form425.htm
Filed by
Affiliated Computer Services, Inc.
Pursuant
to Rule 425 under the Securities Act of 1933
and
deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of
1934
Subject
Company: Affiliated Computer Services, Inc.
Commission
File No.: 1-12665
A
C S expertise in action Corporate Overview October 2009
Forward-Looking Statements This communication contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 and the
provisions of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (which Sections were
adopted as part of the Private Securities Litigation Reform Act of
1995). Such forward-looking statements and assumptions include, among
other things, statements with respect to our financial condition, results of
operations, cash flows, business strategies, operating efficiencies,
indebtedness, litigation, competitive positions, growth opportunities, plans and
objectives of management, and other matters. Such forward-looking statements are
based upon management’s current knowledge and assumptions about future events
and are subject to numerous assumptions, risks, uncertainties and other factors,
many of which are outside of our control, which could cause actual results to
differ materially from the anticipated results, prospects, performance or
achievements expressed or implied by such statements. Such risks and
uncertainties include, but are not limited to: (a) the cost and cash flow impact
of our debt and our ability to obtain further financing; (b) the complexity of
the legal and regulatory environments in which we operate, including the effect
of claims and litigation; (c) our oversight by the SEC and other regulatory
agencies and investigations by those agencies; (d) our credit rating or further
reductions of our credit rating; (e) a decline in revenues from or a loss or
failure of significant clients; (f) our ability to recover capital investments
in connection with our contracts; (g) possible period-to-period fluctuations in
our non-recurring revenues and related cash flows; (h) competition and our
ability to compete effectively; (i) dissatisfaction with our services by our
clients; (j) our dependency to a significant extent on third party providers,
such as subcontractors, a relatively small number of primary software vendors,
utility providers and network providers; (k) our ability to identify, acquire or
integrate other businesses or technologies; (l) our ability to manage our
operations and our growth; (m) termination rights, audits and investigations
related to our Government contracts; (n) delays in signing and commencing new
business; (o) the effect of some provisions in contracts and our ability to
control costs; (p) claims associated with our actuarial consulting and benefit
plan management services; (q) claims of infringement of third-party intellectual
property rights; (r) laws relating to individually identifiable information; (s)
potential breaches of our security system; (t) the impact of budget deficits
and/or fluctuations in the number of requests for proposals issued by
governments; (u) risks regarding our international and domestic operations; (v)
fluctuations in foreign currency exchange rates; (w) our ability to attract and
retain necessary technical personnel, skilled management and qualified
subcontractors; (x) risks associated with loans that we service; (y) the effect
of certain provisions of our certificate of incorporation, bylaws and Delaware
law and our stock ownership; (z) the price of our Class A common stock; (aa) the
risk that we will not realize all of the anticipated benefits from our proposed
transaction with Xerox; (bb) the risk that customer retention and revenue
expansion goals for the proposed Xerox transaction will not be met and that
disruptions from the proposed Xerox transaction will harm relationships with
customers, employees and suppliers; (cc) the risk that unexpected costs will be
incurred in connection with the proposed Xerox transaction; (dd) the outcome of
litigation, including with respect to the proposed Xerox transaction; (ee)
antitrust and other regulatory proceedings to which we may be a party in
connection with the proposed Xerox transaction; and (ff) the risk that the
proposed Xerox transaction will not close or that our or Xerox’s shareholders
fail to approve the proposed Xerox transaction. For more details on
factors that may cause actual results to differ materially from such
forward-looking statements, please see Item 1A. Risk Factors of our Annual
Report on Form 10-K for the fiscal year ended June 30, 2009 and other reports
from time to time that we file with or furnish to the SEC. Forward-looking
statements contained or referenced in this news release speak only as of the
date of this release. We disclaim, and do not undertake any obligation to,
