SYS-CON MEDIA Authors: Mat Mathews, PR.com Newswire, David Smith, Tim Crawford, Kevin Benedict

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Accenture Reports Second-Quarter Fiscal 2014 Results

Accenture (NYSE:ACN) reported financial results for the second quarter of fiscal 2014, ended Feb. 28, 2014, with net revenues of $7.13 billion, an increase of 1 percent in U.S. dollars and 3 percent in local currency over the same period last year, within the company’s guided range.

Diluted earnings per share were $1.03, compared with $1.65 for the second quarter last year, which included benefits of $243 million, or $0.34 per share, from final determinations of prior-year U.S. federal tax liabilities and $224 million, or $0.31 per share, from a reduction in reorganization liabilities. Excluding these benefits, diluted EPS for the second quarter last year were $1.00.

Operating income for the quarter was $951 million, or 13.3 percent of net revenues, compared with $1.16 billion, or 16.5 percent of net revenues, for the second quarter last year, which included the benefit of $224 million from the reduction in reorganization liabilities. Excluding the benefit, operating income for the second quarter of fiscal 2013 was $940 million, or 13.3 percent of net revenues.

New bookings for the quarter were a record $10.1 billion, with consulting bookings of $4.6 billion and outsourcing bookings of $5.5 billion.

Pierre Nanterme, Accenture’s chairman and CEO, said, “In the second quarter, we delivered revenues within our guided range, reported solid earnings per share and returned substantial cash to shareholders. We continued to see very strong demand for our services, with $10.1 billion in new bookings, including record consulting and record outsourcing bookings.

“Looking ahead, we are well-positioned to deliver our business outlook for the year, given our outstanding year-to-date bookings of $18.8 billion as well as the activity and client interest we see in the marketplace. We remain focused on the successful execution of our growth strategy, and are confident in our ability to deliver value to our clients and our shareholders.”

Financial Review

Revenues before reimbursements (“net revenues”) for the second quarter of fiscal 2014 were $7.13 billion, compared with $7.06 billion for the second quarter of fiscal 2013, an increase of 1 percent in U.S. dollars and 3 percent in local currency, and within the company’s guided range of $6.95 billion to $7.25 billion. The foreign-exchange impact for the quarter was approximately negative 1.5 percent, consistent with the assumption provided in the company’s first-quarter earnings release.

  • Consulting net revenues for the quarter were $3.70 billion, a decrease of 1 percent in U.S. dollars and flat in local currency compared with the second quarter of fiscal 2013.
  • Outsourcing net revenues were $3.43 billion, an increase of 4 percent in U.S. dollars and 5 percent in local currency over the second quarter of fiscal 2013.

Diluted EPS for the quarter were $1.03, compared with $1.65 for the second quarter last year, which included $0.65 in benefits from final determinations of prior-year tax liabilities and reductions in reorganization liabilities. Excluding these benefits, EPS for the second quarter last year were $1.00. The $0.03 increase from adjusted EPS last year reflects:

  • $0.01 from higher revenue and operating results;
  • $0.01 from a lower effective tax rate excluding the impact last year of final determinations of prior-year tax liabilities and the reduction in reorganization liabilities; and
  • $0.03 from a lower share count

partially offset by:

  • $0.02 from lower non-operating income.

Gross margin (gross profit as a percentage of net revenues) for the quarter was 31.3 percent, compared with 31.6 percent for the second quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $1.28 billion, or 17.9 percent of net revenues, compared with $1.29 billion, or 18.3 percent of net revenues, for the second quarter last year.

Operating results for the quarter reflect lower contract profitability, primarily due to pricing pressures and higher payroll costs and, to a lesser extent, lower margins in the early stages of a few large contracts. Operating results also reflect a higher level of investment in the quarter to build new capabilities including strategic acquisitions to enhance the company’s capabilities in key growth areas. These factors were offset by a reduction in variable compensation expense compared to the second quarter of fiscal 2013.

Operating income for the quarter was $951 million, or 13.3 percent of net revenues, compared with $1.16 billion, or 16.5 percent of net revenues, for the second quarter last year, which included the $224 million reorganization benefit. Excluding the reorganization benefit, operating income for the second quarter last year was $940 million, or 13.3 percent of net revenues.

The company’s effective tax rate for the quarter was 24.0 percent, compared with negative 0.5 percent for the second quarter last year. Excluding benefits from the final determinations of prior-year U.S. federal tax liabilities and the reduction in reorganization liabilities, the effective tax rate for the second quarter last year was 24.8 percent.

