##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      FORM 10-K/A
 Amendment No. 1
     Mark Oneþ


Annual Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934For the fiscal year ended
    June 30, 2006ORo


Transition Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934For the transition period
    from          to          .   Commission file number 1-12665
 AFFILIATED COMPUTER SERVICES,
    INC.
   Delaware

51-0310342State or other jurisdiction of
    incorporation or organization

(I.R.S. Employer
    Identification No.)  2828 North Haskell
 Dallas, Texas 75204
    214-841-6111
   Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Exchange on Which
    RegisteredClass A common stock, par
    value $.01 per share

New York Stock Exchange   Securities Registered Pursuant to Section 12(g) of the
    Act:
 NONE
   o þ
   o þ
   o þ
  Regulation S-K Form 10-K. o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
    DOCUMENTS INCORPORATED BY REFERENCE:




---



##### 



AFFILIATED
    COMPUTER SERVICES, INC.
  FORM 10-K/A
    for the Fiscal Year Ended June 30, 2006
  Explanatory Note
    Regarding Purpose for Filing this Form 10-K/A


iiExplanatory
    Note


iiiPart IItem 1.

Business


1Item 1A.

Risk Factors


7Item 1B.

Unresolved Staff Comments


13Item 2.

Properties


13Item 3.

Legal Proceedings


13Item 4.

Submission of Matters to a Vote of
    Security Holders


18Part IIItem 5.

Market for Our Common Equity and
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


19Item 6.

Selected Consolidated Financial
    Data


22Item 7.

Managements Discussion and
    Analysis of Financial Condition and Results of Operations


24Item 7A.

Quantitative and Qualitative
    Disclosures about Market Risk


68Item 8.

Financial Statements and
    Supplementary Data


70Item 9.

Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure


149Item 9A.

Controls and Procedures


149Part IIIItem 10.

Directors and Executive Officers
    of the Registrant


152Item 11.

Executive Compensation


156Item 12.

Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder Matters


164Item 13.

Certain Relationships and Related
    Transactions


165Item 14.

Principal Accounting Fees and
    Services


166Part IVItem 15.

Exhibits and Financial Statements,
    Schedules


167Certification 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)   i




---



##### Table of Contents



EXPLANATORY
    NOTE
    REGARDING PURPOSE FOR FILING THIS
    FORM 10-K/A  Form 10-K Form 10-K.
  Note 2
    sub-heading
  Note 28
    sub-heading
  sub-heading
  sub-heading
  Form 10-K Rules 13a-14(a) 13a-14(b) Form 10-K Form 10-K Form 10-K Form 10-K/A.
 ii




---



##### Table of Contents



EXPLANATORY
    NOTE  Form 10-Q
          Fiscal year ended June 30,Cumulativeprior to2006


2005


2004


2004Additional non-cash stock-based
    compensation expense

$
2,134


$
6,061


$
7,527


$
35,485Change in net income

$
(3,290
)

$
(6,376
)

$
(8,115
)

$
(32,070
)   Form 10-K.
   iii




---



##### Table of Contents



PART I  ITEM 1.
    BUSINESS  General
          Market
    Overview
    
    the desire of organizations to focus on their core competencies;
    the desire of organizations to drive process improvements by
    improving service quality and the speed of execution;
    the desire of organizations to have a workforce that is able to
    expand and contract in relation to their business volumes;
    the increasing acceptance by commercial organizations to utilize
    offshore resources for business process outsourcing;
    the increasing complexity of information technology systems and
    the need to connect electronically with citizens, clients,
    suppliers, and other external and internal systems; 1




---



##### Table of Contents




    the increasing requirements for rapid processing of information
    and the instantaneous communication of large amounts of data to
    multiple locations; and
    the desire by organizations to take advantage of the latest
    advances in technology without the cost and resource commitment
    required to maintain in-house systems.  Business
    Strategy
    Expand Client Base world-wide
  Expand Existing Client Relationships
  Build Recurring Revenues
  Consulting Services
  Provide Flexible Solutions
  Invest in Technology
  Maximize Economies of Scale
  Complete Strategic and Tactical Acquisitions
  Attract, Train and Retain Employees
  Segment
    Information
    Year ended June 30,2006


2005


2004Commercial(1)

$
3,167,630


$
2,175,087


$
1,678,364Government(2)


2,186,031



2,176,072



2,428,029Total Revenues

$
5,353,661


$
4,351,159


$
4,106,393     (1)
    
    Includes $6.9 million of revenues for fiscal year 2004 from
    operations divested through June 30, 2004.(2)
    
    Includes $104.5 million, $218.6 million, and
    $488.5 million of revenues for fiscal years 2006, 2005 and
    2004, respectively, from operations divested through
    June 30, 2006.   2




---



##### Table of Contents



Commercial
    Business
    Process Outsourcing
   Administration
  Human Resources
  Finance and Accounting
  Customer Care
  Payment Services
    Information
    Technology
    Services
   seven-day, point-to-point
  Systems
    Integration Services
  3




---



##### Table of Contents



Consulting
    Services
   Government
        Government
    and Community Solutions
         Government
    Healthcare Solutions
  4




---



##### Table of Contents



Transportation
    Solutions
 E-Z ports-of-entry
  U.S. Department
    of Education
 5-year
  Finance
    and Revenue Solutions
   Revenues
    by Service Line
    Year ended June 30,2006


2005


2004Business process outsourcing(1)

$
3,996,558


$
3,237,981


$
3,017,699Information technology services


971,832



858,639



694,890Systems integration services(2)


385,271



254,539



393,804Total

$
5,353,661


$
4,351,159


$
4,106,393     (1)
    
    Includes $104.2 million, $218 million and
    $276.8 million of revenues for fiscal years 2006, 2005 and
    2004, respectively, from operations divested through
    June 30, 2006.(2)
    
    Includes $0.3 million, $0.6 million and
    $218.6 million of revenues for fiscal years 2006, 2005, and
    2004, respectively, from operations divested through
    June 30, 2006.  Client
    Base
   5




---



##### Table of Contents



Geographic
    information
    Competition
          Employees
     6




---



##### Table of Contents



Certifications
    and Governance
  Rule 13a-14(a) Form 10-K
  U.S. Securities
    and Exchange Commission Reports
  Form 10-K, Form 10-Q Form 8-K, Form 10-K. 1-800-SEC-0330
 ITEM 1A. RISK
    FACTORS    We have
    issued debt and have a substantial uncommitted facility
    available to us. Our debt service cost could limit cash flow
    available to fund our operations, and may limit our ability to
    obtain further debt or equity financing.
   Alleged
    defaults and purported acceleration of our Senior Notes, if
    upheld in litigation, could have a negative impact on our cash
    flow and divert resources that could otherwise be utilized in
    our business operations.
 Form 10-K,
 7




---



##### Table of Contents



The
    complexity of regulatory environments in which we operate has
    increased and may continue to increase our costs.
   We are
    subject to the oversight of the SEC and other regulatory
    agencies and investigations by those agencies could divert
    managements focus and could have a material adverse impact
    on our reputation and financial condition.
 Form 10-K. and/or
  Reductions
    of our credit rating may have an adverse impact on our
    business.
 and/or
  A decline
    in revenues from or a loss of significant clients could reduce
    our profitability and cash flow.
 and/or
 8




---



##### Table of Contents



Client Base.
  Our
    ability to recover capital investments in connection with our
    contracts is subject to risk.
   We have
    non-recurring revenue, which subjects us to a risk that our
    revenues from year to year may fluctuate.
   The
    markets in which we operate are highly competitive and we may
    not be able to compete effectively.
 Competition.
  We may
    not be able to make acquisitions that will complement our
    growth.
 Business
    Strategy.
  A failure
    to properly manage our operations and our growth could have a
    material adverse effect on our business.
  9




---



##### Table of Contents



Our
    Government contracts are subject to termination rights, audits
    and investigations, which, if exercised, could negatively impact
    our reputation and reduce our ability to compete for new
    contracts.
   We may
    incur delays in signing and commencing new business as the
    result of protests of government contracts that we are
    awarded.
   The
    exercise of contract termination provisions and service level
    penalties may have an adverse impact on our business.
 and/or
  Some of
    our contracts contain fixed pricing or benchmarking provisions
    that could adversely affect our operating results and cash
    flow.
   Claims
    associated with our actuarial consulting and benefit plan
    management services could negatively impact our
    business.
  10




---



##### Table of Contents



The loss
    of our significant software vendor relationships could have a
    material adverse effect on our business.
   We may be
    subject to claims of infringement of third-party intellectual
    property rights which could adversely affect our
    business.
   We are
    subject to United States and foreign jurisdiction laws relating
    to individually identifiable information, and failure to comply
    with those laws, whether or not inadvertent, could subject us to
    legal actions and negatively impact our operations.
 and/or
  We are
    subject to breaches of our security systems which may cause data
    privacy concerns.
  11




---



##### Table of Contents



Budget
    deficits
    and/or
    fluctuations in the number of requests for proposals issued by,
    state and local governments and their agencies may adversely
    impactour business.
   Our
    international operations are subject to a number of
    risks.
   Armed
    hostilities and terrorist attacks may negatively impact the
    countries in which we operate.
   A failure
    to attract and retain necessary technical personnel, skilled
    management and qualified subcontractors may have an adverse
    impact on our business.
   Risks
    associated with loans that we service may reduce our
    profitability and cash flow.
  12




---



##### Table of Contents



A
    disruption in utility or network services may have a negative
    impact on our business.
   Our
    indemnification obligations may have a material adverse effect
    on our business.
   Other
    Risks
  ITEM 1B.  UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS  Regulatory
    Agency Investigations Relating to Stock Option Grant
    Practices
    13




---



##### Table of Contents



Internal
    Investigation Relating to Stock Option Grant Practices
 Review of Stock Option Grant
    Practices
  Lawsuits
    Related to Stock Option Grant Practices
   Dallas
    County District Court
 
    Merl Huntsinger, Derivatively on Behalf of Nominal Defendant
    Affiliated Computer Services, Inc., Plaintiff, vs. 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, vs. Darwin
    Deason, Mark A. King, J. Livingston Kosberg, Dennis McCuistion,
    Joseph P. ONeill, Jeffrey A. Rich and Frank A. Rossi, 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 McCuiston;
    J. Livingston Kosberg; Gerald Ford; Clifford Kendall; David
    Black; Henry Hortenstine; Peter Bracken; William Deckelman;
    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.  In Re Affiliated
    Computer Services, Inc. Derivative Litigation
  U.S. District
    Court of Delaware
 
    Jeffrey T. Strauss, derivatively on behalf of Affiliated
    Computer Services Inc. v. Jeffrey A. Rich; Mark A. King;
    and Affiliated Computer Services, Inc., as
    defendants  U.S. District Court of Delaware,
    Cause
    No. 06-318,
    filed on May 16, 2006.  Delaware
    Chancery Court
 
    Jan Brandin, in the Right of and for the Benefit of
    Affiliated Computer Services, Inc., Plaintiff, vs. 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. CA2123-N, pending
    before the Court of Chancery of the State of Delaware in and for
    New Castle County, filed on May 2, 2006.  U.S. District
    Court, 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,
    U.S. District Court, Northern District of Texas, Dallas
    Division, Cause No. 3-06CV1110-M, 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 McCuiston;
    Warren Edwards; John Rexford and John M. Brophy, Defendants, and
    Affiliated Computer Services, Inc., Nominal Defendant,
    U.S. District Court, Northern District of Texas, Dallas
    Division, Cause
    No. 3-06CV1212-M,
    filed on July 7, 2006.  In
    Re Affiliated Computer Services Derivative Litigation
   14




---



##### Table of Contents



U.S. District
    Court of Texas, 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, Defendants,U.S. District Court,
    Northern District of Texas, Dallas Division, Civil Action
    No. 306-CV-1592P
    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, U.S. District Court, Northern District of
    Texas, Dallas Division, Case
    No. 3:06-CV-02379-M.      Declaratory
    Action with Respect to Alleged Default and Purported
    Acceleration of our Senior Notes
 Form 10-K Form 10-K
  Form 10-K Form 10-K
  Form 10-K Form 10-K
   15




---



##### Table of Contents



Form 10-K Form 10-K
      Amendment,
    Consent and Waiver for our Credit Facility
            16




---



##### Table of Contents



Investigation
    Regarding Photo Enforcement Contract in Edmonton, Alberta,
    Canada
 month-to-month
    Investigation
    Concerning Procurement Process at Hanscom Air Force
    Base
   Investigation
    Regarding Certain Child Support Payment Processing
    Contracts.
  17




---



##### Table of Contents



Investigation
    Regarding Florida Workforce Contracts
 welfare-to-workforce
    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   18




---



##### Table of Contents



PART II ITEM 5.
    MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND
    ISSUER PURCHASES OF EQUITY SECURITIES    Fiscal year ended June 30, 2006

High


LowFirst Quarter

$
55.10


$
48.46Second Quarter


61.16



46.91Third Quarter


63.66



55.14Fourth Quarter


60.39



46.50   Fiscal year ended June 30, 2005First Quarter

$
57.84


$
49.11Second Quarter


61.23



52.31Third Quarter


60.82



49.52Fourth Quarter


53.86



45.81         Number of securitiesNumber of





remaining available forsecurities to be





future issuance underissued upon exercise


Weighted average


equity compensationof outstanding


exercise price of


plans (excludingoptions, warrants


outstanding options,


securities reflected inand rights


warrants and rights


initial column)Plan Category

as of June 30, 2006


(3)


as of June 30, 2006Equity compensation plans approved
    by security shareholdersStock options


11,638,410
(1)

$
42.30



3,404,636
(2)Employee stock purchase plan


N/A



N/A



915,936Equity compensation plans not
    approved by security shareholders










Total


11,638,410


$
42.30



4,320,572     (1)
    
    These plans consist of the 1988 Stock Option Plan and the 1997
    Stock Incentive Plan. No additional shares can be issued under
    the 1988 Stock Option Plan. Upon exercise the holder is entitled
    to receive Class A common stock.(2)
    
    Under our 1997 Stock Incentive Plan, as authorized by our
    shareholders pursuant to our November 14, 1997 Proxy
    Statement, the number of shares of our Class A common stock
    available for issuance is subject to increase by approval of our
    Board of Directors pursuant to a formula that limits the number
    of shares optioned, sold, granted or otherwise issued under the
    1997 Stock Incentive Plan to current employees, consultants and
    non-employee directors to no more than 12.8% of our issued and
    outstanding shares of common stock. Consequently, any share
    repurchases (as discussed below) reduce the number of options to
    purchase shares that we may grant under the 1997 Stock Incentive
    Plan.(3)
    
    Weighted average exercise price of outstanding options,
    warrants, and rights of $42.30 per share is prior to the
    repricing of certain options that has occurred or is expected to
    occur, as discussed in Item 7. Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Review of Stock Option Grant Practices. 19




---



##### Table of Contents



Form 10-K
  Tender
    Offer
   Share
    Repurchase Programs
 Rule 10b5-1.
 20




---



##### Table of Contents



Rule 10b5-1.
  Rule 10b5-1.
    Total number of


Maximum number (orshares


approximate dollarpurchased as


value) of shares thatTotal


Average


part of publicly


may yet be purchasednumber of shares


price paid


announced plans


under the plans orPeriod

purchased


per share


or programs


programsApril 1 - April 30, 2006





$







$
May 1 - May 31, 2006














June 1 - June 30, 2006


5,450,084



49.41



5,450,084



730,688,206For the quarter ended
    June 30, 2006


5,450,084


$
49.41



5,450,084


$
730,688,206   Convertible
    Notes
  21




---



##### Table of Contents



ITEM 6. SELECTED
    CONSOLIDATED FINANCIAL DATA      As of and for the fiscal year ended June 30,2006(b)


2005(c)


2004(d)


2003


2002(e)Results of Operations
    Data:Revenues(a)

$
5,353,661


$
4,351,159


$
4,106,393


$
3,787,206


$
3,062,918Operating income (as reported)

$
617,284


$
654,481


$
843,711


$
519,281


$
400,632Adjustments(i)






(6,997
)


(8,966
)


(10,497
)


(9,247
)Operating income (as restated)





$
647,484


$
834,745


$
508,784


$
391,385Net income (as reported)

$
358,806


$
415,945


$
529,843


$
306,842


$
229,596Adjustments(i)






(6,376
)


(8,115
)


(8,572
)


(7,611
)Net income (as restated)





$
409,569


$
521,728


$
298,270


$
221,985Earnings per share 
    basic (as reported)

$
2.91


$
3.26


$
4.03


$
2.32


$
1.94Adjustments(i)






(0.05
)


(0.06
)


(0.07
)


(0.07
)Earnings per share 
    basic (as restated)





$
3.21


$
3.97


$
2.25


$
1.87Earnings per share 
    diluted (as reported)

$
2.87


$
3.19


$
3.83


$
2.20


$
1.76Adjustments(i)






(0.05
)


(0.06
)


(0.07
)


(0.06
)Earnings per share 
    diluted (as restated)





$
3.14


$
3.77


$
2.13


$
1.70Weighted average shares
    outstanding  basic(f)


123,197



127,560



131,498



132,445



118,646Weighted average shares
    outstanding  diluted(f) (as reported)


125,027



130,382



139,646



143,430



137,464Adjustments(i)






174



234



168



258Weighted average shares
    outstanding  diluted (as restated)(f)






130,556



139,880



143,598



137,722Balance Sheet Data:Working capital

$
704,158


$
405,983


$
406,854


$
422,022


$
388,576Total assets

$
5,502,437


$
4,850,838


$
3,907,242


$
3,698,705


$
3,403,567Total long-term debt(g) (less
    current portion)

$
1,614,032


$
750,355


$
372,439


$
498,340


$
708,233Stockholders equity (as
    reported)

$
2,456,218


$
2,838,428


$
2,590,487


$
2,429,188


$
2,095,420Adjustments(i)






(26,716
)


(20,809
)


(12,685
)


(7,981
)Stockholders equity (as
    restated)





$
2,811,712


$
2,569,678


$
2,416,503


$
2,087,439Other Data:Net cash provided by operating
    activities(h)

$
638,216


$
739,348


$
476,209


$
545,305


$
372,014     (a)
    
    Revenues from operations divested through June 30, 2006
    were $104.5 million, $218.6 million,
    $495.4 million, $966.1 million and $897.3 million
    for fiscal years 2006, 2005, 2004, 2003 and 2002, respectively.
    Please see the discussion in Significant
    Developments  Fiscal Year 2006 and
    Significant Developments  Fiscal Year
    2004 in Managements Discussion and Analysis of
    Financial Condition and Results of Operations and Note 5 of
    our Consolidated Financial Statements for a discussion of
    divestiture activity.(b)
    
    Please see Significant Developments  Fiscal
    Year 2006 in Managements Discussion and Analysis of
    Financial Condition and Results of Operations and the Notes to
    our Consolidated Financial Statements for discussion of
    significant items which 22




---



##### Table of Contents



impacted fiscal year 2006 results of operations, including the
    adoption of SFAS 123(R)(defined in Item 7) and
    the WWS Divestiture (defined in Item 7).(c)
    
    Please see Significant Developments  Fiscal
    Year 2005 in Managements Discussion and Analysis of
    Financial Condition and Results of Operations and the Notes to
    our Consolidated Financial Statements for discussion of
    significant items which impacted fiscal year 2005 results of
    operations. During fiscal year 2005, we acquired the human
    resources consulting and outsourcing business of Mellon
    Financial Corporation.(d)
    
