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
ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
(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
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REQUIRED INFORMATION
The ACS Defense Inc. Profit Sharing and 401(k) Plan 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.
ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
By: /s/ Lora Villarreal
------------------------------
Name: Lora Villarreal
Title: Administrative Committee Member
Date: June 29, 2001
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 2000
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
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
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INDEPENDENT AUDITORS' REPORT
To the Participants and Plan Committee of the
ACS Defense, Inc. Profit Sharing and 401(k) Plan
We have audited the accompanying statement of net assets available for benefits
of ACS Defense, Inc. Profit Sharing and 401(k) Plan ("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. The financial statements
of the ACS Defense, Inc. Profit Sharing and 401(k) Plan as of December 31, 1999
were audited by other auditors whose report dated January 19, 2001, 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.
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, 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 1999 and the changes in net assets
available for benefits for the year ended December 31, 2000 in conformity with
generally accepted accounting principles.
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ACS Defense, Inc. Profit Sharing and 401(k) Plan
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 summarized in Note 6 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 25, 2001
Dallas, Texas
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
2000 1999
----------- -----------
Cash in CIGNA Direct $ 6,604 $ --
Funds held in Connecticut General Life Insurance
Guaranteed Income Fund 20,434,766 22,593,372
Participant Directed Investments:
Pooled separate accounts held by Connecticut
General Life Insurance
At fair value:
Cigna Lifetime60, 50, 40, 30, & 20 5,617,759 5,398,643
Invesco Dynamics Account 3,774,789 977,656
Large Company Stock Index Fund 9,298,281 11,716,787
Large Growth Putnam 8,860,780 13,399,390
Legg Mason Value Trust 929,858 935,325
Fidelity Advisor Growth Opportunity 1,983,005 4,066,628
American Century Ultra Fund 1,517,746 979,360
Small Growth TimesSquare 3,009,421 605,343
Janus Worldwide 3,709,931 3,205,496
Foreign Stock II Fund 674,887 815,798
Cigna Direct-Corporate Common Stocks 28,363 37,022
Cigna Direct- Partnership/Joint Venture Interests 8,750 --
Balanced Invesco 465,783 548,609
ACS Stock 317,507 80,352
Participant Loans 947,418 904,456
----------- -----------
Total Investments 61,585,648 66,264,237
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Receivables:
Employer Contributions 2,263,976 1,416,458
Participant Contributions 341,532 316,329
----------- -----------
Total Receivables 2,605,508 1,732,787
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $64,191,156 $67,997,024
=========== ===========
The accompanying notes are an integral part of these financial statements.
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ACS DEFENSE, INC. PROFIT SHARING & 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
ADDITIONS:
Contributions:
Participants $ 4,425,445
Employer 2,760,873
Rollover from other plans 445,833
------------
Total contributions 7,632,151
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Earnings on investments:
Net realized/unrealized depreciation on investments (5,159,514)
Other income 953
Interest/dividends 1,156,964
------------
Total earnings on investments (4,001,597)
------------
Total additions 3,630,554
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DEDUCTIONS:
Benefits paid to participants 7,747,443
Plan expenses 43,070
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Total deductions 7,790,513
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Net transfers from other plans 354,091
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DECREASE IN NET ASSETS (3,805,868)
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF PERIOD 67,997,024
------------
END OF PERIOD $ 64,191,156
============
The accompanying notes are an integral part of these financial statements.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
NOTE 1. PLAN DESCRIPTION
The following description of the ACS Defense, Inc. Profit Sharing and 401(k)
Plan (Plan) provides only general information. ACS Defense, Inc. is the sponsor
of the Plan. Betac International Corporation is a participating employer.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions. Effective April 1, 1998 the Analytical Systems
Engineering Corporation Profit Sharing and Analytical Systems Engineering
Corporation 401(k) Plan were merged and became the ACS Defense, Inc. Profit
Sharing and 401(k) Plan.
GENERAL
The Plan was established on January 1, 1976 and 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. The Plan was amended and restated as
of October 1, 1999. The amended Plan merged the assets of the Betac
International Corporation 401(k)/Tax Deferred Savings Plan as of October 1,
1999. The Plan administrator and Trustee believe that the Plan complies with the
applicable provisions of the IRC.
Participants in the Plan have the option of investing their contributions to the
Plan in the following funds:
GENERAL ACCOUNT
CIGNA Charter Guaranteed Income Fund is a fixed income fund that invests
primarily in intermediate-term bonds and commercial mortgages within
Connecticut General Life Insurance Company's (CIGNA) 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.
Invesco Dynamics Account invests wholly in the INVESCO Dynamics fund, a
mutual fund that seeks to provide high capital appreciation.
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.
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.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
NOTE 1. PLAN DESCRIPTION (CONTINUED)
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.
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 capitalization 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 is managed by the Bank of Ireland Asset Management
(BIAM) team, pursuant to an agreement with the registered investment
adviser, BBOI Worldwide LLC, which is a joint venture between Bank of
Ireland Asset Management (U.S.) Ltd. and Berger Associates, Inc. This fund
seeks to provide long-term capital appreciation by investing primarily in
the common stock of well-established companies located in the U.S.
