Accenture Reports Strong Third-Quarter Fiscal 2006 Financial Results, with Record Quarterly Revenues; Net revenues increase 11% in local currency; Adjusted EPS up 32% and adjusted operating income up 19%.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 strong financial results for the third quarter of fiscal 2006, ended May 31, with net revenues of $4.41 billion, an increase of 11 percent in local currency over the same period last year, and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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 of $0.56, which include a $0.06 benefit from a $58 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. 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. increased 10 percent on a GAAP basis and 32 percent on an adjusted basis over the third quarter last year. The company achieved the highest quarterly net revenues in its history, driven by record net revenues in all five operating groups and all three 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. regions. Consulting and 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. net revenues were also the highest in any quarter. In addition to achieving double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increases in both its top and bottom lines, the company grew 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. by 3 percent on a GAAP basis and 19 percent on an adjusted basis and expanded its operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 120 basis points, to 14.3 percent. The company also maintained its strong balance sheet and cash flow. William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack D. Green, Accenture's 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, "Our performance in the third quarter demonstrates the overall strength and momentum of our business. We grew revenues across every dimension of our company. We increased operating income, expanded operating margin and reduced SG&A as a percentage of revenues. New bookings of $5.57 billion were the highest in nine quarters. Our balance sheet remains strong, and we generated $746 million in free cash flow. Overall, we are well-positioned for further growth and remain focused on delivering value to our clients and shareholders." Financial Review As previously reported, Accenture began expensing stock options and employee stock purchase plans on Sept. 1, 2005, 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 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 123R. Therefore, in addition to providing year-over-year GAAP comparisons, the company is presenting results for the third quarter of fiscal 2005 on an options-adjusted basis to provide meaningful comparisons on relevant metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. . Revenues before reimbursements ("net revenues") for the third quarter of fiscal 2006 were $4.41 billion, compared with $4.08 billion for the third quarter of fiscal 2005, an increase of 11 percent in local currency and 8 percent in U.S. dollars. Net revenues were the highest of any quarter in the company's history, driven by record net revenues in all five operating groups and all three geographic regions. --Consulting net revenues were $2.66 billion, an increase of 10 percent in local currency and 6 percent in U.S. dollars over the third quarter last year. --Outsourcing net revenues were $1.75 billion, an increase of 14 percent in local currency and 11 percent in U.S. dollars over the same period last year. GAAP 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. EPS for the third quarter of fiscal 2006 were $0.56, compared with $0.51, or $0.46 on an options-adjusted basis, for the third quarter last year. After adjusting for the $0.06 reorganization benefit, EPS for the third quarter of fiscal 2006 were $0.50, compared with $0.38 in the third quarter last year on an options-adjusted basis and excluding an $0.08 benefit from a $73 million reduction in reorganization liabilities in that quarter. Reorganization liabilities were established in connection with the company's transition to a corporate structure in 2001.
Diluted Earnings Per Share For the Three
Months Ended
-------------
May May
31, 31,
2006 2005 % Change
------ ------ ---------
Earnings per share -- as reported (GAAP) $0.56 $0.51 10%
Pro forma stock option and employee share
purchase plan compensation expense, net of
tax -- (0.05)
------ ------
Subtotal $0.56 $0.46 22%
Reorganization benefit (0.06) (0.08)
------ ------
Earnings per share -- as adjusted $0.50 $0.38 32%
====== ======