    Please see Significant Developments  Fiscal
    Year 2004 in Managements Discussion and Analysis of
    Financial Condition and Results of Operations and the Notes to
    our Consolidated Financial Statements for discussion of
    significant items which impacted fiscal year 2004 results of
    operations, including the divestiture of a majority of our
    Federal business.(e)
    
    During fiscal year 2002, we acquired Lockheed Martin
    IMS Corporation and AFSA Data Corporation.(f)
    
    Please see Item 5 and Notes 16, 17 and 30 of our
    Consolidated Financial Statements for a discussion of our share
    repurchase programs and Tender Offer.(g)
    
    During fiscal year 2005, we issued $500 million of Senior
    Notes (defined in Item 7) and during fiscal year 2006
    we entered into a new $800 million Term Loan Facility
    and $1 billion Revolving Facility (each defined in
    Item 7). Please see the discussion in Liquidity and
    Capital Resources in Managements Discussion and
    Analysis of Financial Condition and Results of Operations and
    Note 13 of our Consolidated Financial Statements for
    discussion of our credit arrangements.(h)
    
    Please see Liquidity and Capital Resources in
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations for a discussion of items affecting
    fiscal years 2006, 2005 and 2004 cash flow from operating
    activities.(i)
    
    Our financial results for fiscal years 2005, 2004, 2003 and 2002
    have been restated as a result of our internal investigation of
    our stock option grant practices and other tax matters to record
    additional non-cash stock-based compensation expense resulting
    from stock options granted during 1994 to 2005 that were
    incorrectly accounted for under generally accepted accounting
    principles and related income tax effects. Related income tax
    effects include deferred income tax benefits on the compensation
    expense, and additional income tax liabilities, with adjustments
    to additional paid-in capital, and estimated penalties and
    interest, related to the application of Internal Revenue Code
    Section 162(m) and related Treasury Regulations to
    stock-based executive compensation previously deducted, that is
    now no longer deductible as a result of revised measurement
    dates of certain stock option grants. We have also included in
    our restatements additional income tax liabilities and estimated
    penalties and interest, with adjustments to additional paid-in
    capital and income tax expense, related to certain cash and
    stock-based executive compensation deductions previously taken
    under Section 162(m), which we believe may now be
    non-deductible as a result of information that has been obtained
    by us in connection with our internal investigation, due to
    factors unrelated to revised measurement dates. Please see
    Review of Stock Option Grant Practices in
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations and Note 2 of our Consolidated
    Financial Statements for a discussion of our restatements. 23




---



##### Table of Contents



ITEM 7. MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K
    Overview
       24




---



##### Table of Contents



2007
    Outlook
   25




---



##### Table of Contents



Review of
    Stock Option Grant Practices
      Form 10-Q Form 10-Q).
       26




---



##### Table of Contents



and/or and/or
  Form 10-Q,
  and/or and/or and/or
     27




---



##### Table of Contents



Form 10-Q, Form 10-Q
  Form 10-Q
      
    The stock options held by our employees (other than
    Messrs. King and Edwards and one management employee) will
    be adjusted as necessary, with the optionees consent, to
    avoid adverse tax consequences to the employee, and we will
    compensate such employees for any increase in exercise price
    resulting from the matters which were the subject of the
    internal investigation.
    Our non-employee directors, to avoid the appearance of
    inappropriate gain, voluntarily agreed that with respect to any
    historical option grants to them which require incremental
    compensation expense as a result of revised measurement dates,
    the exercise price will be increased to equal the fair market
    value of the stock on the revised measurement date, regardless
    of whether such increase is necessary to avoid adverse tax
    consequences to the director. The non-employee directors will
    not be reimbursed to offset any individual loss of economic
    benefit related to such repriced stock options.
    Another employee (not an officer as defined in
    Rule 16a-1(f)
    under the Securities Exchange Act of 1934) will be
    reassigned and all of such employees stock options will be
    repriced so that the exercise priceequals the fair market value
    of our stock on the proper measurement date.
    We will consider whether to recover certain profits from Jeffrey
    A. Rich, former Chief Executive Officer, which relate to stock
    options awarded to Mr. Rich which the internal
    investigation concluded were awarded through a process in which
    favorable grant dates were selected after the fact.
    We implemented, or are in the process of implementing, a number
    of changes to our internal controls, including:  
    After reviewing the results of the investigation to date, our
    Board of Directors determined that it would be appropriate to
    accept the resignations of Mr. King and Mr. Edwards.
    Our Board of Directors has since appointed a new Chief Executive
    Officer and Chief Financial Officer.
    Designating internal legal and accounting staffs to oversee the
    documentation and accounting of all grants of stock options or
    restricted stock.
    Monitoring industry and regulatory developments in stock option
    and restricted stock awards and implementing and maintaining
    best practices with respect to grants of stock options or
    restricted stock.
    Adhering to the practice of making annual grants on a date
    certain and through board or committee meetings, and not through
    a unanimous written consent process. This change has already
    been implemented. 28




---



##### Table of Contents



29




---



##### Table of Contents



Decrease in cumulative net income
    and retained earnings:Stock-based compensation expense

$
(51,207
)Estimated tax related penalties
    and interest on underpayment deficiencies resulting from
    disallowed Section 162(m) executive compensation deductions


(11,562
)Decrease in pretax profit


(62,769
)Income tax benefit, net


12,918Decrease in cumulative net income
    and retained earnings





$
(49,851
)Increase to additional paid-in
    capital:Stock-based compensation expense


51,207Reduction of excess tax benefits
    for stock options exercised, due to revised measurement dates(1)


(10,210
)Reduction of excess tax benefits
    for certain stock options exercised related to disallowed
    Section 162(m) executive compensation deductions, due to
    revised measurement dates(2)


(13,372
)Reduction of excess tax benefits
    for certain stock options exercised related to disallowed
    executive compensation deductions previously believed to qualify
    for Section 162(m) exceptions, due to factors unrelated to
    revised measurement dates(3)


(10,505
)Increase in additional paid-in
    capital






17,120Decrease in stockholders
    equity at June 30, 2006





$
(32,731
)     (1)
    
    We recorded cumulative deferred income tax benefits of
    $15.3 million for the income tax effect related to the
    stock-based compensation expense adjustments arising from
    revised measurement dates, of which $10.2 million has been
    realized through June 30, 2006 upon stock option exercises
    and has been reflected as a reduction of excess tax benefits
    previously recorded in additional paid-in capital.(2)
    
    Excess tax benefits for certain stock-based executive
    compensation deductions from stock option exercises previously
    recorded in additional paid-in capital are now disallowed under
    Section 162(m) due to revised measurement dates of certain
    stock option grants. See Other Tax Matters below in
    this discussion of Review of Stock Option Grant
    Practices.(3)
    
    Excess tax benefits for certain stock-based executive
    compensation deductions related to stock option exercises
    previously recorded in additional paid-in capital may now be
    non-deductible under Section 162(m) as a result of information
    obtained by us in connection with our internal investigation,
    due to factors unrelated to revised measurement dates. See
    Other Tax Matters below in this discussion of
    Review of Stock Option Grant Practices. 30




---



##### Table of Contents



Form 10-K
  Estimated


IncomeStock-based


interest


taxcompensation


and


benefit,


Totalexpense


penalties(1)


net


adjustmentsYears ended June 30,1995





$
(63
)

$



$
23


$
(40
)1996






(444
)






130



(314
)1997






(1,404
)






301



(1,103
)1998






(1,876
)






405



(1,471
)1999






(3,325
)






717



(2,608
)2000






(4,870
)


(87
)


511



(4,446
)2001






(6,433
)


(546
)


1,074



(5,905
)2002






(7,833
)


(1,414
)


1,636



(7,611
)2003






(9,237
)


(1,454
)


2,119



(8,572
)Cumulative effect at June 30,
    2003






(35,485
)


(3,501
)


6,916



(32,070
)   Net














Netincome as














income asreported














restatedYears ended June 30,2004

$
529,843



(7,527
)


(2,509
)


1,921



(8,115
)

$
521,7282005


415,945



(6,061
)


(2,526
)


2,211



(6,376
)


409,5692006






(2,134
)


(3,026
)


1,870



(3,290
)Cumulative effect at June 30,
    2006





$
(51,207
)

$
(11,562
)

$
12,918


$
(49,851
)     (1)
    
    Estimated interest and penalties on income tax underpayment
    deficiencies resulting from disallowed executive compensation
    deductions under Section 162(m).       31




---



##### Table of Contents



Currentincometax expense onDeferred


Current


disallowedincome tax


income tax


deductionsbenefit on


benefit on


understock-based


deductible


Section


Income taxcompensation


interest


162(m)


benefit, netYears ended June 30,1995

$
23


$



$



$
231996


130











1301997


301











3011998


405











4051999


717











7172000


945







(434
)


5112001


1,598







(524
)


1,0742002


2,287







(651
)


1,6362003


3,246



70



(1,197
)


2,119Cumulative effect at June 30,
    2003


9,652



70



(2,806
)


6,916Years ended June 30,2004


2,702



387



(1,168
)


1,9212005


2,194



576



(559
)


2,2112006


774



1,096







1,870Cumulative effect at June 30,
    2006

$
15,322


$
2,129


$
(4,533
)

$
12,918   Other tax
    matters
 in-the-money
     32




---



##### Table of Contents



Departure
    of Executive Officers
       33




---



##### Table of Contents



in-the-money
    Significant
    Developments  Fiscal Year 2006
  New
    Business
 T-Mobile,
  Stock-based
    Compensation
       No. 00-15
 34




---



##### Table of Contents



Acquisitions
           Sale of
    Government welfare- to-workforce services business
 welfare-to-workforce
 35




---



##### Table of Contents



welfare-to-workforce
  Restructuring
    activities
         Balance at July 1, 2005

$
Accrual recorded


6,500Payments


(5,601
)Balance at June 30, 2006

$
899  36




---



##### Table of Contents



No. 95-3
    Share
    Repurchase Programs
 Rule 10b5-1.
    Tender
    Offer
   Voting
    Rights of Our Chairman
  37




---



##### Table of Contents



Form 10-Q
  Credit
    Agreement
   Government
    Healthcare Contract
  38




---



##### Table of Contents



Other
   Subsequent
    Events
    Senior Notes
  Credit Facilities
  Rule 10b5-1.
    Form 10-K
   39




---



##### Table of Contents



Form 10-K
     40




---



##### Table of Contents



5-year
    Significant
    Developments  Fiscal Year 2005
  New
    Business
   Acquisitions
 end-to-end
     41




---



##### Table of Contents



Credit
    Arrangements
       Derivative
    instruments and hedging activities
   Share
    Repurchases
   Stock 
    based Compensation
  42




---



##### Table of Contents



Significant
    Developments  Fiscal Year 2004
  New
    Business
   Acquisitions
           Divestitures
  43




---



##### Table of Contents



1998-2000
    U.S. Department
    of Education
   Commercial
    Contract
   Convertible
    Notes
   Government
    Healthcare Contract
  44




---



##### Table of Contents



percentage-of-completion
  Other
 and/or
 45




---



##### Table of Contents



Revenue
    Growth
    Consolidated
  Fiscal Year ended June 30,








Fiscal Year ended June 30,2006


2005


$ Growth


Growth %


2005


2004


$ Growth


Growth %Total Revenues

$
5,353,661


$
4,351,159


$
1,002,502



23
%

$
4,351,159


$
4,106,393


$
244,766



6
%Less: Divestitures


(104,524
)


(218,616
)


114,092







(589
)


(258,037
)


257,448Adjusted

$
5,249,137


$
4,132,543


$
1,116,594



27
%

$
4,350,570


$
3,848,356


$
502,214



13
%Acquired revenues

$
948,500


$
128,111


$
820,389



20
%

$
398,427


$
44,977


$
353,450



9
%Internal revenues


4,300,637



4,004,432



296,205



7
%


3,952,143



3,803,379



148,764



4
%Total

$
5,249,137


$
4,132,543


$
1,116,594



27
%

$
4,350,570


$
3,848,356


$
502,214



13
%   Commercial
  Fiscal Year ended June 30,








Fiscal Year ended June 30,2006


2005


$ Growth


Growth %


2005


2004


$ Growth


Growth %Total Revenues(a)

$
3,167,630


$
2,175,087


$
992,543



46
%

$
2,175,087


$
1,678,364


$
496,723



30
%Less: Divestitures






















(6,915
)


6,915Adjusted

$
3,167,630


$
2,175,087


$
992,543



46
%

$
2,175,087


$
1,671,449


$
503,638



30
%Acquired revenues

$
836,811


$
127,923


$
708,888



33
%

$
365,711


$
44,977


$
320,734



19
%Internal revenues


2,330,819



2,047,164



283,655



13
%


1,809,376



1,626,472



182,904



11
%Total

$
3,167,630


$
2,175,087


$
992,543



46
%

$
2,175,087


$
1,671,449


$
503,638



30
%   Government
  Fiscal Year ended June 30,








Fiscal Year ended June 30,2006


2005


$ Growth


Growth %


2005


2004


$ Growth


Growth %Total Revenues(b)

$
2,186,031


$
2,176,072


$
9,959






$
2,176,072


$
2,428,029


$
(251,957
)


(10
)%Less: Divestitures


(104,524
)


(218,616
)


114,092







(589
)


(251,122
)


250,533Adjusted

$
2,081,507


$
1,957,456


$
124,051



6
%

$
2,175,483


$
2,176,907


$
(1,424
)


Acquired revenues

$
111,689


$
188


$
111,501



5
%

$
32,716


$



$
32,716



2
%Internal revenues


1,969,818



1,957,268



12,550



1
%


2,142,767



2,176,907



(34,140
)


(2
)%Total

$
2,081,507


$
1,957,456


$
124,051



6
%

$
2,175,483


$
2,176,907


$
(1,424
)


     (a)
    
    The Commercial segment includes revenues from operations
    divested through June 30, 2004 of $6.9 million for
    fiscal year 2004.(b)
    
    The Government segment includes revenues from operations
    divested through June 30, 2006 of $104.5 million,
    $218.6 million and $488.5 million for fiscal years
    2006, 2005 and 2004, respectively. 46




---



##### Table of Contents



Results
    of Operations
    Form 10-Q.
    Percentage of RevenueYears ended June 30,2006


2005


2004(as restated)


(as restated)Revenues


100.0
%


100.0
%


100.0
%Operating expenses:Cost of revenues:Wages and benefits


48.0



43.1



43.8Services and supplies


21.8



24.0



26.5Rent, lease and maintenance


12.1



11.6



10.1Depreciation and amortization


5.4



5.4



4.5Other


0.7



0.5



0.7Cost of revenues


88.0



84.6



85.6Gain on sale of business


(0.6
)






(6.9
)Other operating expenses


1.1



0.5



1.0Total operating expenses


88.5



85.1



79.7Operating income


11.5



14.9



20.3Interest expense


1.3



0.5



0.5Other non-operating income, net


(0.2
)


(0.1
)


(0.1
)Pretax profit


10.4



14.5



19.9Income tax expense


3.7



5.1



7.2Net income


6.7
%


9.4
%


12.7
%   Comparison
    of Fiscal Year 2006 to Fiscal Year 2005
  Revenues
    47




---



##### Table of Contents



Operating
    expenses
        48




---



##### Table of Contents



Commercial segment:Provision for doubtful accounts
    for an assessment of risk related to the bankruptcies of certain
    airline clients

$
3.0Government segment:Provisions for estimated legal
    settlement and uncollectible accounts receivable related to the
    WWS Divestiture


3.3Provision for uncollectible
    accounts receivable retained in connection with the sale of the
    majority of our Federal business in fiscal year 2004


2.4Legal settlements and related costs


0.5Corporate:Aircraft impairment


4.7Legal settlements and related costs


2.7Legal costs associated with the
    ongoing stock option investigations and shareholder derivative
    lawsuits


2.7Legal 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


4.0Total

$
23.3


or 0.4%
    as a percentage
    revenues.    49




---



##### Table of Contents



Operating
    income
   Commercial segment:Costs related to our restructuring
    activities

$
(10.2
)Other impairments and severance
    charges


(2.2
)Incremental transaction costs
    related to the Acquired HR Business (included in wages and
    benefits)


(5.7
)Provision for doubtful accounts
    for an assessment of risk related to the bankruptcies of certain
    airline clients


(3.0
)Government segment:Gain on sale of 2006 Divestitures


32.9Costs related to our restructuring
    activities


(2.6
)Other impairments and severance
    charges


(1.5
)Charge related to the North
    Carolina Medicaid contract


(4.0
)Provisions for estimated legal
    settlement, uncollectible accounts receivable related to the WWS
    Divestiture and other charges


(3.4
)Provision for uncollectible
    accounts receivable retained in connection with the sale of the
    majority of our Federal businessin fiscal year 2004


(2.4
)Legal settlements and related costs


(0.5
)Corporate:Stock-based compensation expense
    per SFAS 123(R)


(35.0
)Compensation expense related to
    the departure of Jeffrey A. Rich, our former Chief Executive
    Officer


(5.4
)Aircraft impairment


(4.7
)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


(4.0
)Legal and other costs associated
    with the ongoing stock option investigations and shareholder
    derivative lawsuits


(2.9
)Legal settlements and related costs


(2.7
)Total

$
(57.3
)

or 1.1% 
    as a percentage 
    of revenues.     Interest
    expense
   Other
    non-operating income, net
  50




---



##### Table of Contents



Income
    tax expense
   Comparison
    of Fiscal Year 2005 to Fiscal Year 2004
  Revenues
       E-ZPass, e-disbursement percentage-of-completion
 51




---



##### Table of Contents



Operating
    expenses
         and/or
  Interest
    expense
  52




---



##### Table of Contents



Income
    tax expense
   Liquidity
    and Capital Resources
  Cash
    Flows
            53




---



##### Table of Contents



Year ended June 30,2006(a)


2005(b)


2004(c)Net cash provided by operating
    activities

$
638,710


$
739,348


$
476,209Purchases of property, equipment
    and software, net


(394,467
)


(253,231
)


(224,621
)Additions to other intangible
    assets


(35,831
)


(35,518
)


(33,329
)Free cash flow

$
208,412


$
450,599


$
218,259     (a)
    
    Fiscal year 2006 net cash provided by operating activities
    and free cash flow was negatively impacted by $85.8 million
    payment for the final settlement of the Mellon transition
    services agreement and $26.3 million of incentive
    compensation payments to employees of the Acquired HR Business.(b)
    
    Fiscal year 2005 net cash provided by operating activities
    and free cash flow was positively impacted by a
    $75.9 million benefit of the Acquired HR Business operating
    expenses funded by Mellon offset by a payment of
    $19.3 million related to the settlement of the interest
    rate hedges.(c)
    
    Fiscal year 2004 net cash provided by operating activities
    and free cash flow includes a tax payment of approximately
    $88.1 million related to the gain from the sale of the
    Divested Federal Business.       54




---



##### Table of Contents



Credit
    Facilities
 5-Year
         55




---



##### Table of Contents



56




---



##### Table of Contents



Senior
    Notes
       Form 10-K Form 10-K
  Form 10-K Form 10-K
   57




---



##### Table of Contents



Form 10-K Form 10-K
    Form 10-K Form 10-K
        Other
    credit arrangements
   Credit
    Ratings
 Form 10-K
 58




