Accenture Reports Fourth-Quarter and Full-Year Fiscal 2003 Results; Company Achieves 2 Percent Revenue Growth for Full Year and 12 Percent Revenue Growth for Fourth Quarter.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 9, 2003 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 full fiscal year and fourth quarter ended Aug. 31, 2003. Fiscal Year 2003 Revenues before reimbursements ("net revenues") for the full fiscal year 2003 were $11.82 billion, compared with $11.57 billion for the full fiscal year 2002, an increase of 2 percent in U.S. dollars and a decrease 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 fiscal year 2003 were $1.05, compared with $0.56 for fiscal year 2002. Fiscal year 2002 diluted earnings per share included a loss on investments of $321 million, or $0.28 per share, and a real estate consolidation charge of $111 million, or $0.07 per share. 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 fiscal year 2003 was $1.55 billion, compared with $1.39 billion for fiscal year 2002, an increase of $166 million. Fiscal year 2002 operating income included a $111 million real estate consolidation charge. Operating income as a percentage of net revenues for fiscal year 2003 was 13.1 percent, compared with 12.0 percent in fiscal year 2002. The total gross margin for fiscal year 2003 was 36.5 percent of net revenues, compared with 40.4 percent of net revenues for fiscal year 2002. This change resulted from the shift in the company's mix of business 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, and from continuing pricing pressures. The decline in the gross margin was offset by improved efficiencies in 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. as a result of the company's ongoing cost-management initiatives. Selling, general and administrative costs for fiscal year 2003 decreased $423 million, or 13 percent, from fiscal year 2002, and decreased as a percentage of net revenues from 27.5 percent to 23.3 percent. These cost savings were primarily due to decreases of $143 million in facilities and technology costs; $100 million in bad debt expense; $61 million in business-protection expense; $55 million in business- and market-development spending; and $29 million in variable compensation costs. Accenture recorded variable compensation expense of $11 million in fiscal year 2003, compared with $105 million in fiscal year 2002. The company accrues compensation expense for payments of variable compensation to be made to its executives in later fiscal periods. The company's effective annual tax rate for fiscal year 2003 decreased from 38 percent to 35.1 percent. This reduced the provision for taxes by $47 million, resulting in a $0.05 benefit to diluted earnings per share for the full fiscal year. The reduction in the tax rate was primarily due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of certain prior-year non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. income tax liabilities and lower-than-estimated non-U.S. withholding tax The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. requirements. Income before minority interest for fiscal year 2003 was $1.05 billion, compared with $576 million in fiscal year 2002. Fiscal year 2002 income before minority interest included a $321 million loss on investments and a $111 million real estate consolidation charge, as well as a corresponding tax benefit of $79 million. Accenture's total cash balance, including cash equivalents and restricted cash, at Aug. 31, 2003, was $2.42 billion. For fiscal year 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 $1.51 billion and free cash flow, defined as operating cash flow net of property and equipment additions of $212 million, was $1.30 billion. For fiscal year 2002, operating cash flow was $1.06 billion, free cash flow was $801 million, and property and equipment additions were $263 million. Total debt at Aug. 31, 2003, was $60 million. Outsourcing accounted for $3.57 billion of net revenues for fiscal year 2003, an increase of 37 percent in U.S. dollars and 32 percent in local currency over the full fiscal year 2002. Consulting revenues were $7.92 billion of net revenues for fiscal year 2003, representing a decrease of 10 percent in U.S. dollars and a decrease of 16 percent in local currency from the full fiscal year 2002. Net revenues for Accenture's five operating groups in fiscal year 2003 were as follows: -- Communications & High Tech: $3.29 billion, compared with $3.18 billion for fiscal year 2002, an increase of 3 percent in U.S. dollars, primarily due to increased revenues from large outsourcing contracts and favorable currency translation offsetting 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. : $2.36 billion, compared with $2.37 billion for fiscal year 2002, representing flat growth year-over-year in U.S. dollars, as favorable currency translation and growth in outsourcing were offset by lower consulting revenues, primarily due to the impact of the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. on the capital markets industry. -- Government: $1.58 billion, compared with $1.32 billion for fiscal year 2002, an increase of 20 percent in