AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At June 30, 2003, the Company had available unused domestic net operating loss carry forwards ( NOLs ), net of Internal
Revenue Code Section 382 limitations, of approximately $2.4 million which will expire over various periods through 2022.
The valuation allowance at June 30, 2003 exists principally due to tax benefits of acquired corporations for which realization
of any future benefit is uncertain due to taxable income limitations. The valuation allowance for deferred tax assets decreased
by $22 thousand and $30 thousand during the years ended June 30, 2003 and 2002, respectively.
The depreciation and amortization related deferred tax liabilities significantly increased during the years ended June 30, 2003
and 2002 predominantly due to current tax deductions for intangibles and goodwill, as well as accelerated tax depreciation
methods. Generally, since the adoption of SFAS 142 eliminates the book goodwill amortization, the difference between the
cumulative book and tax bases of acquired goodwill will continue to grow as current tax deductions are realized.
Income tax expense varies from the amount computed by applying the statutory federal income tax rate to income before
income taxes as follows (in thousands):
Year ended June 30,
Statutory U.S. Federal income tax
State income taxes, net
Capital loss on sale of subsidiary
Total income tax expense
$184,105 $130,860 $
Cumulative undistributed earnings of non U.S. subsidiaries for which U.S. taxes have not been provided are included in
consolidated retained earnings in the amount of approximately $5.5 million, $8.0 million and $6.1 million as of June 30, 2003,
2002 and 2001, respectively. If such earnings were distributed, U.S. income taxes would be partially reduced by available
credits for taxes paid to the jurisdictions in which the income was earned.
Federal, state and foreign income tax payments during the years ended June 30, 2003, 2002 and 2001 were approximately
$67.7 million, $39.5 million and $80.3 million, respectively.
Our Class A common stock trades publicly on the New York Stock Exchange (symbol "ACS") and is entitled to one vote per
share. Our Class B common stock is entitled to ten votes per share. Class B shares are convertible, at the holder's option, into
Class A shares, but until converted carry significant transfer restrictions.
In March 2002, we completed the redemption of our 4% Convertible Subordinated Notes due March 2005 ( 4% Notes ).
Holders of all of the outstanding 4% Notes converted their Notes to shares of our Class A common stock in accordance with
Article XII of the Indenture dated as of March 20, 1998 between ACS and U.S. Trust Company of Texas, N.A., as trustee prior
to the March 15, 2002 redemption date. As the result of such conversions, 10.8 million shares of our Class A common stock
were issued to such holders. In fiscal 2001, prior to conversion, $63 thousand of our 4% Notes were converted into 2,952
shares of Class A common stock.
In February 2002, we completed a two for one stock split of our outstanding Class A common stock and Class B common
stock implemented in the form of a 100% stock dividend ( Stock Split ). Each holder of record of our Class A common stock
and Class B common stock as of the close of business on February 15, 2002 received an additional share of such stock held by
them at that time. In connection with the Stock Split, the number of shares of Class A common stock reserved for issuance or
subject to outstanding options granted under our employee stock option or other benefit plans, as well as the number of shares
reserved for issuance under our 4% Notes and 3.5% Notes, were proportionately increased in accordance with the terms of
such options, plans and other instruments.