Dallas Division, filed on
September 15, 2006.
 Simeon Burke In re Affiliated Computer Systems [sic] ERISA Litigation In re Affiliated Computer Systems [sic] ERISA Litigation
 Other Related Matters
  Litigation Arising from Buy-Out Offer
   
    
    Momentum Partners v. Darwin Deason, Lynn R. Blodgett, Joseph P. ONeill, Frank A.
Rossi, J. Livingston Kosberg, Robert B. Holland, Dennis McCuistion, Affiliated Computer
Services, Inc., and Cerberus Capital Management, L.P., Civil Action No. 2814-VCL, in the
Court of Chancery of the State of Delaware in and for New Castle County, filed on March 20,
2007.
 
    
    Mark Levy v. Darwin Deason, Lynn Blodgett, John Rexford, Joseph P. ONeill, Frank A.
Rossi, J. Livingston Kosberg, Dennis McCuistion, Affiliated Computer Services, Inc., and
Cerberus Capital Management, L.P., Civil Action No. 2816-VCL, in the Court of Chancery of
the State of Delaware in and for New Castle County, filed on March 21, 2007.
 
    
    St. Clair Shores Police and Fire Retirement System v. Darwin Deason, Lynn Blodgett,
Joseph P. ONeill, Frank A. Rossi, J. Livingston Kosberg, Dennis McCuistion, Robert B.
Holland, Cerberus Capital Management, L.P., Citigroup Global Markets Inc., and Affiliated
Computer Services, Inc., Civil Action No. 2821-VCL, in the Court of Chancery of the State
of Delaware in and for New Castle County, filed on March 22, 2007.
 
    
    Louisiana Municipal Police Employees Retirement System v. Darwin Deason, Joseph P.
ONeill, Frank A. Rossi, J. Livingston Kosberg, Dennis McCuistion, Robert B. Holland,
Affiliated Computer Services, Inc., and Cerberus Capital
 20




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Management, L.P., Civil Action No. 2839-VCL, in the Court of Chancery of the State of
Delaware in and for New Castle County, filed on March 26, 2007.
 
    
    Edward R. Koller v. Darwin Deason, Frank A. Rossi, J. Livingston Kosberg, Robert B.
Holland, Affiliated Computer Services, Inc., and Cerberus Capital Management, L.P., Civil
Action No. 2908-VCL, in the Court of Chancery of the State of Delaware in and for New Castle
County, filed on April 20, 2007.
 
    
    Suzanne Sweeney Living Trust v. Darwin Deason, Lynn R. Blodgett, John H. Rexford,
Joseph P. ONeill, Frank A. Rossi, J. Livingston Kosberg, Dennis McCuistion, Robert B.
Holland, Affiliated Computer Services, Inc., and Cerberus Capital Management, L.P., Civil
Action No. 2915-VCL, in the Court of Chancery of the State of Delaware in and for New Castle
County, filed on April 24, 2007.
 In Re Affiliated Computer Services, Inc. Shareholder
Litigation
  
    
    Steamship Trade Association/International Longshoremans Association Pension Fund v
Affiliated Computer Services, Inc., Darwin Deason, Lynn Blodgett, John Rexford, Joseph P.
ONeill, Gerardo I. Lopez, Frank A. Rossi, J. Livingston Kosberg, Dennis McCuistion, Robert B.
Holland, and Cereberus [sic] Capital Management, L.P., Cause No. 07-02691 in the District
Court of Dallas County, Texas, 44th Judicial District, filed on March 22, 2007.
 
    
    The City of Birmingham, Alabama Retirement and Relief System v. Darwin Deason, Robert
B. Holland, III, J. Livingston Kosberg, Frank A. Rossi, Joseph P. ONeill, Lynn R. Blodgett,
John H. Rexford, Dennis McCuistion, Affiliated Computer Services, Inc., and Cerberus Capital
Management, L.P., Cause No. 07-02768 in the District Court of Dallas, Texas,
160th Judicial District, filed on March 28, 2007.
 Texas State Court Consolidated stock option derivative case
 Texas State Court Consolidated stock option derivative
case
 Texas Federal Court Consolidated stock option derivative case
 21




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
     Declaratory Action with Respect to Alleged Default and Purported Acceleration of our Senior Notes
and Amendment, Consent and Waiver for our Credit Facility
     22




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    Investigation Concerning Procurement Process at Hanscom Air Force Base
  Investigations Regarding Florida Workforce Contracts
  23




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    Litigation arising from alleged patent infringement
  Other
   24




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
     15. NEW ACCOUNTING PRONOUNCEMENTS
     25




---



##### Table of Contents



AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
     26




---



##### Table of Contents



FORWARD-LOOKING AND CAUTIONARY STATEMENTS
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   27




---



##### Table of Contents



New Business Pipeline
   New Business Signings
   28




---



##### Table of Contents



Internal Revenue Growth
  Client Renewal Rates
  Capital Intensity
   Employees
  Other
  29