Net income for the quarter was $722 million, compared with $1.19 billion for the second quarter last year, which included the favorable impact of both the $224 million reorganization benefit and the $243 million from final determinations of prior-year tax liabilities.

Operating cash flow for the quarter was $292 million, and property and equipment additions were $76 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $216 million. For the same period last year, operating cash flow was $634 million; property and equipment additions were $90 million; and free cash flow was $544 million.

Days services outstanding, or DSOs, were 33 days, compared with 31 days at Aug. 31, 2013 and 31 days at Feb. 28, 2013.

Accenture’s total cash balance at Feb. 28, 2014 was $3.7 billion, compared with $5.6 billion at Aug. 31, 2013. The lower cash balance at Feb. 28, 2014 was principally due to share repurchases and cash dividend payments, as well as funds used for business acquisitions.

Utilization for the quarter was 87 percent, compared with 87 percent for the first quarter of fiscal 2014 and 88 percent for the second quarter of fiscal 2013. Attrition for the second quarter of fiscal 2014 was 12 percent, compared with 11 percent for both the first quarter of fiscal 2014 and the second quarter of fiscal 2013.

New Bookings

New bookings for the second quarter were $10.1 billion and reflect a negative 2 percent foreign-currency impact compared with new bookings in the second quarter last year.

  • Consulting new bookings were $4.6 billion, or 46 percent of total new bookings.
  • Outsourcing new bookings were $5.5 billion, or 54 percent of total new bookings.

Net Revenues by Operating Group

Net revenues by operating group were as follows:

  • Communications, Media & Technology: $1.41 billion, compared with $1.41 billion for the second quarter of fiscal 2013, flat in U.S. dollars and an increase of 2 percent in local currency.
  • Financial Services: $1.56 billion, compared with $1.51 billion for the second quarter of fiscal 2013, an increase of 4 percent in U.S. dollars and 5 percent in local currency.
  • Health & Public Service: $1.18 billion, compared with $1.19 billion for the second quarter of fiscal 2013, a decrease of 1 percent in U.S. dollars and an increase of 1 percent in local currency.
  • Products: $1.75 billion, compared with $1.68 billion for the second quarter of fiscal 2013, an increase of 4 percent in U.S. dollars and 5 percent in local currency.
  • Resources: $1.22 billion, compared with $1.25 billion for the second quarter of fiscal 2013, a decrease of 2 percent in U.S. dollars and flat in local currency.

Net Revenues by Geographic Region

Net revenues by geographic region were as follows:

  • Americas: $3.36 billion, compared with $3.28 billion for the second quarter of fiscal 2013, an increase of 2 percent in U.S. dollars and 4 percent in local currency.
  • Europe, Middle East and Africa (EMEA): $2.86 billion, compared with $2.80 billion for the second quarter of fiscal 2013, an increase of 2 percent in U.S. dollars and flat in local currency.
  • Asia Pacific: $908 million, compared with $978 million for the second quarter of fiscal 2013, a decrease of 7 percent in U.S. dollars and an increase of 4 percent in local currency.

Returning Cash to Shareholders

Accenture continues to return cash to shareholders through cash dividends and share repurchases.

Dividend

Accenture plc has declared a semi-annual cash dividend of $0.93 per share on Accenture plc Class A ordinary shares for shareholders of record at the close of business on April 11, 2014, and Accenture SCA will declare a semi-annual cash dividend of $0.93 per share on Accenture SCA Class I common shares for shareholders of record at the close of business on April 8, 2014. These dividends are both payable on May 15, 2014.

Combined with the semi-annual cash dividend of $0.93 per share paid on Nov. 15, 2013, this will bring the total dividend payments for the fiscal year to $1.86 per share, for total projected cash dividend payments of approximately $1.3 billion.

Share Repurchase Activity

During the second quarter of fiscal 2014, Accenture repurchased or redeemed 9.2 million shares, including approximately 6.5 million shares repurchased in the open market, for a total of $739 million. This brings Accenture’s total share repurchases and redemptions for the first half of fiscal 2014 to 18.9 million shares, including 14.5 million shares repurchased in the open market, for a total of $1.46 billion.

Accenture’s total remaining share repurchase authority at Feb. 28, 2014 was approximately $5.8 billion.

At Feb. 28, 2014, Accenture had approximately 673 million total shares outstanding, including 633 million Accenture plc Class A ordinary shares and 40 million Accenture SCA Class I common shares and Accenture Canada Holdings Inc. exchangeable shares.