update or release any revisions to any forward-looking statement. Additional Information The proposed merger transaction involving ACS and Xerox will be
submitted to the respective stockholders of ACS and Xerox for their
consideration. In connection with the proposed merger, ACS will file
a joint proxy statement with the SEC (which such joint proxy statement will form
a prospectus of a registration statement on Form S-4 that will be filed by Xerox
with the SEC). ACS and Xerox will each mail the joint proxy
statement/prospectus to its stockholders. ACS and Xerox urge
investors and security holders to read the joint proxy statement/prospectus
regarding the proposed transaction when it becomes available because it will
contain important information. You may obtain a free copy of the
joint proxy statement/prospectus, as well as other filings containing
information about ACS and Xerox, without charge, at the SEC’s Internet site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus
and the filings with the SEC that will be incorporated by reference in the joint
proxy statement/prospectus can also be obtained, when available, without charge,
from ACS’s website, www.acs-inc.com, under the heading “Investor Relations” and
then under the heading “SEC Filings”. You may also obtain these
documents, without charge, from Xerox’s website, www.xerox.com, under the tab
“Investor Relations” and then under the heading “SEC Filings”. ACS, Xerox and their respective directors, executive officers and
certain other members of management and employees may be deemed to be
participants in the solicitation of proxies from the respective stockholders of
ACS and Xerox in favor of the merger. Information regarding the
persons who may, under the rules of the SEC, be deemed participants in the
solicitation of the respective stockholders of ACS and Xerox in connection with
the proposed merger will be set forth in the joint proxy statement/prospectus
when it is filed with the SEC. You can find information about ACS’s
executive officers and directors in its Form 10-K filed with the SEC on August
27, 2009. You can find information about Xerox’s executive officers
and directors in its definitive proxy statement filed with the SEC on April 6,
2009. You can obtain free copies of these documents from ACS and
Xerox websites using the contact information above. expertise in action A C
S
expertise
in action A C S Strategy Lynn Blodgett, A C S President & Chief Executive
Officer
Strategy
Our operating philosophy Grow Make long-term decisions Evolve our business
Advance our cost competitive culture expertise in action A C
S
Strategy:
Grow Increased sales headcount = increased sales New business signings (ARR)
$1,000 $800 $600 $400 $200 $0 $ in millions FY07 $607 FY08 $801 FY09 $1,018
expertise in action A C S
Strategy:
Long-term decisions Client for life Long-term focus Strengthen client
relationship Win-win expertise in action A C S
Strategy:
Evolve Core competency in acquisitions Evaluate our portfolio Innovation
expertise in action A C S
Innovation
powers growth Health Enterprise AMP Enterprise Architecture ITIL-Aligned Service
Management A C S Benefits iPhone App Electronic Payment Cards (EPC) expertise in
action A C S
Strategy:
Cost competitive culture Increase global delivery model Project Compete
increased global production by approximately 4,000 Delivered run-rate savings of
approximately $100 million Savings provide opportunity to invest in our business
Sales Innovation Clients expertise in action A C S
Strategy:
Cost competitive culture We significantly expanded global production Commercial
employee base June 30, 2008 38% Offshore 30,952 18,927 Domestic Offshore June
30, 2009 52% Offshore 28,324 31,035 Domestic Offshore expertise in action A C
S
Strategy:
XRX + A C S Why This? 1. Xerox needs to continue to diversify into services 2.
There are two major options Professional services / systems integration BPO 3.
BPO is better because Xerox has already entered the market Managed print
services Litigation support Mortgage processing BPO is a larger, less crowded
market 4. Document / image technology is core to business processing 5. Xerox is
the world leader, by far, in image / document technology expertise in action A C
S
Strategy:
XRX + A C S Why This? 6. Xerox technology can be applied to a vast array of BPO
processes with significant savings 7. Xerox can create substantial value by
applying unstructured data technology to BPO processes creating a significant
competitive advantage 8. A C S is the world leader in diversified BPO 9. A C S
can immediately leverage Xerox Global account management structure to sell more
Unstructured data recognition technology to reduce its $3 billion labor spend
Global brand credibility to boost sales Xerox R&D to solve BPO0 problems 10.