---



##### Table of Contents



Significant Developments
 Global Production Initiative
  Commercial
    
    
    Government
    
    
    Corporate
    
    
    TotalSeverance costs
    
    $
    12,000 - $13,000
    
    
    $
    2,000 - $3,000
    
    
    $
    
    
    
    $
    14,000 - $16,000Transition and other expenses
    
    
    18,000 -   19,000
    
    
    
    4,000 -   5,000
    
    
    
    2,000 -   2,000
    
    
    
    24,000 -   26,000Total costs
    
    $
    30,000 - $32,000
    
    
    $
    6,000 - $8,000
    
    
    $
    2,000 - $2,000
    
    
    $
    38,000 - $42,000As of December 31, 2008, we have added approximately 2,000 positions outside the United States and
reduced corresponding positions in the United States and Europe as a result of this initiative. We
accrued severance costs of $12.9 million ($8.0 million, net of income tax) and incurred $3.8
million ($2.3 million, net of income tax) for transition and other expenses in cost of revenues in
our Consolidated Statement of Income during the three months ended December 31, 2008. The
following table reflects charges recorded during the period in each of our segments (in thousands):Three Months Ended December 31, 2008Commercial
    
    
    Government
    
    
    Corporate
    
    
    TotalAccrued severance costs
    
    $
    10,849
    
    
    $
    2,043
    
    
    $
    
    
    
    $
    12,892Transition and other expenses
    
    
    3,180
    
    
    
    540
    
    
    
    62
    
    
    
    3,782Total costs
    
    $
    14,029
    
    
    $
    2,583
    
    
    $
    62
    
    
    $
    16,674
    Balance at September 30, 2008
    
    $
    Accruals
    
    
    12,892Payments
    
    
    (1,189
    )Balance at December 31, 2008
    
    $
    11,703
 30




---



##### Table of Contents



Acquisition
  Supplemental Executive Retirement Agreement
  Deason/Cerberus Proposal
  31




---



##### Table of Contents



Revenue Growth
  Three Months Ended December 31,
    
    
    Six Months Ended December 31,2008
    
    
    2007
    
    
    $ Growth
    
    
    % Growth
    
    
    2008
    
    
    2007
    
    
    $ Growth
    
    
    % GrowthConsolidatedTotal Revenues
    
    $
    1,612,070
    
    
    $
    1,511,442
    
    
    $
    100,628
    
    
    
    7
    %
    
    $
    3,216,524
    
    
    $
    3,004,525
    
    
    $
    211,999
    
    
    
    7
    %Less: Divestitures
    
    
    (24
    )
    
    
    (8,972
    )
    
    
    8,948
    
    
    
    
    
    
    
    (340
    )
    
    
    (17,088
    )
    
    
    16,748Adjusted
    
    $
    1,612,046
    
    
    $
    1,502,470
    
    
    $
    109,576
    
    
    
    7
    %
    
    $
    3,216,184
    
    
    $
    2,987,437
    
    
    $
    228,747
    
    
    
    8
    %Acquired revenues
    
    $
    51,041
    
    
    $
    
    
    
    $
    51,041
    
    
    
    3
    %
    
    $
    99,552
    
    
    $
    
    
    
    $
    99,552
    
    
    
    4
    %Internal revenues
    
    
    1,561,005
    
    
    
    1,502,470
    
    
    
    58,535
    
    
    
    4
    %
    
    
    3,116,632
    
    
    
    2,987,437
    
    
    
    129,195
    
    
    
    4
    %Total
    
    $
    1,612,046
    
    
    $
    1,502,470
    
    
    $
    109,576
    
    
    
    7
    %
    
    $
    3,216,184
    
    
    $
    2,987,437
    
    
    $
    228,747
    
    
    
    8
    %CommercialTotal Revenues (a)
    
    $
    963,354
    
    
    $
    903,022
    
    
    $
    60,332
    
    
    
    7
    %
    
    $
    1,922,771
    
    
    $
    1,781,901
    
    
    $
    140,870
    
    
    
    8
    %Less: Divestitures
    
    
    (24
    )
    
    
    (3,461
    )
    
    
    3,437
    
    
    
    
    
    
    
    (48
    )
    
    
    (6,363
    )
    
    
    6,315Adjusted
    
    $
    963,330
    
    
    $
    899,561
    
    
    $
    63,769
    
    
    
    7
    %
    
    $
    1,922,723
    
    
    $
    1,775,538
    
    
    $
    147,185
    
    
    
    8
    %Acquired revenues
    
    $
    36,774
    
    
    $
    
    
    
    $
    36,774
    
    
    
    4
    %
    
    $
    71,018
    
    
    $
    
    
    
