##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
      FORM 10-K
  x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 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 0-22141
      Covansys Corporation
 (Exact name of registrant as
    specified in its charter)
  Michigan

38-2606945(State or Other Jurisdiction
    of
    Incorporation or Organization)

(IRS Employer Identification No.)48334-3339(Zip
    Code)   32605 West Twelve Mile Road
 Farmington Hills, Michigan
 (Address of principal executive
    office)
  (248) 488-2088
 Registrants telephone number,
    including area code
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Exchange on Which RegisteredCommon Stock, No Par Value

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act: None
      o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o þ o
  o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



COVANSYS
    CORPORATION AND SUBSIDIARIES
  FORM
    10-K
  For the Fiscal Year Ended December 31, 2006
  INDEX
   
 PART
    IItem 1.

Business


2Item 1A.

Risk
    Factors


5Item 1B.

Unresolved Staff
    Comments


8Item 2.

Properties


9Item 3.

Legal
    Proceedings


9Item 4.

Submission of
    Matters to a Vote of Security Holders


9PART IIItem 5.

Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


10Item 6.

Selected Financial
    Data


11Item 7.

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


12Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


22Item 8.

Financial
    Statements and Supplementary Data


24Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


54Item 9A.

Controls and
    Procedures


54Item 9B.

Other
    Information


57PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


57Item 11.

Executive
    Compensation


57Item 12.

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


57Item 13.

Certain
    Relationships and Related Transactions and Director
    Independence


57Item 14.

Principal
    Accountant Fees and Services


58PART IVItem 15.

Exhibits, Financial
    Statement Schedules


58Signatures


59Subsidiaries of RegistrantConsent of BDO Seidman, LLPConsent of PricewaterhouseCoopers LLPCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906   1




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##### Table of Contents



PART
    I  Item 1.
    Business  Summary
  industry-specific
        
    Custom Application Development, which may include
    the design, development and implementation of custom computer
    information systems.
    Packaged Software Implementation and Enhancements,
    including the configuration, customization and implementation of
    packaged information system software products.
    Application Maintenance and Development Outsourcing
    (AMD/O), which may include the ongoing
    operations and enhancement of custom or packaged information
    system software products.
    Legacy Modernization, which may include the
    migration of legacy applications to newer architecture platforms
    in order to reduce maintenance and operational costs, or
    extending customer legacy applications with new technology
    enhancements or components, such as web enablement.
    Business Process Outsourcing Information Technology
    Enabled Services (BPO/ITS), including
    transaction processing services such as claims, invoices and
    document processing.  (SEI-PCMM ® ®
   2




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##### Table of Contents



Year EndedDecember 31,2006


2005Revenue

$
21,905


$
75,741Income (loss) from operations


(3,238
)


2,793             Segment
    Information
    Competition
   3




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##### Table of Contents



Strategy
    e-business
      Human
    Resources
  company-matched
  on-line
      Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
 4




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##### Table of Contents



Item 1A.
    Risk
    Factors  Form 10-K
    Changes
    in Estimates Could Effect the Profitability of Our Fixed Price
    Projects
      Internal
    Control Weaknesses Could Effect the Reliability of Our Financial
    Statements
   5




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##### Table of Contents



Our
    Operating Results are Difficult to Predict Because They Vary
    from Quarter to Quarter
    
    The timing and number of client projects commenced and completed
    during a quarter;
    Changes in the rates we charge clients for services;
    Employee hiring, attrition, utilization and billing rates;
    Progress on fixed-price projects during a quarter; and
    Our ability to obtain a written contract prior to the end of a
    quarter.    Failure
    to Recruit, Train and Retain Skilled Resources Could Increase
    Costs or Limit Growth
    Government
    Regulation of Immigration may Negatively Impact Our Ability to
    Staff Projects.
  H-1B H-1B H-1B
  Potential
    Anti-Outsourcing Legislation.
    Dependence
    on Key Personnel.
   6




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##### Table of Contents



We are
    Exposed to Regulatory, Political and General Economic Conditions
    in India and Asia that Differ from Those in the United
    States
        Our
    Contracts are Short-Term and Contain Termination Provisions that
    Exposes Us to Greater Variability in Revenue
    We
    Operate in Highly Competitive Markets That Could Effect Our
    Profitability
    Some of
    Our Clients May Experience Unique Economic Conditions that are
    Specific to Their Particular Industry
    
    The inability of participants in the industry to access the
    capital or credit markets;
    Business slowdowns due to excess inventory; and
    Shortfalls in demand for the product or service produced by a
    particular industry. 7




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##### Table of Contents



We
    Frequently Need to Negotiate Contract Renewals on Comparable
    Terms to Maintain Our Profitability
    We Have
    Limited Protection of Our Intellectual Property Rights
    Our
    Services May Infringe Upon the Intellectual Property Rights of
    Others
    We May
    Face Legal Liabilities and Damage to our Professional Reputation
    From Claims Made Against Our Work.
    We May
    Fail to Properly Manage Acquisitions and Strategic
    Investments
      
    Diversion of managements attention;
    Failure to retain key personnel of the acquired business;
    Assumption of unanticipated legal liabilities and other
    problems; and
    Difficulties in integrating systems, operations and cultures.   Item 1B.
    Unresolved
    Staff Comments   8




