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Accenture Reports First-Quarter Fiscal 2013 Results, With Record Quarterly Revenues And EPS

Stocks in this article: ACN

Forward-Looking Statements

Except for the historical information and discussions contained herein, statements in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. These include, without limitation, risks that: the company’s results of operations could be adversely affected by volatile, negative or uncertain economic conditions and the effects of these conditions on the company’s clients’ businesses and levels of business activity; the company’s business depends on generating and maintaining ongoing, profitable client demand for the company’s services and solutions, and a significant reduction in such demand could materially affect the company’s results of operations; if the company is unable to keep its supply of skills and resources in balance with client demand around the world and attract and retain professionals with strong leadership skills, the company’s business, the utilization rate of the company’s professionals and the company’s results of operations may be materially adversely affected; the markets in which the company competes are highly competitive, and the company might not be able to compete effectively; the company could have liability or the company’s reputation could be damaged if the company fails to protect client and/or company data or information systems as obligated by law or contract or if the company’s information systems are breached; as a result of the company’s geographically diverse operations and its growth strategy to continue geographic expansion, the company is more susceptible to certain risks; the company’s results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates; the company’s Global Delivery Network is increasingly concentrated in India and the Philippines, which may expose it to operational risks; the company’s results of operations could materially suffer if the company is not able to obtain sufficient pricing to enable it to meet its profitability expectations; if the company’s pricing estimates do not accurately anticipate the cost, risk and complexity of the company performing its work or third parties upon whom it relies do not meet their commitments, then the company’s contracts could have delivery inefficiencies and be unprofitable; the company’s work with government clients exposes the company to additional risks inherent in the government contracting environment; the company’s business could be materially adversely affected if the company incurs legal liability in connection with providing its services and solutions; the company’s results of operations and ability to grow could be materially negatively affected if the company cannot adapt and expand its services and solutions in response to ongoing changes in technology and offerings by new entrants; the company’s alliance relationships may not be successful or may change, which could adversely affect the company’s results of operations; outsourcing services and the continued expansion of the company’s other services and solutions into new areas subject the company to different operational risks than its consulting and systems integration services; the company’s services or solutions could infringe upon the intellectual property rights of others or the company might lose its ability to utilize the intellectual property of others; the company has only a limited ability to protect its intellectual property rights, which are important to the company’s success; the company’s ability to attract and retain business and employees may depend on its reputation in the marketplace; the company might not be successful at identifying, acquiring or integrating businesses or entering into joint ventures; the company’s profitability could suffer if its cost-management strategies are unsuccessful, and the company may not be able to improve its profitability through improvements to cost-management to the degree it has done in the past; many of the company’s contracts include payments that link some of its fees to the attainment of performance or business targets and/or require the company to meet specific service levels, which could increase the variability of the company’s revenues and impact its margins; changes in the company’s level of taxes, and audits, investigations and tax proceedings, or changes in the company’s treatment as an Irish company, could have a material adverse effect on the company’s results of operations and financial condition; if the company is unable to manage the organizational challenges associated with its size, the company might be unable to achieve its business objectives; if the company is unable to collect its receivables or unbilled services, the company’s results of operations, financial condition and cash flows could be adversely affected; the company’s share price and results of operations could fluctuate and be difficult to predict; the company’s results of operations and share price could be adversely affected if it is unable to maintain effective internal controls; the company may be subject to criticism and negative publicity related to its incorporation in Ireland; as well as the risks, uncertainties and other factors discussed under the “Risk Factors” heading in Accenture plc’s most recent annual report on Form 10-K and other documents filed with or furnished to the Securities and Exchange Commission. Statements in this news release speak only as of the date they were made, and Accenture undertakes no duty to update any forward-looking statements made in this news release or to conform such statements to actual results or changes in Accenture’s expectations.