U.S. dollars, mainly driven by strong growth in both consulting and outsourcing revenues as well as favorable currency effects. Revenue growth in fiscal year 2003 was sourced primarily from clients in the U.S. Federal government, U.S. state A U.S. state is any one of the fifty subnational entities of the United States, although four states use the official title "commonwealth". The separate state governments and the federal government share sovereignty, in that an American is a citizen both of the federal entity and and local governments, particularly in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , and from clients in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . -- Resources: $1.97 billion, compared with $2.01 billion for fiscal year 2002, a decrease of 2 percent in U.S. dollars. Decreases in consulting revenues more than offset strong growth in outsourcing, as weakness in the Chemicals, Energy, Forest Products and Metals & Mining industry groups offset favorable currency translation and growth in the Utilities industry group. -- Products: $2.61 billion, compared with $2.70 billion for fiscal year 2002, a decrease of 3 percent in U.S. dollars, primarily as a result of planned reductions in activity in the Retail industry group in 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). and decreases in HealthServices industry group revenues, offsetting favorable currency effects and growth in the Pharmaceuticals & Medical Products 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 in fiscal year 2003 were as follows: -- Europe, 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. ): $5.35 billion, compared with $4.96 billion for fiscal year 2002, an increase of 8 percent in U.S. dollars and a decrease of 6 percent in local currency, reflecting the weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the U.S. dollar againstall major currencies, most notably the Euro and the British pound. -- Americas A·mer·i·cas , the See America. : $5.67 billion, compared with $5.84 billion, a decrease of 3 percent in U.S. dollars and a decrease of 2 percent in local currency. -- Asia Pacific: $0.79 billion, compared with $0.78 billion, an increase of 2 percent in U.S. dollars and a decrease of 3 percent in local currency. Fourth Quarter 2003 Net revenues for the fourth quarter of fiscal year 2003 were $3.02 billion, compared with $2.69 billion for the fourth quarter of fiscal year 2002, an increase of 12 percent in U.S. dollars and an increase of 5 percent in local currency. Diluted earnings per share for the fourth quarter were $0.25, compared with $0.08 for the fourth quarter of fiscal year 2002. Diluted earnings per share in the fourth quarter of fiscal year 2002 included a real estate consolidation charge of $111 million, or $0.07 per share, and a loss on investments of $15 million, or $0.01 per share. Operating income for the fourth quarter of fiscal 2003 was $350 million, compared with $148 million for the fourth quarter of fiscal 2002, an increase of $202 million. Operating income for the fourth quarter of fiscal 2002 included a $111 million real estate consolidation charge. Operating income as a percentage of net revenues for the fourth quarter of fiscal 2003 was 11.6 percent, compared with 5.5 percent for the fourth quarter of fiscal 2002. The total gross margin for the fourth quarter of fiscal 2003 was 34.4 percent of net revenues, compared with 39.5 percent of net revenues for the fourth quarter of fiscal 2002. This change resulted from the shift in the company's mix of business toward outsourcing, which has lower gross margins, particularly during the first year of new contracts; continuing pricing pressures; and a reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its in the fourth quarter of fiscal 2002 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 costs, which favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected the gross margin in that quarter. The decline in the gross margin for the fourth quarter of fiscal 2003 was partially offset by improved efficiencies in selling, general and administrative costs as a result of the company's ongoing cost-management initiatives, as well as by a benefit of $30 million due to reductions in estimated liabilities related to favorable experience in bad debts and other estimated liabilities that are not expected to recur. Selling, general and administrative costs for the fourth quarter of fiscal 2003 decreased $115 million, or 14 percent, from the fourth quarter of fiscal 2002, and decreased as a percentage of net revenues from 29.8 percent to 22.8 percent. The selling, general and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. savings were primarily due to decreases of $27 million in facilities and technology costs; $14 million in bad debt expense; $13 million in business- and market-development spending; and $9 million in business-protection expense. 