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##### Table of Contents



Item 2.
    Properties      Commercial

Public SectorNorth America

International

North America

OtherSchaumburg, IL
    Jacksonville, FL
    Montreal, Canada
    Santa Clara, CA

Bangalore, India
    Brussels, Belgium
    Chennai, India
    London, UK
    Madrid, Spain
    Mumbai, India
    Munich, Germany
    Rome, Italy
    Shanghai, China
    Singapore
    Vadodara, India

Germantown, MD
    Greenwood, IN
    Kennesaw, GA
    Lenexa, KS
    Overland Park, KS

Farmington Hills, MI    Item 3.
    Legal
    Proceedings    (C-03825).
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   9




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##### Table of Contents



PART
    II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities    Price Range of Common StockHigh


LowYear Ended December 31, 2006:First Quarter

$
17.21


$
13.33Second Quarter

$
18.00


$
12.38Third Quarter

$
18.75


$
10.84Fourth Quarter

$
24.68


$
16.89Year Ended December 31, 2005:First Quarter

$
14.95


$
11.31Second Quarter

$
15.70


$
9.36Third Quarter

$
16.88


$
12.71Fourth Quarter

$
16.90


$
13.51       
  12/01


12/02


12/03


12/04


12/05


12/06Covansys



100.00




41.90




122.91




170.95




152.07




256.42S&P 500



100.00




76.63




96.85




105.56




108.73




123.54Russell 2000



100.00




78.42




114.00




133.38




137.81




161.24      10




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended December 31,2006(a)(b)


2005(b)


2004(c)


2003


2002(d)(e)(In thousands, except per share data)Statement of Operations
    Data:Revenue

$
455,471


$
434,120


$
374,373


$
378,630


$
383,053Cost of revenue


332,307



316,109



281,114



286,183



284,427Gross profit


123,164



118,011



93,259



92,447



98,626Selling, general and
    administrative expenses


74,867



72,097



72,342



82,731



97,957Income from operations


48,297



45,914



20,917



9,716



669Interest expense


41



495



245







Other income, net


5,012



3,507



1,317



1,781



4,110Income before provision for income
    taxes


53,268



48,926



21,989



11,497



4,779Provision for income taxes


17,348



11,388



4,485



1,378



886Net income


35,920



37,538



17,504



10,119



3,893Convertible redeemable preferred
    stock dividends










3,221



4,433



4,298Loss on redemption of convertible
    redeemable preferred stock










28,674







Net income (loss) available for
    shareholders


35,920



37,538



(14,391
)


5,686



(405
)Amounts allocated to participating
    preferred shareholders














(1,385
)


Net income (loss) available to
    common  shareholders

$
35,920


$
37,538


$
(14,391
)

$
4,301


$
(405
)Earnings (loss) per shareBasic

$
0.97


$
1.00


$
(.48
)

$
.16


$
(.01
)Diluted

$
0.95


$
.99


$
(.48
)

$
.16


$
(.01
)Basic weighted average shares


36,855



37,364



29,971



26,975



27,734Dilutive effect of options and
    warrants


839



596



(A
)


229



Convertible redeemable preferred
    stock










(A
)


(A
)


(A
)Diluted weighted average shares


37,694



37,960



29,971



27,204



27,734   (A)
    Anti-dilutive  As of December 31,2006


2005


2004


2003


2002(In thousands)Balance Sheet Data:Cash and short term investments

$
122,277


$
81,362


$
71,250


$
127,475


$
101,551Working capital


173,805



144,910



112,433



187,528



163,110Total assets


297,328



271,261



248,802



314,871



304,936Revolving credit facility and
    long-term debt


















Convertible redeemable preferred
    stock














168,655



164,222Total shareholders equity


231,630



207,860



174,191



87,726



78,565   (a)
    In March 2006, the Company entered into an agreement to sell the
    assets and certain liabilities of the Companys state and
    local government consulting practice, resulting in a pre tax
    loss of $285. See Note 2 to the Consolidated Financial
    Statements for further discussion. 11




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##### Table of Contents



(b)
    In September and December, 2005 we acquired 95% of the voting
    stock of Fortune, located in Vadodara, India, in two separate
    transactions. Also, in November 2005, we acquired all of the
    voting stock of TSPI, located in Jacksonville, FL. Both
    acquisitions were accounted for by the purchase method of
    accounting and, accordingly, their operating results have been
    included in the consolidated financial statements since their
    dates of acquisition. In May 2006, the Company entered into an
    agreement to sell a portion of its ownership interest in Fortune
    to Fidelity National Financial, Inc., resulting in a pre-tax
    gain of $67. See Note 6 to the Consolidated Financial Statements
    for further discussion.  (c)
    In April 2004, we entered into a Stock Purchase Agreement
    with Fidelity Information Services, Inc. (FIS), a
    subsidiary of Fidelity National Financial, Inc. and a
    Recapitalization Agreement with a private equity investment fund
    managed by Clayton, Dubilier & Rice, Inc. (CDR)
    to restructure CDRs stock ownership. See Note 3 to
    the Consolidated Financial Statements for further discussion.(d)
    On May 31, 2002, we acquired all of the capital stock of
    PDA. This acquisition was accounted for by the purchase method
    of accounting and, accordingly, the operating results of PDA
    have been included in the consolidated financial statements
    since the date of acquisition.(e)
    The Company adopted SFAS 142 effective January 1,
    2002, and ceased amortizing goodwill. The Company completed the
    transitional goodwill impairment testing as required by
    SFAS 142, during 2002. These evaluations indicated that
    goodwill was not impaired.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following section should be read in conjunction with our
    Consolidated Financial Statements and related Notes appearing in
    Item 8 of this
    Form 10-K.
    With the exception of statements regarding historical matters
    and statements concerning our current status, certain matters
    discussed in this Managements Discussion and
    Analysis of Financial Condition and Results of Operations
    are forward-looking statements subject to the safe
    harbor created by the Private Securities Litigation Reform Act
    of 1995 that involve substantial risks and uncertainties. Such
    forward-looking statements may be identified by the words
    anticipate, believe,
    estimate, expect or intend
    and similar expressions. Our actual results, performance or
    achievements could differ materially from these forward-looking
    statements. Please refer to Item 1A Risk
    Factors for additional disclosure of risk factors related
    to the Company.
  Overview
       12