    $
    71,018
    
    
    
    4
    %Internal revenues
    
    
    926,556
    
    
    
    899,561
    
    
    
    26,995
    
    
    
    3
    %
    
    
    1,851,705
    
    
    
    1,775,538
    
    
    
    76,167
    
    
    
    4
    %Total
    
    $
    963,330
    
    
    $
    899,561
    
    
    $
    63,769
    
    
    
    7
    %
    
    $
    1,922,723
    
    
    $
    1,775,538
    
    
    $
    147,185
    
    
    
    8
    %GovernmentTotal Revenues (b)
    
    $
    648,716
    
    
    $
    608,420
    
    
    $
    40,296
    
    
    
    7
    %
    
    $
    1,293,753
    
    
    $
    1,222,624
    
    
    $
    71,129
    
    
    
    6
    %Less: Divestitures
    
    
    
    
    
    
    (5,511
    )
    
    
    5,511
    
    
    
    
    
    
    
    (292
    )
    
    
    (10,725
    )
    
    
    10,433Adjusted
    
    $
    648,716
    
    
    $
    602,909
    
    
    $
    45,807
    
    
    
    8
    %
    
    $
    1,293,461
    
    
    $
    1,211,899
    
    
    $
    81,562
    
    
    
    7
    %Acquired revenues
    
    $
    14,267
    
    
    $
    
    
    
    $
    14,267
    
    
    
    3
    %
    
    $
    28,534
    
    
    $
    
    
    
    $
    28,534
    
    
    
    3
    %Internal revenues
    
    
    634,449
    
    
    
    602,909
    
    
    
    31,540
    
    
    
    5
    %
    
    
    1,264,927
    
    
    
    1,211,899
    
    
    
    53,028
    
    
    
    4
    %Total
    
    $
    648,716
    
    
    $
    602,909
    
    
    $
    45,807
    
    
    
    8
    %
    
    $
    1,293,461
    
    
    $
    1,211,899
    
    
    $
    81,562
    
    
    
    7
    %
 
 (a)
    
    The Commercial segment includes revenues from operations divested through December 31,
2008 of $3.5 million and $6.4 million for the three and six months ended December 31, 2007,
respectively.(b)
    
    The Government segment includes revenues from operations divested through December 31,
2008 of $5.5 million for the three months ended December 31, 2007, and $0.3 million and
$10.7 million for the six months ended December 31, 2008 and 2007, respectively. 32




---



##### Table of Contents



Results of Operations
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of revenues:Wages and benefits
    
    
    45.4
    %
    
    
    47.4
    %
    
    
    45.6
    %
    
    
    47.1
    %Services and supplies
    
    
    25.0
    %
    
    
    21.6
    %
    
    
    24.2
    %
    
    
    22.2
    %Rent, lease and maintenance
    
    
    12.2
    %
    
    
    12.3
    %
    
    
    12.4
    %
    
    
    12.3
    %Depreciation and amortization
    
    
    5.9
    %
    
    
    6.2
    %
    
    
    6.0
    %
    
    
    6.2
    %Other
    
    
    0.6
    %
    
    
    0.5
    %
    
    
    0.6
    %
    
    
    0.5
    %Cost of revenues
    
    
    89.1
    %
    
    
    88.0
    %
    
    
    88.8
    %
    
    
    88.3
    %Other operating expenses
    
    
    0.4
    %
    
    
    1.6
    %
    
    
    0.6
    %
    
    
    1.6
    %Total operating expenses
    
    
    89.5
    %
    
    
    89.6
    %
    
    
    89.4
    %
    
    
    89.9
    %Operating income
    
    
    10.5
    %
    
    
    10.4
    %
    
    
    10.6
    %
    
    
    10.1
    %Interest expense
    
    
    2.3
    %
    
    
    2.8
    %
    
    
    2.2
    %
    
    
    2.9
    %Other non-operating expense (income), net
    
    
    0.2
    %
    
    
    -0.4
    %
    
    
    0.2
    %
    
    
    -0.2
    %Pretax profit
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    8.2
    %
    
    
    7.4
    %Income tax expense
    
    
    3.3
    %
    
    
    2.6
    %
    
    
    3.3
    %
    
    
    2.5
    %Net income
    
    
    4.7
    %
    
    
    5.4
    %
    
    
    4.9
    %
    
    
    4.9
    %
 Comparison of the three months ended December 31, 2008 to the three months ended December 31, 2007
 Revenues
    33




---



##### Table of Contents



Operating expenses
     34




---



##### Table of Contents



Three Months EndedDecember 31,2008
    
    
    2007Commercial segment:Gain on sale of unclaimed property business
    
    $
    (0.3
    )
    
    $
    Government segment:Gain on sale of our decision support business
    
    
    
    
    