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. for additional variable compensation expense in the fourth quarter of fiscal 2003 and did not reverse any previously accrued variable compensation. The company expects to pay $16 million of fiscal year 2003 variable compensation in the first quarter of fiscal year 2004. Severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense for the fourth quarter of fiscal year 2003 was $32 million. In the fourth quarter of fiscal year 2002, Accenture incurred severance costs of $93 million and retention payments of $32 million, offset by reductions of variable compensation of $140 million. The decrease in the company's effective annual tax rate for fiscal 2003 reduced the tax rate for the fourth quarter to 31 percent and reduced the provision for taxes by $19 million, resulting in a $0.02 benefit to diluted earnings per share. Income before minority interest for the fourth quarter of fiscal 2003 was $251 million, compared with $78 million for the fourth quarter of fiscal 2002. Income before minority interest for the fourth quarter of fiscal 2002 included a $15 million loss on investments and a $111 million real estate consolidation charge, as well as a corresponding tax benefit of $43 million. Outsourcing accounted for $1.04 billion of net revenues for the fourth quarter of fiscal 2003, an increase of 41 percent in U.S. dollars and 33 percent in local currency over the fourth quarter of fiscal year 2002. Consulting accounted for $1.87 billion of net revenues for the fourth quarter, representing flat growth in U.S. dollars and a decrease of 8 percent in local currency from the fourth quarter of fiscal year 2002. Net revenues for Accenture's five operating groups in the fourth quarter of fiscal 2003 were as follows: -- Communications & High Tech: $849 million, compared with $804 million for the fourth quarter of fiscal year 2002, an increase of 6 percent in U.S. dollars, due to increased outsourcing revenues and favorable currency translation. -- Financial Services: $578 million, compared with $539 million for the fourth quarter of fiscal year 2002, an increase of 7 percent in U.S. dollars, primarily due to the strength of the Euro and outsourcing revenue growth in the Banking and Insurance industry groups. -- Government: $443 million, compared with $328 million for the fourth quarter of fiscal year 2002, an increase of 35 percent in U.S. dollars, mainly due to strong growth in both consulting and outsourcing revenues as well as favorable currency translation. -- Resources: $504 million, compared with $432 million for the fourth quarter of fiscal year 2002, an increase of 17 percent in U.S. dollars, primarily due to strong growth in the Utilities and Energy industry groups, partly offset by declines in the Chemicals, Forest Products and Metals & Mining industry groups. -- Products: $642 million, compared with $589 million for the fourth quarter of fiscal year 2002, an increase of 9 percent in U.S. dollars. Revenue growth in the fourth quarter was led by strong revenue growth in the Pharmaceuticals & Medical Products industry group and increased outsourcing revenues across most other industry groups. Net revenues by geographic region in the fourth quarter of fiscal year 2003 were as follows: -- Europe, Middle East and Africa (EMEA): $1.33 billion, compared with $1.11 billion for the fourth quarter of fiscal year 2002, an increase of 20 percent in U.S. dollars and an increase of 3 percent in local currency, primarily reflecting the weakening of the U.S. dollar against the Euro and the British pound. -- Americas: $1.48 billion, compared with $1.39 billion for the fourth quarter of fiscal year 2002, an increase of 6 percent in both U.S. dollars and local currency. -- Asia Pacific: $201 million, compared with $187 million for the fourth quarter of fiscal year 2002, an increase of 8 percent in U.S. dollars and an increase of 2 percent in local currency, mostly reflecting the strengthening of the Australian dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents against the U.S. dollar. "We are encouraged by Accenture's 12 percent revenue growth in the fourth quarter, as well as by our 2 percent growth in revenues for the full year, which is evidence of the tremendous performance of our people in a year of challenging economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ," said 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. . "Looking ahead, we are well positioned -- with the right strategy, the right people and a strong balance sheet -- to further distinguish Accenture in the marketplace as we maintain our relentless focus on delivering innovative solutions and services that enable our clients to 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." Accenture also reiterated that, effective Sept. 1, 2003, it adopted, on a prospective basis, Emerging Issues Task Force Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables," relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the timing of revenue and income in client engagements combining multiple services, such as consulting and outsourcing services. The company will continue to account for contracts signed on or before Aug. 31, 2003, under the previous 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 (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. . As of Sept. 1, 2003, the company began accounting for all new contracts 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 