1
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER ________
THE 401(k) SAVINGS PLAN FOR ACS-GSG
(FULL TITLE OF THE PLAN)
--------------
AFFILIATED COMPUTER SERVICES, INC.
(NAME OF ISSUER)
2828 NORTH HASKELL AVENUE
DALLAS, TEXAS 75201
(PRINCIPAL EXECUTIVE OFFICE)
Notices and communications from the Securities and Exchange Commission relative
to this report should be forwarded to:
William L. Deckelman, Jr., Esq.
Executive Vice President, Secretary And General Counsel
Affiliated Computer Services, Inc.
2828 North Haskell Avenue
Dallas, Texas 75201
(214) 841-6144
2
REQUIRED INFORMATION
The 401(k) Savings Plan for ACS-GSG is subject to the requirements of
the Employee Retirement Income Security Act of 1974. Attached hereto is a copy
of the most recent financial statements and schedules of the Plan prepared in
accordance with the financial reporting requirements of ERISA.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee (or other persons who administer the employee
benefit plan) has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE 401(k) SAVINGS PLAN FOR ACS-GSG
By: /s/ Lora Villarreal
--------------------------------------------------------------
Name: Lora Villarreal
Title: Administrative Committee Member
Date: May 31, 2001
4
THE 401(k) SAVINGS PLAN FOR ACS GSG
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 1999
5
THE 401(k) SAVINGS PLAN FOR ACS GSG
TABLE OF CONTENTS
DECEMBER 31, 1999
Independent Auditors' Report......................................................................................1
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998.....................................................................................3
Statement of Changes in Net Assets Available for
Benefits-for the year ended December 31, 1999..................................................................4
Notes to Financial Statements.....................................................................................5
Supplemental Schedule ...........................................................................................11
6
INDEPENDENT AUDITORS' REPORT
To the Participants and Plan Committee of
The 401(k) Savings Plan for ACS GSG
We have audited the accompanying statements of net assets available for benefits
of The 401(k) Savings Plan for ACS GSG ("Plan") as of December 31, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on the financial statements based on our audit. The financial statements
of The 401(k) Savings Plan for ACS-GSG as of December 31, 1998 were audited by
other auditors whose report dated July 30, 1999, expressed a qualified opinion
as permitted by section 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, the plan administrator instructed us not to perform, and
we did not perform, any auditing procedures with respect to the information
summarized in Note 6, which was certified by Connecticut General Life Insurance
Company, the trustee of the Plan, except for comparing the information with the
related information included in the financial statements and supplemental
schedule. We have been informed by the plan administrator that the trustee holds
the plan's investment assets and executes investment transactions. The plan
administrator has obtained a certification from the trustee as of and for the
year ended December 31, 1999 that the information provided to the plan
administrator by the trustee is complete and accurate.
In our opinion, except for the effects of such adjustments, if any, as might
have been determined to be necessary had we performed procedures with respect to
the information summarized in Note 6, the financial statements referred to above
present fairly, in all material respects, the net assets available for benefits
of the plan as of December 31, 1999 and the changes in net assets available for
benefits for the year ended December 31, 1999 in conformity with generally
accepted accounting principles.
1
7
INDEPENDENT AUDITORS' REPORT (CONTINUED)
Our audit of the Plan's financial statements was conducted for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
supplemental schedule on page 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, except for
the effects on the Schedule of Assets Held For Investment Purposes of such
adjustments, if any, as might have been determined to be necessary had we
performed procedures with respect to the information as described in the second
preceding paragraph, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Salmon, Beach & Company,
A Professional Corporation
Certified Public Accountants & Consultants
October 10, 2000
Dallas, Texas
2
8
THE 401(k) SAVINGS PLAN FOR ACS GSG
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
Funds held in Connecticut General Life Insurance
Guaranteed Income Fund $ 15,256,814 $ -
Pooled separate accounts
CIGNA Lifetime60 332,297 390,829
CIGNA Lifetime50 197,903 209,049
CIGNA Lifetime40 4,444,728 3,842,082
CIGNA Lifetime30 179,270 29,078
CIGNA Lifetime20 926,106 681,098
Large Company Stock Index Fund 5,887,815 4,144,258
Large Company Stock - Growth Fund 19,459,856 14,944,838
Fidelity Advisor Growth Opportunity 35,523 -
American Century Ultra Fund 23,060,868 14,252,712
Balanced Fund 15,634 -
Invesco Dynamics Account 1,055,286 -
Small Company Stock - Growth Fund 1,493,739 -
Janus Worldwide Account 1,707,764 -
Foreign Stock II Fund 2,696,159 -
Fixed Fund - 3,358,358
Actively Managed Fixed Income Fund - 157,386
Lazard Small Cap Equity Fund - 787,249
Templeton Foreign Fund - 1,951,505
CIGNA Direct 670,535 198,096
Legg Mason Value Trust 1,089,504 -
ACS Stock 1,323,051 410,589
Cash - 15,976,071
Other Assets 5,620 -
Participant Loans 1,610,720 980,176
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 81,449,192 $ 62,313,374
=============== ===============
The accompanying notes are an integral part of these financial statements.