---



##### Table of Contents



Derivative
    instruments and hedging activities
       Share
    Repurchase Programs
 Rule 10b5-1.
 59




---



##### Table of Contents



Rule 10b5-1.
  Rule 10b5-1.
  Other
   debt-to-capitalization
   60




---



##### Table of Contents



Related
    Party Transactions
    daughter-in-law
    Disclosures
    about Contractual Obligations and Commercial Commitments as of
    June 30, 2006 (in thousands):
  Payments Due by PeriodLess than








AfterContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-term debt(1)

$
1,108,061


$
9,452


$
16,063


$
16,070


$
1,066,476Senior Notes, net of unamortized
    discount(1)


499,368











249,933



249,435Capital lease obligations(1)


29,677



13,622



15,927



128



Operating leases


1,319,090



335,261



542,073



345,010



96,746Purchase obligations


30,364



18,749



10,695



920



Total Contractual Cash
    Obligations

$
2,986,560


$
377,084


$
584,758


$
612,061


$
1,412,657   Total


Amount of Commitment Expiration per PeriodAmounts


Less than








AfterOther Commercial Commitments

Committed


1 Year


1-3 Years


4-5 Years


5 YearsStandby letters of credit

$
115,739


$
115,739


$



$



$
Surety Bonds


473,827



457,987



13,968



10



1,862Total Commercial
    Commitments

$
589,566


$
573,726


$
13,968


$
10


$
1,862     (1)
    
    Excludes accrued interest of $11 million at June 30,
    2006. 61




---



##### Table of Contents



1998-2000.
    Critical
    Accounting Policies
   62




---



##### Table of Contents



Revenue
    recognition
 percentage-of-completion
  No. 00-21, 00-21).
  percentage-of-completion
      81-1, (SOP 81-1). SOP 81-1 percentage-of-completion
  percentage-of-completion
  00-21 and/or
 63




---



##### Table of Contents



00-21 SOP 81-1. 00-21 SOP 81-1 SOP 81-1, 00-21 00-21
    Cost of
    revenues
   Contingencies
     Valuation
    of goodwill and intangibles
   Share-Based
    Compensation
  64




---



##### Table of Contents




    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.      Pension
    and post-employment benefits
            65




---



##### Table of Contents



As of June 30,2006


2005Other





OtherPension Plans


Benefit Plan


Pension Plans


Benefit PlanNon-U.S. PlansDiscount rate


5.00% - 5.75%



5.75
%


5.00% - 5.25%



5.25
%Rate of increase in compensation
    levels


4.25% - 4.40%



N/A



4.25% - 4.40%



N/AU.S. PlanDiscount rate


6.50%



N/A



N/A



N/ARate of increase in compensation
    levels


3.50%



N/A



N/A



N/A     For the Year Ended


For the period from May 1, 2005June 30, 2006


through June 30, 2005Other





OtherPension Plans


Benefit Plan


Pension Plans


Benefit PlanNon-U.S. PlansDiscount rate


5.00% - 5.75%



5.75
%


5.25% - 5.75%



5.75
%Long-term rate of return on assets


7.00% - 7.50%



N/A



7.00% - 7.50%



N/ARate of increase in compensation
    levels


4.25% - 4.40%



N/A



4.25% - 4.40%



N/AU.S. PlanDiscount rate


5.75%



N/A



N/A



N/ALong-term rate of return on assets


N/A



N/A



N/A



N/ARate of increase in compensation
    levels


3.00%



N/A



N/A



N/A     For the Year Ended


For the period from May 1,June 30, 2006


2005 through June 30, 2005Plus .25%


Less .25%


Plus .25%


Less .25%Non-U.S. PlansEffect on pension benefit
    obligation

$
(5,055
)

$
5,155


$
(4,490
)

$
4,692Effect on service and interest cost

$
(432
)

$
450


$
(380
)

$
399U.S. PlanEffect on pension benefit
    obligation

$
(164
)

$
174



N/A



N/AEffect on service and interest cost

$
(104
)

$
110



N/A



N/A      66




---



##### Table of Contents



year-over-year
      For the period from May 1,For the Year Ended June 30, 2006


2005 through June 30, 2005Plus 1%


Less 1%


Plus 1%


Less 1%Effect on pension benefit
    obligation

$
30


$
(27
)

$
55


$
(48
)Effect on service and interest cost

$
4


$
(4
)

$
7


$
(6
)   Allowance
    for doubtful accounts
   Income
    taxes
     New
    Accounting Pronouncements
   67




---



##### Table of Contents



109-2
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest
    Rates
    68




---



##### Table of Contents



Foreign
    Currency
 non-United
     69




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  PAGEReport of
    Independent Registered Public Accounting Firm


71Consolidated
    Balance Sheets


74Consolidated
    Statements of Income


75Consolidated
    Statements of Changes in Stockholders Equity


76Consolidated
    Statements of Cash Flows


77Notes to
    Consolidated Financial Statements


78  70




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm       Consolidated financial statements
    Share Based Payment
    Internal control over financial reporting
  Internal Control 
    Integrated Framework
     71




---



##### Table of Contents



1. Control environment.
    Form 10-Q, Form 10-Q
     72




---



##### Table of Contents



2. Controls over stock-based compensation
    expense.
    Internal Control  Integrated
    Framework Internal
    Control  Integrated Framework .
     73




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands)
  June 30,2006


2005(as restated)ASSETSCurrent assets:Cash and cash equivalents

$
100,837


$
62,685Accounts receivable, net


1,231,846



1,061,590Income taxes receivable


8,090



Prepaid expenses and other current
    assets


188,490



119,822Total current assets


1,529,263



1,244,097Property, equipment and software,
    net


870,020



677,241Goodwill


2,456,654



2,334,655Other intangibles, net


475,701



466,312Other assets


170,799



128,533Total assets

$
5,502,437


$
4,850,838LIABILITIES AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable

$
104,473


$
62,788Accrued compensation and benefits


172,853



175,782Other accrued liabilities


354,632



471,577Income taxes payable






2,310Deferred taxes


18,047



34,996Current portion of long-term debt


23,074



6,192Current portion of unearned revenue


152,026



84,469Total current liabilities


825,105



838,114Senior Notes, net of unamortized
    discount


499,368



499,288Other long-term debt


1,114,664



251,067Deferred taxes


331,433



231,013Other long-term liabilities


275,649



219,644Total liabilities


3,046,219



2,039,126Commitments and contingencies (See
    Notes 2, 13, 23 and 30)Stockholders equity:Class A common stock,
    $.01 par value, 500,000 shares authorized, 129,848 and
    137,886 shares issued, respectively


1,299



1,379Class B convertible common
    stock, $.01 par value, 14,000 shares authorized,
    6,600 shares issued and outstanding


66



66Additional paid-in capital


1,799,778



1,812,474Accumulated other comprehensive
    loss, net


(10,943
)


(10,910
)Retained earnings


1,836,850



1,969,636Treasury stock at cost, 23,289 and
    19,255 shares, respectively


(1,170,832
)


(960,933
)Total stockholders equity


2,456,218



2,811,712Total liabilities and
    stockholders equity

$
5,502,437


$
4,850,838    74




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 (In
    thousands except per share amounts)
  Year ended June 30,2006


2005


2004(as restated)


(as restated)Revenues

$
5,353,661


$
4,351,159


$
4,106,393Operating expenses:Cost of revenues:Wages and benefits


2,568,042



1,874,044



1,798,006Services and supplies


1,168,540



1,046,341



1,090,207Rent, lease and maintenance


646,474



503,132



416,394Depreciation and amortization


289,852



232,779



183,796Other


39,629



23,687



26,382Cost of revenues


4,712,537



3,679,983



3,514,785Gain on sale of business


(32,907
)






(285,273
)Other operating expenses


56,747



23,692



42,136Total operating expenses


4,736,377



3,703,675



3,271,648Operating income


617,284



647,484



834,745Interest expense


68,367



20,186



18,107Other non-operating income, net


(9,396
)


(5,186
)


(2,509
)Pretax profit


558,313



632,484



819,147Income tax expense


199,507



222,915



297,419Net income

$
358,806


$
409,569


$
521,728Earnings per share:Basic

$
2.91


$
3.21


$
3.97Diluted

$
2.87


$
3.14


$
3.77Shares used in computing earnings
    per share:Basic


123,197



127,560



131,498Diluted


125,027



130,556



139,880    75




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (In
    thousands)
  AccumulatedOtherCommon Stock


Additional





Comprehensive


Treasury StockClass A


Class B


Paid-in


Retained


Income (Loss),


SharesShares


Amount


Shares


Amount


Capital


Earnings


Net


Held


Amount


TotalBalance at June 30, 2003


126,607


$
1,266



6,600


$
66


$
1,358,418


$
1,070,409


$
(971
)





$



$
2,429,188Cumulative effect of restatement on
    prior years


















19,385



(32,070
)














(12,685
)Balance at June 30, 2003 (as
    restated)


126,607



1,266



6,600



66



1,377,803



1,038,339



(971
)










2,416,503Comprehensive income:Foreign currency translation losses


























(2,410
)










(2,410
)Net income (as restated)






















521,728















521,728Total comprehensive income (as
    restated)






































519,318Share repurchases






























(14,992
)


(743,198
)


(743,198
)Stock-based compensation expense
    (as restated)


















7,527



















7,527Tax benefit on stock option
    exercises (as restated)


















18,727



















18,727Employee stock transactions and
    related tax benefits


2,082



21











32,904











92



4,605



37,530Conversion of 3.5%Convertible Subordinated Notes


7,292



73











313,198



















313,271Balance at June 30, 2004 (as
    restated)


135,981



1,360



6,600



66



1,750,159



1,560,067



(3,381
)


(14,900
)


(738,593
)


2,569,678Comprehensive income:Foreign currency translation gains


























4,260











4,260Interest rate hedges, net of income
    tax


























(11,789
)










(11,789
)Net income (as restated)






















409,569















409,569Total comprehensive income (as
    restated)






































402,040Share repurchases






























(4,922
)


(250,793
)


(250,793
)Stock-based compensation expense
    (as restated)


















6,061



















6,061Tax benefit on stock option
    exercises (as restated)


















18,587



















18,587Employee stock transactions and
    related tax benefits


1,905



19











37,667











567



28,453



66,139Balance at June 30, 2005 (as
    restated)


137,886



1,379



6,600



66



1,812,474



1,969,636



(10,910
)


(19,255
)


(960,933
)


2,811,712Comprehensive income:Foreign currency translation losses


























(1,305
)










(1,305
)Foreign currency hedges, net of
    income tax


























(316
)










(316
)Interest rate hedges, net of income
    tax


























1,588











1,588Net income






















358,806















358,806Total comprehensive income






































358,773Share repurchases






























(7,611
)


(385,116
)


(385,116
)Shares purchased in Tender Offer






























(7,365
)


(475,993
)


(475,993
)Retired shares


(10,585
)


(106
)










(141,592
)


(491,592
)






10,585



633,290



Stock-based compensation expense


















33,589



















33,589Tax benefit on stock option
    exercises


















25,772



















25,772Employee stock transactions and
    related tax benefits


2,547



26











69,535











357



17,920



87,481Balance at June 30, 2006


129,848


$
1,299



6,600


$
66


$
1,799,778


$
1,836,850


$
(10,943
)


(23,289
)

$
(1,170,832
)

$
2,456,218    76




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands)
  Year ended June 30,2006


2005


2004(as restated)


(as restated)Cash flows from operating
    activities:Net income

$
358,806


$
409,569


$
521,728Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


289,852



232,779



183,796Contract inducement amortization


15,332



14,309



10,981Provision for uncollectible
    accounts receivable


8,462



763



1,461Deferred financing fee amortization


2,850



1,436



3,142Provision for default loan liability


(1,144
)


(188
)


2,685Gain on sale of business units


(32,907
)


(70
)


(291,967
)Gain on long-term investments


(6,787
)


(2,967
)


(820
)Deferred income tax expense


84,701



84,817



64,961Excess tax benefit on stock-based
    compensation


(14,318
)






Stock-based compensation expense


35,035



6,061



12,589Tax benefit of stock options






20,059



20,236Loss on early extinguishment of
    long-term debt


4,104







Settlement of interest rate hedges






(19,267
)


Asset impairments


19,132







Other non-cash activities


3,790



225



5,000Changes in assets and liabilities,
    net of effects from acquisitions:Increase in accounts receivable


(112,601
)


(21,945
)


(156,063
)Increase in prepaid expenses and
    other current assets


(34,379
)


(16,540
)


(3,596
)(Increase) decrease in other assets


16,090



3,234



(18,362
)Increase (decrease) in accounts
    payable


25,943



(11,483
)


14,194Increase (decrease) in accrued
    compensation and benefits


(3,676
)


(5,362
)


11,502Increase (decrease) in other
    accrued liabilities


(132,238
)


2,414



47,649Increase (decrease) in income taxes
    receivable/payable


18,093



(8,277
)


16,182Increase (decrease) in other
    long-term liabilities


(920
)


15,913



19,856Increase in unearned revenue


95,490



33,868



11,055Total adjustments


279,904



329,779



(45,519
)Net cash provided by operating
    activities


638,710



739,348



476,209Cash flows from investing
    activities:Purchases of property, equipment
    and software, net


(394,467
)


(253,231
)


(224,621
)Additions to other intangible assets


(35,831
)


(35,518
)


(33,329
)Payments for acquisitions, net of
    cash acquired


(250,317
)


(626,858
)


(251,727
)Proceeds from divestitures, net of
    transaction costs


67,665



87



583,133Intangibles acquired in subcontract
    termination


(16,530
)






Purchases of investments


(25,462
)


(8,607
)


(7,690
)Proceeds from sale of investments


3,167



1,713



1,196Additions to notes receivable










(3,015
)Proceeds from notes receivable






425



6,452Net cash provided by (used in)
    investing activities


(651,775
)


(921,989
)


70,399Cash flows from financing
    activities:Proceeds from issuance of long-term
    debt, net


3,681,205



2,790,016



1,459,600Payments of long-term debt


(2,867,995
)


(2,437,635
)


(1,274,238
)Purchase of treasury shares


(385,116
)


(250,793
)


(743,198
)Purchase of shares in Tender Offer


(475,959
)






Stock option settlement with
    Jeffrey A. Rich, former Chief Executive Officer


(18,353
)






Excess tax benefit on stock-based
    compensation


14,318







Proceeds from stock options
    exercised


83,190



36,596



34,262Proceeds from issuance of treasury
    shares


19,927



30,243



4,776Other, net










(2,081
)Net cash provided by (used in)
    financing activities


51,217



168,427



(520,879
)Net increase (decrease) in cash and
    cash equivalents


38,152



(14,214
)


25,729Cash and cash equivalents at
    beginning of year


62,685



76,899



51,170Cash and cash equivalents at end of
    year

$
100,837


$
62,685


$
76,899Supplemental information of
    non-cash financing activities:Conversion of 3.5% Convertible
    Subordinated Notes to Class A Common Stock

$



$



$
316,725See supplemental cash flow
    information in Notes 4, 5, 13, and 15    77




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    BUSINESS
    AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Description
    of business and basis of presentation
         Cash and
    cash equivalents
   Allowance
    for doubtful accounts
   Property,
    equipment and software, net
   98-1, (SOP 98-1), SOP 98-1,
 78




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
       Goodwill
   Other
    intangible assets
   Other
    assets
  79




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    Derivative
    Instruments
 and/or
    Revenue
    recognition
 percentage-of-completion
  No. 00-21, 00-21).
  percentage-of-completion
       80




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  81-1, (SOP 81-1). SOP 81-1 percentage-of-completion
  percentage-of-completion
  00-21 and/or 00-21 SOP 81-1. 00-21 SOP 81-1 SOP 81-1, 00-21 00-21
    Contingencies
     Income
    taxes
  81




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      Sales
    taxes
   Earnings
    per share
   Stock-based
    compensation
     Pensions
    and other postretirement benefits
      82




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   2.
    REVIEW OF
    STOCK OPTION GRANT PRACTICES      Form 10-Q Form 10-Q).
      and/or and/or
 83




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   Form 10-Q,
  and/or and/or and/or
    Form 10-Q, Form 10-Q
  Form 10-Q
   84




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      
    The stock options held by our employees (other than
    Messrs. King and Edwards and one management employee) will
    be adjusted as necessary, with the optionees consent, to
    avoid adverse tax consequences to the employee, and we will
    compensate such employees for any increase in exercise price
    resulting from the matters which were the subject of the
    internal investigation.
    Our non-employee directors, to avoid the appearance of
    inappropriate gain, voluntarily agreed that with respect to any
    historical option grants to them which require incremental
    compensation expense as a result revised measurement dates, the
    exercise price will be increased to equal the fair market value
    of the stock on the revised measurement date, regardless of
    whether such increase is necessary to avoid adverse tax
    consequences to the director. The non-employee directors will
    not be reimbursed to offset any individual loss of economic
    benefit related to such repriced stock options.
    Another employee (not an officer as defined in
    Rule 16a-1(f)
    under the Securities Exchange Act of 1934) will be
    reassigned and all of such employees stock options will be
    repriced so that the exercise price equals the fair market value
    of our stock on the proper measurement date.
    We will consider whether to recover certain profits from Jeffrey
    A. Rich, former Chief Executive Officer, which relate to stock
    options awarded to Mr. Rich which the internal
    investigation concluded were awarded through a process in which
    favorable grant dates were selected after the fact.
    We implemented, or are in the process of implementing, a number
    of changes to our internal controls, including:  
    After reviewing the results of the investigation to date, our
    Board of Directors determined that it would be appropriate to
    accept the resignations of Mr. King and Mr. Edwards.
    Our Board of Directors has since appointed a new Chief Executive
    Officer and Chief Financial Officer.
    Designating internal legal and accounting staffs to oversee the
    documentation and accounting of all grants of stock options or
    restricted stock.
    Monitoring industry and regulatory developments in stock option
    and restricted stock awards and implementing and maintaining
    best practices with respect to grants of stock options or
    restricted stock.
    Adhering to the practice of making annual grants on a date
    certain and through board or committee meetings, and not through
    a unanimous written consent process. This change has already
    been implemented.     85




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
        Decrease in cumulative net income
    and retained earnings:Stock-based compensation expense

$
(51,207
)Estimated tax related penalties
    and interest on underpayment deficiencies resulting from
    disallowed Section 162(m) executive compensation deductions


(11,562
)Decrease in pretax profit


(62,769
)Income tax benefit, net


12,918Decrease in cumulative net income
    and retained earnings





$
(49,851
)Increase to additional paid-in
    capital:Stock-based compensation expense


51,207Reduction of excess income tax
    benefits for stock options exercised, due to revised measurement
    dates(1)


(10,210
)Reduction of excess tax benefits
    for certain stock options exercised related to disallowed
    Section 162(m) executive compensation deductions, due to
    revised measurement dates(2)


(13,372
)Reduction of excess tax benefits
    for certain stock options exercised related to disallowed
    executive compensation deductions previously believed to qualify
    for Section 162(m) exceptions, due to factors unrelated to
    revised measurement dates(3)


(10,505
)Increase in additional paid-in
    capital






17,120Decrease in stockholders
    equity at June 30, 2006





$
(32,731
)  86




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    (1)
    