Issue No. 00-21, potentially changing the timing of revenue recognition and affecting margins in some situations, depending on the company's ability to structure contracts to accommodate the requirements of Issue No. 00-21. If Accenture had applied Issue No. 00-21 in the past, diluted earnings per share would have been approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.02 lower in fiscal 2003 and $0.01 lower in fiscal 2002. In addition, the company would have reported, cumulatively, approximately $114 million less in net revenues, of which $65 million relates to fiscal 2003, $35 million relates to fiscal 2002, and $14 million relates to fiscal 2001; and $54 million less in operating income, of which $33 million relates to fiscal 2003, $15 million relates to fiscal 2002, and $6 million relates to fiscal 2001. Accenture believes the impact of Issue No. 00-21 will continue to be modest going forward because the company plans to structure its new client agreements taking into consideration the new rules. However, should the company sign a larger number of business transformation outsourcing agreements with clients, there could be a greater delay in revenue recognition and an increased effect on margins. As previously stated, Accenture said that, excluding 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 5 percent to 10 percent range. The company also reiterated that, for the full fiscal year 2004, it expects operating cash flow to be $1.6 billion to $1.8 billion; property and equipment additions to be $300 million; free cash flow to be in the range of $1.3 billion to $1.5 billion; and the annual effective tax rate to be in the range of 36 percent to 38 percent. Accenture also reiterated that it is targeting new bookings for fiscal year 2004 to be in the range of $16 billion to $18 billion. For the first quarter of fiscal 2004, Accenture expects net revenues to be in line with the current analysts' consensus estimate of $3.09 billion and earnings per share to be in the range of $0.27 to $0.28. Given both known and potential accounting changes, Accenture will not be providing guidance for earnings per share for the full fiscal year 2004. The company reiterated that, internally for purposes of accruing variable compensation under its executive compensation plan, it will use earnings per share of $1.10 for fiscal year 2004. As announced previously, Accenture's recent primary and secondary offering of 82 million Class A common shares was priced at $21.00 per share. The underwriters of the offering have exercised their right to purchase an additional 12.3 million Class A common shares at a price of $21 per share pursuant to the overallotment option overallotment option See greenshoe. granted to them in connection with the offering. Accenture expects that after giving effect to all transactions related to the recent primary and secondary offering, including application of the underwriters' overallotment option, its active partners will control approximately 46 percent of Accenture's outstanding shares. Standard & Poor's Core Earnings(1) As previously reported, in order to provide investors with an additional perspective, Accenture presents core earnings using Standard & Poor's Core Earnings(1) methodology in addition to reporting earnings on a GAAP basis. Accenture's S&P Core Earnings(1) 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 fiscal year 2003, Accenture's core earnings were $897 million, or $0.90 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 $610 million, or $0.60 per fully diluted share, for fiscal year 2002. Accenture's core earnings per share of $0.90 compare with reported fully diluted earnings per share of $1.05, primarily reflecting the impact of stock options and the company's employee share purchase plan. For the fourth quarter of 2003, Accenture's core earnings were $218 million, or $0.22 per fully diluted share, compared with $22 million, or $0.02 per fully diluted share, for the comparable period of fiscal year 2002. Accenture's core earnings per share of $0.22 compare with reported fully diluted earnings per share of $0.25, primarily reflecting the impact of stock options and the company's employee share purchase plan. 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 Accenture will host a conference call at 8:15 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today to discuss its full fiscal year and fourth-quarter 2003 financial results. To participate, please dial +1 (888) 428-4470 (+1 (612) 326-1011) outside 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. , 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 the passcode 699987 from 1:30 p.m. EDT Thursday Thursday: see week. , Oct. 9 through 11:59 p.m. EDT Thursday, Oct. 23. 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 more than 83,000 people in 47 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. This press release contains 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. relating to 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 statement made in this news release or to conform such statements to actual results or changes in Accenture's expectations.