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Year EndedDecember 31,2006


2005Revenue

$
21,905


$
75,741Income (loss) from operations


(3,238
)


2,793         Critical
    Accounting Policies and Estimates
     13




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Revenue
    Recognition                 14




---



##### Table of Contents



(EITF) 00-21,
      Impairment of Long-Lived Assets.
  Computer Software.
  Goodwill.
  Income Taxes.
   15




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##### Table of Contents



Liquidity
    and Capital Resources
                Off-Balance
    Sheet Arrangements
      Payment
    Due by Period After December 31, 2006
  Less Than


1 to 2


3 to 5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 Years(In thousands)Operating leases

$
43,514


$
7,007


$
13,901


$
10,706


$
11,900  16




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##### Table of Contents



Results
    of Operations
   Years Ended December 31,2006


2005


2004Revenue


100.0
%


100.0
%


100.0
%Cost of revenue


73.0



72.8



75.1Gross profit


27.0



27.2



24.9Selling, general and
    administrative expenses


16.4



16.6



19.3Income from operations


10.6
%


10.6
%


5.6
%     Years Ended December 31,2006


2005


2004Revenue Commercial

$
396,158


$
334,806


$
287,574Less intersegment


(1,823
)


(6,949
)


(5,052
)394,335



327,857



282,522Public Sector


61,136



106,263



91,199Other










652$
455,471


$
434,120


$
374,373Gross profit Commercial

$
115,607


$
101,735


$
85,702Public Sector


11,965



19,288



10,718Other


(4,408
)


(3,012
)


(3,161
)$
123,164


$
118,011


$
93,259   2006
    Compared with 2005  Revenue.
       17




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##### Table of Contents



Gross Profits
      Selling, General and Administrative
    Expenses.
  Interest Expense.
  Other Income, Net.
  Provision for Income Taxes.
 18




---



##### Table of Contents



2005
    Compared with 2004  Revenue.
          Gross Profit.
   19




---



##### Table of Contents



Selling, General and Administrative.
    Interest Expense.
  Other Income, Net.
  Provision for Income Taxes.
 20




---



##### Table of Contents



Restructuring
    and Other Related Charges
    Related
    Party Transactions
             21




---



##### Table of Contents



Recently
    Issued Financial Accounting Standards
          Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K 
  Foreign
    Exchange Risk
     22




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##### Table of Contents



Interest
    Rate Risk
    Derivative
    Risk
   23




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 24




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
         25




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##### Table of Contents



COVANSYS
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
  December 31,2006


2005(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
91,007


$
58,030Short term investments


31,270



23,332Accounts receivable, net of
    allowance for doubtful accounts
    of $1,326 and $1,357 at December 31, 2006 and 2005


94,229



82,526Revenue earned in excess of
    billings


2,981



25,632Deferred taxes


4,816



6,275Prepaid expenses and other


7,505



8,842Total current assets


231,808



204,637Property and equipment, net


33,464



34,506Computer software, net


491



2,150Goodwill


22,545



21,893Deferred taxes


3,644



3,086Other assets


5,376



4,989Total assets

$
297,328


$
271,261LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
12,864


$
14,346Accrued payroll and related costs


22,591



21,542Taxes payable


1,674



1,438Other accrued liabilities


20,814



19,618Deferred revenue


60



2,783Total current liabilities


58,003



59,727Other liabilities


7,695



3,674Commitment and contingenciesShareholders equity:Preferred stock, no par value,
    1,000,000 shares authorized, 0 shares issued as convertible
    redeemable preferred stock as of December 31, 2006 and 2005






Common stock, no par value,
    200,000,000 shares authorized, 36,351,255 and 37,398,342 shares
    issued and outstanding as of December 31, 2006 and 2005,
    respectively






Additional paid-in capital


149,553



165,496Retained earnings


79,891



43,971Accumulated other comprehensive
    income (loss)


2,186



(1,607
)Total shareholders equity


231,630



207,860Total liabilities and
    shareholders equity

$
297,328


$
271,261    26




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##### Table of Contents



COVANSYS
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004(In thousands, except per share data)Revenue

$
455,471


$
434,120


$
374,373Cost of revenue


332,307



316,109



281,114Gross profit


123,164



118,011



93,259Selling, general and
    administrative expenses


74,649



72,097



72,342Net loss on sale of businesses


218







Income from operations


48,297



45,914



20,917Interest expense


41



495



245Other income, net


(5,012
)


(3,507
)