    We recorded cumulative deferred income tax benefits of
    $15.3 million for the income tax effect related to the
    stock-based compensation expense adjustments arising from
    revised measurement dates, of which $10.2 million has been
    realized through June 30, 2006 upon stock option exercises
    and has been reflected as a reduction of excess tax benefits
    previously recorded in additional paid-in capital.(2)
    
    Excess tax benefits for certain stock-based executive
    compensation deductions from stock option exercises previously
    recorded in additional paid-in capital are now disallowed under
    Section 162(m) due to revised measurement dates of certain
    stock option grants. See Other Tax Matters below in
    this discussion of Review of Stock Option Grant
    Practices.(3)
    
    Excess tax benefits for certain stock-based executive
    compensation deductions from stock option exercises previously
    recorded in additional paid-in capital may now be non-deductible
    under Section 162(m) as a result of information obtained by
    us in connection with our internal investigation, due to factors
    unrelated to revised measurement dates. See Other Tax
    Matters below in this discussion of Review of Stock
    Option Grant Practices.  Form 10-K
  Estimated


IncomeStock-based


interest


taxcompensation


and


benefit,


Totalexpense


penalties(1)


net


adjustmentsYears ended June 30,1995





$
(63)


$



$
23


$
(40
)1996






(444)







130



(314
)1997






(1,404)







301



(1,103
)1998






(1,876)







405



(1,471
)1999






(3,325)







717



(2,608
)2000






(4,870)



(87
)


511



(4,446
)2001






(6,433)



(546
)


1,074



(5,905
)2002






(7,833)



(1,414
)


1,636



(7,611
)2003






(9,237)



(1,454
)


2,119



(8,572
)Cumulative effect at June 30,
    2003






(35,485)



(3,501
)


6,916



(32,070
) NetNet income as














income asreported














restatedYears ended June 30,2004

$
529,843


$
(7,527)


$
(2,509
)

$
1,921


$
(8,115
)

$
521,7282005


415,945



(6,061)



(2,526
)


2,211



(6,376
)


409,5692006






(2,134)



(3,026
)


1,870



(3,290
)Cumulative effect at June 30,
    2006





$
(51,207)


$
(11,562
)

$
12,918


$
(49,851
)     (1)
    
    Estimated interest and penalties on income tax underpayment
    deficiencies resulting from disallowed executive compensation
    deductions under Section 162(m).   87




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
          Deferred


Current


Currentincome tax


income tax


income tax expensebenefit on


benefit on


on disallowedstock-based


deductible


deductions under


Income taxcompensation


interest


Section 162(m)


benefit, netYears ended June 30, 1995

$
23


$



$



$
231996


130











1301997


301











3011998


405











4051999


717











7172000


945







(434
)


5112001


1,598







(524
)


1,0742002


2,287







(651
)


1,6362003


3,246



70



(1,197
)


2,119Cumulative effect at June 30,
    2003


9,652



70



(2,806
)


6,916Years ended June 30,2004


2,702



387



(1,168
)


1,9212005


2,194



576



(559
)


2,2112006


774



1,096







1,870Cumulative effect at June 30,
    2006

$
15,322


$
2,129


$
(4,533
)

$
12,918   Other tax
    matters
 in-the-money
 88




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
         89




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
     Consolidated
    Balance Sheet at June 30, 2005
    (In thousands)
 As Reported


Adjustments


As RestatedASSETSCurrent assets:Cash and cash equivalents

$
62,685


$



$
62,685Accounts receivable, net


1,061,590







1,061,590Prepaid expenses and other current
    assets


119,822







119,822Total current assets


1,244,097







1,244,097Property, equipment and software,
    net


677,241







677,241Goodwill


2,334,655







2,334,655Other intangibles, net


466,312







466,312Other assets


128,533







128,533Total assets

$
4,850,838


$



$
4,850,838LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
62,788


$



$
62,788Accrued compensation and benefits


175,782







175,782Other accrued liabilities


471,577







471,577Income taxes payable


2,310







2,310Deferred taxes


34,996







34,996Current portion of long-term debt


6,192







6,192Current portion of unearned revenue


84,469







84,469Total current liabilities


838,114







838,114Senior Notes, net


499,288







499,288Other long-term debt


251,067







251,067Deferred taxes


240,210



(9,197
)(1)


231,013Other long-term liabilities


183,731



35,913
(2)


219,644Total liabilities


2,012,410



26,716



2,039,126Stockholders equity:Class A common stock


1,379







1,379Class B convertible common
    stock


66







66Additional paid-in capital


1,792,629



19,845
(3)


1,812,474Accumulated other comprehensive
    loss, net


(10,910
)






(10,910
)Retained earnings


2,016,197



(46,561
)


1,969,636Treasury stock at cost


(960,933
)






(960,933
)Total stockholders equity


2,838,428



(26,716
)


2,811,712Total liabilities and
    stockholders equity

$
4,850,838


$



$
4,850,838  90




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated
    Statements of Income
    (In thousands except per share amounts)
 Year ended June 30, 2005


Year ended June 30, 2004As Reported


Adjustments


As Restated


As Reported


Adjustments


As RestatedRevenues

$
4,351,159


$



$
4,351,159


$
4,106,393


$



$
4,106,393Operating expenses:Cost of revenues:Wages and benefits


1,867,983



6,061
(4)


1,874,044



1,790,479



7,527
(4)


1,798,006Services and supplies


1,046,341







1,046,341



1,090,207







1,090,207Rent, lease and maintenance


503,132







503,132



416,394







416,394Depreciation and amortization


232,779







232,779



183,796







183,796Other


23,687







23,687



26,382







26,382Cost of revenues


3,673,922



6,061



3,679,983



3,507,258



7,527



3,514,785Gain on sale of business














(285,273
)






(285,273
)Other operating expenses


22,756



936
(5)


23,692



40,697



1,439
(5)


42,136Total operating expenses


3,696,678



6,997



3,703,675



3,262,682



8,966



3,271,648Operating income


654,481



(6,997
)


647,484



843,711



(8,966
)


834,745Interest expense


18,596



1,590
(6)


20,186



17,037



1,070
(6)


18,107Other non-operating income, net


(5,186
)






(5,186
)


(2,509
)






(2,509
)Pretax profit


641,071



(8,587
)


632,484



829,183



(10,036
)


819,147Income tax expense


225,126



(2,211
)(7)


222,915



299,340



(1,921
)(7)


297,419Net income

$
415,945


$
(6,376
)

$
409,569


$
529,843


$
(8,115
)

$
521,728Earnings per share:Basic

$
3.26


$
(0.05
)

$
3.21


$
4.03


$
(0.06
)

$
3.97Diluted

$
3.19


$
(0.05
)

$
3.14


$
3.83


$
(0.06
)

$
3.77Shares used in computing earnings
    per share:Basic


127,560







127,560



131,498







131,498Diluted


130,382



174
(8)


130,556



139,646



234
(8)


139,880  91




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated
    Statements of Cash Flows
    (In thousands)
 Year ended June 30, 2005


Year ended June 30, 2004As Reported


Adjustments


As Restated


As Reported


Adjustments


As RestatedCash flows from operating
    activities:Net income

$
415,945


$
(6,376
)

$
409,569


$
529,843


$
(8,115
)

$
521,728Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


232,779







232,779



183,796







183,796Contract inducement amortization


14,309







14,309



10,981







10,981Provision for uncollectible
    accounts receivable


763







763



1,461







1,461Deferred financing fee amortization


1,436







1,436



3,142







3,142Provision for default loan liability


(188
)






(188
)


2,685







2,685Gain on sale of business units


(70
)






(70
)


(291,967
)






(291,967
)Gain on long-term investments


(2,967
)






(2,967
)


(820
)






(820
)Deferred income tax expense


85,540



(723
)(1)


84,817



66,155



(1,194
)(1)


64,961Stock-based compensation expense






6,061
(4)


6,061







12,589
(4)


12,589Tax benefit of stock options


24,179



(4,120
)


20,059



26,263



(6,027
)


20,236Settlement of interest rate hedges


(19,267
)






(19,267
)










Other non-cash activities


225







225



5,000







5,000Changes in assets and liabilities,
    net of effects from acquisitions:Increase in accounts receivable


(21,945
)






(21,945
)


(156,063
)






(156,063
)Increase in prepaid expenses and
    other current assets


(16,540
)






(16,540
)


(3,596
)






(3,596
)(Increase) decrease in other assets


3,234







3,234



(18,362
)






(18,362
)Increase (decrease) in accounts
    payable


(11,483
)






(11,483
)


14,194







14,194Increase (decrease) in accrued
    compensation and benefits


(5,362
)






(5,362
)


11,502







11,502Increase in other accrued
    liabilities


2,414







2,414



52,711



(5,062
)(9)


47,649Increase (decrease) in income taxes
    receivable/payable


(8,277
)






(8,277
)


16,182







16,182Increase in other long-term
    liabilities


10,755



5,158



15,913



12,047



7,809



19,856Increase in unearned revenue


33,868







33,868



11,055







11,055Total adjustments


323,403



6,376



329,779



(53,634
)


8,115



(45,519
)Net cash provided by operating
    activities


739,348







739,348



476,209







476,209Cash flows from investing
    activities:Purchases of property, equipment
    and software, net


(253,231
)






(253,231
)


(224,621
)






(224,621
)Additions to other intangible assets


(35,518
)






(35,518
)


(33,329
)






(33,329
)Payments for acquisitions, net of
    cash acquired


(626,858
)






(626,858
)


(251,727
)






(251,727
)Proceeds from divestitures, net of
    transaction costs


87







87



583,133







583,133Purchases of investments


(8,607
)






(8,607
)


(7,690
)






(7,690
)Proceeds from sale of investments


1,713







1,713



1,196







1,196Additions to notes receivable














(3,015
)






(3,015
)Proceeds from notes receivable


425







425



6,452







6,452Net cash provided by (used in)
    investing activities


(921,989
)






(921,989
)


70,399







70,399Cash flows from financing
    activities:Proceeds from issuance of long-term
    debt, net


2,790,016







2,790,016



1,459,600







1,459,600Payments of long-term debt


(2,437,635
)






(2,437,635
)


(1,274,238
)






(1,274,238
)Purchase of treasury shares


(250,793
)






(250,793
)


(743,198
)






(743,198
)Proceeds from stock options
    exercised


36,596







36,596



34,262







34,262Proceeds from issuance of treasury
    shares


30,243







30,243



4,776







4,776Other, net














(2,081
)






(2,081
)Net cash provided by (used in)
    financing activities


168,427







168,427



(520,879
)






(520,879
)Net increase (decrease) in cash and
    cash equivalents


(14,214
)






(14,214
)


25,729







25,729Cash and cash equivalents at
    beginning of year


76,899







76,899



51,170







51,170Cash and cash equivalents at end of
    year

$
62,685


$



$
62,685


$
76,899


$



$
76,899     (1)
    
    Deferred income taxes associated with additional stock-based
    compensation expense, net of reversals related to stock option
    exercises. 92




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   (2)
    
    Additional income taxes payable associated with
    Section 162(m) deduction disallowances and accruals for
    related estimated penalties and interest.(3)
    
    Adjustments for additional stock-based compensation expense and
    excess tax benefits and adjustments related to
    Section 162(m) deduction disallowances on stock option
    exercises.(4)
    
    Stock-based compensation expense. Statement of Cash Flows for
    fiscal year 2004 includes stock-based compensation of
    $5.1 million recorded in connection with the divestiture of
    our Divested Federal Business (see Note 5).(5)
    
    Estimated tax penalties associated with Section 162(m)
    deduction disallowances.(6)
    
    Estimated interest expense on Section 162(m) deduction
    disallowances.(7)
    
    Income tax benefits for additional stock-based compensation
    expense and estimated interest expense, offset by additional
    income tax expense related to certain Section 162(m)
    deduction disallowances.(8)
    
    Adjustment to dilutive shares resulting from changes in
    unrecognized compensation and excess tax benefits.(9)
    
    Reclassification of stock-based compensation recorded in
    connection with the divestiture of our Divested Federal Business
    (see Note 5)  3.
    STOCK-BASED
    COMPENSATION PLANS  Stock
    Options
       As
    previously reported
  For the years ended June 30,2005


2004Net incomeAs reported

$
415,945


$
529,843Add: Recorded employee
    compensation cost of stock-based compensation plans, net of
    income tax of $1,890






3,172Less: Pro forma employee
    compensation cost of stock-based compensation plans, net of
    income tax of $13,210 and $13,353, respectively


(23,493
)


(23,652
)Pro forma

$
392,452


$
509,363Basic earnings per shareAs reported

$
3.26


$
4.03Pro forma

$
3.08


$
3.87Diluted earnings per shareAs reported

$
3.19


$
3.83Pro forma

$
3.03


$
3.70  93




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  As
    restated
  For the years ended June 30,2005


2004Net incomeAs restated

$
409,569


$
521,728Add: Recorded employee
    compensation cost of stock-based compensation plans, net of
    income tax of $2,195 and $4,592, respectively


3,866



7,997Less: Pro forma employee
    compensation cost of stock-based compensation plans, net of
    income tax of $14,705 and $15,424, respectively


(26,124
)


(27,341
)Pro forma, as restated

$
387,311


$
502,384Basic earnings per shareAs restated

$
3.21


$
3.97Pro forma, as restated

$
3.04


$
3.82Diluted earnings per shareAs restated

$
3.14


$
3.77Pro forma, as restated

$
2.99


$
3.65     Stock-based compensation expense,net of income taxAsAs reported


Adjustments


restatedYears ended June 30,1995 (net of income tax of $206,
    $23 and $229, respectively)

$
298


$
40


$
3381996 (net of income tax of $130)






314



3141997 (net of income tax of $301)






1,103



1,1031998 (net of income tax of $405)






1,471



1,4711999 (net of income tax of $717)






2,608



2,6082000 (net of income tax of $558,
    $945 and $1,503, respectively)


1,270



3,925



5,1952001 (net of income tax of $1,598)






4,835



4,8352002 (net of income tax of $2,287)






5,546



5,5462003 (net of income tax of $3,246)






5,991



5,991     As
    previously reported
  For the years ended June 30,2005


2004Expected volatility


24.58
%


30.25
%Expected term


4.77 years



5.50 yearsRisk-free interest rate


3.91
%


3.46
%Expected dividend yield


0
%


0
%Weighted average fair value of
    options granted

$
14.86


$
15.70  94




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  As
    restated
  For the years ended June 30,2005


2004Expected volatility


24.58
%


30.25
%Expected term


4.77 years



5.50 yearsRisk-free interest rate


3.91
%


3.46
%Expected dividend yield


0
%


0
%Weighted average fair value of
    options granted (as restated)

$
14.22


$
16.57       No. 00-15
     95




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      Year ended June 30,2006Expected volatility


22.20
%Expected term


4.21 yearsRisk-free interest rate


3.49
%Expected dividend yield


0
%         Weighted


Weighted AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicOptions


Price (2)


Term


Value(in thousands)Outstanding as of June 30,
    2005


15,356,700


$
39.61Granted


1,588,500



53.05Exercised(1)


(2,546,190
)


32.67Forfeited(1)


(2,760,600
)


42.36Expired






Outstanding as of June 30,
    2006


11,638,410


$
42.30



6.96


$
111,995Vested and exercisable at
    June 30, 2006


4,092,060


$
33.52



5.40


$
74,115     (1)
    
    Includes the purchase of 610,000 vested options and the
    cancellation of 640,000 unvested options related to the
    departure of Jeffrey A. Rich, former Chief Executive Officer.(2)
    
    Weighted average exercise price of outstanding options,
    warrants, and rights of $42.30 per share is prior to the
    repricing of certain options that has occurred or is expected to
    occur, as discussed in Note 2.   96




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
     Employee
    Stock Purchase Plan
 paid-in-capital
  4.
    BUSINESS
    COMBINATIONS    Years ended June 30,2006


2005


2004Purchase consideration (in
    thousands):Net cash paid

$
225,024


$
620,382


$
242,402Amounts due to seller


4,638



28,254



22Liabilities assumed


119,984



254,174



68,040Fair value of assets acquired
    (including intangibles)

$
349,646


$
902,810


$
310,464   Fiscal
    year 2006 acquisitions
    97




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
          Fiscal
    year 2005 acquisitions
 end-to-end
   98




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
            Fiscal
    year 2004 acquisitions
  99




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
           Contingent
    consideration
   5.
    DIVESTITURES  Sale of
    our Government welfare to workforce services business
 welfare-to-workforce
 100




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
         welfare-to-workforce
  Sale of
    the Majority of our Federal government business
       1998-2000
    6.
    RESTRUCTURING
    ACTIVITIES   101




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
          Balance at July 1, 2005

$
Accrual recorded


6,500Payments


(5,601
)Balance at June 30, 2006

$
899     No. 95-3
   102




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   7.
    ASSETS
    HELD FOR SALE    Assets Held for SaleIntangible assets related to the
    WWS Divestiture, net

$
634Goodwill related to the WWS
    Divestiture


1,096Total assets held for sale

$
1,730   8.
    ACCOUNTS
    RECEIVABLE    June 30,2006


2005Amounts Billed or Billable:Commercial

$
534,569


$
461,128Government


419,905



381,794954,474



842,922Unbilled Amounts


287,819



224,067Total accounts receivable


1,242,293



1,066,989Allowance for doubtful accounts


(10,447
)


(5,399
)$
1,231,846


$
1,061,590         For the year ended June 30,2006


2005


2004Balance at beginning of period

$
5,399


$
4,756


$
7,240Provision for uncollectible
    accounts receivable


8,462



763



1,461Losses sustained, net of
    recoveries and other


(3,414
)


(120
)


(2,913
)Sale of Divested Federal Business










(1,032
)Balance at end of period

$
10,447


$
5,399


$
4,756    103




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  9.
    PROPERTY,
    EQUIPMENT AND SOFTWARE    June 30,2006


2005Land

$
20,167


$
19,239Buildings and improvements


155,503



125,574Computer equipment


743,516



548,623Computer software


645,242



470,091Furniture and fixtures


97,803



84,6991,662,231



1,248,226Accumulated depreciation and
    amortization


(792,211
)


(570,985
)$
870,020


$
677,241       10.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS    Commercial


Government


TotalBalance as of June 30, 2004

$
886,790


$
1,082,536


$
1,969,326Acquisition activity during the
    year


329,160



34,392



363,552Foreign currency translation
    adjustments


1,777







1,777Balance as of June 30, 2005


1,217,727



1,116,928



2,334,655Acquisition activity during the
    year


64,506



73,823



138,329Divestiture activity during the
    year






(16,656
)


(16,656
)Held for sale as of June 30,
    2006






(1,096
)


(1,096
)Foreign currency translation
    adjustments


(180
)


1,602



1,422Balance as of June 30, 2006

$
1,282,053


$
1,174,601


$
2,456,654    104




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
     June 30,2006


2005GrossGross Carrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationAmortizable intangible assets:Acquired customer-related
    intangibles

$
384,738


$
(104,901
)

$
377,314


$
(76,515
)Customer contract costs


222,268



(90,326
)


175,571



(74,336
)All other


15,147



(6,113
)


12,708



(3,318
)Total

$
622,153


$
(201,340
)