3
9
THE 401(k) SAVINGS PLAN FOR ACS GSG
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
ADDITIONS:
Contributions:
Participants $ 7,853,075
Employer 2,917,087
Rollover from other plans 1,388,160
----------------
Total contributions 12,158,322
----------------
Earnings on investments:
Net realized/unrealized appreciation on investments 15,006,116
Interest/Dividends 801,413
----------------
Total earnings on investments 15,807,529
----------------
Total additions 27,965,851
----------------
DEDUCTIONS:
Benefits paid to participants 7,416,030
Plan expenses 58,911
----------------
Total deductions 7,474,941
----------------
Increase in net assets 20,490,910
Transfer of assets from this Plan (1,355,092)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 62,313,374
----------------
End of period $ 81,449,192
================
The accompanying notes are an integral part of this financial statement.
4
10
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION
The following description of The 401(k) Savings Plan for ACS GSG (Plan) provides
only general information. ACS Government Solutions Group Inc. (Company) is the
sponsor of the Plan. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
GENERAL
The Plan was originally effective on July 1, 1988 and was amended and restated
on January 1, 1999. Until January 1, 1999, the Plan was know as The 401(k)
Savings Plan for Employees of Computer Data Systems, Inc. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974 (ERISA)
and Section 401(a) of the Internal Revenue Code (IRC) of 1986.
Participants in the Plan have the following options, which are primarily pooled
separate accounts managed by Connecticut General Life Insurance Company (CIGNA).
GENERAL ACCOUNT
CIGNA Charter Guaranteed Income Fund which is a fixed income fund that
invests in a diversified portfolio of high quality, fixed income
instruments (primarily intermediate-term bonds and commercial mortgages)
within Connecticut General Life Insurance Company's General Account. The
principal and interest earnings are guaranteed by CIGNA.
SEPARATE ACCOUNTS
CIGNA Lifetime Funds are comprised of five distinct funds offering a
range of risk/return characteristics for 20, 30, 40, 50 and 60 year olds.
These funds include different bond/stock mixes that are appropriate for
individuals at different stages of their lives.
Large Company Stock Index Fund, managed by CIGNA, invests in stocks that
comprise the S&P 500 stock index.
Large Company Stock - Growth Fund, managed by Putnam, invests primarily
in the equity securities selected from 600 to 1,000 companies that have
market capitalization of at least $2 billion, a minimum of 10% earnings
per share growth on a five year basis and evidence of ample liquidity.
Fidelity Advisor Growth Opportunities Fund invests in common stocks and
securities which are convertible into the common stock of companies
believed to have long-term growth potential.
American Century Ultra Fund invests primarily in large companies that
will maximize growth of capital over time.
Balanced Fund, managed by Invesco Capital Management, Inc., seeks to
achieve a high total return by investing in a combination of equity and
fixed income securities.
5
11
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
Invesco Dynamics Account invests in common stocks of mid-sized companies
with market capitalizations between $1 billion and $10 billion to provide
capital appreciation.
Small Company Stock - Growth Fund, managed by TimesSquare Capital
Management, invests primarily in the common and preferred stock of U.S.
companies with market capitilazation between $30 million and $3 billion
with a focus on growing companies involved in new product development and
technological breakthroughs.
Janus Worldwide Account invests primarily in common stocks of foreign and
domestic stocks to provide long-term growth of capital and preservation
of capital.
Foreign Stock II Fund, managed by the Bank of Ireland Asset Management
team, invests in common stocks of well-established companies outside the
U.S. to provide long-term capital appreciation.
