Item 1. Business
We are a global, Fortune 500 company delivering comprehensive business process outsourcing and information technology
outsourcing solutions to commercial and government clients. We were incorporated in Delaware on June 8, 1988 and are based
in Dallas, Texas. We support client operations in nearly 100 countries. Our clients have time critical, transaction intensive
business and information processing needs, and we typically service these needs through long term contracts. Approximately
91%, 90% and 89% of our revenues for fiscal years 2003, 2002 and 2001, respectively, were recurring. Recurring revenues are
revenues derived from services that our clients use each year in connection with their ongoing businesses.
Our services enable businesses and government agencies to focus on core operations, respond to rapidly changing technologies
and reduce expenses associated with business processes and information processing. Our business strategy is to expand our
client base and enhance our service offerings through both internal marketing and the acquisition of complementary companies.
Our marketing efforts focus on developing long term relationships with clients that choose to outsource mission critical business
processes and information technology requirements. Our business expansion has been accomplished both from internal growth
as well as through acquisitions. Since inception, our acquisition program has resulted in geographic expansion, growth and
diversification of our client base, expansion of services and products offered, and increased economies of scale.
We serve three primary markets, which include state and local governments, commercial clients, and the federal government.
We are a leading provider of business process outsourcing and information technology services to state and local governments.
During fiscal year 2003, revenues from our state and local government segment accounted for approximately $1.7 billion, or
45% of our revenues. We provide technology based services with a focus on transaction processing and program management
services such as child support payment processing, electronic toll collection, welfare and community services, and traffic
violations processing. We also design, develop, implement, and operate large scale health and human services programs and the
information technology solutions that support those programs.
Our commercial sector accounted for approximately $1.2 billion, or 33% of our fiscal year 2003 revenues. We provide business
process outsourcing, technology outsourcing, and systems integration services to our commercial sector clients. These services
are provided to a variety of clients nationwide, including healthcare providers, retailers, wholesale distributors, manufacturers,
utilities, financial institutions, insurance and transportation companies. Our business process outsourcing services include claims
processing, finance and accounting, loan processing, human resource and document processing. Our technology outsourcing
services include mainframe, midrange, desktop, network, and web hosting solutions. Our commercial systems integration
services include application development and implementation, applications outsourcing, technical support and training, as well
as network design and installation services.
We also serve the federal government market, which during fiscal year 2003 accounted for approximately $0.9 billion, or 22% of
our annual revenues. Our services in this market are comprised of business process outsourcing services, which consist primarily
of loan processing services and human resources services, as well as, systems integration services, which include application
development and outsourcing, network implementation and maintenance, desktop services, technical staff augmentation, and
training under long term contracts. Approximately 44% of revenues within our federal government business are derived from
civilian agencies with the remaining 56% from Department of Defense agencies.