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Accenture Reports Second-Quarter Fiscal 2013 Results

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 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 could be materially adversely affected by fluctuations in foreign currency exchange rates; 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 Six Months Ended

February 28, 2013

 

% of Net Revenues

 

February 29, 2012

 

% of Net Revenues

February 28, 2013

 

% of Net Revenues

February 29, 2012

 

% of Net Revenues

REVENUES:
Revenues before reimbursements(“Net revenues”) $ 7,058,042 100 % $ 6,797,250 100 % $ 14,278,003 100 % $ 13,871,747 100 %
Reimbursements 435,278   462,578   883,353   977,189  
Revenues 7,493,320 7,259,828 15,161,356 14,848,936
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses 4,827,679 68.4 % 4,680,884 68.9 % 9,681,447 67.8 % 9,503,841 68.5 %
Reimbursable expenses 435,278   462,578   883,353   977,189  
Cost of services 5,262,957 5,143,462 10,564,800 10,481,030
Sales and marketing 834,047 11.8 % 772,338 11.4 % 1,702,249 11.9 % 1,609,815 11.6 %
General and administrative costs 455,551 6.5 % 454,314 6.7 % 904,403 6.3 % 886,831 6.4 %
Reorganization (benefits) costs, net (223,767 ) (3.2 )% 415   0.0 % (223,302 ) (1.6 )% 823   0.0 %
Total operating expenses 6,328,788   6,370,529   12,948,150   12,978,499  
OPERATING INCOME 1,164,532 16.5 % 889,299 13.1 % 2,213,206 15.5 % 1,870,437 13.5 %
Interest income 9,859 9,246 18,626 19,758
Interest expense (3,641 ) (4,220 ) (8,190 ) (8,378 )
Other income, net 10,599   4,215   4,163   9,750  
INCOME BEFORE INCOME TAXES 1,181,349 16.7 % 898,540 13.2 % 2,227,805 15.6 % 1,891,567 13.6 %
(Benefit from) provision for income taxes (5,749 ) 184,350   274,676   465,620  
NET INCOME 1,187,098 16.8 % 714,190 10.5 % 1,953,129 13.7 % 1,425,947 10.3 %

Net income attributable to noncontrolling interests in Accenture SCA and Accenture Canada Holdings Inc.

(78,363 ) (60,588 ) (137,318 ) (122,544 )

Net income attributable to noncontrolling interests – other (1)

(6,933 ) (9,679 ) (15,192 ) (17,394 )
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC $ 1,101,802   15.6 % $ 643,923   9.5 % $ 1,800,619   12.6 % $ 1,286,009   9.3 %
CALCULATION OF EARNINGS PER SHARE:
Net income attributable to Accenture plc $ 1,101,802 $ 643,923 $ 1,800,619 $ 1,286,009

Net income attributable to noncontrolling interests in Accenture SCA and Accenture Canada Holdings Inc. (2)

78,363   60,588   137,318   122,544  

Net income for diluted earnings per share calculation

$ 1,180,165   $ 704,511   $ 1,937,937   $ 1,408,553  
EARNINGS PER SHARE:
-Basic $ 1.70 $ 1.00 $ 2.79 $ 1.99
-Diluted (3) $ 1.65 $ 0.97 $ 2.71 $ 1.93
WEIGHTED AVERAGE SHARES:
-Basic 649,520,337 646,452,990 644,608,780 645,390,718
-Diluted (3) 714,807,680 729,810,080 714,977,392 730,310,743
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) U.S. dollars

Percent Increase (Decrease) Local Currency

Three Months Ended
February 28,

2013

February 29,

2012

OPERATING GROUPS
Communications, Media & Technology $ 1,411,489 $ 1,481,378 (5)% (4)%
Financial Services 1,508,865 1,376,619 10 10
Health & Public Service 1,192,698 1,055,879 13 13
Products 1,680,719 1,584,596 6 6
Resources 1,251,874 1,293,201 (3) (3)
Other   12,397   5,577 n/m n/m
TOTAL Net Revenues 7,058,042 6,797,250 4% 4%
Reimbursements   435,278   462,578 (6)
TOTAL REVENUES $ 7,493,320 $ 7,259,828 3%
GEOGRAPHY
Americas $ 3,279,776 $ 3,028,141 8% 9%
EMEA 2,800,359 2,798,135 (1)
Asia Pacific   977,907   970,974 1 2
TOTAL Net Revenues $ 7,058,042 $ 6,797,250 4% 4%
TYPE OF WORK
Consulting $ 3,752,965 $ 3,775,186 (1)% (1)%
Outsourcing   3,305,077   3,022,064 9 10
TOTAL Net Revenues $ 7,058,042 $ 6,797,250 4% 4%
 

