ACS Announces First Quarter Fiscal Year 2006 Results

21 October 2005

Affiliated Computer Services,
Inc., (NYSE: ACS), a premier provider of business process and information
technology outsourcing solutions, announced first quarter fiscal year 2006
revenues of $1.31 billion, an increase of 25% compared to the first quarter of
the prior year. The Company's internal revenue growth rate accelerated to 4%
in the quarter. First quarter fiscal year 2006 diluted earnings per share was
$0.74, and included charges totaling $0.04 per diluted share for compensation
expense related to the departure of the former Chief Executive Officer and an
assessment of risk related to the bankruptcies of certain airline clients. In
addition, effective July 1, 2005 the Company adopted prospectively Statement
of Financial Accounting Standards No. 123(R), which requires companies to
measure all employee stock-based compensation awards using a fair value method
and recognize compensation costs in its financial statements. This adoption
impacted diluted earnings per share by $0.05 during the quarter.
"The new fiscal year has gotten off to a fast start," said Mark King, ACS'
President and Chief Executive Officer. "I am extremely pleased with how our
internal growth has reaccelerated, not only on an overall basis, but in both
of our operating segments as well. Likewise, new business during the quarter
was very solid at $180 million of annual recurring revenue, and trailing
twelve month new business has grown in excess of 26%, the highest growth rate
in the past two years. The strong new business momentum has carried over to
the second quarter with well over $100 million of annual recurring new
business already awarded in October. As a result, we are very excited about
our future growth opportunities."

Other key highlights from ACS' fiscal 2006 first quarter include:

* Total revenue growth for the first quarter was 25%. Consolidated
internal revenue growth for the first quarter accelerated to 4%.
Total and internal revenue growth for the Commercial segment, which
accounted for 58% of revenues this quarter, accelerated to 55% and
11%, respectively. Total revenue growth for the Government segment,
which accounted for 42% of revenues this quarter, improved to negative
1% all of which was internal.

* Revenue from the Mellon HR business was approximately $160 million
during the quarter, in-line with the trailing twelve months acquired
revenues of $640 million. Total Commercial revenues were $766 million
during the quarter.

* Reported diluted earnings per share was $0.74 for the first quarter of
fiscal year 2006. Excluding the charges totaling $0.04 per diluted
share for the compensation expense related to the departure of the
former Chief Executive Officer and an assessment of risk related to
the bankruptcies of certain airline clients, first quarter adjusted
earnings per share was $0.78, a 15% increase compared to a proforma
$0.68 per diluted share reported in the comparable prior period.

* Annualized recurring new business was $180 million during the quarter.
Trailing twelve month new business increased 26% over the prior
trailing twelve month period.

* Cash flow from operations during the seasonally light first quarter
was approximately $108 million, or 8.2% of revenues. Capital
expenditures and additions to intangible assets were approximately
$102 million, or 7.8% of revenues. Free cash flow during the first
quarter was $6 million.

* The Company has initiated a plan to divest its Government welfare to
workforce services ("WWS") line of business. The Company is in
advanced discussions with interested buyers and expects a closing
during the second quarter of fiscal year 2006. The WWS line of
business generated approximately $220 million in revenue during fiscal
year 2005. The related assets and liabilities of the WWS line of
business have been reflected as held for sale in separate line items
on the attached consolidated balance sheet.

* The Company's Board of Directors authorized a new share repurchase
program to purchase up to $500 million of its Class A common stock
("stock"). This new authorization, combined with the remaining
availability under the existing share repurchase program, leaves
approximately $750 million of availability. Since September 2003, the
Company has repurchased approximately $1 billion in stock, or 15% of
the stock outstanding at inception of the program.

* During the quarter the Company signed a definitive agreement to
acquire the Transport Revenue division of Ascom AG ("ATR"), a
Switzerland based communications company for approximately
$100 million. ATR, with trailing revenue of approximately
$180 million, consists of three business units -- fare collection,
airport parking solutions and toll collection with office locations
across nine countries. The transaction is expected to close during
the second quarter of fiscal year 2006 and is subject to international
and regulatory approvals.

Financial Outlook
During the fiscal year 2005 fourth quarter earnings release in August
2005, the Company provided fiscal year 2006 guidance. This financial
guidance, which assumes the Ascom acquisition closes in December 2005, has not
changed and is as follows:
* Total revenue growth is expected to be in excess of 25%.
* Diluted earnings per share including stock option expense is expected
to range from $3.30 to $3.55 per share.

ACS will discuss these results on a conference call and webcast on
http://www.acs-inc.com at 3:30 p.m. CDT today. During the conference call,
management will refer to a presentation provided on the Investor Relations
page of ACS' website and will use certain non-generally accepted accounting
principles ("GAAP") financial measures for which reconciliations to the most
directly comparable GAAP financial measures will also be provided.
ACS, a FORTUNE 500 company with more than 50,000 people supporting client
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 http://www.acs-inc.com .

