Accenture Reports First-Quarter Earnings.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 13, 2004 Accenture (Accenture, Chicago, IL, www.accenture.com) The world's largest management and technology consulting firm, which was spun off of Arthur Andersen & Co. in 1989 as a separate entity known as Andersen Consulting. (NYSE NYSE See: New York Stock Exchange : ACN ACN Accenture (stock symbol) ACN Accenture ACN Australian Company Number ACN Automatic Collision Notification (US DOT) ACN Acetonitrile ACN Anglican Communion Network ) today reported results for the first quarter of fiscal 2004, ended Nov. 30, 2003. Revenues before reimbursements ("net revenues") for the first quarter were $3.26 billion, compared with $2.93 billion for the first quarter of fiscal year 2003, an increase of 11 percent in U.S. dollars and an increase of 4 percent in local currency. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the first quarter were $0.33, compared with $0.27 for the first quarter of fiscal year 2003. Diluted earnings per share for the first quarter of fiscal 2004 include a benefit of $0.06 a share from an $86 million reduction in reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. liabilities established in connection with Accenture's transition to a corporate structure in 2001. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the first quarter was $507 million, representing 15.5 percent of net revenues, compared with $429 million, or 14.6 percent of net revenues, for the first quarter last fiscal year. Excluding the $86 million reduction in reorganization liabilities, operating income for the first quarter would have been $421 million, or 12.9 percent of net revenues. Gross margin (gross profit as a percentage of net revenues) was 34.1 percent in the first quarter, versus 39.4 percent a year ago and 34.4 percent for the fourth quarter of fiscal 2003. The decline reflects: the continuing shift in the company's business mix toward outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , which has lower gross margins, particularly during the first year of new contracts; ongoing pricing pressures; and lower-than-expected margins on three contracts within the Communications & High Tech operating group, which reduced consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: gross margins for the quarter by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 120 basis points, or $50 million. Selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. for the first quarter of fiscal 2004 were $690 million, or 21.2 percent of net revenues, down from 24.8 percent of net revenues for the first quarter of fiscal 2003, reflecting the continuing shift in the company's business mix toward outsourcing, as well as the company's continued focus on achieving greater efficiencies in acquiring new business and on reducing administrative costs. In the first quarter of fiscal 2004, Accenture did not accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. variable compensation expense and reversed $4 million of previously accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. variable compensation for partners. The company will pay approximately $4 million of previously accrued variable compensation to partners in the second quarter. During the first quarter of fiscal 2003, Accenture accrued variable compensation expense of $17 million. The company's effective tax rate for the three months ended Nov. 30, 2003 was 34.8 percent, compared with 38.0 percent for the three months ended Nov. 30, 2002. The decrease from 38.0 percent to 34.8 percent resulted from the tax effect of the reduction in reorganization liabilities and a reduction of prior-year income tax liabilities as a result of a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of a non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. tax audit in fiscal 2004. The decrease in reorganization liabilities during the three months ended Nov. 30, 2003 reduced the 2004 annual effective tax rate by 1.8 percentage points because it had the effect of increasing pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income without a corresponding increase in income tax expense. The effective tax rate for fiscal 2004 is expected to be 34.8 percent. Income before minority interest for the first quarter of fiscal 2004 was $335 million, compared with $269 million for the first quarter of fiscal 2003. Accenture's total cash balance, including cash equivalents and restricted cash, at Nov. 30, 2003 was $2.33 billion, compared with $2.42 billion at Aug.31, 2003. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. was $126 million for the first quarter of fiscal 2004, compared with $198 million for the first quarter of fiscal 2003. Free cash flow, defined as operating cash flow net of property and equipment additions of $47 million, was $79 million, compared with $179 million for the first quarter last year. The decline in free cash flow is primarily the result of income tax refunds Tax refund Money back from the government when too much tax has been paid or withheld from a salary. that occurred in the first quarter of last fiscal year as well as increases in client receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and unbilled un·billed adj. 1. Not having been billed or charged for: unbilled medical charges. 2. Appearing, as in a movie, without being credited: an unbilled walk-on. services during the first quarter of fiscal 2004. Accenture had 49 days services outstanding for the first quarter of fiscal 2004, compared with 50 for the first quarter of fiscal 2003. The company expects to reduce client balances in future quarters by improving billing and collections and is targeting to be at or below the 44 days services outstanding level achieved at Aug. 31, 2003. Total debt at Nov. 30, 2003 was $50 million, down $10 million from Aug. 31, 2003. Joe W. Forehand forehand the head, neck, shoulders, withers and forelimbs of the horse. , Accenture chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "We are encouraged by signs of economic recovery in many parts of the world. We are seeing good business opportunities and are pleased with our strong new bookings, particularly in outsourcing. New bookings for the first quarter were $5.05 billion, our third-highest quarter ever, with outsourcing new bookings of $2.98 billion and consulting new bookings of $2.07 billion. "Our priority for the balance of the year will be to stay focused on execution. With our utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be improving and with growth in our billable workforce, we can be more selective about the opportunities we pursue and how we price our services. In addition, we are committed to further improving our contract management and operating disciplines. At the same time we will continue to focus on executing the three growth platforms This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. of our business strategy: scaling business consulting, extending our leadership in systems integration and technology, and accelerating our efforts in business process outsourcing Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in . In every aspect of our business, we will continue to be relentless in delivering the value to our clients that enables them to address the challenges they face and become high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" businesses." Consulting and Outsourcing Net Revenues -- Consulting revenues were $2.10 billion, or 64 percent of net revenues for the quarter, a decrease of 1 percent in U.S. dollars and a decrease of 9 percent in local currency from the first quarter of fiscal 2003. -- Outsourcing accounted for $1.17 billion, or 36 percent of net revenues for the quarter, an increase of 45 percent in U.S. dollars and an increase of 37 percent in local currency from the first quarter of fiscal 2003. Net Revenues by Operating Group -- Communications & High Tech: $879 million, compared with $830 million for the first quarter of fiscal 2003, an increase of 6 percent in U.S. dollars and flat in local currency, primarily due to favorable currency translation and increased revenues from large outsourcing contracts, mainly from communications clients, which offset lower consulting revenues. -- Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. : $646 million, compared with $602 million for the first quarter of fiscal 2003, an increase of 7 percent in U.S. dollars and a decrease of 1 percent in local currency, due to the strength of the Euro and to outsourcing revenue growth in our Banking and Insurance industry groups, which offset lower consulting revenues, as well as to revenue growth in our Capital Markets industry group. -- Government: $478 million, compared with $359 million for the first quarter of fiscal 2003, an increase of 33 percent in U.S. dollars and an increase of 27 percent in local currency, reflecting strong growth in both consulting and outsourcing work and growth across all geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge areas, particularly from U.S. Federal government clients. -- Resources: $555 million, compared with $487 million for the first quarter of fiscal 2003, an increase of 14 percent in U.S. dollars and an increase of 7 percent