(1,317
)Income before provision for income
    taxes


53,268



48,926



21,989Provision for income taxes


17,348



11,388



4,485Net income


35,920



37,538



17,504Convertible redeemable preferred
    stock dividends










3,221Loss on redemption of convertible
    redeemable preferred stock










28,674Net income (loss) available to
    common shareholders

$
35,920


$
37,538


$
(14,391
)Earnings (loss) per shareBasic

$
.97


$
1.00


$
(.48
)Diluted

$
.95


$
.99


$
(.48
)Basic weighted average shares


36,855



37,364



29,971Dilutive effect of options and
    warrants


839



596



(A
)Convertible redeemable preferred
    stock










(A
)Diluted weighted average shares


37,694



37,960



29,971   (A)
    Anti-dilutive   27




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##### Table of Contents



COVANSYS
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 AND COMPREHENSIVE INCOME
  AccumulatedCommon











OtherStock


Additional


Retained


Stock


Comprehensive


TotalShares


Paid-In


Earnings


Subscriptions


Income


ShareholdersOutstanding


Capital


(Deficit)


Receivable


(Loss)


Equity(Dollars in thousands)Balance 
    December 31, 2003


26,792,547


$
93,165


$
(1,831
)

$
(1,790
)

$
(1,818
)

$
87,726Net income










17,504











17,504Currency translation adjustment


















3,622



3,622Unrealized losses on short-term
    investments


















(29
)


(29
)Comprehensive income






















21,097Stock options exercised


170,942



1,385















1,385Repayment of stock subscriptions
    receivable


(56,534
)


(961
)






1,790







829Issuances of common stock and other


64,909



712















712Repurchase of common stock


(253,100
)


(2,408
)














(2,408
)Convertible redeemable preferred
    stock dividend






(2,268
)


(953
)










(3,221
)Net proceeds from issuance of
    common stock and warrants to FIS


8,700,000



92,832















92,832Net effect of redemption of
    convertible redeemable preferred stock and warrants


2,000,000



(16,474
)


(8,287
)










(24,761
)Balance 
    December 31, 2004


37,418,764



165,983



6,433







1,775



174,191Net income










37,538











37,538Currency translation adjustment


















(3,378
)


(3,378
)Reclassification of unrealized
    losses on
    short-term
    investments


















29



29Unrealized (loss) on short-term
    investments


















(33
)


(33
)Comprehensive income






















34,156Stock options exercised


395,278



4,316















4,316Repurchase of common stock


(415,700
)


(4,803
)














(4,803
)Balance 
    December 31, 2005


37,398,342



165,496



43,971







(1,607
)


207,860Net income










35,920











35,920Currency translation adjustment


















3,622



3,622Reclassification of unrealized
    losses on short-term investments


















33



33Unrealized gain on short term
    investments


















138



138Comprehensive income






















39,713FAS 123R compensation expense






1,726















1,726Stock options exercised


563,134



5,450















5,450Tax benefit of stock options
    exercised






863















863Repurchase of common stock


(1,610,221
)


(23,982
)














(23,982
)Balance 
    December 31,2006


36,351,255


$
149,553


$
79,891


$



$
2,186


$
231,630    28




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##### Table of Contents



COVANSYS
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004(Dollars in thousands)Cash flows provided by (used in)
    operating activities Net income

$
35,920


$
37,538


$
17,504Adjustments to reconcile net income
    to net cash provided by (used in) operating activities:Depreciation and amortization


12,371



13,145



13,391Loss on disposal and obsolescence
    of property and equipment


260



155



1,395Loss on sale of businesses


218







Provision for doubtful accounts


520



63



892Provision for deferred income taxes


907



1,316



770Stock based compensation cost


1,446







Stock option modification expense
    and other






(6
)


271Impairment of long-lived assets






52



1,225Gain from sale of development center






(1,000
)


Loss (gain) from sale of short term
    investments


(52
)


5



(153
)Gain on sale of long-term investment


(915
)






Change in assets and liabilities,
    net of acquisitions and divestitures:Accounts receivable and revenue
    earned in excess of billings


(15,592
)


(5,230
)


799Prepaid expenses and other assets


(554
)


69



5,073Accounts payable, accrued payroll
    and related costs and other  liabilities


976



5,582



(1,776
)Net cash provided by operating
    activities


35,505



51,689



39,391Cash flows provided by (used in)
    investing activities Investment in property, equipment
    and other


(14,587
)


(16,991
)


(10,167
)Investment in computer software






(83
)


(208
)Proceeds from sale of businesses


33,528







Proceeds from sale of long-term
    investment


915







Proceeds from sale of property and
    equipment


1,382







Proceeds from sale of development
    center


200



800



Proceeds from sale of available for
    sale securities


140,798



130,642



112,750Purchases of available for sale
    securities


(148,215
)


(131,833
)


(95,427
)Business acquisitions, net of cash
    acquired






(7,022
)


Net cash provided by (used in)
    investing activities


14,021



(24,487
)


6,948Cash flows provided by (used in)
    financing activities Repayment of subordinated notes






(17,500
)


Net proceeds from issuances of
    common stock and other










93,906Net proceeds from exercise of stock
    options and other


5,450



3,509



1,385Tax benefit from stock options
    exercised


1,006







Repurchases of common stock


(23,982
)


(4,803
)