GAAP operating income for the third quarter of fiscal 2006 was $690 million, or 15.7 percent of net revenues, compared with $672 million, or 16.5 percent of net revenues, for the third quarter last year, and $606 million, or 14.9 percent of net revenues, on an options-adjusted basis for the third quarter last year. Excluding the $58 million reorganization benefit, operating income for the third quarter of fiscal 2006 was $632 million, or 14.3 percent of net revenues, compared with third-quarter fiscal 2005 operating income of $533 million, or 13.1 percent of net revenues, on a reorganization- and options-adjusted basis. This represents a 19 percent increase in operating income and a margin expansion of 120 basis points. Gross margin (gross profit as a percentage of net revenues) for the third quarter of fiscal 2006 was 33.0 percent, compared with 33.0 percent on an options-adjusted basis, or 34.6 percent on a GAAP basis, for the third quarter of fiscal 2005. Selling, general and administrative expenses in the third quarter of fiscal 2006 were $816 million, or 18.5 percent of net revenues, compared with $804 million, or 19.7 percent of net revenues, in the third quarter last year on a GAAP basis and $808 million, or 19.8 percent of net revenues, on an options-adjusted basis. The company's effective tax rate for the third quarter of fiscal 2006 was 29.9 percent, compared with 29.4 percent for the same period last year. The 29.9 percent effective tax rate for the third quarter of fiscal 2006 reflects the effect of the reduction in the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. tax rate from 37.0 percent to 33.4 percent, primarily as a result of final determinations of reorganization liabilities and prior-year tax liabilities during the quarter. Final determinations include final agreements with tax authorities and expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of statutes of limitations. GAAP income before minority interest was $499 million in the third quarter of fiscal 2006, compared with $486 million in the same period of fiscal 2005 and $440 million on an options-adjusted basis for the same period of fiscal 2005. For the three months ended May 31, 2006, 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 $806 million, and property and equipment additions were $60 million. Free cash flow, defined as operating cash flow net of property and equipment additions, for the third quarter of 2006 was $746 million. Accenture's total cash balance at May 31, 2006 was $2.79 billion, compared with $2.48 billion at Aug. 31, 2005. Cash combined with $324 million of fixed-income securities Fixed-income securities Investments that have specific interest rates, such as bonds. classified as investments on the company's balance sheet was $3.12 billion at May 31, 2006, compared with $3.18 billion at Aug. 31, 2005. Total debt at May 31, 2006 was $50 million. New Bookings New bookings for the third quarter were $5.57 billion, the highest in nine quarters: --Consulting accounted for $2.75 billion of new bookings. --Outsourcing accounted for $2.82 billion of new bookings and represented the company's highest outsourcing bookings in nine quarters. New bookings for the nine months ended May 31, 2006 totaled $15.44 billion, an increase of 23 percent in local currency and 20 percent in U.S. dollars over the same period last year. Net Revenues by Operating Group Net revenues for Accenture's five operating groups were as follows: --Communications & High Tech: $1,079 million, compared with $1,037 million for the third quarter of fiscal 2005, an increase of 7 percent in local currency and 4 percent in U.S. dollars. --Financial Services: $922 million, compared with $909 million for the same period last year, an increase of 6 percent in local currency and 1 percent in U.S. dollars. --Government: $599 million, compared with $577 million for the year-ago period, an increase of 7 percent in local currency and 4 percent in U.S. dollars. --Products: $1,117 million, compared with $933 million for the year-ago period, an increase of 24 percent in local currency and 20 percent in U.S. dollars. --Resources: $687 million, compared with $621 million for the same period last year, an increase of 13 percent in local currency and 11 percent in U.S. dollars. Net Revenues by Geographic Region Net revenues by geographic region were as follows: --Americas: $2.02 billion, compared with $1.75 billion for the third quarter of fiscal 2005, an increase of 14 percent in local currency and 16 percent in U.S. dollars. --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. ): $2.07 billion, compared with $2.07 billion for the third quarter of fiscal 2005, an increase of 7 percent in local currency and flat in U.S. dollars. --Asia Pacific: $317 million, compared with $266 million for the year-ago period, an increase of 25 percent in local currency and 19 percent in U.S. dollars. Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Activity During the third quarter of fiscal 2006, Accenture repurchased or redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. a total of 9.8 million shares for a total of $290 million. At May 31, 2006, Accenture had $2.2 billion of share repurchase authority remaining. Business Outlook Fourth Quarter Fiscal 2006 For the fourth quarter, ending Aug. 31, 2006, Accenture expects net revenues to be in the range of $4.20 billion to $4.35 billion and GAAP diluted EPS to be in the range of $0.52 to $0.54. GAAP diluted EPS will include the impact of a $140 million tax benefit recorded in June June: see month. as a result of the expiration of a statute of limitations A type of federal or state law that restricts the time within which legal proceedings may be brought. Statutes of limitations, which date back to early Roman Law, are a fundamental part of European and U.S. law. . The company's 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: tax provision in the fourth quarter will reflect the impact of this item. Full Fiscal Year 2006 For the full fiscal year 2006, Accenture now expects net revenues to be at the upper end of its previously communicated range of 9 percent to 12 percent in local currency. The company now expects GAAP diluted EPS to be in the range of $1.55 to $1.57, including the impact of the $140 million tax benefit recorded in June. Accenture has increased its outlook for operating cash flow and now expects operating cash flow for the full fiscal year to be in the range of $2.10 billion to $2.20 billion; property and equipment additions to be $350 million; and free cash flow to be in the range of $1.75 billion to $1.85 billion. The company now expects its annual effective tax rate to be in the range of 25 percent to 27 percent, including the impact of the tax benefit recorded in June. Accenture continues to target new bookings in the range of $19 billion to $21 billion for the full fiscal year. Given new bookings to date and pending opportunities, the company now expects to be at the high end of the range. Conference Call and Webcast Details Accenture will host a conference call at 4:30 p.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 third-quarter 2006 financial results. To participate, please dial +1 (800) 230-1092 (+1 (612) 288-0318 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 and podcast (iPOD broadCAST) An audio broadcast that has been converted to an MP3 file or other audio file format for playback in a digital music player or computer. The "pod" in podcast was coined from "iPod," the predominant portable, digital music player, and although podcasts are of the conference call will be available online at www.accenture.com (for approximately two weeks beginning at 9:45 p.m. EDT Thursday Thursday: see week. , June 29). The replay will also be available via telephone by dialing +1 (800) 475-6701 (+1 (320) 365-3844 outside the United States, Puerto Rico and Canada) and entering access code 833247 from 9:45 p.m. EDT Thursday, June 29 through 11:59 p.m. EDT Thursday, July July: see month. 13. 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 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 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 133,000 people in 48 countries, the company generated net revenues of US$15.55 billion for the fiscal year ended Aug. 31, 2005. 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 news 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. and other documents filed with or furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to 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. Non-GAAP Financial Information This press release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to Accenture's financial statements as prepared 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 (GAAP) are included in this press release. Accenture's management believes providing investors with this information gives additional insights into Accenture's results of operations. While Accenture's management believes that these non-GAAP financial measures are useful in evaluating Accenture's operations, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.
ACCENTURE LTD
CONSOLIDATED INCOME STATEMENTS
For the Three and Nine Months Ended May 31, 2006 and 2005
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
Three Months Ended, May 31,
--------------------------------------------
% of Net % of Net
REVENUES: 2006 Revenues 2005 Revenues
------------ --------------------- ---------
Revenues before
reimbursements
(Net revenues) $4,408,069 100% $4,078,573 100%
Reimbursements 397,258 419,037
------------ ------------
Revenues 4,805,327 4,497,610
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 2,954,184 67.0% 2,669,056 65.4%
Reimbursable expenses 397,258 419,037
------------ ------------
Cost of services 3,351,442 3,088,093
Sales and marketing 453,709 10.3% 421,238 10.3%
General and
administrative costs 362,051 8.2% 382,430 9.4%
Reorganization benefits,
net (51,999) (66,099)
------------ ------------
Total operating
expenses 4,115,203 3,825,662
------------ ------------
OPERATING INCOME 690,124 15.7% 671,948 16.5%
Gain on investments, net 15 4,672
Interest income 31,571 29,075
Interest expense (4,852) (6,373)
Other expense (4,971) (10,919)
------------ ------------
INCOME BEFORE INCOME
TAXES 711,887 16.1% 688,403 16.9%
Provision for income taxes 213,088 202,392
------------ ------------
INCOME BEFORE MINORITY
INTEREST 498,799 11.3% 486,011 11.9%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (153,843) (178,677)
Minority interest -
other (1) (2,692) (2,054)
------------ ------------
NET INCOME $342,264 7.8% $305,280 7.5%
============ ============
CALCULATION OF EARNINGS
PER SHARE:
Net income $342,264 $305,280
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 153,843 178,677