$
565,593


$
(154,169
)Non-amortizable
    intangible assets:Title plant

$
51,045






$
51,045Tradename


3,843







3,843$
54,888






$
54,888   Aggregate amortization:For the year ended June 30,
    2006

$
71,353For the year ended June 30,
    2005


57,721For the year ended June 30,
    2004


46,600Estimated amortization for the
    years ended June 30,2007


70,8102008


67,1032009


58,3972010


48,7312011


42,913     11.
    OTHER
    ASSETS   105




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   12.
    OTHER
    ACCRUED LIABILITIES    June 30,2006


2005Accrued payments to vendors and
    contract related accruals

$
223,841


$
311,842Accruals related to acquisitions
    and divestitures


29,247



67,481Software and equipment lease and
    maintenance


42,824



50,795Other


58,720



41,459Total

$
354,632


$
471,577     13.
    LONG-TERM
    DEBT    June 30,2006


2005Term Loan Facility due in
    March 2013

$
796,000


$
Revolving Facility due in March
    2012


310,336



4.70% Senior Notes due in
    June 2010, net of unamortized discount


249,933



249,9165.20% Senior Notes due in
    June 2015, net of unamortized discount


249,435



249,372Unsecured $1.5 billion
    Competitive Advance and Revolving Credit Agreement terminated in
    fiscal year 2006






243,400Capitalized lease obligations at
    various interest rates, payable through 2010


29,677



13,177Other notes payable through 2015


1,725



6821,637,106



756,547Less current portion


(23,074
)


(6,192
)$
1,614,032


$
750,355     Year ending June 30,2007

$
23,0742008


19,5132009


12,4772010


258,0952011


8,036Thereafter


1,315,911Total

$
1,637,106   Credit
    Agreement
  106




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  5-Year
             107




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
                     108




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   Senior
    Notes
       Form 10-K Form 10-K
  Form 10-K Form 10-K
  Form 10-K Form 10-K
   109




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    Form 10-K Form 10-K
        Other
   Interest
   14.
    OTHER
    LONG-TERM LIABILITIES    June 30,20052006


(as restated)Deferred compensation, pension and
    other post-retirement obligations

$
95,911


$
80,550Unearned revenue


95,870



48,180Income taxes payable and estimated
    penalties and interest on income tax underpayment deficiencies
    resulting from certain disallowed Section 162(m) executive
    compensation deductions


37,842



35,913Other


46,026



55,001Total

$
275,649


$
219,644  110




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    15.
    INCOME
    TAXES    Year ended June 30,2006


2005


2004(as restated)


(as restated)Current:U.S. Federal

$
92,090


$
116,334


$
202,109State


11,508



18,170



25,246Foreign


11,208



3,594



5,103Total current expense


114,806



138,098



232,458Deferred:U.S. Federal


75,168



76,051



58,990State


10,010



8,555



5,704Foreign


(477
)


211



267Total deferred expense


84,701



84,817



64,961Total income tax expense

$
199,507


$
222,915


$
297,419     June 30,2006


2005(as restated)Deferred tax assets:Accrued expenses not yet
    deductible for tax purposes

$
50,454


$
39,756Unearned revenue


22,548



14,436Tax credits and loss carryforwards


57,361



66,931Stock-based compensation


16,515



9,198Divestiture-related accruals


4,845



5,826Forward agreements


6,321



7,084Other


872



Subtotal


158,916



143,231Deferred tax assets valuation
    allowance


(14,594
)


(14,475
)Total deferred tax assets


144,322



128,756Deferred tax liabilities:Goodwill amortization


(280,830
)


(208,975
)Depreciation and amortization


(135,908
)


(101,030
)Unbilled revenue


(41,835
)


(54,187
)Prepaid and receivables


(35,229
)


(26,741
)Other






(3,832
)Total deferred tax liabilities


(493,802
)


(394,764
)Net deferred tax liabilities

$
(349,480
)

$
(266,009
)    111




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
        Year ended June 30,2006


2005


2004(as restated)


(as restated)Statutory U.S. Federal income
    tax

$
195,410


$
221,369


$
286,702State income taxes, net


13,505



19,396



19,806Section 162(m) disallowance






870



1,657Basis difference on sales of
    subsidiaries


(449
)


(9,594
)


(5,595
)Research and development tax
    credits






(4,674
)


(6,068
)Foreign benefits


(5,259
)


(2,734
)


(701
)Other


(3,700
)


(1,718
)


1,618Total income tax expense

$
199,507


$
222,915


$
297,419     non-U.S. subsidiaries
  109-2
    16.
    COMMON
    STOCK   112




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   Rule 10b5-1.
  Rule 10b5-1.
  17.
    TENDER
    OFFER    Voting
    Rights of Our Chairman
      113




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
        18.
    PENSION
    AND OTHER POST-EMPLOYMENT PLANS           114




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   Benefit
    obligations
   As of June 30,2006


2005Non-U.S.


U.S.


Other


Non-U.S.


U.S.


OtherPension


Pension


Benefit


Pension


Pension


BenefitPlans


Plan


Plan


Plans


Plan


PlanReconciliation of benefit
    obligation:Obligation at beginning of period

$
89,728


$



$
376


$



$



$
Obligations assumed in business
    combinations














84,434







342Service cost


5,195



2,266



21



751







3Interest cost


4,725



68



21



739







3Plan amendments


72



2,024















Actuarial (gain) loss


(2,256
)


(627
)


(169
)


6,536







21Foreign currency exchange rate
    changes


3,492







30



(2,443
)






9Benefit payments


(2,419
)






(13
)


(289
)






(2
)Obligation at end of period

$
98,537


$
3,731


$
266


$
89,728


$



$
376   Costs
    (income) of plans
   For the years ended June 30,2006


2005Non-U.S.


U.S.


Other


Non-U.S.


U.S.


OtherPension


Pension


Benefit


Pension


Pension


BenefitPlans


Plan


Plan


Plans


Plan


PlanComponents of net periodic benefit
    cost:Defined benefit plans:Service cost

$
5,195


$
2,266


$
21


$
751


$



$
3Interest cost


4,725



68



21



739







3Expected return on assets


(4,952
)










(536
)






Amortization of prior service costs






128















Net periodic benefit cost for
    defined benefit plans

$
4,968


$
2,462


$
42


$
954


$



$
6  115




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Plan
    assets
   For the years ended June 30,2006


2005Non-U.S.


U.S.


Other


Non-U.S.


U.S.


OtherPension


Pension


Benefit


Pension


Pension


BenefitPlans


Plan


Plan


Plans


Plan


PlanReconciliation of fair value of
    plan assets:Fair value of plan assets at
    beginning of period

$
68,195


$



$



$



$



$
Assets assumed in business
    combinations














67,621







Actual return on plan assets


5,093











2,330







Amendments


72



















Foreign currency exchange rate
    changes


2,204











(2,395
)






Employer contributions


4,559



1







928







Benefit payments


(2,419
)










(289
)






Fair value of plan assets at end
    of period

$
77,704


$
1


$



$
68,195


$



$
     For the Years EndedJune 30,2006


2005Mutual fund  equity
    securities


62
%


40
%Mutual fund  debt
    securities


30
%


23
%Cash and cash equivalents


7
%


32
%Mutual fund  real estate


1
%


5
%Total


100
%


100
%       Funded
    status of defined benefit pension plans
   As of June 30,2006


2005Funded


Unfunded


Funded


UnfundedPlans


Plan


Plans


PlanNon-U.S. PlansAccumulated benefit obligation
    (ABO)

$
68,318


$
10,673


$
62,965


$
9,963Projected benefit obligation (PBO)


86,689



11,848



78,819



10,909Fair value of assets


77,704







68,195



U.S. PlanAccumulated benefit obligation
    (ABO)

$



$
2,926


$



$
Projected benefit obligation (PBO)






3,731







Fair value of assets






1







   116




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  As of June 30,2006


2005Other





OtherPension


Benefit


Pension


BenefitPlans


Plan


Plans


PlanNon-U.S. PlansFunded status

$
(20,833
)

$
(266
)

$
(21,533
)

$
(376
)Unrecognized gain (loss)


2,424



(152
)


4,690



21Net amount recognized

$
(18,409
)

$
(418
)

$
(16,843
)

$
(355
)U.S. PlanFunded status at June 30, 2005

$
(3,730
)

$



$



$
Unrecognized prior services cost


1,896











Unrecognized gain (loss)


(627
)










Net amount recognized

$
(2,461
)

$



$



$
     As of June 30,2006


2005Other





OtherPension


Benefit


Pension


BenefitPlans


Plan


Plans


PlanNon-U.S. PlansAccrued benefit liability

$
(18,409
)

$
(418
)

$
(16,843
)

$
(355
)Intangible asset














Net amount recognized

$
(18,409
)

$
(418
)

$
(16,843
)

$
(355
)U.S. PlanAccrued benefit liability

$
(2,925
)

$



$



$
Intangible asset


464











Net amount recognized

$
(2,461
)

$



$



$
     Assumptions
    for calculating benefit obligations and net periodic benefit
    cost
   As of June 30,2006


2005Other





OtherBenefit





BenefitPension Plans


Plan


Pension Plans


PlanNon-U.S. PlansDiscount rate


5.00%  5.75%



5.75
%


5.00%  5.25
%


5.25
%Rate of increase in compensation
    levels


4.25%  4.40%



N/A



4.25%  4.40
%


N/AU.S. PlanDiscount rate


6.50%



N/A



N/A



N/ARate of increase in compensation
    levels


3.50%



N/A



N/A



N/A  117




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    For the year ended


For the period from May 1,June 30, 2006


2005 through June 30, 2005Other





OtherBenefit





BenefitPension Plans


Plan


Pension Plans


PlanNon-U.S. PlansDiscount rate


5.00%  5.75
%


5.75
%


5.25%  5.75
%


5.75
%Long-term rate of return on assets


7.00%  7.50
%


N/A



7.00%  7.50
%


N/ARate of increase in compensation
    levels


4.25%  4.40
%


N/A



4.25%  4.40
%


N/AU.S. PlanDiscount rate


5.75
%


N/A



N/A



N/ALong-term rate of return on assets


N/A



N/A



N/A



N/ARate of increase in compensation
    levels


3.00
%


N/A



N/A



N/A     For the Year Ended


For the period from May 1,June 30, 2006


2005 through June 30, 2005Plus .25%


Less .25%


Plus .25%


Less .25%Non-U.S. PlansEffect on pension benefit
    obligation

$
(5,055
)

$
5,155


$
(4,490
)

$
4,692Effect on service and interest cost

$
(432
)

$
450


$
(380
)

$
399U.S. PlanEffect on pension benefit
    obligation

$
(164
)

$
174



N/A



N/AEffect on service and interest cost

$
(104
)

$
110



N/A



N/A       year-over-year
   118




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    For the Year Ended


For the period from May 1,June 30, 2006


2005 through June 30, 2005Plus 1%


Less 1%


Plus 1%


Less 1%Effect on pension benefit
    obligation

$
30


$
(27
)

$
55


$
(48
)Effect on service and interest cost

$
4


$
(4
)

$
7


$
(6
)   Expected
    Cash Flows
     OtherPension Plans


BenefitNon-U.S. Plans


U.S. Plan


Plan2007

$
2,823


$
24


$
172008


2,884



57



182009


2,987



114



192010


2,861



188



182011


3,084



302



132012-2016


19,808



4,320



64   Supplemental
    executive retirement plan
 grossed-up
 119




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   Deferred
    compensation plans
     Other
    contributory plans
   19.
    EARNINGS
    PER SHARE      Year ended June 30,2006


2005


2004(as restated)


(as restated)Numerator:Numerator for earnings per
    share  Income available to common stockholders

$
358,806


$
409,569


$
521,728Effect of dilutive securities:Interest on Convertible Notes (net
    of income tax)










5,196Numerator for earnings per share
    assuming dilution  Income available to common
    stockholders

$
358,806


$
409,569


$
526,924Denominator:Weighted average shares
    outstanding (basic)


123,197



127,560



131,498Effect of dilutive securities:Convertible Notes










4,750Stock options


1,830



2,996



3,632Total potential common shares


1,830



2,996



8,382Denominator for earnings per share
    assuming dilution


125,027



130,556



139,880Earnings per share (basic)

$
2.91


$
3.21


$
3.97Earnings per share assuming
    dilution

$
2.87


$
3.14


$
3.77  120




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      20.
    FINANCIAL
    INSTRUMENTS  Long-term
    Debt
     Derivatives
    and hedging instruments
       Investments
  121




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
     21.
    COMPREHENSIVE
    INCOME      Year ended June 30,2006


2005


2004(as restated)


(as restated)Net income

$
358,806


$
409,569


$
521,728Other comprehensive income (loss):Foreign currency translation
    adjustment


(1,305
)


4,260



(2,410
)Unrealized losses on foreign
    exchange forward agreements (net of income tax of $193)


(316
)






Unrealized loss on forward
    interest rate agreements (net of income tax of $7,150)






(11,899
)


Amortization of unrealized loss on
    forward interest rate agreements (net of income tax of $956 and
    $66)


1,588



110



Comprehensive income

$
358,773


$
402,040


$
519,318     As of June 30,2006


2005Foreign currency gains (losses)

$
(426
)

$
879Unrealized losses on foreign
    exchange forward agreements (net of income tax of $193)


(316
)


Unrealized loss on forward
    interest rate agreements (net of income tax of $6.1 million
    and $7.1 million, respectively)


(10,201
)


(11,789
)Total

$
(10,943
)

$
(10,910
)   22.
    RELATED
    PARTY TRANSACTIONS   122




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   daughter-in-law
    23.
    COMMITMENTS
    AND CONTINGENCIES    Year ending June 30,2007

$
335,2612008


291,8802009


250,1932010


212,8022011


132,208Thereafter


96,746$
1,319,090       Regulatory
    Agency Investigations Relating to Stock Option Grant
    Practices
    123




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      Lawsuits
    Related to Stock Option Grant Practices
   Dallas
    County District Court
 
    Merl Huntsinger, Derivatively on Behalf of Nominal Defendant
    Affiliated Computer Services, Inc., Plaintiff, vs. 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, vs. Darwin
    Deason, Mark A. King, J. Livingston Kosberg, Dennis McCuistion,
    Joseph P. ONeill, Jeffrey A. Rich and Frank A. Rossi, 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 McCuiston;
    J. Livingston Kosberg; Gerald Ford; Clifford Kendall; David
    Black; Henry Hortenstine; Peter Bracken; William Deckelman;
    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.  In Re Affiliated
    Computer Services, Inc. Derivative Litigation
  U.S. District
    Court of Delaware
 
    Jeffrey T. Strauss, derivatively on behalf of Affiliated
    Computer Services Inc. v. Jeffrey A. Rich; Mark A. King;
    and Affiliated Computer Services, Inc., as
    defendants  U.S. District Court of Delaware,
    Cause
    No. 06-318,
    filed on May 16, 2006.  Delaware
    Chancery Court
 
    Jan Brandin, in the Right of and for the Benefit of
    Affiliated Computer Services, Inc., Plaintiff, vs. 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. CA2123-N,
    pending before the Court of Chancery of the State of Delaware in
    and for New Castle County, filed on May 2, 2006.  U.S. District
    Court, 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,
    U.S. District Court, Northern District of Texas, Dallas
    Division, Cause No. 3-06CV1110-M, 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 McCuiston;
    Warren Edwards; John Rexford and John M. Brophy, Defendants, and
    Affiliated Computer Services, Inc., Nominal Defendant,
    U.S. District Court, Northern District of Texas, Dallas
    Division, Cause
    No. 3-06CV1212-M,
    filed on July 7, 2006. 124




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  The Alaska Electrical and Lunceford cases were consolidated into
    one case in the U.S. District Court of Texas on
    August 1, 2006, and are now collectively known as the In Re
    Affiliated Computer Services Derivative Litigation case.    U.S. District
    Court of Texas, 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, Defendants, U.S. District Court,
    Northern District of Texas, Dallas Division, Civil Action
    No. 306-CV-1592P
    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, U.S. District Court, Northern District of
    Texas, Dallas Division, Case
    No. 3:06-CV-02379-M.      Declaratory
    Action with Respect to Alleged Default and Purported
    Acceleration of our Senior Notes and Amendment, Consent and
    Waiver for our Credit Facility
   Investigation
    Regarding Photo Enforcement Contract in Edmonton, Alberta,
    Canada
 month-to-month
   125




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    Investigation
    Concerning Procurement Process at Hanscom Air Force
    Base
   Inquiry
    Regarding Certain Child Support Payment Processing
    Contracts
   Investigation
    regarding Florida Workforce Contracts
  126




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  welfare-to-workforce
           127




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
          24.
    DEPARTURE
    OF EXECUTIVE OFFICERS   128




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
      in-the-money
   129




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   25.
    GEORGIA
    CONTRACT  percentage-of-completion
  26.
    SEGMENT
    INFORMATION       130




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    Commercial


Government


Corporate(c)


ConsolidatedFiscal year 2006Revenues(a)

$
3,167,630


$
2,186,031


$



$
5,353,661Operating expenses (excluding gain
    on sale of business and depreciation and amortization)


2,657,353



1,708,548



113,531



4,479,432Gain on sale of business






(32,907
)






(32,907
)Depreciation and amortization
    expense


195,621



92,671



1,560



289,852Operating income (loss)

$
314,656


$
417,719


$
(115,091
)

$
617,284Total assets

$
2,940,693


$
2,529,021


$
32,723


$
5,502,437Capital expenditures, net(b)

$
250,531


$
145,999


$
(2,063
)

$
394,467Fiscal year 2005 (as
    restated)Revenues(a)

$
2,175,087


$
2,176,072


$



$
4,351,159Operating expenses (excluding
    depreciation and amortization)


1,727,358



1,682,001



61,537



3,470,896Depreciation and amortization
    expense


145,859



85,016



1,904



232,779Operating income (loss)

$
301,870


$
409,055


$
(63,441
)

$
647,484Total assets

$
2,608,617


$
2,160,297


$
81,924


$
4,850,838Capital expenditures, net

$
149,406


$
102,560


$
1,265


$
253,231Fiscal year 2004 (as
    restated)Revenues(a)

$
1,678,364


$
2,428,029


$



$
4,106,393Operating expenses (excluding gain
    on sale of business and depreciation and amortization)


1,308,411



1,989,392



75,322



3,373,125Gain on sale of business






(285,273
)






(285,273
)Depreciation and amortization
    expense


109,382



72,286



2,128



183,796Operating income (loss)

$
260,571


$
651,624


$
(77,450
)

$
834,745Total assets

$
1,718,115


$
2,088,841


$
100,286


$
3,907,242Capital expenditures, net

$
112,519


$
110,649


$
1,453


$
224,621     (a)
    
    Revenues in our Commercial segment for fiscal years 2004 include
    revenues from operations divested as of June 30, 2004 of
    $6.9 million. Revenues in our Government segment for fiscal
    years 2006, 2005 and 2004 include revenues from operations
    divested through June 30, 2006 of $104.5 million,
    $218.6 million and $488.5 million, respectively.(b)
    
    Corporate capital expenditures, net includes proceeds of
    $3.4 million related to the sale of the corporate aircraft.(c)
    
    Corporate segment operating expenses include $35 million
    ($22.9 million, net of income tax), $6.1 million
    ($3.9 million, net of income tax) and $12.6 million
    ($8.0 million, net of income tax) of stock-based
    compensation expense in fiscal years 2006, 2005 and 2004,
    respectively. 131




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  27.
    REVENUE
    BY SERVICE LINE    Year ended June 30,2006


2005


2004Business process outsourcing(1)