(2,408
)Redemption of convertible
    redeemable preferred stock
    and warrants










(179,139
)Net cash used in financing
    activities


(17,526
)


(18,794
)


(86,256
)Effect of exchange rate changes on
    cash


977



(219
)


87Increase (decrease) in cash
    and cash equivalents


32,977



8,189



(39,830
)Cash and cash equivalents at
    beginning of year


58,030



49,841



89,671Cash and cash equivalents at end of
    year

$
91,007


$
58,030


$
49,841Supplemental disclosure of cash
    flow information:Cash paid (received) during
    the year for:Income taxes

$
15,555


$
11,481


$
5,604Interest

$
14


$
664


$
Noncash financing
    activities Debt issued in connection with
    redemption of convertible redeemable preferred stock and warrants

$



$



$
17,500    29




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##### Table of Contents



COVANSYS
    CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands, except per share data)
  1.  Organization
    and Summary of Significant Accounting Policies
  Operations    Principles
    of Consolidation and Organization    Foreign
    Currency      Comprehensive
    Income    Cash
    and Cash Equivalents    Short
    Term Investments  available-for-sale. available-for-sale
    December 31,2006


2005Fair value

$
31,270


$
23,332Cost


31,132



23,365Gross unrealized gain (loss)


138



(33
)  30




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  Financial
    Instruments    Investments      December 31,2006


2005Cost Method:Investcare*

$
654


$
654     Goodwill    Property
    and Equipment      Long-Lived
    Assets   31




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  Revenue
    Recognition  time-and-material
  time-and-materials time-and-materials
             32




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
        Computer
    Software          Income
    Taxes   33




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Other
    Income, Net    Net
    Income (Loss) Per Share  Issue 03-6
  Year Ended December 31,2006


2005


2004Common stock equivalents related
    to convertible redeemable preferred stock










6,140,060Warrants issued to CDR to purchase
    5,300,000 shares of common stock










3,742,366Warrants issued to CDR to purchase
    5,000,000 shares of common stock






5,000,000



1,469,466Warrants issued to FIS to purchase
    4,000,000 shares of common stock


1,000,000



3,000,000



1,175,573Average number of stock options
    outstanding


379,611



650,562



3,056,541   Issue 03-6. 03-6 Issue 03-6 Issue 03-6
  Use of
    Estimates in the Preparation of Financial
    Statements    percentage-of-completion
 34




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Stock
    Options         35




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Year EndedDecember 31,2005


2004Net income (loss) available for
    common shareholders:As reported

$
37,538


$
(14,391
)Stock-based employee compensation
    cost included in the determination of net income (loss)
    available for common shareholders






243Stock-based employee compensation
    cost had the fair value method been used


2,750



1,698SFAS No. 123 pro forma

$
34,788


$
(15,846
)Basic earnings (loss) per share:As reported

$
1.00


$
(.48
)SFAS No. 123 pro forma

$
.93


$
(.53
)Diluted earnings (loss) per share:As reported

$
.99


$
(.48
)SFAS No. 123 pro forma

$
.92


$
(.53
)     Recently
    Issued Financial Accounting Standards
       36




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    2.  Sale
    of State and Local Government Consulting Practice
      Year EndedDecember 31,2006


2005Revenue

$
21,905


$
75,741Income (loss) from operations


(3,238
)


2,793         3.
    Recapitalization     37




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
      D-42, 00-27,
  4.
    Fixed
    Price Contracts           38




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    5.
    Common
    Stock Repurchase Program    6.
    Acquisitions        Short-term investments

$
1,317Accounts receivable, net


1,321Prepaids and other current assets


41Property and equipment, net


2,477Other assets


60Goodwill


3,262Accounts payable


12Accrued payroll and other


1,444    39




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  7.
    Goodwill    Goodwill balance at
    January 1, 2005

$
19,148Acquisitions


3,262Foreign currency translation
    adjustment


(517
)Goodwill balance at
    December 31, 2005


21,893Sale of business


(100
)Currency translation


752Goodwill balance at
    December 31, 2006

$
22,545     December 31,2006


2005Commercial

$
16,184


$
15,532Public Sector


6,361



6,361$
22,545


$
21,893     8.
    Accounts
    Receivable and Credit Risk      2006


2005


2004Balance  beginning of
    period

$
1,357


$
1,532


$
1,789Provision


520



63



892Charge-offs


(551
)


(238
)


(1,149
)Balance  end of period

$
1,326


$
1,357


$
1,532    40




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  9.
    Property
    and Equipment    EstimatedDecember 31,


Useful2006


2005


LivesEquipment and purchased software

$
63,544


$
62,752



3-10 yearsFurniture and fixtures


5,444



5,464



5-7 yearsLeasehold Improvements


12,275



11,010



5-7 yearsBuildings


2,655



2,945



31 years83,918



82,171Accumulated depreciation


(50,454
)


(47,665
)Property and equipment, net

$
33,464


$
34,506     10.  Related
    Party Transactions
    
    Fidelity Information Services (FIS), a subsidiary of
    Fidelity National Financial, Inc., is a stockholder of the
    Company with representation on its Board of Directors.
    Synova, Inc. and its subsidiaries (Synova) is a
    professional services organization owned by the Companys
    Chairman, Chief Executive Officer, and President.
    Clayton, Dublier & Rice, Inc. (CDR) is a
    stockholder of the Company with representation on its Board of
    Directors.
    SIRVA, Inc. (SIRVA) is a company related through
    common ownership of CDR.
    Chesapeake Group, Inc. (Chesapeake) is a company
    owned by a Director and shareholder of the company. 41