Percent Increase (Decrease) U.S. dollars

Percent Increase (Decrease) Local Currency

Six Months Ended
February 28,

2013

February 29,

2012

OPERATING GROUPS
Communications, Media & Technology $ 2,870,275 $ 3,016,564 (5)% (3)%
Financial Services 3,071,807 2,860,458 7 10
Health & Public Service 2,367,408 2,110,181 12 13
Products 3,379,262 3,254,149 4 6
Resources 2,573,339 2,620,076 (2)
Other   15,912   10,319 n/m n/m
TOTAL Net Revenues 14,278,003 13,871,747 3% 5%
Reimbursements   883,353   977,189 10
TOTAL REVENUES $ 15,161,356 $ 14,848,936 2%

 

Americas $ 6,612,896 $ 6,102,858 8% 9%
EMEA 5,625,255 5,806,663 (3)
Asia Pacific   2,039,852   1,962,226 4 5
TOTAL Net Revenues $ 14,278,003 $ 13,871,747 3% 5%
TYPE OF WORK
Consulting $ 7,713,641 $ 7,858,610 (2)%

—%

Outsourcing   6,564,362   6,013,137 9 11
TOTAL Net Revenues $ 14,278,003 $ 13,871,747 3% 5%

_________n/m = not meaningful

 
 

ACCENTURE PLCFor the Three Months Ended February 28, 2013 and February 29, 2012(In thousands of U.S. dollars)(Unaudited)

 

OPERATING INCOME BY OPERATING GROUP

       
Operating Income as Reported (GAAP)
Three Months Ended
February 28, 2013     February 29, 2012

Operating Income

   

Operating Margin

Operating Income

   

Operating Margin

Communications, Media & Technology $ 225,744 16% $ 203,406 14%
Financial Services 244,158 16 142,714 10
Health & Public Service 188,218 16 99,593 9
Products 264,234 16 184,257 12
Resources 242,178   19 259,329   20
Total $ 1,164,532   16.5% $ 889,299   13.1%
   
Three Months Ended
February 28, 2013   February 29, 2012
 

Operating Income and Operating Margin Excluding Reorganization

Operating Income and Operating Margin as Reported (GAAP)

Operating Income (GAAP)

Reorganization Benefits (1)

 

Operating Income

 

Operating Margin

Operating Income

 

Operating Margin

Increase (Decrease)

Communications, Media & Technology $

225,744

 

$

43,304

 

$

182,440

 

13 % $

203,406

 

14 % $

(20,966

)
Financial Services 244,158 48,170 195,988 13 142,714 10

53,274

Health & Public Service 188,218 39,446 148,772 12 99,593 9

49,179

Products 264,234 52,924 211,310 13 184,257 12

27,053

Resources   242,178     40,411     201,767   16   259,329   20  

(57,562

)
Total $ 1,164,532   $ 224,255   $ 940,277   13.3 % $ 889,299   13.1 % $

50,978

 
   

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP), TO NET INCOME AND DILUTED EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)

 
Three Months Ended
February 28, 2013   February 29, 2012
Net Income  

Diluted Earnings Per Share

Net Income  

Diluted Earnings Per Share

As reported (GAAP) $ 1,187,098 $ 1.65 $ 714,190 $

0.97

 

Less impact of reorganization benefits (1)(2) (224,255 ) (0.31 )
Less benefit from final determinations of U.S. federal tax liabilities (242,938 ) (0.34 )    
As adjusted (Non-GAAP) $ 719,905   $ 1.00   $ 714,190   $ 0.97  
________
(1) Represents reorganization benefits related to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure during 2001.
(2) Reorganization benefits had the effect of increasing income before income taxes without any increase in income tax expense.
 
 

ACCENTURE PLCFor the Six Months Ended February 28, 2013 and February 29, 2012(In thousands of U.S. dollars)(Unaudited)

 

OPERATING INCOME BY OPERATING GROUP

        Operating Income as Reported (GAAP)
Six Months Ended
February 28, 2013   February 29, 2012
Operating Income   Operating Margin Operating Income   Operating Margin
Communications, Media & Technology $ 408,792 14% $ 431,933 14%
Financial Services 485,256 16 357,569 13
Health & Public Service 331,677 14 212,427 10
Products 499,926 15 403,032 12
Resources 487,555   19 465,476   18
Total $ 2,213,206   15.5% $ 1,870,437   13.5%
   
Six Months Ended
February 28, 2013   February 29, 2012
 

Operating Income and Operating Margin Excluding Reorganization Benefits

Operating Income and Operating Margin as Reported (GAAP)

Operating Income (GAAP)

Reorganization Benefits (1)

 

Operating Income

 

Operating Margin

Operating Income

 

Operating Margin

Increase (Decrease)

Communications, Media & Technology $

408,792

 

