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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
SEC File Number: 001-12665
CUSIP Number: 008190
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(Check One): |
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o Form 10-K o Form 20-F o Form 11-K þ Form 10-Q o Form 10D
o Form N-SAR
o Form N-CSR |
For
Period Ended: March 31, 2006
o Transition Report on Form 10-K
o Transition Report on Form 20-F
o Transition Report on Form 11-K
o Transition Report on Form 10-Q
o Transition Report on Form N-SAR
For the Transition Period Ended:
Nothing in this form shall be construed to imply that the Commission has verified any
information contained herein.
If the notification relates to a portion of the filing checked above, identify the Item(s) to
which the notification relates: N/A
Part I Registrant Information
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Full Name of Registrant:
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Affiliated Computer Services, Inc. |
Former Name if Applicable:
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N/A |
Address of Principal Executive Office
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2828 North Haskell Avenue |
(Street and Number): |
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City, State and Zip Code:
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Dallas, Texas 75204 |
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Part II Rules 12b-25(b) and (c)
If the subject report could not be filed without unreasonable effort or expense and the
registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box
if appropriate)
(a) The reasons described in reasonable detail in Part III of this form could not be
eliminated without unreasonable effort or expense;
þ (b) The subject annual report, semi-annual report, transition report on Form
10-K, Form 20-F, Form 11-K, Form N-SAR or Form
N-CSR, or portion thereof, will be filed on or
before the fifteenth calendar day following the prescribed due date; or the subject quarterly
report or transition report on Form 10-Q or subject distribution report on Form 10-D, or portion
thereof, will be filed on or before the fifth calendar day following the prescribed due date; and
(c) The accountants statement or other exhibit required by Rule 12b-25(c) has been
attached if applicable.
Part III Narrative
State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR, or the
transition report or portion thereof, could not be filed within the prescribed time period.
As previously announced, Affiliated Computer Services, Inc. (the Company or ACS) received
a letter dated March 1, 2006 from the Securities and Exchange Commission (the SEC) informing the
Company that the SEC had begun an informal investigation into stock option grants made by ACS from
October 1998 through March 2005. The Company is cooperating with the SEC in connection with its
investigation. In addition, ACS has also been named as a nominal defendant in three separate
shareholder derivative suits filed in State District Court in Dallas, Texas and in the Chancery
Court of Delaware (New Castle County). In each of those suits, certain ACS directors and a former
officer have also been named as defendants. The suits allege breach of fiduciary duties and unjust
enrichment related to certain stock option grants to certain officers during prior periods ranging
from 1996 through 2002. The Texas suits also allege breach of fiduciary duties and unjust
enrichment in connection with the Companys purchase of vested stock options from its former chief
executive officer in September 2005. ACS intends to vigorously defend the lawsuits.
At the direction of the Companys Board of Directors, in response to the informal SEC
investigation noted above, ACS has commenced an internal investigation through its regular outside
counsel into the Companys historical stock option practices, including a review of the Companys
underlying option grant documentation and procedures. Due to the volume of data
subject to this review, the Company is unable to complete and file by the prescribed due
date its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 without
unreasonable effort or expense. The Company is working diligently to file its Quarterly Report on
Form 10-Q by the fifth calendar day following the required filing date as prescribed in Rule
12b-25, although the determination of the final amount of the non-cash stock-based
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compensation expense charge noted below and the related determination concerning whether a
restatement of prior period financial statements will be necessary may result in the inability of
the Company to meet this filing date.
Historically, the Company has granted stock options principally utilizing a process whereby
its compensation committee or special compensation committee, as applicable, would approve stock
option grants through unanimous written consents with specified effective dates that generally
preceded the date on which the consents had been executed by all members of the applicable
compensation committee. In connection with option grants to senior executives, the historical
practice was for the Companys chairman, who during periods prior to September 2003 was also a
member of the Companys compensation committee, to engage, on a relatively contemporaneous basis
with the effective date specified in the written consent, in individual telephonic discussions with
each of the members of the applicable compensation committee, during which the committee member
would indicate his approval of the option grants in question. In connection with significant
acquisitions, the Companys historical practice was for its Board of Directors (including members
of the applicable compensation committee) to consider during board meetings convened for the
purpose of approving an acquisition the proposed stock option component that would be designated to
an acquisition targets management team, with a unanimous written consent of the applicable
compensation committee to follow at a later time with a specified effective date for the option
grants in question.