------------ ------------
Net income for diluted
earnings per share
calculation $496,107 $483,957
============ ============
EARNINGS PER SHARE:
- Basic $0.58 $0.52
============ ============
- Diluted $0.56 $0.51
============ ============
WEIGHTED AVERAGE SHARES:
- Basic 589,933,994 587,277,097
- Diluted 886,889,939 952,292,398
Cash dividends per share $ - $ -
--------------------------
Nine Months Ended May 31,
------------------------------------------
REVENUES: % of Net % of Net
2006 Revenues 2005 Revenues
------------------------------------------
Revenues before
reimbursements
(Net revenues) $12,680,339 100% $11,622,450 100%
Reimbursements 1,159,116 1,162,916
------------ ------------
Revenues 13,839,455 12,785,366
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 9,037,490 71.3% 7,823,445 67.3%
Reimbursable expenses 1,159,116 1,162,916
------------ ------------
Cost of services 10,196,606 8,986,361
Sales and marketing 1,255,723 9.9% 1,157,100 10.0%
General and administrative
costs 1,101,164 8.7% 1,134,723 9.8%
Reorganization benefits,
net (54,030) (94,868)
------------ ------------
Total operating
expenses 12,499,463 11,183,316
------------ ------------
OPERATING INCOME 1,339,992 10.6% 1,602,050 13.8%
Gain on investments, net 3,245 19,305
Interest income 86,505 77,259
Interest expense (14,095) (18,989)
Other expense (18,113) (16,092)
------------ ------------
INCOME BEFORE INCOME
TAXES 1,397,534 11.0% 1,663,533 14.3%
Provision for income taxes 466,777 517,359
------------ ------------
INCOME BEFORE MINORITY
INTEREST 930,757 7.3% 1,146,174 9.9%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (296,633) (429,046)
Minority interest -
other (1) (7,240) (5,789)
------------ ------------
NET INCOME $626,884 4.9% $711,339 6.1%
============ ============
CALCULATION OF EARNINGS
PER SHARE:
Net income $626,884 $711,339
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 296,633 429,046
------------ ------------
Net income for diluted
earnings per share
calculation $923,517 $1,140,385
============ ============
EARNINGS PER SHARE:
- Basic $1.07 $1.21
============ ============
- Diluted $1.03 $1.17
============ ============
WEIGHTED AVERAGE SHARES:
- Basic 587,424,108 589,530,351
- Diluted 898,103,729 970,731,118
Cash dividends per share $ 0.30 $ -
(1) Minority interest - other is comprised primarily of minority
interest attributable to the minority shareholders of Avanade,
Inc.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada
Holdings Inc. exchangeable shares, respectively, for Accenture Ltd
Class A common shares, on a one-for-one basis.
ACCENTURE LTD
RECONCILIATION OF CONSOLIDATED INCOME STATEMENT, AS REPORTED (GAAP),
TO CONSOLIDATED INCOME STATEMENT ON AN OPTIONS-ADJUSTED BASIS
For the Three Months Ended May 31, 2005
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
As Reported Options- % of Net
(GAAP) Adjustments(3) Adjusted Revenues
----------------------------------------------
REVENUES:
Revenues before
reimbursements (Net
revenues) $4,078,573 $- $4,078,573 100%
Reimbursements 419,037 - 419,037
------------ ---------- ------------
Revenues 4,497,610 - 4,497,610
OPERATING EXPENSES:
Cost of services:
Cost of services before
reimbursable expenses 2,669,056 61,798 2,730,854 67.0%
Reimbursable expenses 419,037 - 419,037
------------ ---------- ------------
Cost of services 3,088,093 61,798 3,149,891
Sales and marketing 421,238 1,653 422,891 10.4%
General and
administrative costs 382,430 2,644 385,074 9.4%
Reorganization benefits,
net (66,099) - (66,099)
------------ ---------- ------------
Total operating
expenses 3,825,662 66,095 3,891,757
------------ ---------- ------------
OPERATING INCOME 671,948 (66,095) 605,853 14.9%
Gain on investments,
net 4,672 - 4,672
Interest income 29,075 - 29,075
Interest expense (6,373) - (6,373)
Other expense (10,919) - (10,919)
------------ ---------- ------------
INCOME BEFORE INCOME
TAXES 688,403 (66,095) 622,308 15.3%
Provision for income
taxes 202,392 (19,733) 182,659
------------ ---------- ------------
INCOME BEFORE MINORITY
INTEREST 486,011 (46,362) 439,649 10.8%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc (178,677) 17,116 (161,561)
Minority interest -
other (1) (2,054) - (2,054)
------------ ---------- ------------
NET INCOME $305,280 $(29,246) $276,034 6.8%
============ ========== ============
CALCULATION OF EARNINGS
PER SHARE:
Net income $305,280 $276,034
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 178,677 161,561
------------ ------------
Net income for diluted
earnings per share
calculation $483,957 $437,595
============ ============
EARNINGS PER SHARE:
- Basic $0.52 $0.47
============ ============
- Diluted $0.51 $0.46
============ ============
WEIGHTED AVERAGE
SHARES:
- Basic 587,277,097 587,277,097
- Diluted 952,292,398 952,292,398
(1) Minority interest - other is comprised primarily of minority
interest attributable to the minority shareholders of Avanade,
Inc.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada
Holdings Inc. exchangeable shares, respectively, for Accenture Ltd
Class A common shares, on a one-for-one basis.
