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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
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
(FULL TITLE OF THE PLAN)
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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
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REQUIRED INFORMATION
The ACS Desktop Solutions, Inc. 401(k) Profit Sharing Plan for ACS
Desktop Solutions, Inc. 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.
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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 ACS DESKTOP SOLUTIONS, INC. 401(K) PROFIT SHARING PLAN
By: /s/ LORA VILLARREAL
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Name: Lora Villarreal
Title: Administrative Committee Member
Date: May 31, 2001
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 1999
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
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 Schedules .....................................................................10
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INDEPENDENT AUDITORS' REPORT
To the Participants and Plan Committee of the
ACS Desktop Solutions, Inc. 401(k) Profit Sharing Plan
We have audited the accompanying statements of net assets available for benefits
of ACS Desktop Solutions, Inc. 401(k) Profit Sharing Plan ("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 ACS Desktop Solutions, Inc. 401(k) Profit Sharing Plan
as of December 31, 1998 were audited by other auditors whose report dated August
31, 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
schedules. 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 then ended in conformity with generally accepted
accounting principles.
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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
September 11, 2000
Dallas, Texas
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
1999 1998
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Funds held in Connecticut General Life Insurance
Guaranteed Income Fund $ 497,440 $ 302,760
Pooled separate accounts
Cigna Lifetime50 16,251 74
Cigna Lifetime40 525,764 591,228
Cigna Lifetime30 27,537 2,204
Cigna Lifetime20 19,930 1,179
Large Company Stock Index Fund 196,676 112,274
Large Company Stock - Growth Fund 1,637,492 1,312,952
Fidelity Advisor Growth Opportunity 1,176 -
American Century Ultra Fund 328,466 49,753
Balanced Fund 205 -
Invesco Dynamics Account 112,747 -
Small Company Stock - Growth Fund 394,654 -
Janus Worldwide Account 210,054 -
Foreign Stock II Fund 135,151 -
Lazard Small Cap Portfolio - 472,084
Actively Managed Fixed Income - 261,314
Templeton Foreign Account - 15,860
Legg Mason Value Trust 33,015 -
ACS Stock 93,057 14,899
Participant Loans 25,500 12,506
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NET ASSETS AVAILABLE FOR BENEFITS $ 4,255,115 $ 3,149,087
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The accompanying notes are an integral part of these financial statements.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
ADDITIONS:
Contributions:
Participants $ 550,887
Employer 79,021
Rollover from other plans 7,737
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Total contributions 637,645
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Earnings on investments:
Net realized/unrealized appreciation on investments 726,515
Interest/Dividends 17,814
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Total earnings on investments 744,329
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Total additions 1,381,974
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DEDUCTIONS:
Benefits paid to participants 420,047
Plan expenses 2,232
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Total deductions 422,279
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Net transfers from other plans 146,333
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Increase in net assets 1,106,028
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 3,149,087
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End of period $ 4,255,115
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The accompanying notes are an integral part of these financial statements.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION
The following description of the ACS Desktop Solutions, Inc. 401(k) Profit
Sharing Plan (Plan) provides only general information. ACS Desktop Solutions,
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 April 1, 1998 and was amended and restated
on July 1, 1998. 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 TimesSquare Capital
Management, Inc., 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.
Invesco Dynamics Account invests in common stocks of mid-sized companies
with market capitalizations between 1 billion and 10 billion to provide
capital appreciation.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
Small Company Stock - Growth Fund, managed by Fiduciary Trust Company
International, 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.
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.
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.
Participating employees may contribute the lesser of thirty thousand dollars, as
adjusted under IRC code 415(d) or 25% of the participant's 415 compensation
through payroll deductions. The Company may make a discretionary matching
contribution to the Plan based on a percentage of the participant's salary
reduction contributions. In addition, the Company may make a discretionary
profit sharing contribution. For the year ended December 31, 1999, the Company
made a matching contribution of 25% of the participant's deferral limited to 5%
of the participant's salary. For the year ended December 31, 1999, the Company
did not make any profit sharing contributions to the Plan.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
ALLOCATION
Each participant's account is credited with the participant's 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 profit sharing 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. Employer matching contributions have the
following vesting schedule:
Years of Vesting Service Vested Interest
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Less than 2 0%
2 50%
3 or more 100%
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 range from 1-5 years or within
a reasonable time if the purpose of the loan is to acquire a primary residence.
The balance in the participant's account secures the loans. The interest rates
are determined by the trustee using the local prevailing rate. An interest rate
of 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.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
NOTE 1. PLAN DESCRIPTION (CONTINUED)
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. At December 31, 1999, the Plan maintained a balance of
$2,472 in forfeited non-vested accounts.
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.
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 September 28, 1995,
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. 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 46 terminated employees with account balances totaling
$435,270 at December 31, 1999.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $ 497,440
CIGNA Lifetime40 525,764
Large Company Stock - Growth Fund 1,637,492
American Century Ultra Fund 328,466
Small Company Stock - Growth Fund 394,654
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.
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
DECEMBER 31, 1999
SUPPLEMENTAL SCHEDULES
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ACS DESKTOP SOLUTIONS, INC. 401(k) PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 1999
EIN# 54-1315551
PLAN NUMBER: 002
(b) IDENTITY OF ISSUE, (c) DESCRIPTION OF INVESTMENT, INCLUDING
BORROWER, LESSOR, OR MATURITY DATE, RATE OF INTEREST,
(a) SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE (d) COST (e) CURRENT VALUE
------ ------------------------------- ------------------------------------------------ -------------------- ----------------------
* CIGNA Chtr Guaranteed Income Fund $ 497,440 $ 497,440
* CIGNA CIGNA Lifetime50 14,872 16,251
* CIGNA CIGNA Lifetime40 423,362 525,764
* CIGNA CIGNA Lifetime30 23,398 27,537
* CIGNA CIGNA Lifetime20 16,069 19,930
* CIGNA Chtr Large Co Stk Index-CIGNA 160,781 196,676
* CIGNA American Century Ultra Account 248,824 328,466
* CIGNA Chtr Lg Co Stock Growth-Putnam 1,123,073 1,637,492
* CIGNA Chtr Balanced Fund-Invesco 118 205
* CIGNA Fid Adv Growth Opportunites 618 1,176
* CIGNA Invesco Dynamics 96,527 112,747
* CIGNA Chtr Sm Co Stk Growth-Fiduciary 332,264 394,654
* CIGNA Janus Worldwide Account 177,443 210,054
* CIGNA Chtr Foreign Stk II-Bank Ireland 122,587 135,151
* NATL FINANCIAL SERVICES CORP Affiliated Computer Services Stock 82,214 93,057
* LEGG MASON Legg Mason Value Trust 30,825 33,015
Participant Loans at 9.5% interest rate - 25,500
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$ 3,350,415 $ 4,255,115
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* Denotes a party-in-interest.
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INDEX TO EXHIBITS
Exhibit No. Description
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23 Consent of Salmon, Beach & Company, P.C.