Business Outlook

Third Quarter Fiscal 2014

Accenture expects net revenues for the third quarter of fiscal 2014 to be in the range of $7.40 billion to $7.65 billion. This range assumes a foreign-exchange impact of zero percent compared with the third quarter of fiscal 2013.

Full Fiscal Year 2014

For fiscal 2014, the company now expects net revenue growth to be in the range of 3 percent to 6 percent in local currency, compared with 2 percent to 6 percent previously.

Accenture’s business outlook for the full 2014 fiscal year continues to assume a foreign-exchange impact of negative 0.5 percent compared with fiscal 2013.

The company now expects diluted EPS to be in the range of $4.50 to $4.62, compared with $4.44 to $4.56 previously.

Accenture continues to expect operating margin for the full fiscal year to be in the range of 14.3 percent to 14.5 percent. This compares with 15.2 percent in fiscal 2013 on a GAAP basis, which included a positive impact of 100 basis points from reductions in reorganization liabilities. Accenture continues to expect its operating margin for fiscal 2014 to expand 10 to 30 basis points from the adjusted Non-GAAP operating margin of 14.2 percent for fiscal 2013.

For fiscal 2014, the company now expects operating cash flow to be in the range of $3.3 billion to $3.6 billion, compared with $3.6 billion to $3.9 billion previously; continues to expect property and equipment additions to be $400 million; and now expects free cash flow to be in the range of $2.9 billion to $3.2 billion, compared with $3.2 billion to $3.5 billion previously.

The company continues to expect to return at least $3.7 billion to its shareholders in fiscal 2014 through dividends and share repurchases.

The company now expects its annual effective tax rate to be in the range of 25.5 percent to 26.5 percent, compared with 26.5 percent to 27.5 percent previously.

Accenture now expects new bookings for fiscal 2014 in the range of $33 billion to $36 billion, compared with $32 billion to $35 billion previously.

Conference Call and Webcast Details

Accenture will host a conference call at 8:00 a.m. EDT today to discuss its second-quarter fiscal 2014 financial results. To participate, please dial +1 (800) 230-1074 [+1 (612) 234-9959 outside the United States, Puerto Rico and Canada] approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accenture Web site at www.accenture.com.

A replay of the conference call will be available online at www.accenture.com beginning at 10:00 a.m. EDT today, Thursday, Mar. 27, and continuing until Thursday, June 26, 2014. A podcast of the conference call will be available online at www.accenture.com beginning approximately 24 hours after the call and continuing until Thursday, June 26, 2014. 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 320421 from 10:00 a.m. EDT Thursday, Mar. 27 through Thursday, June 26, 2014.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with approximately 289,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.

Non-GAAP Financial Information

This news 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 (GAAP) are included in this press release. Financial results “in local currency” are calculated by restating current-period activity into U.S. dollars using the comparable prior-year period’s foreign-currency exchange rates. Accenture’s management believes providing investors with this information gives additional insights into Accenture’s results of operations. While Accenture’s management believes that the non-GAAP financial measures herein 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.

Forward-Looking Statements

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

ACCENTURE PLC
                     
CONSOLIDATED INCOME STATEMENTS
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
Three Months Ended February 28, Six Months Ended February 28,
  2014   % of Net Revenues   2013   % of Net Revenues   2014   % of Net Revenues   2013   % of Net Revenues
REVENUES:
Revenues before reimbursements (“Net revenues”) $ 7,130,667 100 % $ 7,058,042 100 % $ 14,489,416 100 % $ 14,278,003 100 %
Reimbursements   436,816     435,278     877,763     883,353  
Revenues 7,567,483 7,493,320 15,367,179 15,161,356
 
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses 4,900,525 68.7 % 4,827,679 68.4 % 9,809,927 67.7 % 9,681,447 67.8 %
Reimbursable expenses   436,816     435,278     877,763     883,353  
Cost of services 5,337,341 5,262,957 10,687,690 10,564,800
Sales and marketing 837,255 11.7 % 834,047 11.8 % 1,765,465 12.2 % 1,702,249 11.9 %
General and administrative costs 441,605 6.2 % 455,551 6.5 % 889,658 6.1 % 904,403 6.3 %
Reorganization benefits, net  

 

%

  (223,767 ) (3.2 %)   (18,015 ) (0.1 %)   (223,302 ) (1.6 %)
Total operating expenses   6,616,201     6,328,788     13,324,798  

 