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.
Balanced Fund, managed by Invesco Capital Management, Inc., seeks to
achieve a high total return on investment through capital appreciation and
current income by investing in a combination of equity and fixed income
securities.
Affiliated Computer Services (ACS) stock is an investment in the Company's
common stock. This stock belongs to parent company of the Plan's sponsor.
FUNDING
The Plan is a defined contribution and profit sharing 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, leased, non-resident aliens and
independent contractors.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
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 may make a discretionary contribution to the Plan based on a
percentage of employee compensation and Company profitability as decided by the
Company's Board of Directors. For the year ended December 31, 2000, the Company
made matching contributions of 25% of deferred employee contributions limited to
5% of employee compensation.
The Company made a 3.801% profit sharing contribution to the Plan in 2000
amounting to $2,220,615 less forfeitures used of $578,015.
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 participants on the
last day of the Plan year in the same proportion of 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
------------------------ ---------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 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,
unless otherwise determined by the trustee, range from 6.60 percent to 10
percent. Principal and interest is paid ratably through weekly or semimonthly
payroll deductions. Participant notes receivable are valued at cost which
approximates fair values.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
NOTE 1. PLAN DESCRIPTION (CONTINUED)
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
employer contributions occurring during the Plan year or are used to pay Plan
expenses. Any forfeitures not applied shall be held unallocated in a suspense
account, and applied as noted above in a subsequent plan year. At December 31,
2000, the Plan maintained a balance of $619,726 in forfeited non-vested accounts
and utilized $8,185 in forfeitures to offset employer contributions in the
current year. In addition, $578,015 of the above noted forfeiture balance was
used to offset the employer profit sharing contribution for 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.
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.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
NOTE 3. INCOME TAX STATUS
The Internal Revenue Service has determined by letter dated September 15, 1994,
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 complies with the applicable
provisions 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 344 terminated employees with account balances totaling
$14,090,125 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 $ 20,434,766
Cigna Lifetime40 4,481,714
Invesco Dynamics Account 3,774,789
Large Company Stock Index Fund 9,298,281
Large Growth Putnam 8,860,780
Janus Worldwide 3,709,931
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.
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
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, Inc. (parent company) in
July, 2001.
NOTE 9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 SCHEDULE H
Reconciliation of Changes in Net Assets Available for Benefits
Decrease in Change per audited financial statements $ (3,805,868)
Less: Transfers to the Plan (354,091)
Add: Prior year Adjustment to Participant Loans 14,799
Add: Prior year contributions receivable 1,732,787
---------------
Net Loss per Schedule H $ (2,412,373)
===============
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ACS DEFENSE, INC. PROFIT SHARING AND 401(k) PLAN
DECEMBER 31, 2000
SUPPLEMENTAL SCHEDULE
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ACS DEFENSE PROFIT SHARING
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2000
EIN# 54-1315551
PLAN NUMBER: 002
(b) IDENTITY OF ISSUE, (c) DESCRIPTION OF INVESTMENT,
BORROWER, LESSOR, OR INCLUDING MATURITY DATE, RATE OF (e) CURRENT
(a) SIMILAR PARTY INTEREST, COLLATERAL, PAR, OR MATURITY VALUE (d) COST VALUE
--- --------------------- -------------------------------------------- ------------ ------------
* CIGNA Chtr Guaranteed Income Fund $ 20,434,766 $ 20,434,766
* CIGNA CIGNA Lifetime60 664,708 694,165
* CIGNA CIGNA Lifetime50 108,595 117,344
* CIGNA CIGNA Lifetime40 3,815,534 4,481,714
* CIGNA CIGNA Lifetime30 161,130 165,169
* CIGNA CIGNA Lifetime20 152,770 159,367
* CIGNA Chtr Large Co Stk Index-CIGNA 8,708,448 9,298,281
* CIGNA American Century Ultra Account 1,703,953 1,517,746
* CIGNA Chtr Lg Co Stock Growth-Putnam 8,742,300 8,860,780
* CIGNA Chtr Balanced Fund-Invesco 477,353 465,783
* CIGNA Fid Adv Growth Opportunities 2,345,763 1,983,005
* CIGNA Invesco Dynamics 4,385,038 3,774,789
* CIGNA Chtr Sm Co Stk Growth-Timessquare 3,063,646 3,009,421
* CIGNA Janus Worldwide Account 4,292,616 3,709,931
* CIGNA Chtr Foreign Stk II-Bank Ireland 680,758 674,887
* NATL FINANCIAL Affiliated Computer Services Stock 208,839 317,507
SERVICES CORP
* LEGG MASON Legg Mason Value Trust 1,035,194 929,858
* CIGNA CIGNA Direct 75,482 28,363
* CIGNA Fiserve Securities Inc.- Cash account 6,604 6,604
* CIGNA Star Gas Partners L.P. 8,092 8,750
Participant Loans at 9.5% interest rate - 947,418
------------ ------------
$ 61,071,589 $ 61,585,648
============ ============
* Denotes a party-in-interest.
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INDEX TO EXHIBITS
Exhibit No. Description
23 Consent of Salmon, Beach & Company, P.C.