A C S can substantially reduce Xerox administrative and customer care costs
making Xerox base business more competitive expertise in action A C
S
expertise
in action A C S Government Segment Tom Burlin, Executive Vice
President & Chief Operating Officer
Government
Segment Revenue distribution Commercial Government 60% 40% State & Local
Gov't Healthcare Transportation Federal 12% 25% 30% 33% Characteristics of our
Government Segment: Recurring revenue Diverse service offerings Revenue
generating services Mission critical services Federally funded / needs based
services Leveragable technology solutions expertise in action A C
S
expertise
in action A C S Government Solutions
Government
Solutions Key service offerings Healthcare Medicaid solutions and fiscal agent
operations Pharmacy benefits Health information analytics Enrollment broker
Medicaid eligibility Fraud and abuse protection Electronic health records Health
information exchange Population health management Care and disease management
Federal Loan servicing Healthcare payment processing Health information
exchange/EHR Document records management Electronic payment card services
Customer Care IT services Cyber security operations State & Local
Constituent Services Child support payment processing Human services program
modernization Eligibility processing & case management Electronic payment
services Unemployment services Customer care, N11 Citizen relief and disaster
recovery Public safety and justice solutions Finance & Administration Tax
and revenue services Human resources and ERP Records management IT services and
systems integration Unclaimed property data management systems Abandoned stock
portfolio maintenance Emerging Energy Environment Weatherization Global
expansion
Government
Solutions We win because... A C S is a leader in government business process
services Deep understanding of government programs Operations partner to
government We touch millions of citizen's lives every day — reliable, responsive
Longevity and commitment to market Applied innovation
Government
Solutions Applied innovation Electronic Payment Cards (EPC) Saves millions in
check processing for variety of government programs: Temporary Assistance
Unemployment Child Support In-home Care Provider Payments Social Security and
SSI Applied EPC in 18 states and federal government in 4 years across 25
programs Sophisticated EPPIC platform solution expertise in action A C
S
Government
Solutions Oklahoma Department of Human Services $12 million in savings The
Challenge Highly satisfied client achieving results in all areas — savings,
efficiencies, accuracy, citizen service improvements, high satisfaction with
providers, reduced fraud and cited as a national model Improve efficiency
Improve service across all programs Eliminate manual processes Increase accuracy
Reduce overpayments Reduce costs overall The Solution Electronic
Payment Cards (EPC) Electronic Benefits Transfer (EBT) e-Childcare solution
EPPIC platform Enrollment planning and design Payment deposits (multiple
options) Transaction processing 24/7 customer service The Result Saves $12M per
year 100% payment accuracy 100% accuracy on transactions for 300,000 cardholders
Faster payments, secure, convenient From 20% child care provider satisfaction
rating to 90% Award-winning expertise in action A C S
Government
Solutions Update on key contracts Department of Education Indiana Eligibility US
Department of the Treasury expertise in action A C S
Government
Solutions Our path to growth Continue invest in scalable platforms Leverage
commercial solutions Capture short-term Stimulus projects Develop new offerings
and new markets: Health Information Technology Energy and Environment Expand
globally Enter adjacent markets via acquisitions expertise in action A C
S
expertise
in action A C S Transportation Solutions
Transportation
Solutions Key service offerings TSG SALES OFFICES ACROSS 12
COUNTRIES* AMERICAS Washington DC, US Edmonton, CA Toronto, CA Lima, Peru
Santiago, CL Mexico City, MX EUROPE Paris, FR Valence, FR Zurich, CH Bern, CH
London, UK Milan, IT Madrid, ES MIDDLE EAST Dubai, UAE ASIA Beijing, CN *Over 20
sales offices across the US. TSG PROJECTS IN MORE THAN 30 COUNTRIES FOCUS ON SIX
CORE MARKETS Roadways Public Transport Photo Enforcement On-Street Parking
Off-Street Parking Commercial Trucking END-TO-END SERVICE CAPABILITIES System
Integration Multi-modal, multi-agency multi-payment integration Enterprise level
software development End-to-end technology integration Turn-Key
Solutions Electronic toll lanes Transit ticketing GPS-based asset
management Photo enforcement Parking revenue Back Office
Operations Customer services centers USD$ billions collected and processed
annually Business analytics Data warehousing Violations Processing
Capture most types of roadway violations License plate recognition systems
Processing Past due collections Infrastructure Investment
Build-operate-transfer (BOT) projects Equity investments Long-term concessions
Revenue sharing arrangements
Transportation
Solutions A C S participates in a large global market Market opportunity Total
$11B 100% 80 60 40 20 0 5.2 Rest of the world Rest of US tolling
market A C S USA Roadways 1.8 A C S- Rest of the world Rest of
Western Europe A C S West. Europe Public Transport 1.5 Rest of US A C
S US/Canada Photo enf. 1.1 Remaining market in current A C S core
geography A C S current share in core geography Onstreet
parking 1.2 Total available market in rest of the world
Remaining market in current A C S core geography Offstreet Parking
0.2 0.1 Company Estimates expertise in action A C
S
Transportation
Solutions Alternative to standard government procurements Build Contractor
Designs program and technical solution Provides overall integration and program
management Installs next generation technology (smart cards, cameras, etc.)