in local currency, as strong growth in outsourcing more than offset a decrease in our consulting revenues and growth in our Utilities industry group and favorable currency translation more than offset declines in most of our other industry groups within Resources. -- Products: $701 million, compared with $650 million for the first quarter of fiscal 2003, an increase of 8 percent in U.S. dollars and an increase of 1 percent in local currency, primarily as a result of favorable currency translation and growth in our Pharmaceuticals & Medical Products industry group, partly offset by a decrease in our Transportation & Travel services industry group. Net Revenues by Geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. Region -- Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Middle East and Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ): $1.55 billion, comparedwith $1.33 billion for the first quarter of fiscal 2003, an increase of 16 percent in U.S. dollars and an increase of 4 percent in local currency. -- Americas A·mer·i·cas , the See America. : $1.49 billion, compared with $1.39 billion for the first quarter of fiscal 2003, an increase of 7 percent in U.S. dollars and an increase of 5 percent in local currency. -- Asia Pacific: $220 million, compared with $207 million for the first quarter of fiscal 2003, an increase of 6 percent in U.S. dollars and a decrease of 3 percent in local currency. Business Outlook Accenture said that it will take a charge in the second quarter of fiscal 2004 related to real estate consolidation, primarily in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the United Kingdom, which is expected to be substantially completed during the second quarter. The total cost of consolidating locations and disposing of related fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → is expected to be in the range of $75 million to $100 million and will be recorded as various locations are consolidated. For the second quarter of fiscal 2004, Accenture expects net revenues to be in the range of $3.10 billion to $3.25 billion and earnings per share to be in the range of $0.21 to $0.27. Accenture said that, including any future impact of EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 00-21, it expects net revenue growth for fiscal year 2004 to be in the 8 percent to 12 percent range. For the full fiscal year 2004, Accenture expects operating cash flow to be $1.6 billion to $1.8 billion; property and equipment additions to be in the range of $300 million to $350 million; and free cash flow to be in the range of $1.3 billion to $1.5 billion. Accenture is targeting new bookings for fiscal year 2004 to be in the range of $18 billion to $20 billion. Given both known and potential accounting changes, Accenture will not be providing guidance at this time for earnings per share for the full fiscal year 2004. The three contracts with lower-than-expected margins identified in the first quarter could continue to affect Accenture's margins in the second quarter but are not expected to affect the company's ability to meet its management plan for the full fiscal year or its trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. for future earnings per share. Standard & Poor's Core Earnings* In order to provide investors with an additional perspective, Accenture presents core earnings using Standard & Poor's Core Earnings* methodology in addition to reporting earnings on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis. Accenture's S&P Core Earnings* calculation principally reflects adjustments to add back minority interest, includes stock option and related compensation expense, and excludes non-operational items such as net gains or losses on investments. For the first quarter of fiscal 2004, Accenture's core earnings were $260 million, or $0.25 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $224 million, or $0.22 per fully diluted share, for the comparable period of fiscal year 2003. Accenture's core earnings per share of $0.25 compare with reported fully diluted earnings per share of $0.33, primarily reflecting the impact of stock options, the company's employee share purchase plan, and the benefit of the decrease in reorganization liabilities. Accenture's core earnings were calculated in consultation with Standard & Poor's Corporate Value Consulting division to ensure consistency Consistency can refer to:
Conference Call and Webcast Details Accenture will host a conference call at 8:15 a.m. ET today to discuss its first-quarter fiscal 2004 financial results. To participate, please dial +1 (888) 276-9995 (+1 (612) 326-1003 outside the United States, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ) approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Accenture Web site at www.accenture.com. A replay of the conference call will be available online at www.accenture.com and via telephone by dialing +1 (800) 475-6701 (+1 (320) 365-3844 outside the United States, Puerto Rico and Canada) and entering access code 714765 from 4:30 p.m. ET Tuesday Tuesday: see week. , Jan. 13 through 11:59 p.m. ET Tuesday, Jan. 27. About Accenture Accenture is a global management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects , technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize mo·bi·lize v. 1. To make mobile or capable of movement. 2. To restore the power of motion to a joint. 3. To release into the body, as glycogen from the liver. the right people, skills, and technologies to help clients improve their performance. With approximately 86,000 people in 48 countries, the company generated net revenues of US$11.8 billion for the fiscal year ended Aug. 31, 2003. Its home page is www.accenture.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our operations and results of operations, the accuracy of which is necessarily subject to risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. include general economic conditions and the factors discussed under the "Risk Factors" heading in the Business section of our most recent annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. 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 LTD
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended November 30, 2003 and 2002
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
2003 2002
--------------------- --------------------
% of Net % of Net
Revenues Revenues
--------- --------
REVENUES:
Revenues before
reimbursements (Net
revenues) $3,261,585 100% $2,929,958 100%
Reimbursements 312,903 10% 397,489 14%
----------- --------- ----------- --------
Revenues 3,574,488 110% 3,327,447 114%
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 2,150,890 66% 1,774,197 61%
Reimbursable expenses 312,903 10% 397,489 14%
----------- --------- ----------- --------
Cost of services 2,463,793 76% 2,171,686 74%
Sales and marketing 350,597 11% 355,833 12%
General and administrative
costs 339,356 10% 370,731 13%
Reorganization benefit (86,398) (3%) -- 0%
----------- --------- ----------- --------
Total operating expenses 3,067,348 94% 2,898,250 99%
----------- --------- ----------- --------
OPERATING INCOME 507,140 15.5% 429,197 14.6%
Gain on investments, net 498 0% 3,805 0%
Interest income 10,423 0% 9,093 0%
Interest expense (5,751) 0% (6,536) 0%
Other income (expense) 1,526 0% (1,775) 0%
Equity in losses of
affiliates (686) 0% (530) 0%
----------- --------- ----------- --------
INCOME BEFORE TAXES 513,150 16% 433,254 15%
Provision for taxes 178,576 5% 164,637 6%
----------- --------- ----------- --------
INCOME BEFORE MINORITY
INTEREST 334,574 10% 268,617 9%
Minority interest (160,234) (5%) (141,746) (5%)
----------- --------- ----------- --------
NET INCOME $174,340 5% $126,871 4%
=========== ========= =========== ========
EARNINGS PER SHARE:
- Basic $0.34 $0.27
=========== ===========
- Diluted $0.33 $0.27
=========== ===========
WEIGHTED AVERAGE SHARES:
- Basic 519,417,011 468,119,491
- Diluted 1,019,952,588 1,000,572,365
ACCENTURE LTD
SUMMARY OF REVENUES
For the Three Months Ended November 30, 2003 and 2002
(In thousands of U.S. dollars)
(Unaudited)
Percent
of
Percent Total
Percent Increase/ 2003
Three Months Ended Increase/ (Decrease) Net
November 30, (Decrease) Local Reven-
2003 2002 US$ Currency ues
---------------------- --------- ---------- -------
OPERATING GROUPS
Communication &
High Tech $879,010 $830,007 6% 0% 27%
Financial
Services 646,049 601,922 7% (1)% 20%
Government 478,219 358,938 33% 27% 15%
Products 701,141 649,618 8% 1% 21%
Resources 554,627 487,268 14% 7% 17%
Other 2,539 2,205 15% n/m 0%
----------- ----------- --------
TOTAL Net Revenues 3,261,585 2,929,958 11% 4% 100%
========
Reimbursements 312,903 397,489 (21)%
----------- -----------
TOTAL REVENUES $3,574,488 $3,327,447 7%
=========== ===========
GEOGRAPHY
Americas $1,491,569 $1,392,295 7% 5% 46%
EMEA 1,550,130 1,330,627 16% 4% 47%
Asia Pacific 219,886 207,036 6% (3)% 7%
----------- ----------- --------
TOTAL Net
Revenues 3,261,585 2,929,958 11% 4% 100%
========
Reimbursements 312,903 397,489 (21)%
----------- -----------
TOTAL REVENUES $3,574,488 $3,327,447 7%
=========== ===========
n/m = not meaningful
ACCENTURE LTD
CONSOLIDATED BALANCE SHEETS
November 30, 2003 and August 31, 2003
(In thousands of U.S. dollars)