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
     Receivablefrom(Payable to)Purchases


RelatedSales to


from


PartyRelated


Related


as ofParty


Party


December 31,FIS


2006


$
42,681


$



$
8,4962005



17,298







3,4152004



5,070







2,259Synova


2006



1,750



7,014



(560
)2005



2,074



4,786



(689
)2004



2,520



2,051



(206
)SIRVA


2006



6,430







5332005



8,391







4062004



9,974







1,411Chesapeake


2006







555



2005







321



2004







903



   out-of-pocket
    out-of-pocket
       42




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    11.
    Credit
    Agreement        12.
    Self-Insurance    13.
    Leases  Bulletin 85-3,
    2007

$
7,0072008


7,3732009


6,5282010


6,1942011


4,512Thereafter


11,900   14.
    Stock
    Options   43




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
      2006


2005


2004Expected volatility


35-47
%


43-44
%


49-58
%Expected dividends


0
%


0
%


0
%Expected term (in years)


4.0



4.0



4.0Risk-free rate


4.3-5.1
%


3.7-4.3
%


3.2-3.9
%     Year Ended December 31, 2006Weighted AverageWeighted Average





Remaining Contractual


AggregatePrice per





Life in


IntrinsicOption


Shares


Years


ValueOutstanding December 31, 2005

$
12.09



2,652Granted

$
14.34



85Exercised

$
9.67



(563
)Expired

$
18.31



(213
)Forfeited

$
12.61



(274
)Outstanding December 31, 2006

$
12.13



1,687



6.09


$
18,469Ending vested and expected to vest

$
12.12



1,622



6.04


$
17,800Exercisable December 31, 2006

$
12.12



1,076



5.04


$
11,886         15.  Benefit
    Plans
  Defined
    Contribution Plan
   44




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
      Defined
    Benefit Plan
       45




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Year Ended December 31,2006


2005Change in projected benefit
    obligationsAt beginning of year

$
1,600


$
1,350Service cost


833



508Interest cost


121



99Actuarial (gain)


(30
)


(101
)Sale of PeopleSoft development
    center






(79
)Benefits paid


(201
)


(98
)Currency fluctuation


93



(79
)Benefit obligations at end of year


2,416



1,600Change in plan assetsAt beginning of year


1,277



1,031Return on plan assets


107



97Contributions


525



387Sale of PeopleSoft development
    center






(78
)Benefits paid


(201
)


(98
)Currency fluctuation


52



(62
)Plan assets at end of year


1,760



1,277Funded status of plan at end of
    year

$
(656
)

$
(323
)   Other
    16.  Income
    Taxes
   46




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Year Ended December 31,2006


2005


2004Current Federal

$
11,884


$
5,551


$
1,173State and local


1,849



1,290



531Foreign


2,708



3,231



2,011Total current


16,441



10,072



3,715Deferred Federal


557



990



238State and local


545



543



414Foreign


(195
)


(217
)


118Total deferred


907



1,316



770Total provision

$
17,348


$
11,388


$
4,485   non-U.S.
    Year Ended December 31,2006


2005


2004Federal statutory rate


35
%


35
%


35
%Effect of Tax effect on foreign earnings not
    subject to U.S. tax


(6
)


(8
)


(10
)Reversal of valuation allowance


(1
)


(1
)


(10
)Foreign tax credits


(1
)






Nondeductible expenses


1







1State taxes, net of federal tax
    effect


3



3



2Taxes on distributions from
    foreign subsidiaries


1



1



2Adjustment of tax contingency
    reserves






(6
)


Other, net


1



(1
)


33
%


23
%


20
%  47




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    Year Ended December 31,2006


2005Deferred tax assets Accrued expenses

$
4,144


$
4,817Allowance for doubtful accounts


522



543Net operating loss carryforwards


3,831



4,891Restructuring reserves


223



331Other


891



1,330Total gross deferred tax assets


9,611



11,912Deferred tax
    liabilities Property and equipment and
    capitalized software development costs


(308
)


(1,410
)Net deferred tax assets before
    valuation allowance


9,303



10,502Valuation allowance


(843
)


(1,141
)Net deferred tax assets

$
8,460


$
9,361          48




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    17.  Segment
    Information
    
    Commercial includes all global services provided to non-public
    sector customers. Commercial includes application services for
    maintenance and development outsourcing (AMD/O), retail,
    healthcare, distribution, manufacturing, financial services,
    telecommunications, utilities,
    e-business,
    packaged software implementation and other services.
    Public Sector includes all services provided to domestic state
    and local municipalities.
    Other consists primarily of the labor and supporting expenses
    for the corporate functions, depreciation and amortization
    expenses, and lease expenses for corporate headquarters.        Year Ended December 31,2006


2005


2004Revenue Commercial

$
396,158


$
334,806


$
287,574Less intersegment


(1,823
)


(6,949
)


(5,052
)394,335



327,857



282,522Public Sector


61,136



106,263



91,199Other










652$
455,471


$
434,120


$
374,373 49




---



##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  Year Ended December 31,2006


2005


2004Income (Loss) from OperationsCommercial

$
81,198


$
74,778


$
62,736Public Sector


5,127



8,495



(2,090
)Other


(38,028
)