All statements in this news release that are not based on historical fact
are "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). While management has based any
forward-looking statements contained herein on its current expectations, the
information on which such expectations were based may change. These forward-
looking statements rely on a number of assumptions concerning future events
and are subject to a number of risks, uncertainties, and other factors, many
of which are outside of our control, that could cause actual results to
materially differ from such statements. Such risks, uncertainties, and other
factors include, but are not necessarily limited to, those set forth under the
caption "Risks Related to Our Business" in the Company's prior filings with
the Securities and Exchange Commission, including the most recent annual
report on Form 10-K filed on September 13, 2005. In addition, we operate in a
highly competitive and rapidly changing environment, and new risks may arise.
Accordingly, investors should not place any reliance on forward-looking
statements as a prediction of actual results. We disclaim any intention to,
and undertake no obligation to, update or revise any forward-looking
statement.

Frequently Used Terms
New business signings -- while there are no third party standards or
requirements governing the calculation of new business signings, new business
signings are defined as recurring revenue from new contracts, including the
incremental portion of renewals, signed during the period and represent the
estimated first twelve months of revenue to be recorded under that contract
after full implementation. We use new business signings as a measure of
estimated recurring revenues represented by contractual commitments, both to
forecast prospective revenues and to estimate capital commitments. Revenues
are measured under GAAP.
Trailing twelve month new business -- is the preceding twelve months of
new business signings at a point in time expressed in annual revenue, not
total contract value.

Use of Non-GAAP Financial Information
The Company reports its financial results in accordance with GAAP.
However, the Company uses certain non-GAAP performance measures, including
free cash flow, internal revenue growth and adjusted earnings per share, to
provide both management and investors a more complete understanding of the
Company's underlying operational results.
These non-GAAP measures are indicators management uses to provide
additional meaningful comparisons between current results and prior results,
and as a basis for planning and forecasting for future periods.
Free cash flow -- is measured as operating cash flow (net cash provided by
operating activities, as reported in our consolidated statements of cash
flows) less capital expenditures (purchases of property, equipment and
software, net of sales, as reported in our consolidated statements of cash
flows) less additions to other intangible assets (as reported in our
consolidated statements of cash flows). We believe this free cash flow metric
provides an additional measure of available cash flow after we have satisfied
the capital expenditure requirements of our operations, and should not be
taken in isolation to be a measure of cash flow available for us to satisfy
all our obligations and execute our business strategies. We also rely on cash
flows from investing and financing activities which, together with free cash
flow, are expected to be sufficient for us to execute our business strategies.
Our measure of free cash flow may not be comparable to similarly titled
measures of other companies. (unaudited, $ in millions)

Three months ended
September 30,
2005 2004
Free Cash Flow
Net cash provided by operating activities $ 108 $ 119
Less:
Purchases of property, equipment and software,
net of sales (95) (62)
Additions to other intangible assets (7) (9)
Free Cash Flow $ 6 $ 48

Internal revenue growth -- is measured as total revenue growth less
acquired revenue from acquisitions and revenues from divested operations.
Acquired revenue from acquisitions is based on pre-acquisition normalized
revenue of acquired companies. We use the calculation of internal revenue
growth to measure revenue growth excluding the impact of acquired revenues and
the revenue associated with divested operations and we believe these
adjustments to historical reported results are necessary to accurately reflect
our internal revenue growth.
For the three months ended September 30, 2005, the Company generated
internal revenue growth of 4%. Internal revenue growth is measured as follows
(unaudited, $ in millions):

Three months ended September 30,
2005 2004 Growth % (A)
Consolidated
Total Revenues $ 1,311 $ 1,046 25%
Less: Divested --- ---
Adjusted Base $ 1,311 $ 1,046 25%

Acquired Revenues* $ 226 $ 4 21%
Internal Revenues 1,085 1,042 4%
Total $ 1,311 $ 1,046 25%

Commercial
Total Revenues $ 766 $ 495 55%
Less: Divested --- ---
Adjusted $ 766 $ 495 55%

Acquired Revenues* $ 223 $ 4 44%
Internal Revenues 543 491 11%
Total $ 766 $ 495 55%

Government
Total Revenues $ 545 $ 552 (1%)
Less: Divested --- ---
Adjusted $ 545 $ 552 (1%)

Acquired Revenues* $ 2 $ --- 0%
Internal Revenues 543 552 (1%)
Total $ 545 $ 552 (1%)

* Acquired revenues are based on pre-acquisition normalized revenues of
acquired companies.

(A) Based on actual amounts, not rounded.