(3) Adjustments represent the estimated amounts that Accenture would
have incurred if it had expensed employee stock options and
employee share purchase plans for the three months ended May 31,
2005.
ACCENTURE LTD
RECONCILIATION OF CONSOLIDATED INCOME STATEMENT, AS REPORTED (GAAP),
TO CONSOLIDATED INCOME STATEMENT ON AN OPTIONS-ADJUSTED BASIS
For the Nine Months Ended May 31, 2005
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
As Reported Options- % of Net
(GAAP) Adjustments(3) Adjusted Revenues
------------------------------------------------
REVENUES:
Revenues before
reimbursements (Net
revenues) $11,622,450 $- $11,622,450 100%
Reimbursements 1,162,916 - 1,162,916
------------ ------------- ------------
Revenues 12,785,366 - 12,785,366
OPERATING EXPENSES:
Cost of services:
Cost of services
before reimbursable
expenses 7,823,445 138,773 7,962,218 68.5%
Reimbursable expenses 1,162,916 - 1,162,916
------------ ------------- ------------
Cost of services 8,986,361 138,773 9,125,134
Sales and marketing 1,157,100 3,711 1,160,811 10.0%
General and
administrative costs 1,134,723 5,937 1,140,660 9.8%
Reorganization
benefits, net (94,868) - (94,868)
------------ ------------- ------------
Total operating
expenses 11,183,316 148,421 11,331,737
------------ ------------- ------------
OPERATING INCOME 1,602,050 (148,421) 1,453,629 12.5%
Gain on investments,
net 19,305 - 19,305
Interest income 77,259 - 77,259
Interest expense (18,989) - (18,989)
Other expense (16,092) - (16,092)
------------ ------------- ------------
INCOME BEFORE INCOME
TAXES 1,663,533 (148,421) 1,515,112 13.0%
Provision for income
taxes 517,359 (44,431) 472,928
------------ ------------- ------------
INCOME BEFORE MINORITY
INTEREST 1,146,174 (103,990) 1,042,184 9.0%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc (429,046) 39,082 (389,964)
Minority interest -
other (1) (5,789) - (5,789)
------------ ------------- ------------
NET INCOME $711,339 $(64,908) 646,431 5.6%
============ ============= ============
CALCULATION OF
EARNINGS PER SHARE:
Net income $711,339 $646,431
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 429,046 389,964
------------ ------------
Net income for diluted
earnings per share
calculation $1,140,385 $1,036,395
============ ============
EARNINGS PER SHARE:
- Basic $1.21 $1.10
============ ============
- Diluted $1.17 $1.07
============ ============
WEIGHTED AVERAGE
SHARES:
- Basic 589,530,351 589,530,351
- Diluted 970,731,118 970,731,118
(1) Minority interest - other is comprised primarily of minority
interest attributable to the minority shareholders of Avanade,
Inc.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada
Holdings Inc. exchangeable shares, respectively, for Accenture
Ltd Class A common shares, on a one-for-one basis.
(3) Adjustments represent the estimated amounts that Accenture would
have incurred if it had expensed employee stock options and
employee share purchase plans for the nine months ended May 31,
2005.