Based on its option grant procedures, the Company has historically considered the effective
date specified in the written consents by the applicable compensation committee as the accounting
measurement date for determining stock-based compensation expense under APB 25 and SFAS 123(R).
However, the Company has determined, in consultation with its independent public accounting
firm, that the proper accounting measurement date for stock option awards cannot precede the date
on which the grants were approved through the execution of written consents or through a valid
meeting of the applicable compensation committee. Notwithstanding the Companys accounting
determination noted above, the Company believes that (i) its historical written consent effective
date process is permitted under the Companys current and predecessor stock option plans and
Delaware corporate law, (ii) the Company has consistently followed this process in prior accounting
periods, and (iii) in many cases, the grants in question had been verbally discussed and approved
by each of the members of the applicable compensation committee on a relatively contemporaneous
basis with the specified effective date of those grants.
Accordingly, based on the preliminary results of its review of the Companys historical stock
option practices, including its underlying option grant documentation and procedures, and the
initial findings of its internal investigation (which is on-going and not complete as of the date
of this filing), the Company has preliminarily determined that it will record a cumulative prior
period non-cash stock-based compensation expense charge in an amount that is not presently anticipated to
exceed approximately $40 million. This charge relates to certain of the option
grants covering approximately 24 million common shares (after
giving effect to forfeitures of option grants covering approximately
7 million common shares) by the Company subsequent to its initial
public offering in 1994 and through December 31, 2005. During this same period, the Company
recorded a cumulative pre-tax profit of approximately $3.5 billion. At this time, ACS is unable
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to determine the final amount of such adjustment or whether such adjustment will require a restatement
of prior period financial statements or will be reflected in its third quarter 2006
results of operations. Such determinations will be made prior to the Companys filing of its
Form 10-Q for the third quarter ended March 31, 2006. The Company is also evaluating the impact of
this matter on its internal control over financial
reporting and related report thereon as of June 30, 2005 as well
as its disclosure controls and procedures. In that regard, the Company intends
to revise its stock option grant procedures so that all future grants
are contemporaneously approved
in formal meetings of the compensation committee.
Notwithstanding the above-referenced accounting determination, based on the initial findings
of its internal investigation (which is on-going and not complete as
of the date of this filing), ACS does not believe that any director or officer of the Company has
engaged in the intentional backdating of stock option grants in order to achieve a more
advantageous exercise price.
Part IV Other Information
(1) Name and telephone number of person to contact in regard to this notification
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Warren D. Edwards
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(214)
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841-8082 |
(Name)
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(Area Code)
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(Telephone Number) |
(2) Have all other periodic reports required under Section 13 or 15(d) of the Securities
Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12
months or for such shorter period that the registrant was required to file such report(s) been
filed? If the answer is no, identify report(s).
þ Yes o No
(3) Is it anticipated that any significant change in results of operations from the
corresponding period for the last fiscal year will be reflected by the earnings statements to be
included in the subject report or portion thereof?
þ Yes o No
If so: attach an explanation of the anticipated change, both narratively and quantitatively,
and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.
Other
than as described in the Companys Form 8-K filed on April 27,
2006 and as discussed above, no such change is anticipated by the Company.
Certain matters discussed in this Notification of Late Filing on Form 12b-25, including those
relating to the nature and scope of the Companys pending internal investigation, expectations as
to the completion of the investigation and timing of the filing of the Quarterly Report on Form
10-Q for the period ended March 31, 2006, constitute forward-looking statements. Actual results or
events could differ materially from those stated or implied in these forward-looking statements,
including as a result of additional actions and findings resulting from the continuing internal
investigation and as a result of other risks set forth in the Companys SEC reports, which are
available at the SECs website at http://www.sec.gov. There
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can be no assurance concerning the results of the internal investigation or the timing of the filing of the Quarterly Report on Form
10-Q for the period ended March 31, 2006.
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Affiliated Computer Services, Inc.
(Name of the Registrant
as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned thereunto duly
authorized.
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Date: May 10, 2006
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By: |
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/s/ Warren D. Edwards |
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Warren D. Edwards
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Executive Vice President and |
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Chief Financial Officer |
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