CIGNA Direct is a self-directed account where a participant can select
publicly traded stocks or mutual funds up to 50% of the participant's
total account balance.
Legg Mason Value Trust invests in securities that are believed to be
undervalued in relation to the long-term earning power of the invested
companies.
Affiliated Computer Services (ACS) stock is an investment in the
Company's stock. This stock is the parent company of the Plan's sponsor.
Participants had the following choices through November 1999. These funds were
rolled into other funds at the election of each participant.
Fixed Fund invests in a diversified portfolio of high quality, fixed
income instruments that preserve capital.
Lazard Small Cap Portfolio invests primarily in small-cap equity
securities.
Actively Managed Fixed Income invests in an actively managed portfolio of
predominantly high quality corporate and government fixed income
securities.
Templeton Foreign Account invests in common stock including America,
European, and Global Depository Receipts.
FUNDING
The Plan is a defined contribution plan wherein participants elect to reduce
their compensation and have such reductions contributed to the Plan on their
behalf. The Plan covers employees of the Company who are not covered by a
collective bargaining agreement.
6
12
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
FUNDING (CONTINUED)
Participating employees may contribute up to fifteen percent of covered
compensation through payroll deductions or the maximum amount permitted under
applicable Internal Revenue Service provisions. The Company matches each
participant's salary reduction contributions equal to 100% of the first 2% and
25% of the next 4% of such participant's compensation. In the prior year, the
Company made matching contributions of 25% up to 5% of participant's
compensation. The Company may change the rate of matching contributions at any
time by notifying participants in sufficient time to adjust their salary
reduction contributions prior to the start of the period in which the new
matching contribution percentage applies. In addition, the Company may make a
discretionary matching contribution to the Plan, based on a percentage of the
participant's salary reduction contributions.
ALLOCATION
Each participant's account is credited with the participant's and Company's
matching contribution and allocated to each participant's account upon receipt.
Investment income or loss is allocated daily based on the ratio of each
participant's account balance at the end of each day.
Company discretionary contributions are allocated among the participants on the
last day of the Plan year and in the same proportion that the entitled
participant's compensation for such Plan year bears to the total compensation of
all entitled participants.
VESTING
Employee contributions are 100% vested. An employee is credited with a year of
service for each fiscal year that the employee completes at least 1,000 hours of
service. Effective January 1, 1999, employer matching contributions vest over
the following schedule:
Years of Vesting Service Vested Interest
------------------------ ---------------
Less than 2 0%
2 50%
3 or more 100%
For employees that started prior to January 1, 1999, employer matching
contributions vest over the following schedule:
Years of Vesting Service Vested Interest
------------------------ ---------------
Less than 1 0%
1 20%
2 50%
3 or more 100%
7
13
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
PARTICIPANT NOTES RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50 percent of their account balance.
Loan transactions are treated as a transfer to (from) the investment fund and
from (to) the Participant Notes fund. Loan terms are not to exceed five years,
unless for the purpose of acquiring a principal residence, in which case the
loan may not be in excess of ten years. The balance in the participant's account
secures the loans. The interest rates are determined by the trustee using the
prime rate. An interest rate of 8.75% to 9.5% was charged during 1999. Principal
and interest is paid ratably through regular payroll deductions. Participant
notes receivable are valued at cost which approximates fair values.
TERMINATION
The Company's Board of Directors may terminate the Plan at any time. Upon
termination, the Board of Directors may elect to distribute to each participant,
or his or her beneficiary, the proportionate share of the Plan's assets as
determined by the individual account balances on the date of termination, or
continue the existence of the trust for the purpose of paying benefits as they
become due under the terms of the Plan. In addition, upon termination of the
Plan, participants' vested interest in employer contributions shall be 100%.
Upon termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, or one of various
installment payments available under the Plan.
FORFEITURES
Forfeitures are first used to reinstate previously forfeited account balances of
rehired former participants and any remaining forfeitures serve to reduce the
employer contributions. The Company reduced its matching contribution by
$165,585 of forfeitures for the year ended December 31, 1999.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Plan is presented to
assist in understanding the financial statements. The financial statements and
notes are representations of the Plan's administrator, who is responsible for
their integrity and objectivity. The accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect certain reported amounts and disclosures, such as fair
value. Accordingly, actual results may differ from those estimates.