November August
30, 31,
2003 2003
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,329,651 $2,332,161
Restricted cash 4,357 83,280
Receivables from clients, net 1,486,133 1,416,153
Unbilled services 1,004,231 828,515
Other current assets 427,998 377,102
----------- -----------
Total current assets 5,252,370 5,037,211
----------- -----------
NON-CURRENT ASSETS:
Investments 30,526 33,330
Property and equipment, net 631,022 650,455
Other non-current assets 789,348 738,244
----------- -----------
Total non-current assets 1,450,896 1,422,029
----------- -----------
TOTAL ASSETS $6,703,266 $6,459,240
=========== ===========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt $36,214 46,162
Accounts payable 496,809 573,201
Deferred revenues 659,021 676,841
Accrued payroll and related benefits 1,063,085 974,319
Other accrued liabilities 1,195,484 1,080,573
----------- -----------
Total current liabilities 3,450,613 3,351,096
----------- -----------
NON-CURRENT LIABILITIES:
Long-term debt 13,729 13,955
Other non-current liabilities 1,354,241 1,416,395
----------- -----------
Total non-current liabilities 1,367,970 1,430,350
----------- -----------
MINORITY INTEREST 844,694 883,586
----------- -----------
EQUITY:
Shareholders' equity 1,039,989 794,208
----------- -----------
Total equity 1,039,989 794,208
----------- -----------
TOTAL LIABILITIES AND EQUITY $6,703,266 $6,459,240
=========== ===========
ACCENTURE LTD
CORE EARNINGS CALCULATION USING STANDARD & POOR'S CORE EARNINGS*
METHODOLOGY
For the Three Months Ended November 30, 2003 and 2002
(In thousands of U.S. dollars)
(Unaudited)
2003 2002 Notes
-------------- -------------- -----
Net Income $174,340 $126,871
S&P Core Earnings* Adjustments
Minority interest relating to
Accenture SCA and Accenture
Canada Holdings, Inc.
(net of tax) 160,158 142,266 (A)
-------------- --------------
334,498 269,137
Include:
---------------------------------
Employee stock option and share
purchase plan expense (39,450) (59,784) (B)
Pension adjustments 12,035 (5,441) (C)
Exclude:
---------------------------------
(Gain) loss on investments, net,
excluding SFAS 133 (48) (3,771) (D)
(Gain) loss on disposal of
property and equipment 1,805 4,237 (E)
Charges/reversals relating to
prior-period
reorganization costs (86,398) -- (F)
-------------- --------------
S&P Core Earnings*
Adjustments before taxes (112,056) (64,759)
Tax effect 37,247 19,676 (G)
-------------- --------------
S&P Core Earnings*
Adjustments, net (74,809) (45,083)
-------------- --------------
S&P Core Earnings* $259,689 $224,054
============== ==============
EPS, S&P Core Earnings* (Diluted) $0.25 $0.22
============== ==============
EPS, GAAP (Diluted) $0.33 $0.27
============== ==============
Weighted Average Diluted Shares
Outstanding 1,019,952,588 1,000,572,365 (H)
S&P Core Earnings* and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. , S&P Core Earnings* (Diluted) are non-GAAP financial measures. NOTES TO STANDARD & POOR'S CORE EARNINGS* ADJUSTMENTS (Unaudited) (A) Some of our partners and former partners and their permitted transferees own shares in our subsidiary Accenture SCA (Single Connector Attachment) An 80-pin plug and socket used to connect peripherals. With a SCSI drive, it rolls three cables (power, data channel and ID configuration) into one connector for fast installation and removal. and in our subsidiary Accenture Canada Holdings, Inc., which are non transferable except by exchange for shares in Accenture Ltd (or for cash at the Company's option). The shareholders of Accenture SCA and Accenture Canada Holdings, Inc. have substantially the same rights and economic interests as Accenture Ltd shareholders and are subject to the same restrictions. In addition, we view and operate the business as a single enterprise. We similarly focus on the results of Accenture as a whole as we believe that this better reflects the substance of the overall Accenture corporate structure. Therefore, the minority interest related to these shareholders is added back to Net Income. Net income before Minority interest is also consistent with diluted shares, which assume the conversion of all minority Accenture SCA and Accenture Canada Holdings Inc. shares on a one for one basis. (B) As we elect to follow Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for employee stock options and share purchase rights rather than the alternative fair value accounting provided for under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123, "Accounting for Stock-Based Compensation," in which stock options and share purchase rights are expensed, we have deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. the amount as computed under SFAS 123 in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the S&P Core Earnings* methodology. The impact of income taxes and minority interests is shown in the following table:
Three Months
Ended November
30,
-----------------
2003 2002
-------- --------
Employee stock options and share purchase rights
expense, before tax and minority interest $39,450 $59,784
Income tax benefit (11,835) (17,935)
Minority interest (13,222) (22,121)
-------- --------
Employee stock option and purchase plan expense, net
of tax and minority interest $14,393 $19,728
======== ========
(C) Under the S&P Core Earnings* methodology, pension service costs and interest costs (to the extent that interest cost exceeds actual returns on assets) are included in the Company's core earnings. Other items, such as expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: on plan assets and amortization of gains and losses and prior service costs, are not included in the S&P Core Earnings* methodology. Pension expense computed under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting has been adjusted to reflect service costs, interest costs, and actual returns on pension plan assets. (D) Under the S&P Core Earnings* methodology, investment gains and losses are not considered a part of the Company's normal, or core, business. As such, these items are excluded from S&P Core Earnings*. No adjustment is required for SFAS 133 items for purposes of calculating S&P Core Earnings*. The adjustment represents Gain (loss) on investments, net as reported under generally accepted accounting principles adjusted for SFAS No. 133 gain of $450 and $34 for the three months ended November November: see month. 30, 2003 and 2002, respectively. (E) Under the S&P Core Earnings* methodology, gains and losses on disposal of property, plant and equipment are excluded from core earnings. (F) In connection with our transition to a corporate structure in 2001, Accenture recorded tax related re-organization costs of $455 million. For the three months ended November 30, 2003, Accenture recorded a benefit of $86 million related to this charge. Accenture did not record net income or expense related to this charge during the three months ended November 30, 2002. Under the S&P Core Earnings* methodology, amounts relating to restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). charges recorded in prior periods do not relate to the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" operations and are excluded from the calculation of core earnings. (G) Under the S&P Core Earnings* methodology, we have applied the statutory federal tax rate of 35% to the S&P Core Earnings* adjustments with the exception of stock options and share purchase rights. Stock options and share purchase rights are tax affected using a 30% tax rate, which is consistent with the rate used in our financial statement disclosures and represents our best estimate of the tax benefit related to stock options and share purchase rights. (H) Diluted shares outstanding represent average shares outstanding for purposes of computing computing - computer Diluted Earnings Per Share under generally accepted accounting standards, as well as Diluted Earnings Per Share under S&P Core Earnings* methodology. * Standard & Poor's Corporate Value Consulting ("S&P CVC See CSC. ") has reviewed Accenture's calculation of Core Earnings for consistency with Standard & Poor's Core Earnings methodology. This review was based solely on financial information generated by Accenture; Standard & Poor's has not conducted any review or undertaken to investigate or verify (1) To prove the correctness of data. (2) In data entry operations, to compare the keystrokes of a second operator with the data entered by the first operator to ensure that the data were typed in accurately. See validate. , and is not responsible for, the basis, adequacy, accuracy or completeness of the information used in Accenture's calculation of Core Earnings. Standard & Poor's review has been limited solely to the application of the Standard & Poor's Core Earnings methodology to the specific financial information generated, prepared and provided by Accenture; Standard & Poor's makes no representation as to the adequacy or accuracy of Accenture's financial information used in the calculation. Standard & Poor's has no duty to update its review of Accenture's calculation of Core Earnings. Standard & Poor's Core Earnings methodology is published on Standard & Poor's web site at www.standardandpoors.com. |
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