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, 2000
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.
INDEX TO EXHIBITS
Exhibit No. Description
23 Consent of Salmon, Beach & Company, P.C.
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: Lora Villarreal
---------------
Name: Lora Villarreal
Title: Administrative Committee Member
Date: June 29, 2001
4
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 2000
5
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
TABLE OF CONTENTS
DECEMBER 31, 2000
Independent Auditors' Report..................................................1
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999.................................................3
Statement of Changes in Net Assets Available for
Benefits-for the year ended December 31, 2000..............................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 Government Solutions Group
We have audited the accompanying statements of net assets available for benefits
of The 401(k) Savings Plan for ACS Government Solutions Group ("Plan") as of
December 31, 2000 and 1999, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2000. 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.
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, 2000 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, 2000 and the changes in net assets available for
benefits for the year ended December 31, 2000 in conformity with generally
accepted accounting principles.
7
The 401(k) Savings Plan for ACS Government Solutions Group
Page two
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
June 21, 2001
Dallas, Texas
8
THE 401(K) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
2000 1999
---- ----
Cash in CIGNA Direct $ 53,689 $ --
Funds held in Connecticut General Life Insurance
Guaranteed Income Fund 13,601,059 15,256,814
Participant Directed Investments:
Pooled separate accounts held by Connecticut
General Life Insurance
At fair value:
CIGNA Lifetime60 349,984 332,297
CIGNA Lifetime50 179,138 197,903
CIGNA Lifetime40 4,113,917 4,444,728
CIGNA Lifetime30 359,796 179,270
CIGNA Lifetime20 1,159,873 926,106
Large Company Stock Index Fund 5,115,457 5,887,815
Large Company Stock - Growth Fund 14,849,970 19,459,856
Fidelity Advisor Growth Opportunity 334,781 35,523
American Century Ultra Fund 16,681,095 23,060,868
Balanced Fund 83,324 15,634
Invesco Dynamics Account 3,718,639 1,055,286
Small Company Stock - Growth Fund 2,912,164 1,493,739
Janus Worldwide Account 2,611,490 1,707,764
Foreign Stock II Fund 2,111,614 2,696,159
Legg Mason Value Trust 1,285,214 1,089,504
CIGNA Direct - Corporate Common Stock 267,714 670,535
CIGNA Direct - Mutual Funds 150,395 --
----------- -----------
56,284,565 63,252,987
ACS Stock 1,319,355 1,323,051
Participant Loans 2,486,846 1,610,720
----------- -----------
73,745,514 81,443,572
Other Assets -- 5,620
Account Receivable
Participants 1,051
Employer 403
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $73,746,968 $81,449,192
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
9
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
ADDITIONS:
Contributions:
Participants $ 9,018,135
Employer 2,859,878
Rollover from other plans 950,374
------------
Total contributions 12,828,387
------------
Earnings on investments:
Net realized/unrealized depreciation on investments (9,333,091)
Interest/dividends 870,629
------------
Total earnings on investments (8,462,462)
Total additions 4,365,925
------------
DEDUCTIONS:
Benefits paid to participants 12,092,429
Plan expenses 66,832
------------
Total deductions 12,159,261
------------
Net transfers to this plan 91,112
------------
DECREASE IN NET ASSETS (7,702,224)
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF PERIOD 81,449,192
------------
END OF PERIOD $ 73,746,968
============
The accompanying notes are an integral part of these financial statements.
4
10
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
NOTE 1. PLAN DESCRIPTION
The following description of The 401(k) Savings Plan for ACS Government
Solutions Group (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 known 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 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 GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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 capitilization 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 common stock. This stock belongs to the parent company of the
Plan's sponsor.
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 GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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 GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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 7.00% to 10.5% was charged during 2000.
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
$218,754 of forfeitures for the year ended December 31, 2000.
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 GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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 544 terminated employees with account balances totaling
$12,938,650 at December 31, 2000.
NOTE 5. INVESTMENTS
The Plan maintains the following investments, which represent 5% or more of net
assets available for benefits at December 31, 2000:
Guaranteed Income Fund $13,601,059
CIGNA Lifetime40 4,113,917
Large Company Stock Index Fund 5,115,457
Large Company Stock - Growth Fund 14,849,970
American Century Ultra Fund 16,681,095
Invesco Dynamics Account 3,718,639
9
15
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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, 2000,
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.
NOTE 8. SUBSEQUENT EVENT
It is anticipated that the Plan's assets will be consolidated into a
multi-employer plan of Affiliated Computer Services (parent company) as of July
1, 2001.
10
16
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
DECEMBER 31, 2000
SUPPLEMENTAL SCHEDULE
11
17
THE 401(k) SAVINGS PLAN FOR ACS GOVERNMENT SOLUTIONS GROUP
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT YEAR END
EIN# 52-0882982
PLAN NUMBER: 005
(b) IDENTITY OF (c) DESCRIPTION OF INVESTMENT, INCLUDING
issue, borrower, maturity date, rate of interest,
lessor, or similar collateral, par, or maturity value (e) CURRENT
(a) party (d) COST VALUE
----------------------------------------------------------------------------------------------------------------------------
* CIGNA CIGNA Lifetime60 $ 316,390 $ 349,984
* CIGNA CIGNA Lifetime50 166,881 179,138
* CIGNA CIGNA Lifetime40 3,523,869 4,113,917
* CIGNA CIGNA Lifetime30 343,363 359,797
* CIGNA CIGNA Lifetime20 1,046,562 1,159,873
* CIGNA Chtr Large Co Stk Index-CIGNA 4,837,946 5,115,457
* CIGNA Chtr Lg Co Stock Growth-Putnam 13,454,505 14,849,970
* CIGNA American Century Ultra Account 15,001,084 16,681,095
* CIGNA Chtr Balanced Fund-Invesco 83,231 83,324
* CIGNA Fid Adv Growth Opportunities 379,784 334,781
* CIGNA Invesco Dynamics 4,312,728 3,718,639
* CIGNA Chtr Sm Co Stk Growth-Fiduciary 2,759,265 2,912,164
* CIGNA Janus Worldwide Account 3,036,748 2,611,490
* CIGNA Chtr Foreign Stk II-Bank Ireland 2,142,295 2,111,614
* CIGNA Chtr Guaranteed Income Fund 13,601,059 13,601,059
* CIGNA Legg Mason Value Trust 1,446,827 1,285,214
* NATL Affiliated Computer Services Stock 893,901 1,319,355
FINANCIAL
SERVICES CORP
* CIGNA CIGNA Direct 621,885 471,797
Participant Loans at 7% to 10.5% 2,486,846
----------- -----------
$67,968,323 $73,745,514
=========== ===========
* Denotes a party-in-interest
12
18
INDEX TO EXHIBITS
Exhibit No. Description
23 Consent of Salmon, Beach & Company, P.C.