8
14
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION
CIGNA Retirement and Investment Services holds the Plan's investments. The fair
value per unit/share is stated at quoted market prices. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded on
the accrual basis.
The Plan presents, in the statement of changes in net assets available for
benefits, the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
NOTE 3. INCOME TAX STATUS
The Internal Revenue Service has determined by letter dated February 1, 1996,
that the Plan, as then designed, was in compliance with the applicable sections
of the IRC. The Plan has since been amended, however, the Plan administrator and
the Plan's tax counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC. The Plan is
in the process of filing for an updated letter of determination. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
NOTE 4. TERMINATED EMPLOYEE INFORMATION
The Plan holds funds for 473 terminated employees with account balances totaling
$12,667,581 at December 31, 1999.
NOTE 5. INVESTMENTS
The Plan maintains the following investments, which represent 5% or more of net
assets available for benefits at December 31, 1999:
Guaranteed Income Fund $ 15,256,814
CIGNA Lifetime40 4,444,728
Large Company Stock Index Fund 5,887,815
Large Company Stock - Growth Fund 19,459,856
American Century Ultra Fund 23,060,868
9
15
THE 401(k) SAVINGS PLAN FOR ACS GSG
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 6. INFORMATION CERTIFIED BY TRUST COMPANY
Under the Department of Labor's ("DOL") regulations, certain assets and related
information held by a bank, trust company, or similar institution or an
insurance company that is regulated and subject to periodic examination by a
state or federal agency does not have to be audited, provided the plan
administrator exercises this option and the institution holding the assets
certifies the required information. CIGNA has provided certification as to the
completeness and accuracy of all information presented in the accompanying
statements of net assets available for plan benefits as of December 31, 1999,
and in the statement of changes in net assets available for plan benefits for
the year then ended, except for participant loan information. The accompanying
supplemental schedule also includes information certified by CIGNA as being
complete and accurate except for information related to participant loans and
investment costs.
NOTE 7. RELATED PARTY TRANSACTIONS
The Plan invests in units of pooled separate accounts managed by a subsidiary of
CIGNA, who acts as custodian of the Plan's assets as defined, by the Plan. These
transactions qualify as party-in-interest transactions. However, they are exempt
from the prohibited transaction rules.
10
16
THE 401(k) SAVINGS PLAN FOR ACS GSG
DECEMBER 31, 1999
SUPPLEMENTAL SCHEDULE
11
17
THE 401(k) SAVINGS PLAN FOR ACS GSG
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT YEAR END
EIN# 52-0882982
PLAN NUMBER: 001
(b) IDENTITY OF ISSUE, (c) DESCRIPTION OF INVESTMENT, INCLUDING
BORROWER, LESSOR, OR MATURITY DATE, RATE OF INTEREST, (e) CURRENT
(a) SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE VALUE
------ -----------------------------------------------------------------------------------------------------
* CIGNA CIGNA Lifetime60 $ 332,297
* CIGNA CIGNA Lifetime50 197,903
* CIGNA CIGNA Lifetime40 4,444,728
* CIGNA CIGNA Lifetime30 179,270
* CIGNA CIGNA Lifetime20 926,106
* CIGNA Chtr Large Co Stk Index-CIGNA 5,887,815
* CIGNA Chtr Lg Co Stock Growth-Putnam 19,459,856
* CIGNA American Century Ultra Account 23,060,868
* CIGNA Chtr Balanced Fund-Invesco 15,634
* CIGNA Fid Adv Growth Opportunities 35,523
* CIGNA Invesco Dynamics 1,055,286
* CIGNA Chtr Sm Co Stk Growth-Fiduciary 1,493,739
* CIGNA Janus Worldwide Account 1,707,764
* CIGNA Chtr Foreign Stk II-Bank Ireland 2,696,159
* CIGNA Chtr Guaranteed Income Fund 15,262,434
* CIGNA Legg Mason Value Trust 1,089,504
* NATL FINANCIAL SERVICES CORP Affiliated Computer Services Stock 1,323,051
* CIGNA CIGNA Direct 670,535
Participant Loans at 7% to 10% 1,610,720
-------------------
$ 81,449,192
===================
* Denotes a party-in-interest
12
18
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
23 Consent of Salmon, Beach & Company, P.C.