8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: (Date of earliest event reported)
August 1, 2003

Commission file number 0-24787

AFFILIATED COMPUTER SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	51-0310342
(State or other Jurisdiction of Incorporation)	(IRS Employer Identification No.)

2828 NORTH HASKELL
DALLAS, TEXAS 75204
(Address of principal executive offices)
(Zip Code)

(214) 841-6111
(Registrant’s telephone number, including area code)

Page 1

TABLE OF CONTENTS

	ITEM 5. OTHER EVENTS
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
	ITEM 9. REGULATION FD DISCLSOURES
SIGNATURES
INDEX TO EXHIBITS
EX-99.1 Press Release
EX-99.2 Slides Presented During Conference Call

ITEM 5. OTHER EVENTS

     On August 1, 2003, the Registrant announced the signing of a definitive agreement to sell a significant portion of its federal government business to Lockheed Martin Corporation for approximately $658 million, including $70 million payable under a five year non-compete. The Registrant will retain its contract to provide student loan processing services to the Department of Education and certain other assets.

     Concurrent with the signing of the sale agreement, the Registrant has also entered into a definitive agreement to acquire the commercial information technology business of Lockheed Martin for approximately $107 million.

     No date has been established for the closing of these transactions, which are subject to government, regulatory and other required approvals.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

     Pursuant to the rules and regulations of the Securities and Exchange Commission, the exhibits referenced below and the information set forth therein are deemed to be furnished pursuant to Item 9 hereof and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

     (c)  Exhibits

EXHIBIT NUMBER	DESCRIPTION
99.1	Affiliated Computer Services, Inc. Press Release dated August 1, 2003.
99.2	Affiliated Computer Services, Inc. copy of slides presented during conference call on August 1, 2003

ITEM 9. REGULATION FD DISCLSOURES

     The Registrant hereby incorporates by reference into this Item 9 the information set forth in its press release, dated August 1, 2003, and the information set forth in slides presented during a management conference call on August 1, 2003, copies of which are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively.

     Pursuant to the rules and regulations of the Securities and Exchange Commission, the press release attached as Exhibit 99.1 and the slides presented during that call attached hereto as Exhibit 99.2 are deemed to be furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

Page 2

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 1, 2003

AFFILIATED COMPUTER SERVICES, INC.
By:	/s/ WARREN D. EDWARDS
Name: Title:	Warren D. Edwards Executive Vice President and Chief Financial Officer

Page 3

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Affiliated Computer Services, Inc. Press Release dated August 1, 2003
99.2	Affiliated Computer Services, Inc. copy of slides presented during conference call on August 1, 2003

Page 4

EX-99.1 3 d07879exv99w1.htm EX-99.1 PRESS RELEASE

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Investor Relations Contact	Media Contact
Warren Edwards	Lesley Pool
Executive Vice President/	Senior Vice President/
Chief Financial Officer	Chief Marketing Officer
ACS, Inc.	ACS, Inc.
214-841-8082	214-841-8028
warren.edwards@acs-inc.com	lesley.pool@acs-inc.com

ACS To Sell Portion of Federal Business to Lockheed Martin and
Acquire Lockheed’s Commercial IT Business

ACS Announces Fiscal Year 2004 Earnings Guidance

DALLAS, TEXAS: August 1, 2003 – ACS (NYSE: ACS), a premier provider of business process and information technology outsourcing solutions, announced today the signing of a definitive agreement to sell a substantial portion of its federal government business to Lockheed Martin for approximately $658 million which includes $70 million payable pursuant to a five-year non-compete agreement. In a concurrent transaction, ACS will acquire Lockheed Martin’s commercial information technology (IT) business for approximately $107 million. ACS will retain its BPO contract with the Department of Education to provide student loan processing services (the “DLSS contract”). The expected after-tax proceeds from the divestiture will be used to pay down debt and for general corporate purposes.

“This is a terrific win-win transaction for both companies,” said Jeff Rich, Chief Executive Officer of ACS. “Lockheed Martin is a premier player in the federal market and ACS is a premier player in the commercial market. These transactions build on our respective strengths and enable ACS to maintain our commitment to the higher education marketplace. We are thrilled to welcome the employees and clients of Lockheed Martin who are joining ACS, and we’d like to thank our federal employees for their valued contributions.”

“This transaction represents a real benefit to both Lockheed Martin and ACS as we achieve better alignment of our business portfolios,” said Vance Coffman, Chief Executive Officer of Lockheed Martin.