$
3,996,558


$
3,237,981


$
3,017,699Information technology services


971,832



858,639



694,890Systems integration services(2)


385,271



254,539



393,804Total

$
5,353,661


$
4,351,159


$
4,106,393     (1)
    
    Includes $104.2 million, $218 million and
    $276.8 million of revenues for fiscal years 2006, 2005 and
    2004, respectively, from operations divested through
    June 30, 2006.(2)
    
    Includes $0.3 million, $0.6 million and
    $218.6 million of revenues for fiscal years 2006, 2005, and
    2004, respectively, from operations divested through
    June 30, 2006.  28.
    QUARTERLY
    RESULTS OF OPERATIONS (UNAUDITED)      Form 10-K Form 10-Q
  132




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Balance SheetsAt September 30,2005


2004As Reported


Adjustments


As Restated


As Reported


Adjustments


As RestatedASSETSCurrent assets:Cash and cash equivalents

$
34,226


$



$
34,226


$
59,577


$



$
59,577Accounts receivable, net


1,111,926







1,111,926



870,049







870,049Prepaid expenses and other current
    assets


130,024







130,024



100,562







100,562Assets held for sale


67,296







67,296











Total current assets


1,343,472







1,343,472



1,030,188







1,030,188Property, equipment and software,
    net


713,594







713,594



557,745







557,745Goodwill


2,325,838







2,325,838



2,023,048







2,023,048Other intangibles, net


487,913







487,913



291,051







291,051Other assets


143,648







143,648



82,826







82,826Total assets

$
5,014,465


$



$
5,014,465


$
3,984,858


$



$
3,984,858LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
67,431


$



$
67,431


$
44,354


$



$
44,354Accrued compensation and benefits


174,691







174,691



96,568







96,568Other accrued liabilities


453,273







453,273



335,093







335,093Income taxes payable


24,188







24,188



26,962







26,962Deferred taxes


34,083







34,083



33,414







33,414Current portion of long-term debt


6,466







6,466



6,075







6,075Current portion of unearned revenue


92,871







92,871



51,840







51,840Liabilities related to assets held
    for sale


9,877







9,877











Total current liabilities


862,880







862,880



594,306







594,306Senior Notes, net


499,308







499,308











Other long-term debt


257,817







257,817



366,290







366,290Deferred taxes


255,679



(7,375
)(1)


248,304



227,293



(8,829
)(1)


218,464Other long-term liabilities


189,251



36,302
(2)


225,553



83,906



29,467
(2)


113,373Total liabilities


2,064,935



28,927



2,093,862



1,271,795



20,638



1,292,433Stockholders equity:Class A common stock


1,384







1,384



1,367







1,367Class B convertible common
    stock


66







66



66







66Additional paid-in capital


1,807,881



18,383
(3)


1,826,264



1,752,661



20,775
(3)


1,773,436Accumulated other comprehensive
    loss, net


(10,737
)






(10,737
)


(2,602
)






(2,602
)Retained earnings


2,110,320



(47,310
)


2,063,010



1,694,409



(41,413
)


1,652,996Treasury stock at cost


(959,384
)






(959,384
)


(732,838
)






(732,838
)Total stockholders equity


2,949,530



(28,927
)


2,920,603



2,713,063



(20,638
)


2,692,425Total liabilities and
    stockholders equity

$
5,014,465


$



$
5,014,465


$
3,984,858


$



$
3,984,858   133




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of IncomeQuarter ended September 302005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedRevenues

$
1,310,917


$



$
1,310,917


$
1,046,182


$



$
1,046,182Operating expenses:Cost of revenues:Wages and benefits


628,119



566
(4)


628,685



431,848



1,635
(4)


433,483Services and supplies


290,772







290,772



275,062







275,062Rent, lease and maintenance


155,172







155,172



118,993







118,993Depreciation and amortization


68,080







68,080



54,319







54,319Other


4,247







4,247



4,027







4,027Cost of revenues


1,146,390



566



1,146,956



884,249



1,635



885,884Other operating expenses


9,764







9,764



6,892







6,892Total operating expenses


1,156,154



566



1,156,720



891,141



1,635



892,776Operating income


154,763



(566
)


154,197



155,041



(1,635
)


153,406Interest expense


12,128



611
(6)


12,739



3,955



287
(6)


4,242Other non-operating expense
    (income), net


(4,381
)






(4,381
)


434







434Pretax profit


147,016



(1,177
)


145,839



150,652



(1,922
)


148,730Income tax expense


52,892



(428
)(7)


52,464



56,495



(694
)(7)


55,801Net income

$
94,124


$
(749
)

$
93,375


$
94,157


$
(1,228
)

$
92,929Earnings per share:Basic

$
0.75


$
(0.01
)

$
0.74


$
0.74


$
(0.01
)

$
0.73Diluted

$
0.74


$
(0.01
)

$
0.73


$
0.72


$
(0.01
)

$
0.71Shares used in computing earnings
    per share:Basic


125,429







125,429



127,948







127,948Diluted(9)


127,222



64
(8)


127,286



131,070



160
(8)


131,230   134




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of Cash FlowsThree months ended September 30,2005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedCash flows from operating
    activities:Net income

$
94,124


$
(749
)

$
93,375


$
94,157


$
(1,228
)

$
92,929Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


68,080







68,080



54,319







54,319Provision for uncollectible
    accounts receivable


3,250







3,250



550







550Deferred income tax expense


13,928



1,822
(1)


15,750



27,796



(354
)(1)


27,442Excess tax benefit on stock-based
    compensation


(6,982
)


1,504



(5,478
)










Stock-based compensation expense


8,741



566
(4)


9,307







1,635
(4)


1,635Tax benefit of stock options














9,402







9,402Other non-cash activities


1,746







1,746



3,423







3,423Changes in assets and liabilities,
    net of effects from acquisitions:(Increase) decrease in accounts
    receivable


(73,805
)






(73,805
)


10,235







10,235Increase in prepaid expenses and
    other current Assets


(8,767
)






(8,767
)


(6,683
)






(6,683
)(Increase) decrease in other assets


(9,328
)






(9,328
)


3,757







3,757Increase (decrease) in accounts
    payable


9,038







9,038



(20,897
)






(20,897
)Decrease in accrued compensation
    and benefits


(18,643
)






(18,643
)


(46,958
)






(46,958
)Decrease in other accrued
    liabilities


(20,319
)






(20,319
)


(19,878
)






(19,878
)Increase in income taxes
    receivable/payable


32,577







32,577



15,780







15,780Increase (decrease) in other
    long-term liabilities


1,255



(1,639
)


(384
)


4,550



(53
)


4,497Increase (decrease) in unearned
    revenue


12,931







12,931



(10,430
)






(10,430
)Total adjustments


13,702



2,253



15,955



24,966



1,228



26,194Net cash provided by operating
    activities


107,826



1,504



109,330



119,123







119,123Cash flows from investing
    activities:Purchases of property, equipment
    and software, net


(94,777
)






(94,777
)


(61,587
)






(61,587
)Additions to other intangible assets


(6,906
)






(6,906
)


(9,360
)






(9,360
)Payments for acquisitions, net of
    cash acquired


(42,644
)






(42,644
)


(70,705
)






(70,705
)Proceeds from divestitures, net of
    transaction costs














(8
)






(8
)Intangibles acquired in subcontract
    termination


(16,530
)






(16,530
)










Purchases of investments


(4,515
)






(4,515
)


(4,541
)






(4,541
)Additions to notes receivable














(1,076
)






(1,076
)Proceeds from notes receivable














2,419







2,419Net cash used in investing
    activities


(165,372
)






(165,372
)


(144,858
)






(144,858
)Cash flows from financing
    activities:Proceeds from issuance of long-term
    debt, net


383,461







383,461



404,980







404,980Payments of long-term debt


(377,708
)






(377,708
)


(415,643
)






(415,643
)Excess tax benefit on stock-based
    compensation


6,982



(1,504
)


5,478











Proceeds from stock options
    exercised


14,739







14,739



13,040







13,040Proceeds from issuance of treasury
    shares


1,613







1,613



6,036







6,036Net cash provided by financing
    activities


29,087



(1,504
)


27,583



8,413







8,413Net decrease in cash and cash
    equivalents


(28,459
)






(28,459
)


(17,322
)






(17,322
)Cash and cash equivalents at
    beginning of period


62,685







62,685



76,899







76,899Cash and cash equivalents at end of
    period

$
34,226


$



$
34,226


$
59,577


$



$
59,577  135




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Balance SheetsAt December 31,2005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedASSETSCurrent assets:Cash and cash equivalents

$
107,263


$



$
107,263


$
35,866


$



$
35,866Accounts receivable, net


1,232,322







1,232,322



844,609







844,609Prepaid expenses and other current
    assets


167,831







167,831



102,272







102,272Total current assets


1,507,416







1,507,416



982,747







982,747Property, equipment and software,
    net


768,315







768,315



562,273







562,273Goodwill


2,396,626







2,396,626



2,039,786







2,039,786Other intangibles, net


480,423







480,423



296,362







296,362Other assets


158,224







158,224



83,473







83,473Total assets

$
5,311,004


$



$
5,311,004


$
3,964,641


$



$
3,964,641LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
88,106


$



$
88,106


$
64,437


$



$
64,437Accrued compensation and benefits


157,328







157,328



83,669







83,669Other accrued liabilities


521,395







521,395



287,616







287,616Income taxes payable


29,194







29,194



30,705







30,705Deferred taxes


28,939







28,939



37,111







37,111Current portion of long-term debt


7,489







7,489



4,953







4,953Current portion of unearned revenue


98,837







98,837



58,406







58,406Total current liabilities


931,288







931,288



566,897







566,897Senior Notes, net


499,328







499,328











Other long-term debt


426,275







426,275



254,950







254,950Deferred taxes


287,285



(6,823
)(1)


280,462



239,711



(9,169
)(1)


230,542Other long-term liabilities


196,979



36,763
(2)


233,742



87,140



29,684
(2)


116,824Total liabilities


2,341,155



29,940



2,371,095



1,148,698



20,515



1,169,213Stockholders equity:Class A common stock


1,389







1,389



1,371







1,371Class B convertible common
    stock


66







66



66







66Additional paid-in capital


1,837,051



18,196
(3)


1,855,247



1,763,472



22,142
(3)


1,785,614Accumulated other comprehensive
    income (loss), net


(13,449
)






(13,449
)


1,230







1,230Retained earnings


2,213,516



(48,136
)


2,165,380



1,790,554



(42,657
)


1,747,897Treasury stock at cost


(1,068,724
)






(1,068,724
)


(740,750
)






(740,750
)Total stockholders equity


2,969,849



(29,940
)


2,939,909



2,815,943



(20,515
)


2,795,428Total liabilities and
    stockholders equity

$
5,311,004


$



$
5,311,004


$
3,964,641


$



$
3,964,641  136




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Quarter ended December 31,Consolidated Statements of Income2005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedRevenues

$
1,347,587


$



$
1,347,587


$
1,027,286


$



$
1,027,286Operating expenses:Cost of revenues:Wages and benefits


632,889



572
(4)


633,461



435,970



1,613
(4)


437,583Services and supplies


305,889







305,889



251,006







251,006Rent, lease and maintenance


163,541







163,541



121,124







121,124Depreciation and amortization


70,444







70,444



55,586







55,586Other


7,511







7,511



4,118







4,118Cost of revenues


1,180,274



572



1,180,846



867,804



1,613



869,417Gain on sale of business


(29,765
)






(29,765
)










Other operating expenses


21,084







21,084



4,558







4,558Total operating expenses


1,171,593



572



1,172,165



872,362



1,613



873,975Operating income


175,994



(572
)


175,422



154,924



(1,613
)


153,311Interest expense


13,333



723
(6)


14,056



2,869



341
(6)


3,210Other non-operating income, net


(1,994
)






(1,994
)


(1,776
)






(1,776
)Pretax profit


164,655



(1,295
)


163,360



153,831



(1,954
)


151,877Income tax expense


61,459



(469
)(7)


60,990



57,686



(709
)(7)


56,977Net income

$
103,196


$
(826
)

$
102,370


$
96,145


$
(1,245
)

$
94,900Earnings per share:Basic

$
0.83


$
(0.01
)

$
0.82


$
0.75


$
(0.01
)

$
0.74Diluted

$
0.81


$



$
0.81


$
0.73


$
(0.01
)

$
0.72Shares used in computing earnings
    per share:Basic


124,849







124,849



128,619







128,619Diluted(9)


126,865



61
(8)


126,926



131,933



183
(8)


132,116  137




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Six Months Ended December 31,Consolidated Statements of Income2005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedRevenues

$
2,658,504


$



$
2,658,504


$
2,073,468


$



$
2,073,468Operating expenses:Cost of revenues:Wages and benefits


1,261,008



1,138
(4)


1,262,146



867,818



3,248
(4)


871,066Services and supplies


596,661







596,661



526,068







526,068Rent, lease and maintenance


318,713







318,713



240,117







240,117Depreciation and amortization


138,524







138,524



109,905







109,905Other


11,758







11,758



8,145







8,145Cost of revenues


2,326,664



1,138



2,327,802



1,752,053



3,248



1,755,301Gain on sale of business


(29,765
)






(29,765
)










Other operating expenses


30,848







30,848



11,450







11,450Total operating expenses


2,327,747



1,138



2,328,885



1,763,503



3,248



1,766,751Operating income


330,757



(1,138
)


329,619



309,965



(3,248
)


306,717Interest expense


25,461



1,334
(6)


26,795



6,824



628
(6)


7,452Other non-operating income, net


(6,375
)






(6,375
)


(1,342
)






(1,342
)Pretax profit


311,671



(2,472
)


309,199



304,483



(3,876
)


300,607Income tax expense


114,351



(897
)(7)


113,454



114,181



(1,403
)(7)


112,778Net income

$
197,320


$
(1,575
)

$
195,745


$
190,302


$
(2,473
)

$
187,829Earnings per share:Basic

$
1.58


$
(0.02
)

$
1.56


$
1.48


$
(0.02
)

$
1.46Diluted

$
1.55


$
(0.01
)

$
1.54


$
1.45


$
(0.02
)

$
1.43Shares used in computing earnings
    per share:Basic


125,139







125,139



128,283







128,283Diluted(9)


127,044



62
(8)


127,106



131,501



172
(8)


131,673  138




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of Cash FlowsSix Months Ended December 31,2005


2004As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedCash flows from operating
    activities:Net income

$
197,320


$
(1,575
)

$
195,745


$
190,302


$
(2,473
)

$
187,829Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


138,524







138,524



109,905







109,905Provision for uncollectible
    accounts receivable


4,495







4,495



1,128







1,128Gain on sale of business units


(29,765
)






(29,765
)










Deferred income tax expense


34,698



2,374
(1)


37,072



43,813



(694
)(1)


43,119Excess tax benefit on stock-based
    compensation


(9,480
)


1,822



(7,658
)










Stock-based compensation expense


17,371



1,138
(4)


18,509







3,248
(4)


3,248Tax benefit of stock options














14,389







14,389Asset Impairments


5,755







5,755











Other non-cash activities


5,954







5,954



4,828







4,828Changes in assets and liabilities,
    net of effects from acquisitions:(Increase) decrease in accounts
    receivable


(26,848
)






(26,848
)


37,827







37,827Increase in prepaid expenses and
    other current Assets


(5,044
)






(5,044
)


(8,493
)






(8,493
)Decrease in other assets


2,987







2,987



6,599







6,599Increase (decrease) in accounts
    payable


8,451







8,451



(1,195
)






(1,195
)Decrease in accrued compensation
    and benefits


(21,866
)






(21,866
)


(53,342
)






(53,342
)Decrease in other accrued
    liabilities


(31,058
)






(31,058
)


(67,222
)






(67,222
)Increase in income taxes
    receivable/payable


41,138







41,138



19,621







19,621Increase in other long-term
    liabilities


3,596



(1,937
)


1,659



2,367



(81
)


2,286Increase in unearned revenue


19,521







19,521



(1,253
)






(1,253
)Total adjustments


158,429



3,397



161,826



108,972



2,473



111,445Net cash provided by operating
    activities


355,749



1,822



357,571



299,274







299,274Cash flows from investing
    activities:Purchases of property, equipment
    and software, net


(184,973
)






(184,973
)


(106,553
)






(106,553
)Additions to other intangible assets


(13,046
)






(13,046
)


(24,925
)






(24,925
)Payments for acquisitions, net of
    cash acquired


(153,760
)






(153,760
)


(95,838
)






(95,838
)Proceeds from divestitures, net of
    transaction costs














(8
)






(8
)Intangibles acquired in subcontract
    termination


(16,530
)






(16,530
)










Purchases of investments


(25,439
)






(25,439
)


(4,587
)






(4,587
)Proceeds from sale of investments


24







24



46







46Proceeds from notes receivable














425







425Net cash used in investing
    activities


(393,724
)






(393,724
)


(231,440
)






(231,440
)Cash flows from financing
    activities:Proceeds from issuance of long-term
    debt, net


1,003,629







1,003,629



865,472







865,472Payments of long-term debt


(835,213
)






(835,213
)


(992,002
)






(992,002
)Purchase of treasury shares


(115,804
)






(115,804
)


(14,849
)






(14,849
)Excess tax benefit on stock-based
    compensation


9,480



(1,822
)


7,658











Executive stock option settlement


(18,353
)






(18,353
)










Proceeds from stock options
    exercised


30,965







30,965



18,595







18,595Proceeds from issuance of treasury
    shares


7,849







7,849



13,917







13,917Net cash provided by (used in)
    financing Activities


82,553



(1,822
)


80,731



(108,867
)






(108,867
)Net increase (decrease) in cash and
    cash equivalents


44,578







44,578



(41,033
)






(41,033
)Cash and cash equivalents at
    beginning of period


62,685







62,685



76,899







76,899Cash and cash equivalents at end of
    period

$
107,263


$



$
107,263


$
35,866


$



$
35,866  139




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Balance SheetsAt March 31,2006


2005As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedASSETSCurrent assets:Cash and cash equivalents

$
174,877


$



$
174,877


$
46,532


$



$
46,532Accounts receivable, net


1,167,374







1,167,374



907,267







907,267Prepaid expenses and other current
    assets


180,914







180,914



116,745







116,745Total current assets


1,523,165







1,523,165



1,070,544







1,070,544Property, equipment and software,
    net


818,247







818,247



601,580







601,580Goodwill


2,395,320







2,395,320



2,129,160







2,129,160Other intangibles, net


465,757







465,757



311,671







311,671Other assets


185,254







185,254



94,876







94,876Total assets

$
5,387,743


$



$
5,387,743


$
4,207,831


$



$
4,207,831LIABILITIES AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable

$
102,969


$



$
102,969


$
59,664


$



$
59,664Accrued compensation and benefits


158,390







158,390



111,163







111,163Other accrued liabilities


445,449







445,449



333,349







333,349Income taxes payable


5,267







5,267



14,740







14,740Deferred taxes


25,552







25,552



39,842







39,842Current portion of long-term debt


22,285







22,285



7,206







7,206Current portion of unearned revenue


106,697







106,697



67,060







67,060Total current liabilities


866,609







866,609



633,024







633,024Senior Notes, net


499,348







499,348











Other long-term debt


865,960







865,960



390,889







390,889Deferred taxes


299,800



(5,012
)(1)


294,788



231,715



(9,105
)(1)