Provides investment Municipality Establishes objectives Has program
oversight Operate Contractor Operates the program for 5 to 15 years
typically Collects a percentage of users' fees to pay back investment
Municipality Has program oversight Transfer Contractor Ensures
continuity with transfer of staff, required intellectual property, and
technology Municipality Operates the program going forward expertise in action
ACS
Transportation
Solutions A C S leads speed enforcement market in U.S. 120 Speed Cameras
Implemented the largest digital mobile and fixed speed enforcement program in
the United States today. The Challenge Reduce dangerous driving and speeding
through County school zones Costly enforcement and limited police resources The
Solution Deploy a combination of mobile speed and fixed speed cameras throughout
the County's school zones Vendor responsible for all processing operations and
maintenance THE RESULT In process of identifying/installing 60 additional fixed
sites 70% reduction in aggressive speeding in enforced zones expertise in action
A C S
Transportation
Solutions Our path to growth Increase sales force Build-Operate-Transfer (BOT)
programs Focus on industry trends (e.g., HOT lanes, speed enforcement) Enter new
verticals in adjacent markets Leverage core competency in acquisitions expertise
in action A C S
expertise
in action A C S Questions? Tom Burlin, Executive Vice President & Chief
Operating Officer
expertise
in action A C S Commercial Segment Tom Blodgett, Executive Vice
President & Chief Operating Officer
Commercial
Segment Revenue distribution Commercial Government 40% 60% IT
Solutions Enterprise Sol & Services Business Process Solutions 32% 33%
35% Characteristics of our Commercial Segment: Recurring revenue
Diverse client base Mission critical services Diverse service offerings Global
production model Leveragable technology solutions expertise in action A C
S
expertise
in action A C S IT Solutions
IT
Solutions Key service offerings Comprehensive IT Services Remote & hosted
managed services Server monitoring & management Managed storage, backup
& recovery Managed network services Utility computing IT Commercial Services
Managed IT procurement Asset management services Telecommunications expense
management End User Computing Services Help desk / service desk
management Desktop On site support & maintenance Messaging solutions IT
Strategy & Architecture Service Infrastructure design & consultancy
Consolidation & optimization Storage & backup assessment
Virtualization Critical Operations & Risk Management Disaster
recovery / business continuity Security services Application Services Lawson
application management SAP application management Application development &
maintenance expertise in action A C S
Information
Technology Solutions Our strategy The A C S IT Services strategy is to enable
our client's growth and success through a six-pronged approach: EMEA expansion
Client Intimacy Innovation Operational Excellence Alliance/Analyst/Advisor
Relations Transformation Capabilities Our mission is a shared one because it is
only through our clients that we will be successful expertise in action A C
S
IT
Solutions Why we win... Innovation Retains Client Innovative solutions retained
the client and expanded services THE CHALLENGE Client needed flexible operations
partner Client needed vision for the future of IT delivery THE
SOLUTION Advanced Monitoring Solution Dual Datacenter and advance DR strategy
Advanced Network Management for end-to-end Network visibility Server Automation
tool to meet Security Compliance and Server Automation needs AMP to automate,
standardize, and simplify data flow AMP to provide a foundation for cloud
computing The Result Innovation partner Client intimacy Expanded
service offerings New revenue opportunities Leveragable solutions expertise in
action A C S
IT
Solutions Our path to growth Investment in sales Continued investment in
innovation Vendor alliances Growth through acquisitions expertise in action A C
S
expertise
in action A C S Enterprise Solutions & Services
Enterprise
Solutions & Services Key service offerings Buck Consultants Communication
Compensation Health and Productivity HR Technology and Administration Human
Capital Management Retirement Finance & Accounting Procure to pay Order to