                   
 
ACCENTURE PLC
 
CONSOLIDATED INCOME STATEMENTS
 
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
Three Months Ended November 30,
2012

% of Net Revenues

2011

% of Net Revenues

REVENUES:
Revenues before reimbursements ("Net revenues") $ 7,219,961 100 % $ 7,074,497 100 %
Reimbursements   448,075     514,611  

Revenues

7,668,036 7,589,108
 
OPERATING EXPENSES:
Cost of services:

Cost of services before reimbursable expenses

4,853,768 67.2 % 4,822,957 68.2 %
Reimbursable expenses   448,075     514,611  
Cost of services 5,301,843 5,337,568
Sales and marketing 868,202 12.0 % 837,477 11.8 %
General and administrative costs 448,852 6.2 % 432,517 6.1 %
Reorganization costs, net   465     408  
Total operating expenses   6,619,362     6,607,970  
 
OPERATING INCOME 1,048,674 14.5 % 981,138 13.9 %
 
Interest income 8,767 10,512
Interest expense (4,549 ) (4,158 )
Other (expense) income, net   (6,436 )   5,535  
 
INCOME BEFORE INCOME TAXES 1,046,456 14.5 % 993,027 14.0 %
 
Provision for income taxes   280,425     281,270  
 
NET INCOME 766,031 10.6 % 711,757 10.1 %
 

Net income attributable to noncontrolling interests

   in Accenture SCA and Accenture Canada Holdings Inc.

(58,955 ) (61,956 )
Net income attributable to noncontrolling interests – other (1)   (8,259 )   (7,715 )
 
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC $ 698,817   9.7 % $ 642,086   9.1 %
 
CALCULATION OF EARNINGS PER SHARE:
Net income attributable to Accenture plc $ 698,817 $ 642,086

Net income attributable to noncontrolling interests

   in Accenture SCA and Accenture Canada Holdings Inc. (2)

  58,955     61,956  
Net income for diluted earnings per share calculation $ 757,772   $ 704,042  
 
EARNINGS PER SHARE:
- Basic $ 1.09 $ 1.00
- Diluted (3) $ 1.06 $ 0.96
 
WEIGHTED AVERAGE SHARES:
- Basic 639,659,238 644,285,298
- Diluted (3) 716,368,102 730,745,055
 
Cash dividends per share $ 0.81 $ 0.675
 

_________________

(1) Comprised primarily of noncontrolling interest attributable to the noncontrolling shareholders of Avanade, Inc.
 
(2) Diluted earnings per share assumes the redemption of all Accenture SCA Class I common shares owned by holders of

noncontrolling interests and the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc

Class A ordinary shares on a one-for-one basis.

 
(3) Diluted weighted average Accenture plc Class A ordinary shares and earnings per share amounts in fiscal 2012 have been

restated to reflect additional restricted share units issued to holders of restricted share units in connection with the fiscal 2013

payment of cash dividends.

 
 
                             
 
ACCENTURE PLC
 
SUMMARY OF REVENUES
 
(In thousands of U.S. dollars)
(Unaudited)
 
 

Percent Increase (Decrease) Local Currency

Percent Increase (Decrease) U.S. Dollars
Three Months Ended November 30,
2012 2011
OPERATING GROUPS
Communications, Media & Technology $ 1,458,786 $ 1,535,186 (5 %) (1 %)
Financial Services 1,562,942 1,483,839 5 9
Health & Public Service 1,174,710 1,054,302 11 13
Products 1,698,543 1,669,553 2 5
Resources 1,321,465 1,326,875 0 3
Other   3,515     4,742 n/m n/m
TOTAL Net Revenues 7,219,961 7,074,497 2 % 5 %
Reimbursements   448,075     514,611 (13 )
TOTAL REVENUES $ 7,668,036   $ 7,589,108 1 %
 
GEOGRAPHY

Americas

$ 3,333,120 $ 3,074,717 8 % 10 %
EMEA 2,824,896 3,008,528 (6 ) 0
Asia Pacific   1,061,945     991,252 7 8
TOTAL Net Revenues $ 7,219,961   $ 7,074,497 2 % 5 %
 