ACCENTURE LTD
SUMMARY OF REVENUES
(In thousands of U.S. dollars)
(Unaudited)
Percent
Percent Percent of Total
Three Months Ended Increase Increase 2006
-------------------------- (Decrease) Local Net
May 31, 2006 May 31, 2005 US$ Currency Revenues
------------- ------------ ---- -------- --------
OPERATING GROUPS
Communications
& High Tech $1,079,220 $1,036,972 4% 7% 24%
Financial
Services 921,676 909,421 1% 6% 21%
Government 598,842 577,248 4% 7% 14%
Products 1,116,766 932,680 20% 24% 25%
Resources 687,412 620,564 11% 13% 16%
Other 4,153 1,688 n/m n/m --
------------- ------------ --------
TOTAL Net
Revenues 4,408,069 4,078,573 8% 11% 100%
========
Reimbursements 397,258 419,037 (5%)
------------- ------------
TOTAL
REVENUES $4,805,327 $4,497,610 7%
============ ============
GEOGRAPHY
Americas $2,018,417 $1,745,657 16% 14% 46%
EMEA 2,073,050 2,067,059 0% 7% 47%
Asia Pacific 316,602 265,857 19% 25% 7%
------------- ------------ --------
TOTAL Net
Revenues $4,408,069 $4,078,573 8% 11% 100%
============= ============ ========
TYPE OF WORK
Consulting $2,656,667 $2,497,339 6% 10% 60%
Outsourcing 1,751,402 1,581,234 11% 14% 40%
------------ ------------ --------
TOTAL Net
Revenues $4,408,069 $4,078,573 8% 11% 100%
============ ============ ========
Percent
Percent of Total
Nine Months Ended Percent Increase 2006
-------------------------- Increase Local Net
May 31, 2006 May 31, 2005 US$ Currency Revenues
------------- ------------ ---- -------- --------
OPERATING GROUPS
Communications
& High Tech $3,152,853 $2,991,991 5% 8% 25%
Financial
Services 2,609,910 2,575,450 1% 5% 20%
Government 1,794,648 1,622,162 11% 13% 14%
Products 3,138,006 2,646,272 19% 22% 25%
Resources 1,976,764 1,781,449 11% 13% 16%
Other 8,158 5,126 n/m n/m --
-------------------------- --------
TOTAL Net
Revenues 12,680,339 11,622,450 9% 12% 100%
========
Reimbursements 1,159,116 1,162,916 0%
--------------------------
TOTAL
REVENUES $13,839,455 $12,785,366 8%
============ ============
GEOGRAPHY
Americas $5,771,674 $4,871,848 18% 17% 46%
EMEA 5,998,177 5,946,586 1% 7% 47%
Asia Pacific 910,488 804,016 13% 18% 7%
------------ ------------ --------
TOTAL Net
Revenues $12,680,339 $11,622,450 9% 12% 100%
============ ============ ========
TYPE OF WORK
Consulting $7,698,682 $7,183,544 7% 10% 61%
Outsourcing 4,981,657 4,438,906 12% 15% 39%
------------ ------------ --------
TOTAL Net
Revenues $12,680,339 $11,622,450 9% 12% 100%
============ ============ ========
n/m = not meaningful
ACCENTURE LTD
OPERATING INCOME BY OPERATING GROUP (OG)
For the Three Months Ended May 31, 2006 and 2005
(In thousands of U.S. dollars)
(Unaudited)
Operating Income as Reported
-------------------------------------
2006 2005
------------------ ------------------
Percent Percent
of OG of OG Percent
Operating Net Operating Net Increase
OPERATING GROUPS Income Revenues Income Revenues (Decrease)
-------------------------------------------------
Communications &
High Tech $173,516 16% $222,520 21% (22%)
Financial Services 125,542 14% 163,218 18% (23%)
Government 66,136 11% 69,181 12% (4%)
Products 229,951 21% 117,381 13% 96%
Resources 94,979 14% 99,648 16% (5%)
--------- -------- --------- --------
Total $690,124 15.7% $671,948 16.5% 3%
========= ======== ========= ========
Operating Income on an Options-Adjusted Basis and
Excluding Reorganization Benefits
------------------------
2006
------------------------
Percent
Adjusted of OG
Reorg. Operating Net
OPERATING GROUPS Benefits(1) Income Revenues
--------------------------------
Communications & High Tech $13,710 $159,806 15%
Financial Services 11,847 $113,695 12%
Government 8,797 $57,339 10%