Adjusted earnings per share -- is used by the Company to present the
impact of certain transactions or events that management expects to be
infrequently occurring. We believe this adjusted measure is more indicative
of the Company's operating performance. The presentation of this additional
information is not meant to be considered in isolation or as a substitute for
comparable metrics prepared in accordance with GAAP in the United States.
(unaudited, $ in thousands, except per share amounts):

Three months ended
September 30, 2005
Net Income
As reported $ 94,124
Add back: Former CEO compensation
expense and our assessment of risk
related to the bankruptcies of our
airline clients, net of income tax 5,353
Adjusted $ 99,477

Basic earnings per share
As reported $ 0.75
Adjusted $ 0.79

Diluted earnings per share
As reported $ 0.74
Adjusted $ 0.78

Prior to July 1, 2005, we followed Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," ("APB 25") in accounting
for our stock-based compensation plans. Under APB 25, no compensation expense
is recognized for our stock-based compensation plans since the exercise prices
of awards under our plans are at the current market price of our stock on the
date of grant. Had compensation cost for our stock-based compensation plans
been determined based on the fair value at the grant date under those plans
consistent with the fair value method of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", our net income
and earnings per share would have been reduced to the pro forma amounts
indicated below (unaudited, $ in thousands, except per share amounts):

Three months ended
September 30, 2004
Net Income
As reported $ 94,157
Less: Pro forma employee compensation
cost of stock-based compensation
plans, net of income tax 5,566
Pro forma $ 88,591

Basic earnings per share
As reported $ 0.74
Pro forma $ 0.69

Diluted earnings per share
As reported $ 0.72
Pro forma $ 0.68

AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)

Three months ended Proforma
September 30, Three months ended
2005 2004 September 30, 2004 (B)
Revenues $1,310,917 $1,046,182 $1,046,182

Expenses:
Wages and benefits 628,119 (A) 431,848 440,082
Services and supplies 290,772 275,062 275,062
Rent, lease and maintenance 155,172 118,993 118,993
Depreciation and amortization 68,080 54,319 54,319
Other operating expenses 14,011 (A) 10,919 10,919

Total operating expenses 1,156,154 891,141 899,375

Operating income 154,763 155,041 146,807

Interest expense 12,128 3,955 3,955
Other non-operating (income)
expense, net (4,381) 434 434

Pretax profit 147,016 150,652 142,418

Income tax expense 52,892 56,495 53,827

Net income $94,124 $94,157 $88,591

Earnings per common share:
Basic $ 0.75 $ 0.74 $ 0.69

Diluted $ 0.74 $ 0.72 $ 0.68

Shares used in computing
earnings per common share:

Basic 125,429 127,948 127,948

Diluted 127,222 131,070 130,309

(A) During the first quarter of fiscal year 2006, the Company recorded
an $8.4 million charge, or $0.04 per diluted share for the departure
of the former Chief Executive Officer and our assessment of risk
related to the bankruptcies of our airline clients.
(B) The prior year proforma results reflect the impact of Statement of
Financial Accounting Standards No. 123(R), which requires companies
to measure all employee stock-based compensation awards using a fair
value method and recognize compensation costs in its financial
statements. The Company adopted SFAS 123(R) on a prospective basis
and, as a result, we have presented proforma results of operations
for the prior year quarter for comparative purposes.

Three months ended
September 30, 2004

Pro Forma Stock
Compensation
As Reported Expense Pro Forma
Revenues $1,046,182 $ --- $1,046,182

Expenses:
Wages and benefits 431,848 8,234 440,082
Services and supplies 275,062 --- 275,062
Rent, lease and maintenance 118,993 --- 118,993
Depreciation and amortization 54,319 --- 54,319
Other operating expenses 10,919 --- 10,919

Total operating expenses 891,141 8,234 899,375

Operating income 155,041 (8,234) 146,807

Interest expense 3,955 --- 3,955
Other non-operating (income) expense, net 434 --- 434

Pretax profit 150,652 (8,234) 142,418

Income tax expense 56,495 (2,668) 53,827

Net income $94,157 $(5,566) $88,591

AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)

September 30, June 30,
2005 2005
(Unaudited) (Audited)
ASSETS:
Cash and cash equivalents $ 34,226 $ 62,685
Accounts receivable, net 1,111,926 1,061,590
Other current assets 130,024 119,822
Assets held for sale 67,296 ---
Total current assets 1,343,472 1,244,097
Property, equipment and software, net 713,594 677,241
Goodwill, net 2,325,838 2,334,655
Other intangible assets, net 487,913 466,312
Other long-term assets 143,648 128,533
TOTAL ASSETS $5,014,465 $4,850,838

LIABILITIES:
Accounts payable $ 67,431 $ 62,788
Accrued compensation 174,691 175,782
Other accrued liabilities 453,273 471,577
Income taxes payable 24,188 2,310
Deferred taxes 34,083 34,996
Current portion of long-term debt 6,466 6,192
Current portion of unearned revenue 92,871 84,469
Liabilities related to assets held for sale 9,877 ---
Total current liabilities 862,880 838,114

Long-term debt 757,125 750,355
Long-term deferred taxes 255,679 240,210
Other long-term liabilities 189,251 183,731
TOTAL LIABILITIES 2,064,935 2,012,410
TOTAL STOCKHOLDERS' EQUITY 2,949,530 2,838,428
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,014,465 $4,850,838