cash Accounting Treasury / Payroll Closing & Reporting Financial planning
& analysis Total Benefits Outsourcing Full scope of benefits
admin. for H&W, DB, and DC Customized benefits calculator Event/transaction
processing Regulatory/Plan compliance Design and implementation of employee
communication programs Commercial Education Customer Care Imaging / Document
Management Billing Services Online payments Loan origination and servicing
Financial Aid Processing Return of Title IV Refund Human Resources
Outsourcing Employee services center Workforce administration Employee data
management Payroll processing Compensation Talent Management Relocation Services
Expat Administration HR Analytics HR Transformation Learning Services
Learning strategy, assessment, content design, development and management
Instructor led, e-learning and virtual classroom Learning administration and
delivery Forecasting, reporting, logistics, and learner care Translation
services Tuition management services
Enterprise
Solutions & Services Applied innovation — A C S Learning virtual worlds
Recruiting Onboarding Orientation Process Training Practice Simulations Coaching
Mentoring Knowledge Sharing Face-to-Face Facilitated Sessions
Enterprise
Solutions & Services Total Benefits Outsourcing Transformation: A
leverage-able solution positioned for growth Call Center Manila Operation
Virtual Enterprise Skills Based expertise in action A C S
Enterprise
Solutions & Services Total Benefits Outsourcing Transformation: A
leverage-able solution positioned for growth Call Center Skills Based Manila
Operation Virtual Enterprise Portal Integrated Standardized Efficient expertise
in action A C S
Enterprise
Solutions & Services Total Benefits Outsourcing Transformation: A
leverage-able solution positioned for growth Call Center Skills Based Manila
Operation Virtual Enterprise Portal Integrated Standardized
Efficient Workflow Management Tool Streamlined Global Workforce
Defined Processes Workflow Automation expertise in action A C
S
Enterprise
Solutions & Services Total Benefits Outsourcing Transformation: A
leverage-able solution positioned for growth Call Center Skills Based Manila
Operation Virtual Enterprise Portal Integrated Standardized
Efficient Workflow Management Tool Streamlined Global Workforce
Defined Processes Workflow Automation Service Delivery Model Global
Capacity Technology Scalability expertise in action A C S
Enterprise
Solutions & Services Our path to growth Continue sales investment Successful
launch of fiscal 2009 bookings Gain market share in all key markets Acquire
strategically Develop alternate loan markets Innovate, Automate, Optimize
expertise in action A C S
expertise
in action A C S Business Process Solutions
Business
Process Solutions Key service offerings Communications & Consumer Goods
Wireless: Customer acquisitions Customer care Device support Data wireless web
support Loyalty plans Collections Retail / Consumer Goods: Supply chain
efficiency Inventory management Data collection Customer care Managed Mobility
Services Healthcare Payer & Insurance Customer Care Healthcare
Payer Transaction processing Recovery services Insurance: Bill review /
membership & billing Healthcare Provider Consulting Analytics
Revenue cycle management Applications delivery Information technology
outsourcing Transactional BPO Transactional: Ticketing/ fulfillment
On-line check-in support Data capture, storage & retrieval Payment
processing Customer care: Customer support Frequent flier program assistance
Online Web Booking support Collections Transportation/ logistics services:
TripPak Credit applications Loan processing Lease administration expertise in
action A C S
Business
Process Solutions The core of exceptional customer service THE CHALLENGE
Multi-supplier environment Inconsistent, inaccurate service High attrition among
skilled workforce With an unrivaled global brand, the client has a reputation
for pushing the boundaries of technological innovation. They needed an
innovative partner with a reputation for pushing the boundaries of customer
loyalty. THE SOLUTION Deliver exceptional customer experience through:
Proactively address industry developments Shared market strategy and
optimization Innovative Recruiting Technically savvy & customer focused
Enthusiasts of Client’s products Quick implementation and aggressive results #1