ACCENTURE LTD
CONSOLIDATED INCOME STATEMENT
For the Three Months Ended August 31, 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) $3,017,009 100% $2,691,672 100%
Reimbursements 445,332 15% 392,933 15%
----------- --------- ----------- --------
Revenues 3,462,341 115% 3,084,605 115%
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 1,978,081 66% 1,629,764 61%
Reimbursable expenses 445,332 15% 392,933 15%
----------- --------- ----------- --------
Cost of services 2,423,413 80% 2,022,697 75%
Sales and marketing 370,090 12% 392,584 15%
General and administrative
costs 318,743 11% 410,871 15%
Restructuring costs -- 0% 110,524 4%
----------- --------- ----------- --------
Total operating
expenses 3,112,246 103% 2,936,676 109%
----------- --------- ----------- --------
OPERATING INCOME 350,095 12% 147,929 5%
Gain (loss) on investments,
net 2,567 0% (14,521) (1%)
Interest income 10,532 0% 12,635 0%
Interest expense (4,747) 0% (12,608) 0%
Other income 6,032 0% 67 0%
Equity in losses of
affiliates (552) 0% (192) 0%
----------- --------- ----------- --------
INCOME BEFORE TAXES 363,927 12% 133,310 5%
Provision for taxes 112,752 4% 55,536 2%
----------- --------- ----------- --------
INCOME BEFORE MINORITY
INTEREST 251,175 8% 77,774 3%
Minority interest (130,670) (4%) (39,627) (1%)
----------- --------- ----------- --------
NET INCOME $ 120,505 4% $ 38,147 1%
=========== ========= =========== ========
EARNINGS PER SHARE:
- Basic $ 0.26 $ 0.08
=========== ===========
- Diluted $ 0.25 $ 0.08
=========== ===========
ADJUSTED TO EXCLUDE 2002 RESTRUCTURING COSTS AND LOSS ON
INVESTMENTS, NET (A)
INCOME BEFORE MINORITY
INTEREST AS REPORTED UNDER
GAAP $ 251,175 $ 77,774
Add Back: Restructuring
costs, net of tax -- 68,525
Add Back: Loss on
investments, net of tax -- 13,877
----------- -----------
ADJUSTED INCOME BEFORE
MINORITY INTEREST $ 251,175 $ 160,176(A)
=========== ===========
ADJUSTED EARNINGS PER SHARE:
- Basic $ 0.26 $ 0.17(A)
=========== ===========
- Diluted $ 0.25 $ 0.16(A)
=========== ===========
WEIGHTED AVERAGE SHARES:
- Basic 470,389,376 468,829,346
- Diluted 996,778,954 1,006,394,255
(A) Adjusted Income Before Minority Interest and Adjusted Earnings Per
Share are non-GAAP financial measures.
ACCENTURE LTD
CONSOLIDATED INCOME STATEMENT
For the Years Ended August 31, 2003 and 2002
(In thousands of U.S. dollars, except share and per share data)
2003 (Unaudited) 2002
---------------------- ---------------------
% of Net % of Net
Revenues Revenues
--------- --------
REVENUES:
Revenues before
reimbursements (Net
revenues) $11,817,999 100% $11,574,269 100%
Reimbursements 1,579,241 13% 1,530,755 13%
------------ --------- ------------ --------
Revenues 13,397,240 113% 13,105,024 113%
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 7,508,059 64% 6,896,975 60%
Reimbursable expenses 1,579,241 13% 1,530,755 13%
------------ --------- ------------ --------
Cost of services 9,087,300 77% 8,427,730 73%
Sales and marketing 1,458,484 12% 1,565,616 14%
General and
administrative costs 1,300,221 11% 1,615,703 14%
Restructuring costs -- 0% 110,524 1%
------------ --------- ------------ --------
Total operating
expenses 11,846,005 100% 11,719,573 101%
------------ --------- ------------ --------
OPERATING INCOME 1,551,235 13% 1,385,451 12%
Gain (loss) on investments,
net 10,123 0% (321,127) (3%)
Interest income 41,130 0% 46,185 0%
Interest expense (21,016) 0% (48,864) 0%
Other income 31,754 0% 14,993 0%
Equity in losses of
affiliates (409) 0% (9,080) 0%
------------ --------- ------------ --------
INCOME BEFORE TAXES 1,612,817 14% 1,067,558 9%
Provision for taxes 566,099 5% 491,071 4%
------------ --------- ------------ --------
INCOME BEFORE MINORITY
INTEREST 1,046,718 9% 576,487 5%
Minority interest (548,480) (5%) (331,592) (3%)
------------ --------- ------------ --------
NET INCOME $ 498,238 4% $ 244,895 2%
============ ========= ============ ========
EARNINGS PER SHARE:
- Basic $ 1.06 $ 0.57
============ ============
- Diluted $ 1.05 $ 0.56
============ ============
ADJUSTED TO EXCLUDE 2002 RESTRUCTURING COSTS AND LOSS ON
INVESTMENTS, NET (A)
INCOME BEFORE MINORITY
INTEREST AS REPORTED
UNDER GAAP $ 1,046,718 $ 576,487
Add Back: Restructuring
costs, net of tax -- 68,525
Add Back: Loss on
investments, net of tax -- 283,833
------------ ------------
ADJUSTED INCOME BEFORE
MINORITY INTEREST $ 1,046,718 $ 928,845(A)
============ ============
ADJUSTED EARNINGS PER
SHARE:
- Basic $ 1.06 $ 0.93(A)
============ ============
- Diluted $ 1.05 $ 0.91(A)
============ ============
WEIGHTED AVERAGE SHARES:
- Basic 468,592,110 425,941,809
- Diluted 996,754,596 1,023,789,546
(A) Adjusted Income Before Minority Interest and Adjusted Earnings Per
Share are non-GAAP financial measures.