    
    (2.4
    )Gain on settlement of indemnification and other claims with Lockheed
Martin Corporation
    
    
    
    
    
    
    (2.2
    )Corporate segment:Legal costs associated with the ongoing stock option investigations and
stockholder derivative lawsuits, net of insurance recovery
    
    
    (5.6
    )
    
    
    12.3Legal costs associated with the potential sale of the Company and
stockholder derivative lawsuits
    
    
    0.2
    
    
    
    4.0Total
    
    $
    (5.7
    )
    
    $
    11.7As a percentage of revenue
    
    
    -0.4
    %
    
    
    0.8
    %Change as a percentage of revenue explained above
    
    
    -1.2
    %
 35




---



##### Table of Contents



Operating income
  Three Months EndedDecember 31,2008
    
    
    2007Commercial segment:Costs related to our global production initiative
    
    $
    (14.0
    )
    
    $
    Gain on sale of unclaimed property business
    
    
    0.3
    
    
    
    Impairment charge related to the termination of a Commercial client that
was acquired
    
    
    
    
    
    
    (1.6
    )Government segment:Costs related to our global production initiative
    
    
    (2.6
    )
    
    
    Gain on sale of decision support business
    
    
    
    
    
    
    2.4Gain on settlement of indemnification and other claims with Lockheed
Martin Corporation
    
    
    
    
    
    
    2.2Corporate segment:Benefit (costs) related to our deferred compensation plans
    
    
    12.8
    
    
    
    (1.8
    )SERP Termination
    
    
    (8.9
    )
    
    
    Legal credit (costs) associated with the ongoing stock option investigations
and stockholder derivative lawsuits, net of insurance recovery
    
    
    4.7
    
    
    
    (13.0
    )Legal costs associated with the potential sale of the Company and stockholder
derivative lawsuits
    
    
    (0.4
    )
    
    
    (3.8
    )Credit related to certain former employees stock options
    
    
    0.5
    
    
    
    0.4Costs related to our global production initiative
    
    
    (0.1
    )
    
    
    Total
    
    $
    (7.7
    )
    
    $
    (15.2
    )As a percentage of revenue
    
    
    -0.5
    %
    
    
    -1.0
    %Change as a percentage of revenue explained above
    
    
    0.5
    %Other net change as a percentage of revenue
    
    
    -0.4
    %Total change as a percentage of revenue
    
    
    0.1
    %
 Interest expense
  Other non-operating expense (income), net
  Income tax expense
  36




---



##### Table of Contents



Comparison of the six months ended December 31, 2008 to the six months ended December 31, 2007
 Revenues
    Operating expenses
    37




---



##### Table of Contents



Six Months EndedDecember 31,2008
    
    
    2007Commercial segment:Gain on sale of unclaimed property business
    
    $
    (0.5
    )
    
    $
    Estimated pre-acquisition litigation settlement related to our human resources
consulting and outsourcing business acquired from Mellon Financial
Corporation in May 2005
    
    
    
    
    
    
    3.0Government segment:Gain on sale of bindery business
    
    
    (0.2
    )
    
    
    Gain on sale of our decision support business
    
    
    
    
    
    
    (2.4
    )Gain on settlement of indemnification and other claims with Lockheed
Martin Corporation
    
    
    
    
    
    
    (2.2
    )Corporate segment:Legal costs associated with the ongoing stock option investigations and
stockholder derivative lawsuits, net of insurance recovery
    
    
    (2.0
    )
    
    
    23.0Legal costs associated with the potential sale of the Company and
stockholder derivative lawsuits
    
    
    0.9
    
    
    
    5.2Total
    
    $
    (1.8
    )
    
    $
    26.6As a percentage of revenue
    
    
    -0.1
    %
    
    
    0.9
    %Change as a percentage of revenue explained above
    
    
    -1.0
    %
 38




---



##### Table of Contents



Operating income
  Six Months EndedDecember 31,2008
    
    
    2007Commercial segment:Costs related to our global production initiative
    
    $
    (14.0
    )
    
    $
    Gain on sale of unclaimed property business
    
    
    0.5
    
    
    
    Estimated pre-acquisision litigation settlement related to our human resources
consulting and outsourcing business acquired from Mellon Financial
Corporation in May 2005
    
    
    
    
    
    
    (3.0
    )Impairment charge related to the termination of a Commercial client that
was acquired
    
    
    
    
    
    
    (1.6
    )Government segment:Costs related to our global production initiative
    
    
    (2.6
    )
    
    
    Gain on sale of bindery business
    
    
    0.2
    
    
    
    Gain on sale of our decision support business
    
    
    
    
    
    
    2.4Gain on settlement of indemnification and other claims with Lockheed
Martin Corporation
    
    
    
    
    
    
    2.2Corporate segment:Benefit (cost) related to our deferred compensation plans
    
    
    18.9
    
    
    