(37,359
)


(39,729
)48,297



45,914



20,917Interest Expense


(41
)


(495
)


(245
)Other Income, net


5,012



3,507



1,317Income Before Provision For Income
    Taxes

$
53,268


$
48,926


$
21,989     Year Ended December 31,2006


2005


2004Revenue North America (substantially
    United States)

$
392,058


$
371,200


$
326,296India/Asia


159,196



131,818



106,140Less intersegment


(115,157
)


(90,340
)


(77,765
)44,039



41,478



28,375Europe


20,207



21,446



21,644Less intersegment


(833
)


(4
)


(1,942
)19,374



21,442



19,702$
455,471


$
434,120


$
374,373   As of December 31,2006


2005Long-Lived Assets North America

$
25,911


$
31,770India/Asia


28,700



25,211Other international


7,265



6,557$
61,876


$
63,538   18.  Commitments,
    Contingencies and Potential Liability to Clients
   50




---



##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
    19.  Restructuring,
    Merger and Other Related Charges
      Severance


Lease Terminations


TotalBalance January 1, 2004

$
371


$
1,668


$
2,039Expense


1,252



1,696



2,948Payments and other


(1,556
)


(1,190
)


(2,746
)Balance December 31, 2004


67



2,174



2,241Expense






491



491Payments and other


(67
)


(1,471
)


(1,538
)Balance at December 31, 2005






1,194



1,194Expense






575



575Payments and other






(844
)


(844
)Balance at December 31, 2006

$



$
925


$
925   20.  Other
    Income, Net
     51




---



##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  21.  Other
    22.  Supplemental
    Quarterly Information (Unaudited)
  Quarter EndedMarch 31


June 30


September 30


December 312006Revenue

$
109,776


$
117,981


$
110,855


$
116,859Gross Profit


24,190



33,100



31,782



34,092Income from operations


5,516



14,157



13,939



14,685Net income


4,957



10,339



10,337



10,287Basic net income per share

$
.13


$
.28


$
.28


$
.28Diluted net income per share

$
.13


$
.27


$
.28


$
.272005Revenue

$
104,273


$
108,708


$
111,178


$
109,961Gross profit


30,323



30,407



28,996



28,285Income from operations


11,462



12,267



11,346



10,839Net income


8,057



11,248



8,610



9,623Basic net income per share

$
.22


$
.30


$
.23


$
.26Diluted net income per share

$
.21


$
.30


$
.23


$
.25    (a)
    Gross profit for the quarter ended December 31, 2004,
    includes the cost associated with services performed for one of
    the Companys significant customers after it had reached
    the authorized spending limit on a time-and-material contract.
    In accordance with Staff Accounting Bulletin 104, the
    Company did not recognize the revenue for these services in 2004
    and gross profit was negatively impacted by approximately
    $3,500. In 2005, the Company received a contract which covered
    these services and recognized the revenue in the first quarter
    of 2005, with a corresponding increase in gross profit.  (b)
    The tax provision for the quarter ended June 30, 2005
    included the reversal of previously recorded tax reserves of
    $3,200 due to the expiration of the statute of limitations for
    the tax years the recorded reserves related to and a charge of
    $500 from the reversal of deferred tax assets due to an enacted
    law change in the State of Ohio.  (c)
    The tax provision for the quarter ended September 30, 2005
    included the reversal of previously recorded valuation
    allowances of $369 that were no longer required.  (d)
    Net income in the quarter ended December 31, 2005 includes
    $812 related to the sale of the Companys development
    center in Bangalore, India. 52




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##### Table of Contents



COVANSYS CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share data)
  (e)
    The tax provision for the quarter ended December 31, 2005
    includes a net credit of $614 from the adjustment of recorded
    reserves and valuation allowances based on an evaluation of
    estimated tax exposures.  (f)
    Gross profit for the quarter ended December 31, 2005
    includes a charge of $900 due to the accrual of previously
    unrecognized employee benefits for certain employees of our
    Indian operation.  (g)
    The tax provision for the quarter ended September 30, 2006
    was favorably impacted by return to provision adjustments of
    $312.(h)
    The tax provision for the quarter ended December 31, 2006
    included the reversal of previously recorded tax valuation
    allowances of $377 that were no longer required, partially
    offset by adjustments in recorded reserves of $153.  (i)
    Net income in the quarter ended December 31, 2006 includes
    $549 from the sale of one of the Companys investments
    carried at cost. 53




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  DISCLOSURE
    CONTROLS AND PROCEDURES
    MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
        Changes in Internal Controls over
    Financial Reporting and Managements Remediation
    Initiatives.
     54




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##### Table of Contents



CHANGES
    IN INTERNAL CONTROL OVER FINANCIAL REPORTING
    AND MANAGEMENTS REMEDIATION INITIATIVES
         55




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                   56




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##### Table of Contents



Item 9B.
    Other
    Information    PART
    III   Item 10.
    Directors,
    Executive Officers and Corporate Governance    Audit
    Committee
  Rule 10A-3(b)(1)
  Audit
    Committee Financial Expert
  Regulation S-K
  Section 16(a)
    Beneficial Ownership Reporting Compliance
    Code of
    Ethical Conduct
      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Item 13.
    Certain
    Relationships and Related Transactions and Directors
    Independence   57