ACS remains firmly committed to the education market place, both at the federal and state and local government levels. The DLSS contract being retained by ACS, with current annual revenues of approximately $172 million, is currently being re-competed

with an award expected in the October to November of 2003 time period. ACS is also retaining certain other assets. Revenues from the divested federal business for the year ended June 30, 2003 were approximately $685 million. Additionally, the commercial operations of ACS will continue to serve as a subcontractor on portions of the transferred business.

ACS’ commercial sector expertise will provide the acquired clients with access to additional BPO and IT services. ACS will be acquiring four data centers across the U.S., approximately 1,000 employees, and a diverse client base representing the manufacturing, automotive, retail, financial services, and communications industries. Annual recurring revenues from the acquired business approximated $240 million on a trailing basis.

The Board of Directors of both companies have approved the transactions which are subject to government, regulatory, and other approvals. The transactions are expected to be consummated during the December 2003 quarter.

ACS expects these transactions to be non-dilutive to its projected fiscal year 2004 diluted earnings per share estimates of $2.57 to $2.66 per share, excluding the impact of a significant non-recurring gain that the company expects to record once these transactions are consummated. Fiscal year 2004 revenue is estimated at $4.1 billion to $4.25 billion and assumes an October 1, 2003 effective date for the consummation of these transactions. These estimates, on a quarterly basis, are set forth in the following table ($ in millions except per share amounts).

	Q1		Q2		Q3		Q4
Revenue:		$1,015 – 1,025		$945 – 975		$1,025 – 1,065		$1,115 – 1,185
Diluted EPS:		$0.59 - 0.60		$0.62 - 0.64		$0.67 - 0.70		$0.69 - 0.72

The company will host a conference call with investors this morning at 10:00 a.m. CDT to discuss these transactions, as well as to provide financial estimates for fiscal year 2004. The dial in number for the conference call is: 877-564-0884 for domestic calls and 1-630-395-0207 for international calls. The passcode for both numbers is “ACS.” Or, you may listen to the webcast via the Internet at: www.acs-inc.com, by selecting the Investor Relations, Conference Calls segment.

Headquartered in Bethesda, Md., Lockheed Martin employs about 125,000 people worldwide and is principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services. The corporation reported 2002 sales of $26.6 billion.

ACS, a Fortune 500 company with more than 40,000 people supporting operations in nearly 100 countries, provides business process and information technology outsourcing

solutions to world-class commercial and government clients. The company’s Class A common stock trades on the New York Stock Exchange under the symbol “ACS.” ACS makes technology work. Visit ACS on the Internet at www.acs-inc.com.

The statements in this news release that do not directly relate to historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are outside the Company’s control. As such, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Factors could cause actual results to differ materially from such forward-looking statements. For a description of these factors, see the Company’s prior filings with the Securities and Exchange Commission, including the most recent Form 10-K. ACS disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future event, or otherwise.

EX-99.2 4 d07879exv99w2.htm EX-99.2 SLIDES PRESENTED DURING CONFERENCE CALL

Focused Growth Fiscal 2004 August 1, 2003 Conference Call

Safe Harbor This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are outside the Company's control. As such, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Factors could cause actual results to differ materially from such forward-looking statements. For a description of these factors, see the Company's prior filings with the Securities and Exchange Commission, including the most recent Form 10-K. ACS disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future event, or otherwise.

Transaction Overview Sale of selected ACS Federal operations to Lockheed Martin Acquisition of Lockheed Martin's commercial IT outsourcing business Non-dilutive to earnings Slide 1

Transaction Rationale Improves ACS focus Improves revenue growth profile Improves operating margin Improves balance sheet and financial flexibility Slide 2

Closing Conditions Government regulatory approval Other consents No material adverse changes Slide 3

Divested Federal Business ($ in millions) Slide 4

Divested Revenues - Quarterly Impact ($ in millions) Slide 5

Acquired Business Commercial IT outsourcing Trailing, recurring revenues of approximately $240 million World-class clients World-class BPO prospects Additional geographic data centers Slide 6

Revenue Mix Impact ($ in millions) Slide 7

Net Cash Proceeds at Closing ($ in millions) Slide 8

Preliminary Non-Recurring Gain Slide 9 $1.00 to $1.20 per share

Accretion / Dilution Analysis ($ in millions, except EPS) Slide 10

Fiscal Year 2004 Guidance ($ in millions) Slide 11

Fiscal Year 2004 Quarterly Guidance ($ in millions, except per share amounts) Slide 12

EX-99.1

exv99w1

EX-99.2

exv99w2