    (0.3
    )SERP Termination
    
    
    (8.9
    )
    
    
    Legal credit (costs) associated with the ongoing stock option investigations
and stockholder derivative lawsuits , net of insurance recovery
    
    
    0.3
    
    
    
    (24.1
    )Legal costs associated with the potential sale of the Company and stockholder
derivative lawsuits
    
    
    (1.2
    )
    
    
    (8.7
    )Cost related to amending certain employee stock options
    
    
    
    
    
    
    (1.2
    )Credit (cost) related to certain former employees stock options
    
    
    0.8
    
    
    
    (0.5
    )Costs related to our global production initiative
    
    
    (0.1
    )
    
    
    Total
    
    $
    (6.1
    )
    
    $
    (34.8
    )As a percentage of revenue
    
    
    -0.2
    %
    
    
    -1.2
    %Change as a percentage of revenue explained above
    
    
    1.0
    %Other net change as a percentage of revenue
    
    
    -0.5
    %Total change as a percentage of revenue
    
    
    0.5
    %
 Interest expense
  Other non-operating expense (income), net
  Income tax expense
  39




---



##### Table of Contents



Liquidity and Capital Resources
 Cash flow
    Six Months EndedDecember 31,2008
    
    
    2007Net cash provided by operating activities
    
    $
    308,725
    
    
    $
    330,621Purchases of property, equipment and software, net
    
    
    (148,596
    )
    
    
    (132,402
    )Additions to other intangible assets
    
    
    (17,818
    )
    
    
    (17,416
    )Free cash flow
    
    $
    142,311
    
    
    $
    180,803
  
    
    During the six months ended December 31, 2008, we used $19.0 million for acquisitions,
net of cash acquired, primarily for the acquisition of a
South American-based customer care
services provider and contingent consideration and a working capital settlement related to
prior year acquisitions. During the six months ended December 31, 2007, we used $23.8
million for acquisitions, net of cash acquired, primarily for contingent consideration
payments for prior year acquisitions, including Heritage Information Systems, Inc. and
Primax Recoveries, Inc.
    
    During the six months ended December 31, 2008, we received $10.3 million related to our
divestiture activities, including the sale of our bindery business. During the six months
ended December 31, 2007, we received $4 million related to the sale of our decision support
business.
    
    Cash used for the purchase of property, equipment and software and additions to other
intangible assets was $166.4 million and $149.8 million for the six months ended December
31, 2008 and 2007, respectively. Historically, the
capital intensity in our business has ranged between 5% and 7% of revenue. During the six
months ended December 31, 2008 and 2007, the overall capital intensity of our business was
approximately 5.2% and 5.0% of revenues, respectively.
    
    During the six months ended December 31, 2008, we received $12.6 million in proceeds
primarily for investments
 40




---



##### Table of Contents



which matured during the period and purchased $7.6 million of
investments to support our deferred compensation plans.
    
    During the six months ended December 31, 2007, we paid Lockheed Martin Corporation $6.5
million to settle all claims related to the sale of the majority of our federal business
and our acquisition of Lockheed Martin Corporations commercial information technology
services business in fiscal year 2004.
  Credit arrangements
    Capital and Credit Market Risk
  Credit ratings
  41




---



##### Table of Contents



Derivative instruments and hedging activities
  Share Repurchase Program
  Stock Option Repricing
  Other
   Disclosures about Contractual Obligations and Commercial Commitments as of December 31, 2008 (in
thousands):
 Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsLong-term debt (1)
    
    $
    1,818,395
    
    
    $
    18,230
    
    
    $
    36,065
    
    
    $
    1,764,061
    
    
    $
    39Senior Notes, net of unamortized discount (1)
    
    
    499,569
    
    
    
    
    
    
    
    249,976
    
    
    
    
    
    
    
    249,593Capital lease obligations (1)
    
    
    53,313
    
    
    
    31,930
    
    
    
    20,524
    
    
    
    859
    
    
    
    Operating leases (2)
    
    
    906,393
    
    
    
    323,510
    
    
    
    420,016
    
    
    
    109,303
    
    
    
    53,564Purchase obligations (3) (4)
    
    
    34,787
    
    
    
    10,987
    
    
    
    23,800
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    3,312,457
    
    
    $
    384,657
    
    
    $
    750,381
    
    
    $
    1,874,223
    
    
    $
    303,196Amount of Commitment Expiration per PeriodTotalAmounts
    
    Less than
    
    
    
    
    
    
    
    
    
    After 5Other Commercial Commitments
    
    Committed
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    YearsStandby letters of credit
    
    $
    73,563
    
    
    $
    73,563
    
    
    $
    
    
    
    $
    
    
    
    $
    Surety bonds
    
    
    626,319
    
    
    
    570,469
    
    
    