  12,948,150  
 
OPERATING INCOME 951,282 13.3 % 1,164,532 16.5 % 2,042,381 14.1 % 2,213,206 15.5 %
 
Interest income 7,960 9,859 14,716 18,626
Interest expense (4,348 ) (3,641 ) (8,006 ) (8,190 )
Other (expense) income, net   (4,766 )   10,599     (15,386 )   4,163  
INCOME BEFORE INCOME TAXES 950,128 13.3 % 1,181,349 16.7 % 2,033,705 14.0 % 2,227,805 15.6 %
 
Provision for (benefit from) income taxes   227,797     (5,749 )   499,728     274,676  
NET INCOME 722,331 10.1 % 1,187,098 16.8 % 1,533,977 10.6 % 1,953,129 13.7 %
 
Net income attributable to noncontrolling interests in Accenture SCA

and Accenture Canada Holdings Inc.

(42,849 ) (78,363 ) (91,947 ) (137,318 )
Net income attributable to noncontrolling interests – other (1)   (8,182 )   (6,933 )   (18,884 )   (15,192 )
 
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC $ 671,300   9.4 % $ 1,101,802   15.6 % $ 1,423,146   9.8 % $ 1,800,619   12.6 %
 
CALCULATION OF EARNINGS PER SHARE:
Net income attributable to Accenture plc $ 671,300 $ 1,101,802 $ 1,423,146 $ 1,800,619
Net income attributable to noncontrolling interests in Accenture SCA

and Accenture Canada Holdings Inc. (2)

  42,849     78,363     91,947     137,318  
Net income for diluted earnings per share calculation $ 714,149   $ 1,180,165   $ 1,515,093   $ 1,937,937  
EARNINGS PER SHARE:
-Basic $ 1.06 $ 1.70 $ 2.24 $ 2.79
-Diluted (3) $ 1.03 $ 1.65 $ 2.18 $ 2.71
WEIGHTED AVERAGE SHARES:
-Basic 635,929,351 649,520,337 636,314,554 644,608,780
-Diluted (3) 693,209,942 715,464,436 695,508,819 715,567,376
Cash dividends per share $

$

$ 0.93 $ 0.81

 

__________________
(1)   Comprised primarily of noncontrolling interest attributable to the noncontrolling shareholders of Avanade, Inc.
(2) Diluted earnings per share assumes the redemption of all Accenture SCA Class I common shares owned by holders of noncontrolling interests and the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis.
(3) Diluted weighted average Accenture plc Class A ordinary shares and earnings per share amounts in fiscal 2013 have been restated to reflect additional restricted share units issued to holders of restricted share units in connection with the fiscal 2014 payment of cash dividends.
 
     
ACCENTURE PLC
                                               
SUMMARY OF REVENUES
(In thousands of U.S. dollars)
(Unaudited)

 

 

Three Months Ended February 28,

Percent

Increase

(Decrease)

Percent

Increase

(Decrease)

Local

2014

2013

U.S. dollars

 

Currency

OPERATING GROUPS
Communications, Media & Technology $     1,408,616 $     1,411,489 —% 2%
Financial Services 1,563,655 1,508,865 4

5

Health & Public Service 1,183,728 1,192,698 (1) 1
Products 1,745,515 1,680,719 4 5
Resources

 

1,224,897 1,251,874 (2)
Other       4,256       12,397 n/m n/m
TOTAL Net Revenues 7,130,667 7,058,042 1% 3%
Reimbursements       436,816       435,278
TOTAL REVENUES $     7,567,483 $     7,493,320 1%
GEOGRAPHY
Americas $ 3,361,579 $ 3,279,776 2% 4%
EMEA 2,861,214 2,800,359 2
Asia Pacific       907,874       977,907 (7) 4
TOTAL Net Revenues $     7,130,667 $     7,058,042 1% 3%
TYPE OF WORK
Consulting $ 3,696,916 $ 3,752,965 (1)% —%
Outsourcing       3,433,751       3,305,077 4 5
TOTAL Net Revenues $     7,130,667 $     7,058,042 1% 3%
 

 

 

 

Six Months Ended February 28,

 

Percent

Increase

(Decrease)

 

Percent

Increase

(Decrease)

Local

2014 2013

U.S. dollars

Currency

OPERATING GROUPS
Communications, Media & Technology $ 2,819,599 $ 2,870,275 (2)%

—%

Financial Services 3,161,621 3,071,807 3 4
Health & Public Service 2,413,802 2,367,408 2 4
Products 3,546,577 3,379,262 5