Products 14,141 $215,810 19%
Resources 9,188 $85,791 12%
-------- ---------
Total $57,683 $632,441 14.3%
======== =========
--------------------------------------
2005
--------------------------------------
Percent
Adjusted of OG Percent
Options Reorg. Operating Net Increase
OPERATING GROUPS Adjs.(2) Benefits(1) Income Revenues (Decrease)
-------------------------------------------------
Communications & High
Tech $15,725 $17,005 $189,790 18% (16%)
Financial Services 16,252 16,782 $130,184 14% (13%)
Government 7,871 10,566 $50,744 9% 13%
Products 15,521 17,492 $84,368 9% 156%
Resources 10,726 10,707 $78,215 13% 10%
----------------------------
Total $66,095 $72,552 $533,301 13.1% 19%
============================
(1) Represents reorganization benefits related to certain
reorganization liabilities established in connection with
Accenture's transition to a corporate structure in 2001, which are
included in Reorganization benefits, net on the income statement.
(2) Adjustments represent the estimated amounts that Accenture would
have incurred if it had expensed employee stock options and
employee share purchase plans for the three months ended May 31,
2005.
ACCENTURE LTD
OPERATING INCOME (LOSS) BY OPERATING GROUP (OG)
For the Nine Months Ended May 31, 2006 and 2005
(In thousands of U.S. dollars)
(Unaudited)
Operating Income (Loss) as Reported
-----------------------------------------
2006 2005
-----------------------------------------
Percent Percent
Operating of OG of OG Percent
Income Net Operating Net Increase
OPERATING GROUPS (Loss) Revenues Income Revenues (Decrease)
-----------------------------------------------------
Communications &
High Tech $523,310 17% $510,345 17% 3%
Financial
Services 309,477 12% 385,697 15% (20%)
Government (3) (8,826) (0%) 128,791 8% n/m
Products (3) 265,006 8% 301,240 11% (12%)
Resources 251,025 13% 275,977 15% (9%)
----------- -----------
Total $1,339,992 10.6% $1,602,050 13.8% (16%)
=========== ===========
Operating Income (Loss) on an Options-Adjusted Basis and
Excluding Reorganization Benefits
------------------------
2006
------------------------
Adjusted Percent
Operating of OG
Reorg. Income Net
OPERATING GROUPS Benefits (1) (Loss) Revenues
---------------------------------
Communications & High Tech $17,183 $506,127 16%
Financial Services 14,901 $294,576 11%
Government (3) 10,984 $(19,810) (1%)
Products (3) 17,742 $247,264 8%
Resources 11,511 $239,514 12%
-------- -----------
Total $72,321 $1,267,671 10.0%
======== ===========
--------------------------------------
2005
--------------------------------------
Percent
Adjusted of OG Percent
Options Reorg. Operating Net Increase
OPERATING GROUPS Adjs.(2) Benefits(1) Income Revenues (Decrease)
------------------------------------------------
Communications & High
Tech $34,898 $27,510 $447,937 15% 13%
Financial Services 35,496 26,324 323,877 13% (9%)
Government (3) 18,916 17,249 92,626 6% n/m
Products (3) 35,513 27,020 238,707 9% 4%
Resources 23,598 16,688 235,691 13% 2%
--------- --------------------
Total $148,421 $114,791 $1,338,838 11.5% (5%)
========= ========= ===========
n/m = not meaningful
(1) Represents reorganization benefits related to certain
reorganization liabilities established in connection with
Accenture's transition to a corporate structure in 2001, which are
included in Reorganization benefits, net on the income statement.
(2) Adjustments represent the estimated amounts that Accenture would
have incurred if it had expensed employee stock options and
employee share purchase plans for the nine months ended May 31,
2005.
(3) Includes the impact of the NHS provision.