    53,675
    
    
    
    2,175
    
    
    
    Total Commercial Commitments
    
    $
    699,882
    
    
    $
    644,032
    
    
    $
    53,675
    
    
    $
    2,175
    
    
    $
    
 
 (1)
    
    Excludes accrued interest of $5.4 million at December 31, 2008.(2)
    
    We have various contractual commitments to lease hardware and software and for the
purchase of maintenance on such leased assets with varying terms through fiscal year 2013,
which are included in operating leases in the table.(3)
    
    We have entered into various contractual agreements to purchase telecommunications
services. These agreements provide for minimum annual spending commitments, and have
varying terms through fiscal year 2011, and are
included in purchase obligations in the table.(4)
    
    In June 2006, we entered into a two year agreement with Rich Capital, LLC, an M&A
advisory firm owned by Jeffery A. Rich, a former Chief Executive Officer, to provide us
with advisory services in connection with potential acquisition candidates. This
contractual obligation is included in purchase obligations in the table above. However, we
have currently suspended payment under this agreement pending determination whether Rich
Capital, LLC is
capable of performing its obligations under the contract in view of the
previously reported internal investigations conclusions regarding stock options awarded to
Mr. Rich. 42




---



##### Table of Contents



Pensions and Post-Employment Benefits
 Income Taxes
     Critical Accounting Policies
   Revenue Recognition
    43




---



##### Table of Contents



Cost of
Revenues
  Contingencies
  44




---



##### Table of Contents



Valuation
of Goodwill and Intangibles
  Valuation
of Property, Equipment and Software
  Stock-Based
Compensation
  
    
    Expected volatility of our stock price based on historical monthly volatility over the
expected term.
    
    Expected term of the option based on historical employee stock option exercise behavior
and the vesting and contractual terms of the respective option.
    
    Risk-free interest rate for periods within the expected term of the option.
    
    Expected dividend yield.
   45




---



##### Table of Contents



Pension
and Post-Employment Benefits
   Allowance
for Doubtful Accounts
  Income
Taxes
    Fair
Value Measurements
    46




---



##### Table of Contents



New Accounting Pronouncements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      
 ITEM 4. CONTROLS AND PROCEDURES
  47




---



##### Table of Contents



PART II
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  48




---



##### Table of Contents



SIGNATURES
  AFFILIATED COMPUTER SERVICES, INC.By:
    /s/ Kevin KyserKevin KyserExecutive Vice President and
Chief Financial Officer 49




---



##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Exhibit Name2.1
    
    Stock Purchase Agreement, dated as of July 31, 2003 between
Lockheed Martin Corporation and Affiliated Computer Services,
Inc. (filed as Exhibit 10.1 to our Quarterly Report on Form
10-Q, filed November 14, 2003 and incorporated herein by
reference).2.2
    
    Asset Purchase Agreement, dated as of July 31, 2003 between
Lockheed Martin Service, Inc. and Affiliated Computer Services,
Inc. (filed as Exhibit 10.2 to our Quarterly Report on Form
10-Q, filed November 14, 2003 and incorporated herein by
reference).2.3
    
    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).2.4
    
    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).2.5
    
    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
    
    Certificate of Elimination of the Series A Cumulative Redeemable
Preferred Stock of Affiliated Computer Services, Inc. dated
August 20, 2001 (filed as Exhibit 4.3 to our Registration
Statement on Form S-8, File No. 333-42385, filed June 13, 2007
and incorporated herein by reference).3.4
    
    Bylaws of Affiliated Computer Services, Inc., as amended and in
effect on August 21, 2008 (filed as Exhibit 3.2 to our Current
Report on Form 8-K, filed August 27, 2008 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
    
    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).4.3
    
    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).4.4
    
    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).4.5
    
    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).4.6
    
    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, as amended December 7, 2007, by and between
Affiliated Computer Services, Inc. and Darwin Deason (filed as
Exhibit 99.1 to our Current Report on Form 8-K filed December
10, 2007 and incorporated herein by reference).10.1
    
    1997 Stock Incentive Plan of the Company (filed as Appendix D to
our Joint Proxy Statement on Schedule 14A, filed November 14,
1997 and incorporated herein by reference).10.2
    
    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).
 50




---



##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Exhibit Name10.3
    
    2007 Equity Incentive Plan of the Company (filed as Appendix C
to our Proxy Statement on Schedule 14A, filed April 30, 2007 and
incorporated herein by reference).10.4
    
    Form of Directors Indemnification Agreement (filed as Exhibit
10.1 to our Current Report on Form 8-K, filed June 5, 2008 and
incorporated herein by reference).10.5
    