6

Resources 2,539,904 2,573,339 (1)
Other       7,913       15,912 n/m n/m
TOTAL Net Revenues 14,489,416 14,278,003 1% 3%
Reimbursements       877,763       883,353 (1)
TOTAL REVENUES $     15,367,179 $     15,161,356 1%
GEOGRAPHY
Americas $ 6,795,333 $ 6,612,896 3% 4%
EMEA 5,783,355 5,625,255 3
Asia Pacific       1,910,728       2,039,852 (6) 4
TOTAL Net Revenues $     14,489,416 $     14,278,003 1% 3%
TYPE OF WORK
Consulting $ 7,634,583 $ 7,713,641 (1)% —%
Outsourcing       6,854,833       6,564,362 4 6
TOTAL Net Revenues $     14,489,416 $     14,278,003 1% 3%
__________________
n/m = not meaningful
 
 
ACCENTURE PLC
For the Three Months Ended February 28, 2014 and 2013
(In thousands of U.S. dollars)
(Unaudited)
 
OPERATING INCOME BY OPERATING GROUP
 
                                Operating Income as Reported (GAAP)
Three Months Ended February 28,
2014         2013
Operating

Income

      Operating

Margin

  Operating

Income

      Operating

Margin

Communications, Media & Technology $     181,815 13 %   $     225,744 16 %
Financial Services 209,138 13 244,158 16
Health & Public Service 145,614 12 188,218 16
Products 205,526 12 264,234 16
Resources       209,189 17       242,178 19
Total $     951,282 13.3 % $     1,164,532 16.5 %
 
                                 
Three Months Ended February 28,
2014 2013  
Operating Income and

Operating Margin as

Reported (GAAP)

  Operating Income and Operating Margin

Excluding Reorganization Benefits

(Non-GAAP)

Operating

Income

Operating

Margin

Operating

Income

(GAAP)

Reorganization

Benefits (1)

Operating

Income (2)

Operating

Margin (2)

Increase

(Decrease)

Communications, Media & Technology $   181,815 13 % $   225,744 $   43,304 $   182,440 13 % $   (625 )
Financial Services 209,138 13 244,158 48,170 195,988 13 13,150
Health & Public Service 145,614 12 188,218 39,446 148,772 12 (3,158 )
Products 205,526 12 264,234 52,924 211,310 13 (5,784 )
Resources     209,189 17     242,178     40,411     201,767 16     7,422  
Total $   951,282 13.3 % $   1,164,532 $   224,255 $   940,277 13.3 % $   11,005  
 
                             
RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP), TO NET INCOME AND DILUTED

EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)

 
 
Three Months Ended February 28,
2014 2013
Net Income

Diluted

Earnings

Per Share

Net Income

Diluted

Earnings

Per Share

As reported (GAAP) $     722,331 $     1.03 $     1,187,098 $     1.65
Less impact of reorganization benefits (1)(2) (224,255 ) (0.31 )
Less benefit from final determinations of U.S. federal tax liabilities                   (242,938 )       (0.34 )
As adjusted (Non-GAAP) $     722,331 $     1.03 $     719,905   $     1.00  

 

__________________

(1)

 

Represents reorganization benefits related to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure during 2001.

(2)

Reorganization benefits had the effect of increasing income before income taxes without any increase in income tax expense.

 
ACCENTURE PLC    
For the Six Months Ended February 28, 2014 and 2013
(In thousands of U.S. dollars)
(Unaudited)
                                                               
OPERATING INCOME BY OPERATING GROUP
 
Operating Income as Reported (GAAP)
Six Months Ended February 28,
2014 2013
Operating

Income

Operating

Margin

Operating

Income

Operating

Margin

Communications, Media & Technology $     335,183 12 % $     408,792 14 %
Financial Services 472,706 15 485,256 16
Health & Public Service 324,919 13 331,677 14
Products 452,913 13 499,926 15
Resources       456,660 18       487,555 19
Total $     2,042,381 14.1 % $     2,213,206 15.5 %
 
                                   
Six Months Ended February 28,
2014 2013

 

Operating Income and

Operating Margin as

Reported (GAAP)

  Operating Income and Operating Margin

Excluding Reorganization Benefits

(Non-GAAP)

Operating

Income

Operating

Margin

Operating

Income

(GAAP)

Reorganization

Benefits (1)

Operating

Income (2)

Operating

Margin (2)

Increase

(Decrease)