ACCENTURE LTD
SUMMARY OF REVENUES
For the Three Months and Years Ended August 31, 2003 and 2002
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Percent
August 31, increase/
2003 2002 (decrease)US$
------------------------- -------------
OPERATING GROUPS
Communication & High Tech $ 848,807 $ 804,457 6 %
Financial Services 577,941 538,510 7 %
Government 442,662 327,507 35 %
Products 642,159 588,966 9 %
Resources 503,667 432,076 17 %
Other 1,773 156 n/m
------------ ------------
TOTAL Net Revenues 3,017,009 2,691,672 12 %
Reimbursements 445,332 392,933 13 %
------------ ------------
TOTAL REVENUES $ 3,462,341 $ 3,084,605 12 %
============ ============
GEOGRAPHY
Americas $ 1,484,510 $ 1,394,126 6 %
EMEA 1,331,175 1,110,486 20 %
Asia Pacific 201,324 187,060 8 %
------------ ------------
TOTAL Net Revenues 3,017,009 2,691,672 12 %
Reimbursements 445,332 392,933 13 %
------------ -----------
TOTAL REVENUES $ 3,462,341 $ 3,084,605 12 %
============ ============
Percent
increase/
(decrease) Percent of Total
Local currency 2003 Net Revenues
-------------- -----------------
OPERATING GROUPS
Communication & High Tech 28 %
Financial Services 19 %
Government 15 %
Products 21 %
Resources 17 %
Other 0 %
------------------
TOTAL Net Revenues 100 %
==================
Reimbursements
TOTAL REVENUES
GEOGRAPHY
Americas 6 % 49 %
EMEA 3 % 44 %
Asia Pacific 2 % 7 %
------------------
TOTAL Net Revenues 5 % 100 %
==================
Reimbursements
TOTAL REVENUES
Year Ended Percent
August 31, increase/
2003 2002 (decrease)US$
------------------------- -------------
OPERATING GROUPS
Communication & High Tech $ 3,290,372 $3,181,658 3 %
Financial Services 2,355,321 2,366,427 0 %
Government 1,581,758 1,315,819 20 %
Products 2,613,303 2,695,978 (3)%
Resources 1,966,043 2,005,045 (2)%
Other 11,202 9,342 20 %
------------ ------------
TOTAL Net Revenues 11,817,999 11,574,269 2 %
Reimbursements 1,579,241 1,530,755 3 %
------------ ------------
TOTAL REVENUES $13,397,240 $13,105,024 2 %
============ ============
GEOGRAPHY
Americas $ 5,671,026 $ 5,835,992 (3)%
EMEA 5,352,850 4,962,942 8 %
Asia Pacific 794,123 775,335 2 %
------------ ------------
TOTAL Net Revenues 11,817,999 11,574,269 2 %
Reimbursements 1,579,241 1,530,755 3 %
------------ ------------
TOTAL REVENUES $13,397,240 $13,105,024 2 %
============ ============
Percent
increase/
(decrease) Percent of Total
Local currency 2003 Net Revenues
-------------- -----------------
OPERATING GROUPS
Communication & High Tech 28 %
Financial Services 20 %
Government 13 %
Products 22 %
Resources 17 %
Other 0 %
------------------
TOTAL Net Revenues 100 %
==================
Reimbursements
TOTAL REVENUES
GEOGRAPHY
Americas (2) % 48 %
EMEA (6) % 45 %
Asia Pacific (3) % 7 %
------------------
TOTAL Net Revenues (4) % 100 %
==================
Reimbursements
TOTAL REVENUES
n/m = not meaningful
ACCENTURE LTD
CONSOLIDATED BALANCE SHEETS
August 31, 2003 and August 31, 2002