222,610Other long-term liabilities


203,700



37,287
(2)


240,987



116,466



29,919
(2)


146,385Total liabilities


2,735,417



32,275



2,767,692



1,372,094



20,814



1,392,908Stockholders equity:Class A common stock


1,404







1,404



1,376







1,376Class B convertible common
    stock


66







66



66







66Additional paid-in capital


1,914,384



16,737
(3)


1,931,121



1,780,628



23,002
(3)


1,803,630Accumulated other comprehensive
    income (loss), net


(15,983
)






(15,983
)


79







79Retained earnings


2,291,392



(49,012
)


2,242,380



1,905,220



(43,816
)


1,861,404Treasury stock at cost


(1,538,937
)






(1,538,937
)


(851,632
)






(851,632
)Total stockholders equity


2,652,326



(32,275
)


2,620,051



2,835,737



(20,814
)


2,814,923Total liabilities and
    stockholders equity

$
5,387,743


$



$
5,387,743


$
4,207,831


$



$
4,207,831  140




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of IncomeQuarter ended March 31,2006


2005As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedRevenues

$
1,314,455


$



$
1,314,455


$
1,063,299


$



$
1,063,299Operating expenses:Cost of revenues:Wages and benefits


643,651



551
(4)


644,202



452,794



1,450
(4)


454,244Services and supplies


272,990







272,990



251,825







251,825Rent, lease and maintenance


156,489







156,489



124,047







124,047Depreciation and amortization


72,891







72,891



57,801







57,801Other


20,303







20,303



4,893







4,893Cost of revenues


1,166,324



551



1,166,875



891,360



1,450



892,810Gain on sale of business


(2,717
)






(2,717
)










Other operating expenses


12,430







12,430



6,127







6,127Total operating expenses


1,176,037



551



1,176,588



897,487



1,450



898,937Operating income


138,418



(551
)


137,867



165,812



(1,450
)


164,362Interest expense


14,967



823
(6)


15,790



3,688



369
(6)


4,057Other non-operating expense
    (income), net


589







589



(466
)






(466
)Pretax profit


122,862



(1,374
)


121,488



162,590



(1,819
)


160,771Income tax expense


44,986



(498
)(7)


44,488



47,924



(658
)(7)


47,266Net income

$
77,876


$
(876
)

$
77,000


$
114,666


$
(1,161
)

$
113,505Earnings per share:Basic

$
0.63


$
(0.01
)

$
0.62


$
0.90


$
(0.01
)

$
0.89Diluted

$
0.62


$
(0.01
)

$
0.61


$
0.88


$
(0.01
)

$
0.87Shares used in computing earnings
    per share:Basic


124,347







124,347



127,568







127,568Diluted(9)


126,319



62
(8)


126,381



130,229



201
(8)


130,430  141




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of IncomeNine months ended March 31,2006


2005As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedRevenues

$
3,972,959


$



$
3,972,959


$
3,136,767


$



$
3,136,767Operating expenses:Cost of revenues:Wages and benefits


1,904,659



1,689
(4)


1,906,348



1,320,612



4,698
(4)


1,325,310Services and supplies


869,651







869,651



777,893







777,893Rent, lease and maintenance


475,202







475,202



364,164







364,164Depreciation and amortization


211,415







211,415



167,706







167,706Other


32,061







32,061



13,038







13,038Cost of revenues


3,492,988



1,689



3,494,677



2,643,413



4,698



2,648,111Gain on sale of business


(32,482
)






(32,482
)










Other operating expenses


43,278







43,278



17,577







17,577Total operating expenses


3,503,784



1,689



3,505,473



2,660,990



4,698



2,665,688Operating income


469,175



(1,689
)


467,486



475,777



(4,698
)


471,079Interest expense


40,428



2,157
(6)


42,585



10,512



997
(6)


11,509Other non-operating income, net


(5,786
)






(5,786
)


(1,808
)






(1,808
)Pretax profit


434,533



(3,846
)


430,687



467,073



(5,695
)


461,378Income tax expense


159,337



(1,395
)(7)


157,942



162,105



(2,061
)(7)


160,044Net income

$
275,196


$
(2,451
)

$
272,745


$
304,968


$
(3,634
)

$
301,334Earnings per share:Basic

$
2.20


$
(0.02
)

$
2.18


$
2.38


$
(0.03
)

$
2.35Diluted

$
2.17


$
(0.02
)

$
2.15


$
2.33


$
(0.03
)

$
2.30Shares used in computing earnings
    per share:Basic


124,879







124,879



128,048







128,048Diluted(9)


126,806



62
(8)


126,868



131,081



181
(8)


131,262  142




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of Cash FlowsNine months ended March 31,2006


2005As





As


As





AsReported


Adjustments


Restated


Reported


Adjustments


RestatedCash flows from operating
    activities:Net income

$
275,196


$
(2,451
)

$
272,745


$
304,968


$
(3,634
)

$
301,334Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


211,415







211,415



167,706







167,706Provision for uncollectible
    accounts receivable


7,986







7,986



773







773Gain on sale of business units


(32,482
)






(32,482
)


(70
)






(70
)Deferred income tax expense


50,397



4,185
(1)


54,582



56,523



(630
)(1)


55,893Excess tax benefit on stock-based
    compensation


(17,302
)


3,234



(14,068
)










Stock-based compensation expense


25,364



1,689
(4)


27,053







4,698
(4)


4,698Tax benefit of stock options














20,612







20,612Loss on early extinguishment of
    long-term debt


4,104







4,104











Asset Impairments


14,450







14,450











Other non-cash activities


10,317







10,317



9,020







9,020Changes in assets and liabilities,
    net of effects from acquisitions:Increase in accounts receivable


(41,591
)






(41,591
)


(16,633
)






(16,633
)Increase in prepaid expenses and
    other current Assets


(15,399
)






(15,399
)


(17,660
)






(17,660
)(Increase) decrease in other assets


5,959







5,959



(1,436
)






(1,436
)Increase (decrease) in accounts
    payable


25,841







25,841



(14,606
)






(14,606
)Decrease in accrued compensation
    and benefits


(20,387
)






(20,387
)


(28,557
)






(28,557
)Decrease in other accrued
    liabilities


(106,214
)






(106,214
)


(49,217
)






(49,217
)Increase in income taxes
    receivable/payable


32,837







32,837



3,774







3,774Increase (decrease) in other
    long-term liabilities


(2,544
)


(3,423
)


(5,967
)


10,319



(434
)


9,885Increase in unearned revenue


40,513







40,513



26,457







26,457Total adjustments


193,264



5,685



198,949



167,005



3,634



170,639Net cash provided by operating
    activities


468,460



3,234



471,694



471,973







471,973Cash flows from investing
    activities:Purchases of property, equipment
    and software, net


(290,108
)






(290,108
)


(170,185
)






(170,185
)Additions to other intangible assets


(28,386
)






(28,386
)


(29,444
)






(29,444
)Payments for acquisitions, net of
    cash acquired


(155,229
)






(155,229
)


(213,322
)






(213,322
)Proceeds from divestitures, net of
    transaction costs


67,664







67,664



87







87Intangibles acquired in subcontract
    termination


(16,530
)






(16,530
)










Purchases of investments


(25,456
)






(25,456
)


(6,604
)






(6,604
)Proceeds from sale of investments


1,903







1,903



46







46Proceeds from notes receivable














425







425Net cash used in investing
    activities


(446,142
)






(446,142
)


(418,997
)






(418,997
)Cash flows from financing
    activities:Proceeds from issuance of long-term
    debt, net


3,334,917







3,334,917



1,341,163







1,341,163Payments of long-term debt


(2,759,272
)






(2,759,272
)


(1,342,456
)






(1,342,456
)Purchase of treasury shares


(115,804
)






(115,804
)


(131,121
)






(131,121
)Purchase of shares in Tender Offer


(466,071
)






(466,071
)










Excess tax benefit on stock-based
    compensation


17,302



(3,234
)


14,068











Executive stock option settlement


(18,353
)






(18,353
)










Proceeds from stock options
    exercised


82,010







82,010



28,868







28,868Proceeds from issuance of treasury
    shares


15,145







15,145



20,203







20,203Net cash provided by (used in)
    financing activities


89,874



(3,234
)


86,640



(83,343
)






(83,343
)Net increase (decrease) in cash and
    cash equivalents


112,192







112,192



(30,367
)






(30,367
)Cash and cash equivalents at
    beginning of period


62,685







62,685



76,899







76,899Cash and cash equivalents at end of
    period

$
174,877






$
174,877


$
46,532






$
46,532  143




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  Consolidated Statements of IncomeQuarter ended June 30,2005As





As2006


Reported


Adjustments


RestatedRevenues

$
1,380,702


$
1,214,392


$



$
1,214,392Operating expenses:Cost of revenues:Wages and benefits


661,694



547,371



1,363
(4)


548,734Services and supplies


298,889



268,448







268,448Rent, lease and maintenance


171,272



138,968







138,968Depreciation and amortization


78,437



65,073







65,073Other


7,568



10,649







10,649Cost of revenues


1,217,860



1,030,509



1,363



1,031,872Gain on sale of business


(425
)










Other operating expenses


13,469



5,179



936
(5)


6,115Total operating expenses


1,230,904



1,035,688



2,299



1,037,987Operating income


149,798



178,704



(2,299
)


176,405Interest expense


25,782



8,084



593
(6)


8,677Other non-operating income, net


(3,610
)


(3,378
)






(3,378
)Pretax profit


127,626



173,998



(2,892
)


171,106Income tax expense


41,565



63,021



(150
)(7)


62,871Net income

$
86,061


$
110,977


$
(2,742
)

$
108,235Earnings per share:Basic

$
0.73


$
0.88


$
(0.02
)

$
0.86Diluted

$
0.72


$
0.87


$
(0.03
)

$
0.84Shares used in computing earnings
    per share:Basic


118,131



126,087







126,087Diluted(9)


119,484



128,279



151
(8)


128,430     (1)
    
    Deferred income taxes associated with additional stock-based
    compensation expense, net of reversals related to stock option
    exercises.(2)
    
    Additional income taxes payable associated with
    Section 162(m) deduction disallowances and accruals for
    related estimated penalties and interest.(3)
    
    Adjustments for additional stock-based compensation expense and
    excess tax benefits and adjustments related to
    Section 162(m) deduction disallowances on stock option
    exercises.(4)
    
    Stock-based compensation expense.(5)
    
    Estimated tax penalties associated with Section 162(m)
    deduction disallowances.(6)
    
    Estimated interest expense on Section 162(m) deduction
    disallowances. 144




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
   (7)
    
    Income tax benefits for additional stock-based compensation
    expense and estimated interest expense, offset by additional
    income tax expense related to certain Section 162(m)
    deduction disallowances.(8)
    
    Adjustment to dilutive shares resulting from changes in
    unrecognized compensation and excess tax benefits.(9)
    
    Basic earnings per share of common stock is computed using the
    weighted average number of our common shares outstanding during
    the periods. Diluted earnings per share is adjusted for the
    incremental shares that would be outstanding upon the assumed
    exercise of stock options. Shares used in computing diluted
    earnings per share includes the weighted average shares
    outstanding for the period used in calculating basic earnings
    per share, plus the dilutive effect of stock options outstanding
    during the period. Except for the second quarter of fiscal year
    2005 in which all outstanding stock options were considered
    dilutive in our calculation, share dilution for all quarters
    presented excludes the effect of options outstanding that were
    considered antidilutive because the average market price of the
    underlying stock did not exceed the sum of the option exercise
    price, unrecognized compensation expense and windfall tax
    benefits. 145




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
  29.
    NEW
    ACCOUNTING PRONOUNCEMENTS          109-2
  30.
    SUBSEQUENT
    EVENTS   146




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
        Form 10-K
    Rule 10b5-1.
       147




---



##### Table of Contents



AFFILIATED
    COMPUTER SERVICES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (CONTINUED)
    Form 10-K
    5-year
   148




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   ITEM 9A. CONTROLS
    AND PROCEDURES  Stock
    Option Investigation
   Managements
    Evaluation of Disclosure Controls and Procedures
 Rule 13a-15(e) Form 10-K
  Managements
    Report on Internal Control over Financial
    Reporting
 Rule 13a-15(f)
         149




---



##### Table of Contents



10-Q, 10-Q
         150




---



##### Table of Contents



Remediation
    of the Material Weaknesses in Internal Control over Financial
    Reporting
   
    After reviewing the results of the investigation to date, our
    Board of Directors determined that it would be appropriate to
    accept the resignations of Mr. King and Mr. Edwards. Our Board
    of Directors has since appointed a new Chief Executive Officer
    and Chief Financial Officer.
    Adhering to the practice of making annual grants on a date
    certain and through board or committee meetings, and not through
    a unanimous written consent process.
    Designating internal legal and accounting staffs to oversee the
    documentation and accounting of all grants of stock options or
    restricted stock.
    Monitoring industry and regulatory developments in stock option
    and restricted stock awards and implementing and maintaining
    best practices with respect to grants of stock options or
    restricted stock.  Changes
    in Internal Control over Financial Reporting
  151




---



##### Table of Contents



PART III ITEM 10. DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  Directors
    Served asName

Principal Occupation

Director SinceDarwin Deason

Chairman of the Board


1988Lynn R. Blodgett

President and Chief Executive
    Officer


2005John H. Rexford

Executive Vice President and Chief
    Financial Officer


2006Joseph P. ONeill

President and Chief Executive
    Officer, Public Strategies Washington, Inc.


1994Frank A. Rossi

Chairman, FAR Holdings Company,
    L.L.C.


1994J. Livingston Kosberg

Investor


2003Dennis McCuistion

President, McCuistion &
    Associates, Inc.


2003   Business
    Experience of each Director
    Darwin Deason,
  Lynn R. Blodgett
  John H. Rexford,
  Joseph P. ONeill,
  Frank A. Rossi,
  J. Livingston Kosberg,
  Dennis McCuistion,
 152




---



##### Table of Contents



Executive
    Officers
    Name

Position with the CompanyTom Burlin

Chief Operating
    Officer  Government Solutions GroupWilliam L.
    Deckelman, Jr.

Executive Vice President,
    Corporate Secretary and General CounselAnn Vezina

Chief Operating
    Officer  Commercial Solutions Group   Business
    Experience of each Executive Officer
  Tom Burlin,
  William L. Deckelman, Jr.,
  Ann Vezina,
  Corporate
    Governance
  Director
    Independence
 www.acs-inc.com
  Corporate
    Governance Guidelines
 www.acs-inc.com
 153




---



##### Table of Contents



Code
    of Conduct
 www.acs-inc.com Form 8-K www.acs-inc.com
  Executive
    Sessions and Lead Independent Director
   Stockholder
    and Interested Party Communications
 e-mail director@acs-inc.com (866) 414-3646.
  Board of
    Directors and Board Committees
 www.acs-inc.com
  Audit
    Committee
 Regulation S-K
    
    monitoring the integrity of our consolidated financial
    statements;
    monitoring our system of internal controls and the independence
    and performance of our internal auditors; and
    appointing and monitoring our independent registered public
    accounting firm.  www.acs-inc.com
 154




---



##### Table of Contents



Compensation
    Committee
   
    recommending to the Board of Directors policies and plans
    concerning the salaries, bonuses and other compensation of our
    executive officers (including reviewing the salaries of the
    executive officers and recommending bonuses and other forms of
    additional compensation for the executive officers);
    compliance with the requirements of Section 162(m) of the
    Internal Revenue Code of 1986, as amended (the
    Code), with respect to the review of compensation to
    executive officers whose annual compensation exceeds
    $1 million so that such amounts may be deductible by us for
    federal income tax purposes; and
    the grant of all awards under the stock option plans (other than
    those to independent directors).  www.acs-inc.com
  Nominating
    and Corporate Governance Committee
   www.acs-inc.com
  Special
    Transaction Committee
   Section 16(a)
    Beneficial Ownership Reporting Compliance
   155




---



##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION  Directors
    Compensation
    Fiscal Year 2006 Independent Director Annual
    Retainer

$
45,000 Lead Independent
    Director Annual Retainer

$
15,000 Audit Committee Chair
    Annual Retainer

$
15,000 Nominating &
    Corporate Governance Committee Chair Annual Retainer

$
5,000 Compensation Committee
    Chair Annual Retainer

$
5,000 Board Meeting (in
    person)

$
2,000 Board Meeting
    (telephonic)

$
1,000 Audit Committee
    Meeting (in person)

$
2,000 Audit Committee
    Meeting (telephonic)

$
1,000 Annual Stock Option
    Grant


7,500 shares Initial Stock Option
    Grant


20,000 shares          156




---



##### Table of Contents



Summary
    of Named Executive Officers Cash and Other
    Compensation
    SUMMARY
    COMPENSATION TABLE
  Long-Term CompensationAwardsAnnual Compensation





Securities


PayoutsOther Annual


Restricted


Underlying


LTIP


All OtherSalary


Bonus


Compensation


Stock Award(s)


Options/


Payouts


CompensationName and Principal Position

Year


($)


($)


($) (1)


($)(2)


SARs (#)


($)(3)


($)Darwin Deason


2006



845,447







252,102
(4)














6,884
(5)Chairman of the Board


2005



803,982



1,058,989



161,791















6,1022004



779,470



1,733,327



154,278







300,000







5,500Mark A. King


2006



687,316







65,814
(7)














4,030
(8)President & Chief
    Executive


2005



550,000



507,114











375,000







3,719Officer(6)


2004



550,000



856,134











100,000







3,598Lynn Blodgett


2006



554,998























1,209
(10)Executive Vice President and


2005



450,000



355,639











300,000







875Chief Operating Officer(9)


2004



375,000



500,338











100,000







644Warren D. Edwards


2006



470,243























3,195
(12)Executive Vice President and


2005



450,000



237,092











200,000







3,359Chief Financial Officer(11)


2004



350,000



466,982











75,000







3,051Tom Burlin


2006



350,000



150,000



















663
(13)President and Group


2005



13,462



50,000











100,000







Executive Vice
    President 


2004



























Government SolutionsFormer Officer:Jeffrey A. Rich


2006



793,470







22,576,186
(15)














5,793
(16)Chief Executive Officer(14)


2005



750,000



790,308



160,364







500,000







5,4302004



750,000



1,334,235



150,363















4,158     (1)
    
    As permitted by SEC rules, this column excludes perquisites and
    other personal benefits for the Named Executive Officer if the
    total incremental cost in a given year did not exceed the lesser
    of $50,000 or 10% of such officers combined salary and
    bonus for that year. Other Annual Compensation includes medical,
    auto, and tax and estate planning perquisites as well as
    non-business use of corporate aircraft. In proxy statements for
    fiscal year 2004 (and prior years) we reported non-business use
    of corporate aircraft using the Standard Industry Fare Level
    (SIFL) tables published by the Internal Revenue Service. The
    SIFL tables are used to determine the amount of compensation
    income that is imputed to the executive for tax purposes for
    non-business use of corporate aircraft. The SEC requires that we
    use a methodology based on the incremental cost to us of fuel,
    trip-related maintenance, crew travel expenses, on-board
    catering, landing fees, trip-related hangar/parking costs and
    other similar variable costs to determine the cost of
    non-business use of corporate aircraft. Compensation related to
    non-business use of corporate aircraft reflected in this table
    for fiscal year 2004 has been adjusted based on this
    methodology. Since the corporate aircraft are primarily used for
    business travel, we do not include the fixed costs that do not
    change based on usage, such as pilots salaries, the
    purchase costs of any company-owned aircraft, and the cost of
    maintenance not related to trips. For this table we have
    recalculated the incremental cost of non-business use of
    corporate aircraft for all named executives in previously
    reported years using the new methodology.(2)
    