    Form of Change in Control Agreement, dated as of June 9, 2008
(June 6, 2008, in the case of Ann Vezina), by and between
Affiliated Computer Services, Inc. and each of Tom Burlin, Kevin
Kyser and Tom Blodgett (filed as Exhibit 10.1 to our Current
Report on Form 8-K, filed June 11, 2008 and incorporated herein
by reference).10.6
    
    Change in Control Agreement, dated as of June 9, 2008, by and
between Affiliated Computer Services, Inc. and John Rexford
(filed as Exhibit 10.2 to our Current Report on Form 8-K, filed
June 11, 2008 and incorporated herein by reference).10.7
    
    Amendment to Change in Control Agreements with certain executive
officers (filed as Exhibit 10.4 to our Current Report on Form
8-K, filed December 30, 2008 and incorporated herein by
reference).10.8
    
    Supplemental Executive Retirement Agreement, dated as of
December 15, 1998, by and between Affiliated Computer Services,
Inc. and Darwin Deason (filed as Exhibit 10.13 to our Annual
Report on Form 10-K, filed September 29, 1999 and incorporated
herein by reference).10.9
    
    Amendment to Supplemental Executive Retirement Agreement, dated
as of November 13, 2003, by and between Affiliated Computer
Services, Inc. and Darwin Deason (filed as Exhibit 10.1 to our
Quarterly Report on Form 10-Q, filed February 17, 2004 and
incorporated herein by reference).10.10
    
    Amendment No. 2 to Supplemental Executive Retirement Agreement,
dated as of June 30, 2005, by and between Affiliated Computer
Services, Inc. and Darwin Deason (filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed July 1, 2005 and incorporated
herein by reference).10.11
    
    Amendment No. 3 to Supplemental Executive Retirement Agreement
by and between Affiliated Computer Services, Inc. and Darwin
Deason (filed as Exhibit 10.1 to our Current Report on Form 8-K,
filed December 30, 2008 and incorporated herein by reference).10.12
    
    Amended and Restated Executive Employment Agreement, effective
as of May 1, 2008, by and between Affiliated Computer Services,
Inc. and Lynn Blodgett (filed as Exhibit 10.3 to our Current
Report on Form 8-K, filed June 11, 2008 and incorporated herein
by reference).10.13
    
    Amendment to Amended and Restated Executive Employment Agreement
by and between Affiliated Computer Services, Inc. and Lynn
Blodgett (filed as Exhibit 10.3 to our Current Report on Form
8-K, filed December 30, 2008 and incorporated herein by
reference).10.14
    
    Employment Agreement, as amended December 7, 2007, between the
Company and Darwin Deason (filed as Exhibit 99.2 to our Current
Report on Form 8-K, filed December 10, 2007 and incorporated
herein by reference).10.15
    
    Amendment to Employment Agreement between the Company and Darwin
Deason (filed as Exhibit 10.2 to our Current Report on Form 8-K,
filed December 30, 2008 and incorporated herein by reference).10.16
    
    Affiliated Computer Services, Inc. 401(k) Supplemental Plan,
effective as of July 1, 2000, as amended (filed as Exhibit 10.15
to our Annual Report on Form 10-K, filed September 13, 2004 and
incorporated herein by reference).10.17
    
    Affiliated Computer Services, Inc. Executive Benefit Plan,
effective as of January 1, 2002, as amended (filed as Exhibit
10.15 to our Annual Report on Form 10-K, filed September 13,
2005 and incorporated herein by reference).10.18
    
    Form of Stock Option Agreement (filed as Exhibit 10.17 to our
Annual Report on Form 10-K, filed September 13, 2005 and
incorporated herein by reference).10.19
    
    Form of Stock Option Agreement (UK grant) (filed as Exhibit
10.18 to our Annual Report on Form 10-K, filed September 13,
2005 and incorporated herein by reference).10.20
    
    Form of Stock Option Agreement (Switzerland, Canton of Fribourg)
(filed as Exhibit 10.8 to our Quarterly Report on Form 10-Q
filed May 16, 2006 and incorporated herein by reference.10.21
    
    Form of Stock Option Agreement (Switzerland, Cantons of Aargau,
Basel-Landschaft, Bern & Zurich) (filed as Exhibit 10.9 to our
Quarterly Report on Form 10-Q filed May 16, 2006 and
incorporated herein by reference.10.22
    
    1997 Stock Incentive Plan for Employees in France (filed as
Exhibit 10.35 to our Annual Report on Form 10-K filed January
23, 2007 and incorporated herein by reference.)10.23
    
    Form of Stock Option Agreement (France) (filed as Exhibit 10.36
to our Annual Report on Form 10-K filed January 23, 2007 and
incorporated herein by reference.)
 51




---



##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Exhibit Name10.24
    
    Form of Stock Option Agreement (Canada, other than Quebec)
(filed as Exhibit 10.20 to our Annual Report on Form 10-K filed
August 28, 2008 and incorporated herein by reference.)10.25
    