(In thousands of U.S. dollars)
August 31, August 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,332,161 $ 1,316,976
Restricted cash 83,280 79,445
Receivables from clients, net 1,416,153 1,330,642
Unbilled services 828,515 774,214
Other current assets 381,349 559,811
------------ ------------
Total current assets 5,041,458 4,061,088
------------ ------------
NON-CURRENT ASSETS:
Investments 29,083 76,017
Property and equipment, net 650,455 716,504
Other non-current assets 738,244 625,339
------------ ------------
Total non-current assets 1,417,782 1,417,860
------------ ------------
TOTAL ASSETS $ 6,459,240 $ 5,478,948
============ ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt $ 46,162 $ 63,099
Accounts payable 573,201 450,208
Deferred revenue 676,841 543,917
Accrued payroll and related benefits 974,319 1,139,887
Other accrued liabilities 1,080,573 1,129,951
------------ ------------
Total current liabilities 3,351,096 3,327,062
------------ ------------
NON-CURRENT LIABILITIES:
Long-term debt 13,955 3,428
Other non-current liabilities 1,416,395 1,190,436
------------ ------------
Total non-current liabilities 1,430,350 1,193,864
------------ ------------
MINORITY INTEREST 883,586 519,396
------------ ------------
EQUITY:
Shareholders' equity 794,208 438,626
------------ ------------
Total equity 794,208 438,626
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 6,459,240 $ 5,478,948
============ ============
ACCENTURE LTD
CORE EARNINGS CALCULATION USING STANDARD & POOR'S CORE EARNINGS(1)
METHODOLOGY
For the Three Months Ended August 31, 2003 and 2002
(In thousands of U.S. dollars)
(Unaudited)
2003 2002 Notes
------------- --------------- -----
Net Income $ 120,505 $ 38,147
S&P Core Earnings(1) Adjustments
Minority interest relating to
Accenture SCA and Accenture
Canada Holdings, Inc. (net of
tax) 130,443 39,627 (A)
------------- ---------------
250,948 77,774
Include:
----------------------------------
Employee stock option and share
purchase plan expense (37,560) (90,073) (B)
Pension adjustments 2,006 (5,566) (C)
Exclude:
----------------------------------
(Gain) loss on investments, net,
excluding SFAS 133 (2,331) 11,911 (D)
(Gain) loss on disposal of
property and equipment 8,707 5,205 (E)
Charges/reversals relating to
prior-period restructuring
charges (17,861) -- (F)
------------- ---------------
S&P Core Earnings(1) Adjustments
before taxes (47,039) (78,523)
Tax effect 14,585 22,979 (G)
------------- ---------------
S&P Core Earnings(1) Adjustments,
net (32,454) (55,544)
------------- ---------------
S&P Core Earnings(1) $ 218,494 $ 22,230
============= ===============
EPS, S&P Core Earnings(1)(Diluted) $ 0.22 $ 0.02
============= ===============
EPS, GAAP (Diluted) $ 0.25 $ 0.08
============= ===============
Weighted Average Diluted Shares
Outstanding 996,778,954 1,006,394,255 (H)
S&P Core Earnings(1) and EPS, S&P Core Earnings(1) (Diluted) are
non-GAAP financial measures.