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##### Table of Contents



Item 14.
    Principal
    Accountants Fees and Services    PART
    IV   Item 15.
    Exhibits,
    Financial Statement Schedules    1.  Consolidated
    Financial Statements
    PageReports of Independent Registered
    Public Accounting Firms


24Consolidated Balance Sheets as of
    December 31, 2006 and 2005


25Consolidated Statements of
    Operations for each of the years ended December 31, 2006,
    2005 and 2004


26Consolidated Statements of
    Shareholders Equity and Comprehensive Income for each of
    the years ended December 31, 2006, 2005 and 2004


27Consolidated Statements of Cash
    Flows for each of the years ended December 31, 2006, 2005
    and 2004


28Notes to Consolidated Financial
    Statements


29   2.  Financial
    Statement Schedules
    3.  Exhibits
  ExhibitNo.

Description3
.1(a)

Restated Articles of Incorporation
    of the Company, as amended.3
.2(b)

Restated Bylaws.4
.1

See Exhibits 3.1 and 3.2 for
    provisions of the Restated Articles of Incorporation and
    Restated Bylaws of the Company defining the rights of the
    holders of Common Stock of the Company.4
.2(c)

Specimen Stock Certificate.10
.1(d)

Credit Agreement with JPMorgan
    Chase Bank, N.A.10
.2(b)

Shareholder Rights Plan.10
.3(b)

Master Service Provider Agreement
    with Fidelity Information Services.10
.4(b)

Exhibits to Master Service
    Provider Agreement with Fidelity Information Services.21
.1

Subsidiaries of Registrant.23
.1

Consent of BDO Seidman, LLP.23
.2

Consent of PricewaterhouseCoopers
    LLP.31
.1

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (a)
    Incorporated herein by reference and filed with the
    Companys Form 10-Q for the period ended March 31,
    2004.  (b)
    Incorporated herein by reference and filed with the
    Companys Form 10-Q for the period ended
    September 30, 2004.  (c)
    Incorporated herein by reference to exhibit of the same number
    in the
    Form S-1
    Registration Statement of the Registrant (Registration
    No. 333-18413)
    dated as of December 20, 1996, as amended.  (d)
    Incorporated herein by reference to exhibit of the same number
    in the
    Form 8-K
    Current Report dated December 28, 2005. 58




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##### Table of Contents



SIGNATURES    Covansys Corporation
  By:
    /s/  Rajendra
    B. Vattikuti   Chairman, Chief Executive Officer,
    President and Director
         /s/  Rajendra
    B.
    VattikutiRajendra
    B. Vattikuti

Chairman, Chief Executive
    Officer,
    President and Director
    (Principal Executive Officer)

March 7, 2007/s/  James
    S. TroubaJames
    S. Trouba

Vice President and
    Chief Financial Officer
    (Principal Financial Officer)

March 7, 2007/s/  Thomas
    E. LindseyThomas
    E. Lindsey

Vice President, Controller and
    Chief Accounting Officer
    (Principal Accounting Officer)

March 7, 2007*James
    E. Barlett

Director

March 7, 2007*William
    C. Brooks

Director

March 7, 2007*Brian
    Hershkowitz

Director

March 7, 2007*Douglas
    S. Land

Director

March 7, 2007*Ronald
    K. Machtley

Director

March 7, 2007 59




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##### Table of Contents



*John
    A. Stanley

Director

March 7, 2007*David H.
    Wasserman

Director

March 7, 2007*Gary
    C. Wendt

Director

March 7, 2007*
    /s/  James
    S. TroubaJames
    S. Trouba
    Attorney-in-fact  60




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##### Table of Contents



EXHIBIT
    INDEX
  ExhibitNo.

Description3
.1(a)

Restated Articles of Incorporation
    of the Company, as amended.3
.2(b)

Restated Bylaws.4
.1

See Exhibits 3.1 and 3.2 for
    provisions of the Restated Articles of Incorporation and
    Restated Bylaws of the Company defining the rights of the
    holders of Common Stock of the Company.4
.2(c)

Specimen Stock Certificate.10
.1(d)

Credit Agreement with JPMorgan
    Chase Bank, N.A.10
.2(b)

Shareholder Rights Plan.10
.3(b)

Master Service Provider Agreement
    with Fidelity Information Services.10
.4(b)

Exhibits to Master Service
    Provider Agreement with Fidelity Information Services.21
.1

Subsidiaries of Registrant.23
.1

Consent of BDO Seidman, LLP.23
.2

Consent of PricewaterhouseCoopers
    LLP.31
.1

Certification Pursuant to
    Section 302 of the
    Sarbanes-Oxley
    Act of 2002.31
.2

Certification Pursuant to
    Section 302 of the
    Sarbanes-Oxley
    Act of 2002.32
.1

Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.32
.2

Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.     (a)
    Incorporated herein by reference and filed with the
    Companys Form 10-Q for the period ended March 31,
    2004.  (b)
    Incorporated herein by reference and filed with the
    Companys Form 10-Q for the period ended
    September 30, 2004.  (c)
    Incorporated herein by reference to exhibit of the same number
    in the
    Form S-1
    Registration Statement of the Registrant (Registration
    No. 333-18413)
    dated as of December 20, 1996, as amended.  (d)
    Incorporated herein by reference to exhibit of the same number
    in the Form 8-K Current Report dated December 28, 2005.