ACCENTURE LTD
RECONCILIATION OF DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP) TO
DILUTED EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)
For the Three and Nine Months Ended May 31, 2006 and 2005
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
For the Three Months For the Nine Months
Ended Ended
May 31, 2006 May 31, 2006
-----------------------------------------------
Dollar Per Share Dollar Per Share
Amount Amount (1) Amount Amount (1)
--------- ---------- --------- ------------
NET INCOME $342,264 $626,884
Minority interest
in Accenture SCA
and Accenture
Canada Holdings
Inc. (2) 153,843 296,633
--------- ---------
Net income for
diluted earnings
per share
calculation 496,107 $ 0.56 923,517 $ 1.03
Less reorganization
benefit, net of
tax impacts of
$3,574 and
$7,026 for the
three and nine
month periods,
respectively (54,109) (0.06) (65,295) (0.07)
--------- ---------- --------- ------------
Net income for
diluted earnings
per share
calculation,
adjusted $441,998 $ 0.50 $858,222 $ 0.96
========= ========== ========= ============
WEIGHTED AVERAGE
SHARES--Diluted 886,889,939 898,103,729
For the Three Months For the Nine Months
Ended Ended
May 31, 2005 May 31, 2005
--------------------- -----------------------
Dollar Per Share Dollar Per Share
Amount Amount (1) Amount Amount (1)
--------- ---------- --------- ------------
NET INCOME $305,280 $711,339
Minority interest
in Accenture SCA
and Accenture
Canada Holdings
Inc. (2) 178,677 429,046
--------- ---------
Net income for
diluted earnings
per share
calculation 483,957 $ 0.51 1,140,385 $ 1.17
Pro forma stock
option and
employee share
purchase plan
compensation
expense, net
of tax (3) (46,362) (0.05) (103,990) (0.10)
Less reorganization
benefit, net of
tax impacts of
$1,198 and
$8,757 for the
three and nine
month periods,
respectively (71,354) (0.08) (106,034) (0.11)
--------- ---------- --------- ------------
Net income for
diluted earnings
per share
calculation,
adjusted $366,241 $ 0.38 $930,361 $ 0.96
========= ========== ========= ============
WEIGHTED AVERAGE
SHARES--Diluted 952,292,398 970,731,118
(1) The per share amount is calculated as the dollar amount divided by
the number of weighted average diluted shares.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada
Holdings Inc. exchangeable shares, respectively, for Accenture Ltd
Class A common shares, on a one-for-one basis.
(3) Calculated as pre-tax stock option and employee share purchase
plan compensation expense of $66,095 and $148,421 for the three
and nine months ended May 31, 2005, respectively, applying an
average tax rate of 30%.
ACCENTURE LTD
CONSOLIDATED BALANCE SHEETS
May 31, 2006 and August 31, 2005
(In thousands of U.S. dollars)
May 31, August 31,
2006 2005
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,793,716 $2,483,990
Short-term investments 192,399 463,460
Receivables from clients, net 2,001,091 1,752,937
Unbilled services, net 1,329,774 1,353,676
Other current assets 606,182 631,204
----------- -----------
Total current assets 6,923,162 6,685,267
----------- -----------
NON-CURRENT ASSETS:
Unbilled services, net 117,659 472,430
Investments 148,806 262,873
Property and equipment, net 739,489 693,710
Other non-current assets 1,082,055 843,072
----------- -----------
Total non-current assets 2,088,009 2,272,085
----------- -----------
TOTAL ASSETS $9,011,171 $8,957,352
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 24,804 $ 31,072
Accounts payable 803,711 807,317
Deferred revenues 1,609,103 1,284,303
Accrued payroll and related benefits 1,553,316 1,430,998
Other accrued liabilities 1,730,041 1,377,443
----------- -----------
Total current liabilities 5,720,975 4,931,133
----------- -----------
NON-CURRENT LIABILITIES:
Long-term debt 25,589 44,116
Other non-current liabilities 1,062,342 1,304,230
----------- -----------
Total non-current liabilities 1,087,931 1,348,346
----------- -----------
MINORITY INTEREST 719,620 980,959
SHAREHOLDERS' EQUITY 1,482,645 1,696,914
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $9,011,171 $8,957,352
=========== ===========
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