ACCENTURE LTD
CORE EARNINGS CALCULATION USING STANDARD & POOR'S CORE EARNINGS(1)
METHODOLOGY
For the Years Ended August 31, 2003 and 2002
(In thousands of U.S. dollars)
(Unaudited)
2003 2002 Notes
------------- --------------- -----
Net Income $ 498,238 $ 244,895
S&P Core Earnings(1) Adjustments
Minority interest relating to
Accenture SCA and Accenture
Canada Holdings, Inc. (net of
tax) 549,507 331,592 (A)
------------- ---------------
1,047,745 576,487
Include:
----------------------------------
Employee stock option and share
purchase plan expense (182,320) (353,082) (B)
Pension adjustments (9,940) (23,335) (C)
Exclude:
----------------------------------
(Gain) loss on investments, net,
excluding SFAS 133 (10,534) 319,657 (D)
(Gain) loss on disposal of
property and equipment 2,826 20,679 (E)
Charges/reversals relating to
prior-period restructuring
charges (17,861) -- (F)
------------- ---------------
S&P Core Earnings(1) Adjustments
before taxes (217,829) (36,081)
Tax effect 67,124 69,139 (G)
------------- ---------------
S&P Core Earnings(1) Adjustments,
net (150,705) 33,058
------------- ---------------
S&P Core Earnings(1) $ 897,040 $ 609,545
============= ===============
EPS, S&P Core Earnings(1)(Diluted) $ 0.90 $ 0.60
============= ===============
EPS, GAAP (Diluted) $ 1.05 $ 0.56
============= ===============
Weighted Average Diluted Shares
Outstanding 996,754,596 1,023,789,546 (H)
S&P Core Earnings(1) and EPS, S&P Core Earnings(1) (Diluted) are
non-GAAP financial measures.
NOTES TO STANDARD & POOR'S CORE EARNINGS(1) ADJUSTMENTS
(Unaudited)
(A) Some of our partners and former partners and their permitted
transferees own shares in our subsidiary Accenture SCA 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 Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for
employee share options and purchase plans rather than the
alternative fair value accounting provided for under SFAS 123,
"Accounting for Stock-Based Compensation," in which stock options
and purchase plans are expensed, we have deducted the amount as
computed under SFAS 123 in accordance with the S&P Core
Earnings(1) methodology. The impact of income taxes and minority
interests is shown in the following table:
Three Months Ended Year Ended
August 31, August 31,
2003 2002 2003 2002
-------- -------- --------- ---------
Employee stock option and
purchase plan
Expense, before tax and
minority interest $37,560 $90,073 $182,320 $353,082
Income tax benefit (11,268) (27,022) (54,696) (105,925)
Minority interest (13,667) (33,316) (66,888) (142,066)
-------- -------- --------- ---------
Employee stock option and
purchase plan expense, net of
tax and minority interest $12,625 $29,735 $60,736 $105,091
======== ======== ========= =========
(C) Under the S&P Core Earnings(1) 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 on plan assets and
amortization of gains and losses and prior service costs, are not
included in the S&P Core Earnings(1) methodology. Pension expense
computed under generally accepted accounting principles has been
adjusted to reflect service costs, interest costs, and actual
returns on pension plan assets.
(D) Under the S&P Core Earnings(1) 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(1). No adjustment is required for SFAS 133 items for
purposes of calculating S&P Core Earnings(1). The adjustment
represents Gain (loss) on investments, net as reported under
generally accepted accounting principles adjusted for a SFAS No.
133 gain of $236 and a loss of $(2,609) for the three months ended
August 31, 2003 and 2002, respectively, and losses of $(410) and
$(1,470) for the years ended August 31, 2003 and 2002,
respectively.
(E) Under the S&P Core Earnings(1) 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. In fiscal 2003, Accenture released $18 million net of
interest related to this charge. Accenture did not record net
income or expense related to this charge in fiscal 2002. Under the
S&P Core Earnings(1) methodology amounts relating to restructuring
charges recorded in prior periods do not relate to the on-going
operations and are excluded from the calculation of core earnings.
(G) Under the S&P Core Earnings(1) methodology, we have applied the
statutory federal tax rate of 35% to the S&P Core Earnings(1)
adjustments with the exception of stock options and purchase plans
and certain investment losses. Stock options and purchase plans
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 purchase plans. For year ended August 31, 2002,
investment writedowns totaling $211,900 were not tax affected for
financial statement purposes, as the tax benefits, if any, for
these losses are not expected to be realized.
(H) Diluted shares outstanding represent average shares outstanding
for purposes of computing Diluted Earnings Per Share under
generally accepted accounting standards, as well as Diluted
Earnings Per Share under S&P Core Earnings(1) methodology.
(1) Standard & Poor's Corporate Value Consulting ("S&P CVC") 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, 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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