$

43,304

 

$

365,488

 

13%

$

431,933

 

14%

$

(66,445

)

Financial Services 485,256 48,170 437,086 14 357,569 13

79,517

Health & Public Service 331,677 39,446 292,231 12 212,427 10

79,804

Products 499,926 52,924 447,002 13 403,032 12

43,970

Resources   487,555     40,411     447,144   17   465,476   18  

(18,332

)

Total $ 2,213,206   $ 224,255   $ 1,988,951  

13.9%

$ 1,870,437  

13.5%

$

118,514

 
   

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP), TO NET INCOME AND DILUTED EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)

 
Six Months Ended
February 28, 2013   February 29, 2012
Net Income  

Diluted Earnings Per Share

Net Income  

Diluted Earnings Per Share

As reported (GAAP) $ 1,953,129 $ 2.71 $ 1,425,947 $

1.93

 

Less impact of reorganization benefits (1)(2) (224,255 ) (0.31 )
Less benefit from final determinations of U.S. federal tax liabilities (242,938 ) (0.34 )    
As adjusted (Non-GAAP) $ 1,485,936   $ 2.06   $ 1,425,947   $ 1.93  
________
(1) Represents reorganization benefits related to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure during 2001.
(2) Reorganization benefits had the effect of increasing income before income taxes without any increase in income tax expense.
 
   
 

ACCENTURE PLC CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars)

 

February 28, 2013

August 31, 2012

(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,636,086 $

6,640,526

 

Short-term investments 404 2,261
Receivables from clients, net 3,518,104 3,080,877
Unbilled services, net 1,457,798 1,399,834
Other current assets 1,404,557   1,464,433  
Total current assets 12,016,949   12,587,931  
NON-CURRENT ASSETS:
Unbilled services, net 10,122 12,151
Investments 45,827 28,180
Property and equipment, net 810,896 779,494
Other non-current assets 3,474,936   3,257,659  
Total non-current assets 4,341,781   4,077,484  
TOTAL ASSETS $ 16,358,730   $ 16,665,415  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings $ 13 $ 11
Accounts payable 883,048 903,847
Deferred revenues 2,318,238 2,275,052
Accrued payroll and related benefits 2,998,006 3,428,838
Other accrued liabilities 1,166,169   1,501,457  
Total current liabilities 7,365,474   8,109,205  
NON-CURRENT LIABILITIES:
Long-term debt 16 22
Other non-current liabilities 3,053,369   3,931,760  
Total non-current liabilities 3,053,385   3,931,782  
TOTAL ACCENTURE PLC SHAREHOLDERS’ EQUITY 5,452,349 4,145,833
NONCONTROLLING INTERESTS 487,522   478,595  
TOTAL SHAREHOLDERS’ EQUITY 5,939,871   4,624,428  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 16,358,730   $ 16,665,415  
   
 

ACCENTURE PLC CONSOLIDATED CASH FLOWS STATEMENTS (In thousands of U.S. dollars) (Unaudited)

 
Three Months Ended Six Months Ended

February 28, 2013

 

February 29, 2012

February 28, 2013

 

February 29, 2012

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,187,098 $ 714,190 $ 1,953,129 $ 1,425,947
Depreciation, amortization and asset impairments 157,266 147,010 297,190 279,635
Reorganization (benefits) costs, net (223,767 ) 415 (223,302 ) 823
Share-based compensation expense 184,434 160,959 298,604 261,517
Change in assets and liabilities/other, net (670,807 ) (164,761 ) (1,800,212 ) (634,851 )
Net cash provided by operating activities 634,224   857,813   525,409   1,333,071  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (90,241 ) (85,379 ) (176,788 ) (166,254 )
Purchases of businesses and investments, net of cash acquired (88,011 ) (2,821 ) (297,963 ) (162,876 )
Other investing, net 1,589   909   2,351   1,928  
Net cash used in investing activities (176,663 ) (87,291 ) (472,400 ) (327,202 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares 112,239 88,932 276,845 228,879
Purchases of shares (608,958 ) (464,974 ) (829,789 ) (750,079 )
Cash dividends paid (560,135 ) (474,896 )
Other financing, net 31,295   (2,240 ) 69,993   30,197  
Net cash used in financing activities (465,424 ) (378,282 ) (1,043,086 ) (965,899 )
Effect of exchange rate changes on cash and cash equivalents (34,943 ) 84,600   (14,363 ) (172,302 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (42,806 ) 476,840 (1,004,440 ) (132,332 )
CASH AND CASH EQUIVALENTS, beginning of period 5,678,892   5,091,906   6,640,526   5,701,078  
CASH AND CASH EQUIVALENTS, end of period $ 5,636,086   $ 5,568,746   $ 5,636,086   $ 5,568,746  




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