TYPE OF WORK
Consulting $ 3,960,676 $ 4,083,424 (3 %) 0 %
Outsourcing   3,259,285     2,991,073 9 13
TOTAL Net Revenues $ 7,219,961   $ 7,074,497 2 % 5 %

_________________

n/m = not meaningful
 
OPERATING INCOME BY OPERATING GROUP (OG)
 
 
Three Months Ended November 30,
2012 2011
OPERATING GROUPS Operating

Income

Operating

Margin

Operating

Income

Operating

Margin

Increase (Decrease)

Communications, Media & Technology $ 183,048 13 % $ 228,527 15 % $ (45,479 )
Financial Services 241,098 15 214,855 14 26,243
Health & Public Service 143,459 12 112,834 11 30,625
Products 235,692 14 218,775 13 16,917
Resources   245,377 19   206,147 16   39,230  
Total $ 1,048,674 14.5 % $ 981,138 13.9 % $ 67,536  
 
 
 
 
ACCENTURE PLC
           
CONSOLIDATED BALANCE SHEETS
 
(In thousands of U.S. dollars)
 
November 30, 2012 August 31, 2012
(Unaudited)
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 5,678,892 $ 6,640,526
Short-term investments 2,349 2,261
Receivables from clients, net 3,501,506 3,080,877
Unbilled services, net 1,487,964 1,399,834
Other current assets   1,342,815   1,464,433
 
Total current assets   12,013,526   12,587,931
 
NON-CURRENT ASSETS:
Unbilled services, net 11,121 12,151
Investments 27,902 28,180
Property and equipment, net 799,443 779,494
Other non-current assets   3,556,028   3,257,659
 
Total non-current assets   4,394,494   4,077,484
 
TOTAL ASSETS $ 16,408,020 $ 16,665,415
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings $ 13 $ 11
Accounts payable 890,233 903,847
Deferred revenues 2,127,658 2,275,052
Accrued payroll and related benefits 3,338,958 3,428,838
Other accrued liabilities   1,620,497   1,501,457
 
Total current liabilities   7,977,359   8,109,205
 
NON-CURRENT LIABILITIES:
Long-term debt 19 22
Other non-current liabilities   3,436,670   3,931,760
 
Total non-current liabilities   3,436,689   3,931,782
 
TOTAL ACCENTURE PLC SHAREHOLDERS' EQUITY 4,506,633 4,145,833
 
NONCONTROLLING INTERESTS   487,339   478,595
 
TOTAL SHAREHOLDERS' EQUITY 4,993,972 4,624,428
   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 16,408,020 $ 16,665,415
 
 
               
 
ACCENTURE PLC
 
CONSOLIDATED CASH FLOWS STATEMENTS
 
(In thousands of U.S. dollars)
(Unaudited)
 
Three Months Ended November 30,
2012 2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 766,031 $ 711,757
Depreciation, amortization and asset impairments 139,924 132,625
Share-based compensation expense 114,170 100,558
Change in assets and liabilities/other, net   (1,128,940 )   (469,682 )
 
Net cash (used in) provided by operating activities   (108,815 )   475,258  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (86,547 ) (80,875 )
Purchases of businesses and investments, net of cash acquired (209,952 ) (160,055 )
Other investing, net   762     1,019  
 
Net cash used in investing activities   (295,737 )   (239,911 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares 164,606 139,947
Purchases of shares (220,831 ) (285,105 )
Cash dividends paid (560,135 ) (474,896 )
Other financing, net   38,698     32,437  
 

Net cash used in financing activities

(577,662 ) (587,617 )
Effect of exchange rate changes on cash and cash equivalents   20,580     (256,902 )
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (961,634 ) (609,172 )
 
CASH AND CASH EQUIVALENTS, beginning of period   6,640,526     5,701,078  
 
CASH AND CASH EQUIVALENTS, end of period $ 5,678,892   $ 5,091,906  
 
 




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