CSAT RANKING THE RESULT #1 CSAT spot after just 3 months 93% CSAT - Best results
over internal and external providers Fully operational within one month of
signing After two months, client increased scope to 1300 agents in three sites:
Oregon, Kentucky and North Carolina Adopted concept center approach. Cloned
client culture and emulated retail stores to increase agent recruiting and
performance. Decreased attrition and increased CSAT expertise in action A C
S
Business
Process Solutions Client success story: Wellpoint™ Communications 2nd largest
health insurer with about 35M members THE CHALLENGE Multiple site with no
unifying strategy No Budget Predictability Lack Efficiencies Facilities and
equipment outdated Lack of Alignment the 50+ 3rd party vendors WELLPOINT THE
SOLUTION Acquired assets “On-board/re-badge” WellPoint employees Assume and
manage existing 3rd Party contracts and equipment leases Build and transition
operations to new facility Partner with third party to deliver technology system
for data consolidation and document management Go “at risk” for postage savings
driven by consolidation By understanding the real issues and goals of the
client, the A C S team structured a deal that provided better results for the
client and positioned us as the front leader for the solution. THE RESULT Growth
comes from happy clients Understand the client’s ultimate goals Tenacity and
flexibility Innovation, innovation, innovation “It takes a village” Step outside
expertise in action A C S
Business
Process Solutions Our path to growth Penetrate and radiate Expand service
capability Develop end-to-end revenue cycle solution Leverage “Healthcare
Communication” Targeted international expansion Innovation through acquisition
expertise in action A C S
expertise
in action A C S Questions? Tom Blodgett, Executive Vice President & Chief
Operating Officer
expertise
in action A C S Financial Update Kevin Kyser, Executive Vice President &
Chief Financial Officer
Financial
Diverse revenue Commercial Solutions ~60% of A C S revenue Information
Technology Solutions 21% Communications & Consumer Goods 7% Human Capital
Management Solutions 14% Healthcare Payer and Insurance 7% Commercial Education
& Financial Svcs 4% Healthcare Provider 2% Finance & Accounting 2%
Travel, Transportation & Logistics 2% Mortgage & Financial Services 1%
Government Solutions ~40% of A C S revenue State & Local 13% Government
Healthcare 10% Transportation Solutions 12% Federal Solutions
5%
Financial
Update Revenue and margins driven by diverse business mix Revenue
Growth Fiscal 2008 Finance & Accounting Human Capital Management
IT Outsourcing Business Process Solutions Gov. Healthcare Federal Gov.
Commercial Education & Financial Solutions Transportation State & Local
Margins expertise in action A C S
Financial
Update Revenue and margins driven by diverse business mix Revenue Growth Finance
& Accounting IT Outsourcing Human Capital Management
Transportation State & Local Commercial Education & Financial Solutions
Gov. Healthcare Business Process Solutions Federal Gov. Fiscal 2009 Margins
expertise in action A C S
Financial
Update Financial rationale for out of cycle discounts Client for life Certainty
of long-term revenue and profit Healthy ROI expertise in action A C
S
Financial
Update Ramp of new business impacts key metrics Year 1 Year 2 Year 3 Year 4 Year
5 Year 6 $6 $5 $4 $3 $2 $1 $0 -$1 -$2 -$3 -$4 in millions Revenue EBIT Note:
Model above is based on Finance & Accounting contract and may not be
indicative of all new business signings. expertise in action A C
S
Financial
Update We are delivering good, consistent free cash flow Goals Free cash flow
6-8% of revenue Capex 5-7% of revenue Reduce DSO’s Key drivers Capex on new
business DSO reduction Supplier payment terms FY07 FY08 FY09 9% 8% 7% 6% 5% 4%
3% 2% 1% 0% expertise in action A C S
Financial
Update Potential uses of cash Acquisitions Geographic expansion Increase service
offerings Research & development Invest in the business Innovation projects
Sales Retire 4.7% senior notes Repurchase shares expertise in action A C
S
Financial
Update Debt maturities by fiscal year $2,000 $1,500 $1,000 $500 $0 $250 $1,725
$250 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Senior Notes Term Loan
expertise in action A C S
A
C S expertise in action Thank you!