    Form of Stock Option Agreement (Quebec) (filed as Exhibit 10.21
to our Annual Report on Form 10-K filed August 28, 2008 and
incorporated herein by reference.)10.26
    
    Form of Stock Option Agreement (Germany) (filed as Exhibit 10.22
to our Annual Report on Form 10-K filed August 28, 2008 and
incorporated herein by reference.)10.27
    
    Agreement, dated as of September 30, 2005, between Affiliated
Computer Services, Inc. and Jeffrey A. Rich (filed as Exhibit
10.1 to our Current Report on Form 8-K, filed October 3, 2005
and incorporated herein by reference).10.28
    
    Credit Agreement, dated March 20, 2006, by and among Affiliated
Computer Services, Inc., and certain subsidiary parties thereto,
as Borrowers, Citicorp USA, Inc., as Administrative Agent,
Citigroup Global Markets Inc., as Sole Lead Arranger and Book
Runner, and various other agents, lenders and issuers (filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed March 21,
2006 and incorporated herein by reference).10.29
    
    Amendment No. 1 to Credit Agreement dated as of March 30, 2006,
by and among Affiliated Computer Services, Inc., and certain
subsidiary parties thereto, as Borrowers, and Citicorp USA,
Inc., as Administrative Agent (filed as Exhibit 10.24 to our
Annual Report on Form 10-K, filed January 23, 2007 and
incorporated herein by reference).10.30
    
    Amendment No. 2 to Credit Agreement dated as of July 6, 2006, by
and among Affiliated Computer Services, Inc., and certain
subsidiary parties thereto, as Borrowers, and Citicorp USA,
Inc., as Administrative Agent (filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed July 7, 2006 and incorporated
herein by reference).10.31
    
    Amendment No. 3, Consent and Waiver to Credit Agreement, by and
among Affiliated Computer Services, Inc., and certain subsidiary
parties thereto and Citicorp USA, Inc., as Administrative Agent
(filed as Exhibit 10.1 to our Current Report on Form 8-K, filed
September 28, 2006 and incorporated herein by reference).10.32
    
    Amendment No. 4, Consent and Waiver to Credit Agreement, by and
among Affiliated Computer Services, Inc., and certain subsidiary
parties thereto and Citicorp USA, Inc., as Administrative Agent
(filed as Exhibit 10.1 to our Current Report on Form 8-K, filed
December 22, 2006 and incorporated herein by reference).10.33
    
    Pledge and Security Agreement, dated March 20, 2006, by and
among Affiliated Computer Services and certain of its
subsidiaries, and Citicorp USA, Inc., as Administrative Agent
(filed as Exhibit 10.2 to our Current Report on Form 8-K, filed
March 21, 2006 and incorporated herein by reference).10.34
    
    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 to our
Current Report on Form 8-K, filed March 21, 2006 and
incorporated herein by reference).10.35
    
    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 to
our Current Report on Form 8-K, filed March 21, 2006 and
incorporated herein by reference).10.36
    
    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 reference).10.37
    
    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
to our Current Report on Form 8-K, filed March 21, 2006 and
incorporated herein by reference).10.38
    
    Affirmation of Liens and Guaranties, dated as of July 6, 2006,
by and among Affiliated Computer Services, Inc. and certain of
its subsidiaries, and Citicorp USA, Inc., as Administrative
Agent (filed as Exhibit 10.2 to our Current Report on Form 8-K,
filed July 7, 2006 and incorporated herein by reference).10.39
    
    Confirmation Deed, dated as of July 6, 2006, by and among the
entities listed on the Schedule thereto and Citicorp USA, Inc.,
as Security Agent (filed as Exhibit 10.3 to our Current Report
on Form 8-K, filed July 7, 2006 and incorporated herein by
reference).10.40
    
    Engagement Letter between Rich Capital, LLC and Affiliated
Computer Services, Inc. dated June 9, 2006 (filed as Exhibit
10.1 on Form 8-K, filed June 12, 2006 and incorporated herein by
reference).10.41
    
    Separation Agreement dated as of November 26, 2006 between
Affiliated Computer Services, Inc. and Mark A. King (filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed November
27, 2006 and incorporated herein by reference).
 52




---



##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Exhibit Name10.42
    
    Separation Agreement dated as of November 26, 2006 between
Affiliated Computer Services, Inc. and Warren D. Edwards (filed
as Exhibit 10.2 to our Current Report on Form 8-K, filed
November 27, 2006 and incorporated herein by reference).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
Item 601(b)(32)(ii) of Regulation S-K, 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
Item 601(b)(32)(ii) of Regulation S-K, this Exhibit is furnished
to the SEC and shall not be deemed to be filed.
 
 *
    
    Filed herewith.
    
    Management contract or compensatory plan or arrangement. 53