    We did not grant any restricted stock awards or stock
    appreciation rights (SARs) to the Named Executive
    Officers during fiscal years 2006, 2005 or 2004.(3)
    
    We did not grant any long-term incentive plan payouts to the
    Named Executive Officers during fiscal years 2006, 2005 or 2004. 157




---



##### Table of Contents



(4)
    
    Represents $199,887 in non-business use of corporate aircraft,
    $9,073 in auto expense and $43,142 in medical costs. We maintain
    an overall security program for our Chairman of the Board and
    company founder, Mr. Deason, due to business-related
    security concerns. Mr. Deason is provided with security
    systems and equipment as well as security advice and personal
    protection services. The cost of these systems and services are
    incurred as a result of business-related concerns and are not
    maintained as perquisites or otherwise for the personal benefit
    of Mr. Deason. As a result, we have not included such costs
    in the column Other Annual Compensation, but rather
    note them here as follows: $477,364 for 2006, $483,880 for 2005,
    and $381,378 for 2004. With regard to the personal protection
    services, other executive officers and members of our Board of
    Directors receive the incidental benefit of these services when
    attending a meeting or other function at which Mr. Deason
    is also present; such incidental benefit has not been calculated
    or allocated for purposes of this table.(5)
    
    Represents $6,884 in life insurance premiums.(6)
    
    Mr. King was named our President and Chief Executive
    Officer effective as of September 29, 2005.
    Mr. Kings annual base salary for fiscal year 2006 was
    $750,000 effective October 1, 2005. Mr. King resigned
    as a director and President and Chief Executive Officer
    effective as of November 26, 2006.(7)
    
    Represents $34,556 in non-business use of corporate aircraft,
    $22,186 in medical costs, and $9,072 in LTD insurance premiums.(8)
    
    Represents $2,750 in matching 401(k) payments and $1,280 in life
    insurance premiums.(9)
    
    Mr. Blodgett was named our Executive Vice President and
    Chief Operating Officer effective as of September 29, 2005,
    and our President and Chief Executive Officer effective as of
    November 26, 2006. Mr. Blodgetts annual base
    salary for fiscal year 2006 was $600,000 effective
    October 1, 2005.(10)
    
    Represents $1,209 in life insurance premiums.(11)
    
    Mr. Edwards resigned as Executive Vice President and Chief
    Financial Officer effective as of November 26, 2006.(12)
    
    Represents $2,750 in matching 401(k) payments and $445 in life
    insurance premiums.(13)
    
    Represents $663 in life insurance premiums.(14)
    
    Mr. Rich resigned as a director and Chief Executive Officer
    effective as of September 29, 2005.(15)
    
    Represents $22,453,613 from stock option repurchases and
    termination payments (See discussion in the section entitled
    Severance Agreements for Executive Officers);
    $101,689 in non-business use of corporate aircraft, $10,762 in
    medical costs, and $10,122 in LTD insurance premiums.(16)
    
    Represents $4,698 in matching 401(k) payments and $1,095 in life
    insurance premiums.       158




---



##### Table of Contents



AGGREGATED
    OPTION/SAR EXERCISES IN FISCAL YEAR 2006
    AND JUNE 30, 2006 OPTION/SAR VALUES
  Value of UnexercisedNumber of Securities Underlying Unexercised


In-the-MoneyShares


Value


Options/SARs at


Options/SARs atAcquired on


Realized


June 30, 2006 (#) (2)


June 30, 2006 ($) (2) (3)Name

Exercise (#)


($) (1)


Exercisable


Unexercisable


Exercisable


UnexercisableDarwin Deason










360,000



690,000
(4)

$
5,709,600


$
12,071,213Mark A. King(5)










703,000



440,000



16,155,805



2,045,800Lynn Blodgett










302,600



344,400



5,331,670



1,330,480Warren D. Edwards(6)










230,000



225,000



4,005,575



818,350Tom Burlin










20,000



80,000



16,000



64,000Former Officer:Jeffrey A. Rich(7)


610,000



18,353,613















     (1)
    
    Represents the value realized upon exercise calculated as the
    number of options exercised times the difference between the
    actual stock trading price on the date of exercise and the
    exercise price.(2)
    
    We do not have any SARs outstanding.(3)
    
    Represents the value of unexercised options calculated as the
    number of unexercised options times the difference between the
    closing price at June 30, 2006 of $51.61 and the exercise
    price.(4)
    
    Of these options, 450,000 have been designated as integrated
    stock options to fund Mr. Deasons Supplemental
    Executive Retirement Agreement.(5)
    
    Mr. King resigned as a director and President and Chief
    Executive Officer effective as of November 26, 2006. See
    discussion in the section entitled Severance Agreements
    for Executive Officers below.(6)
    
    Mr. Edwards resigned as Executive Vice President and Chief
    Financial Officer effective as of November 26, 2006. See
    discussion in the section entitled Severance Agreements
    for Executive Officers below.(7)
    
    Mr. Rich resigned as a director and Chief Executive Officer
    effective as of September 29, 2005. See discussion in the
    section entitled Severance Agreements for Executive
    Officers below.  Mr. Deasons
    Supplemental Executive Retirement Agreement and Employment
    Agreement
   159




---



##### Table of Contents



grossed-up
    Severance
    Agreements for Executive Officers
   160




---



##### Table of Contents



Name and Position

Severance BenefitDarwin DeasonChairman of the Board



(1)Lynn BlodgettPresident and Chief Executive
    Officer

$
2,441,250
(2)John H. RexfordExecutive Vice President and Chief
    Financial Officer

$
2,450,966
(3)Tom BurlinChief Operating Officer,
    Government Solutions Group

$
1,782,188
(4)All Eligible Executive Officers
    (5 persons)

$
11,713,576Former Officers:Jeffrey A. RichFormer Chief Executive Officer



(5)Mark A. KingFormer President and Chief
    Executive Officer



(2)(6)Warren D. EdwardsFormer Executive Vice President
    and Chief Financial Officer



(2)(7)     (1)
    
    Mr. Deason is not party to a severance agreement. See
    discussion of Mr. Deasons Supplemental
    Executive Retirement Agreement and Employment Agreement
    above.(2)
    
    None of these executive officers received a bonus in fiscal year
    2006 and no amount has been included in the severance payment
    for purposes of this table.(3)
    
    Mr. Rexfords severance benefit is calculated based on
    average commissions paid.(4)
    
    Mr. Burlin received a discretionary bonus of $150,000 in
    fiscal year 2006 and that amount has been included in this
    calculation.(5)
    
    Mr. Rich resigned as a director and Chief Executive Officer
    effective as of September 29, 2005. His Severance Agreement
    was terminated at the date of his departure and he will not
    receive any severance payment.(6)
    
    Mr. King resigned as a director and President and Chief
    Executive Officer effective as of November 26, 2006. His
    severance agreement was terminated at the date of his departure
    and he will not receive any severance payment.(7)
    
    Mr. Edwards resigned as Executive Vice President and Chief
    Financial Officer effective as of November 26, 2006. His
    severance agreement was terminated at the date of his departure
    and he will not receive any severance payment.   161




---



##### Table of Contents



in-the-money
 162




---



##### Table of Contents



Executive
    Benefit Plan and Long-Term Disability Benefits
  co-insurance
    Compensation
    Committee Interlocks and Insider Participation
   163




---



##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Security
    Ownership of Management and Principal Stockholders
    Percent of TotalAmount and Nature


Percent of Total


Amount and Nature


Percent of Total


Shares of Class Aof Beneficial


Shares of Class A


of Beneficial


Shares of Class B


and Class B


Percent of TotalOwnership of Class


Common Stock


Ownership of Class


Common Stock


Common Stock


Voting PowerName

A Common Stock


Owned Beneficially


B Common Stock


Owned Beneficially


Owned Beneficially


Owned Beneficially(1)BENEFICIAL OWNERS OF MORE THAN
    5% OF OUR COMMON STOCKCapital Group International,
    Inc.(2) 11100 Santa Monica Blvd. Los Angeles, CA 90025


11,826,387



12.81
%










11.96
%


7.47
%FMR Corp.(3) 82 Devonshire
    Street Boston, MA 02109


4,465,211



4.84
%










4.51
%


2.82
%SECURITY OWNERSHIP OF
    MANAGEMENTDarwin Deason(4)


2,469,439



2.66
%


6,599,372



100
%


9.12
%


41.60
%Lynn Blodgett(5)


373,500




*











*


*Tom Burlin(6)


20,000




*











*


*Frank A. Rossi(7)


65,500




*











*


*Joseph P. ONeill(8)


103,120




*











*


*J. Livingston Kosberg(9)


18,500




*











*


*Dennis McCuistion(10)


14,095




*











*


*All Current Executive Officers and
    Directors as a Group (10 persons)(11)


3,357,224



3.59
%


6,599,372



100
%


9.94
%


41.94
%Named Executive Officers who have
    resigned since July 1, 2006Mark A. King(12)


873,331




*











*


*Warren D. Edwards(13)


270,308




*











*


*All Current and Listed Former
    Executive Officers and Directors as a Group(14)


4,500,863



4.76
%


6,599,372



100
%


10.97
%


42.37
%     *
    
    Less than 1%(1)
    
    In calculating the percent of total voting power, the voting
    power of shares of Class A common stock (one vote per
    share) and Class B common stock (ten votes per share) are
    aggregated. As of December 31, 2006, there were
    92,314,491 shares of Class A common stock and
    6,599,372 shares of Class B common stock issued and
    outstanding.(2)
    
    Based on filings by the stockholder with the Securities and
    Exchange Commission dated November 14, 2006. Such
    stockholder has indicated that it has sole voting power with
    respect to 4,489,977 shares and no voting power with
    respect to the remaining shares and sole investment power with
    respect to all shares.(3)
    
    Based on a filing by the stockholder with the Securities and
    Exchange Commission dated November 14, 2006. Such
    stockholder has indicated that it has sole voting power with
    respect to 684,615 shares and no voting power with respect
    to the remaining shares and sole investment power with respect
    to all shares.(4)
    
    The shares of our Class A common stock noted in the table
    include 480,000 shares of Class A common stock which
    are not outstanding but are subject to options exercisable
    within sixty days of December 31, 2006; and
    6,545 shares owned by Mr. Deason through the ACS
    Employee Stock Purchase Plan. We have filed a registration
    statement on
    Form S-3
    with the Securities and Exchange Commission covering
    1,504,562 shares of Class A common stock owned by
    Mr. Deason. See discussion of Mr. Deasons voting
    rights under the section entitled Voting Rights of Our
    Chairman.(5)
    
    Includes 372,000 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006. 164




---



##### Table of Contents



(6)
    
    Includes 20,000 shares of our Class A common stock,
    which are not outstanding, but are subject to options
    exercisable within sixty days of December 31, 2006.(7)
    
    Includes 15,500 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006.(8)
    
    Includes 75,500 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006.(9)
    
    Includes 13,500 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006. All shares are held
    in the Livingston Kosberg Trust. Mr. Kosberg holds the sole
    voting power and sole investment power with respect to such
    shares as Trustee.(10)
    
    Includes 13,500 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006. All shares are held
    in the McCuistion and Associates, Inc. Profit Sharing Plan.
    Mr. McCuistion holds the sole voting power and sole
    investment power with respect to such shares.(11)
    
    Includes 1,273,400 shares of our Class A common stock,
    which are not outstanding, but are subject to options
    exercisable within sixty days of December 31, 2006;
    2,198 shares of our Class A common stock owned through
    the ACS 401(k) Plan; and 12,721 shares of our Class A
    common stock owned through the ACS Employee Stock Purchase Plan.(12)
    
    Includes 778,000 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006; 46,875 shares
    of our Class A common stock owned through King Partners,
    Ltd., for which Mr. King holds the sole voting and
    investment power as manager of the general partner;
    9,378 shares of our Class A common stock owned by
    Mr. Kings spouse, to which Mr. King disclaims
    beneficial ownership; 2,343 shares of our Class A
    common stock owned through the ACS 401(k) Plan; and
    5,986 shares of our Class A common stock owned by
    Mr. King through the ACS Employee Stock Purchase Plan.
    Mr. King resigned as a director and our President and Chief
    Executive Officer effective as of November 26, 2006.(13)
    
    Includes 265,000 shares of Class A common stock, which
    are not outstanding, but are subject to options exercisable
    within sixty days of December 31, 2006; and 434 shares
    owned through the ACS 401(k) Plan. Mr. Edwards resigned as
    our Executive Vice President and Chief Financial Officer
    effective as of November 26, 2006.(14)
    
    Includes 2,316,400 shares of our Class A common stock,
    which are not outstanding, but are subject to options
    exercisable within sixty days of December 31, 2006;
    4,975 shares of our Class A common stock owned through
    the ACS 401(k) plan; and 18,707 shares of our Class A
    common stock owned through the ACS Employee Stock Purchase Plan.  Equity
    Compensation Plan Information
  Form 10-K.
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    daughter-in-law
 165




---



##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Independent
    Registered Public Accounting Firms Fees
    2006


2005Audit Fees

$
3,741


$
2,773Audit-Related Fees


412



154Tax Fees


87



313All Other Fees


93



6Total Fees

$
4,333


$
3,246      166




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES                    167




---



##### Table of Contents



SIGNATURES
      By:
    /s/  John
    H. Rexford        Signature

Title/s/  Darwin
    Deason(Darwin
    Deason)

Director, Chairman of the Board/s/  Lynn
    R. Blodgett(Lynn
    R. Blodgett)

Director, President and Chief
    Executive Officer/s/  John
    H. Rexford(John
    H. Rexford)

Director, Executive Vice President
    and Chief Financial Officer/s/  Charles
    E. McDonald(Charles
    E. McDonald)

Senior Vice President and Chief
    Accounting Officer/s/  J.
    Livingston Kosberg(J.
    Livingston Kosberg)

Director/s/  Joseph
    P. ONeill(Joseph
    P. ONeill)

Director/s/  Frank
    A. Rossi(Frank
    A. Rossi)

Director/s/  Dennis
    McCuistion(Dennis
    McCuistion)

Director(Robert
    B. Holland, III)

Director  168




---



##### 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

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 February 9, 2006 and incorporated herein by
    reference). 169




---



##### Table of Contents



ExhibitNumber

Exhibit Name10
.1

Amended Stock Option Plan of the
    Company (filed as Exhibit 10.1 to Amendment No. 1 to
    our Registration Statement on
    Form S-1,
    filed July 15, 1994, File
    No. 33-79394
    and incorporated herein by reference).10
.2

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
.3

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
.4

Form of Directors Indemnification
    Agreement (filed as Exhibit 10.20 to Amendment No. 3
    to our Registration Statement on
    Form S-1,
    filed August 23, 1994, File
    No. 33-79394
    and incorporated herein by reference).10
.5

Form of Severance Agreement, each
    dated as of March 1, 2004 except as otherwise noted, by and
    between Affiliated Computer Services, Inc. and each of Mark A.
    King, Warren D. Edwards, Lynn Blodgett, Harvey Braswell
    (September 14, 2004), John Brophy, William L.
    Deckelman, Jr. and Ann Vezina (May 25, 2006) (filed as
    Exhibit 10.1 to our Quarterly Report on
    Form 10-Q,
    filed May 17, 2004 and incorporated herein by reference).10
.6

Form of Amendment No. 1 to
    Severance Agreement, each dated as of February 2, 2005, by
    and between Affiliated Computer Services, Inc. and each of Mark
    A. King, Warren D. Edwards, Lynn Blodgett, Harvey Braswell, John
    Brophy and William L. Deckelman, Jr. (filed as
    Exhibit 10.1 to our Quarterly Report on
    Form 10-Q,
    filed February 8, 2005 and incorporated herein by
    reference).10
.7

Severance Agreement, dated as of
    February 2, 2005, by and between Affiliated Computer
    Services, Inc. and John Rexford (filed as Exhibit 10.2 to our
    Quarterly Report on
    Form 10-Q,
    filed February 8, 2005 and incorporated herein by
    reference).10
.8

Severance Agreement, dated as of
    June 13, 2005, by and between Affiliated Computer Services,
    Inc. and Tom Burlin (filed as Exhibit 10.1 to our Current
    Report on
    Form 8-K,
    filed June 16, 2005 and incorporated herein by reference).10
.9

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
.10

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
.11

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
.12

Employment Agreement, dated
    February 16, 1999 between the Company and Darwin Deason
    (filed as Exhibit 10(iii)(A) to our Quarterly Report on
    Form 10-Q,
    filed May 17, 1999 and incorporated herein by reference).10
.13

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
.14

Five Year Competitive Advance and
    Revolving Credit Facility Agreement, dated as of
    October 27, 2004, by and among Affiliated Computer
    Services, Inc., other Borrowers from time to time party thereto,
    the Lender Parties from time to time party thereto, JPMorgan
    Chase Bank, as Administrative Agent, Wells Fargo Bank, National
    Association, as Syndication Agent, and others (filed as
    Exhibit 10.1 to our Current Report on
    Form 8-K,
    filed October 29, 2004 and incorporated herein by
    reference).10
.15

Guaranty, dated as of
    October 27, 2004, by Affiliated Computer Services, Inc. for
    the benefit of JPMorgan Chase Bank, as Administrative Agent for
    the benefit of the Lender Parties (filed as Exhibit 10.2 to
    our Current Report on
    Form 8-K,
    filed October 29, 2004 and incorporated herein by
    reference).10
.16

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
.17

Summary of Independent Director
    Compensation (filed as Item 1.01 of our Current Report on
    Form 8-K,
    filed August 29, 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). 170




---



##### Table of Contents



ExhibitNumber

Exhibit Name10
.20

Named Executive Officer
    Compensation (filed as Item 1.01 of our Current Report on
    Form 8-K,
    filed September 14, 2005 and incorporated herein by
    reference).10
.21

Named Executive Officer
    Compensation (filed as Item 1.01 of our Current Report on
    Form 8-K,
    filed October 3, 2005 and incorporated herein by reference).10
.22

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
.23

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
.24

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
.25

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
.26

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
.27

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
.28

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
.29

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
.30

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
.31

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
.32

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
.33

Form of Stock Option Agreement
    (Switzerland, Canton of Fribourg) (filed as Exhibit 10.8 to
    our Quarterly Report on
    Form 10-Q,
    filed May 15, 2006 and incorporated herein by reference).10
.34

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 15, 2006 and incorporated herein by reference).10
.35

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
.36

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).10
.37

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). 171




---



##### Table of Contents



ExhibitNumber

Exhibit Name10
.38

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
.39

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 this
    reference).10
.40

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).10
.41

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).21
.1

Subsidiaries of the Company (filed
    as Exhibit 21.1 to our Annual Report on Form 10-K, filed January
    23, 2007 and incorporated herein by reference).23
.1

Consent of PricewaterhouseCoopers
    LLP (filed as Exhibit 23.1 to our Annual Report on Form 10-K,
    filed January 23, 2007 and incorporated herein by reference).23
.2

Consent of Value Incorporated
    (filed as Exhibit 23.2 to our Annual Report on Form 10-K, filed
    January 23, 2007 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. 172