Communications, Media & Technology $   335,183 12 % $   408,792 $   43,304 $   365,488 13 % $   (30,305 )
Financial Services 472,706 15 485,256 48,170 437,086 14 35,620
Health & Public Service 324,919 13 331,677 39,446 292,231 12 32,688
Products 452,913 13 499,926 52,924 447,002 13 5,911
Resources     456,660 18     487,555     40,411     447,144 17     9,516  
Total $   2,042,381 14.1 % $   2,213,206 $   224,255 $   1,988,951 13.9 % $   53,430  
 
                                     
RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP), TO NET INCOME AND DILUTED

EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)

 
 
Six Months Ended February 28,
2014 2013
Net Income

Diluted

Earnings

Per Share

Net Income

Diluted

Earnings

Per Share

As reported (GAAP) $     1,533,977 $     2.18 $     1,953,129 $     2.71
Less impact of reorganization benefits (1)(2) (224,255 ) (0.31 )
Less benefit from final determinations of U.S. federal tax liabilities                   (242,938 )       (0.34 )
As adjusted (Non-GAAP) $     1,533,977 $     2.18 $     1,485,936   $     2.06  
 
__________________

(1)

 

Represents reorganization benefits related to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure during 2001.

(2)

Reorganization benefits had the effect of increasing income before income taxes without any increase in income tax expense.

 
                     
ACCENTURE PLC
 
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
 
February 28, 2014 August 31, 2013
(Unaudited)
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $     3,680,274 $     5,631,885
Short-term investments 2,706 2,525
Receivables from clients, net 3,588,189 3,333,126
Unbilled services, net 1,730,495 1,513,448
Other current assets       1,632,216       1,363,194
Total current assets       10,633,880       11,844,178
NON-CURRENT ASSETS:
Unbilled services, net 30,947 18,447
Investments 43,350 43,631
Property and equipment, net 783,961 779,675
Other non-current assets       4,865,071       4,181,118
Total non-current assets       5,723,329       5,022,871
TOTAL ASSETS $     16,357,209 $     16,867,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings $ 167 $ -
Accounts payable 936,315 961,851
Deferred revenues 2,438,786 2,230,615
Accrued payroll and related benefits 2,711,689 3,460,393
Other accrued liabilities       1,201,401       1,508,131
Total current liabilities       7,288,358       8,160,990
NON-CURRENT LIABILITIES:
Long-term debt 26,322 25,600
Other non-current liabilities       3,255,842       3,252,630
Total non-current liabilities       3,282,164       3,278,230
TOTAL ACCENTURE PLC SHAREHOLDERS’ EQUITY 5,272,315 4,960,186
NONCONTROLLING INTERESTS       514,372       467,643
TOTAL SHAREHOLDERS’ EQUITY       5,786,687       5,427,829
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $     16,357,209 $     16,867,049
 
                             
ACCENTURE PLC
 
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands of U.S. dollars)
(Unaudited)
 
Three Months Ended February 28, Six Months Ended February 28,
2014 2013 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $     722,331 $     1,187,098 $     1,533,977 $     1,953,129
Depreciation, amortization and asset impairments 149,140 157,266 294,467 297,190
Reorganization benefits, net - (223,767 ) (18,015 ) (223,302 )
Share-based compensation expense 206,780 184,434 333,686 298,604
Change in assets and liabilities/other, net       (785,871 )       (670,807 )       (1,670,502 )       (1,800,212 )
Net cash provided by operating activities       292,380         634,224         473,613         525,409  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (76,167 ) (90,241 ) (135,126 ) (176,788 )
Purchases of businesses and investments, net of cash acquired (472,202 ) (88,011 ) (609,589 ) (297,963 )
Other investing, net       710         1,589         1,504         2,351  
Net cash used in investing activities       (547,659 )       (176,663 )       (743,211 )       (472,400 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares 112,587 112,239 292,820 276,845
Purchases of shares (739,238 ) (608,958 ) (1,460,752 ) (829,789 )
Cash dividends paid - - (630,234 ) (560,135 )
Other financing, net       50,572         31,295         83,571         69,993  
Net cash used in financing activities       (576,079 )       (465,424 )       (1,714,595 )       (1,043,086 )
Effect of exchange rate changes on cash and cash equivalents       (15,566 )       (34,943 )       32,582         (14,363 )
NET DECREASE IN CASH AND CASH EQUIVALENTS (846,924 ) (42,806 ) (1,951,611 ) (1,004,440 )
CASH AND CASH EQUIVALENTS, beginning of period       4,527,198         5,678,892         5,631,885         6,640,526  
CASH AND CASH EQUIVALENTS, end of period $     3,680,274   $     5,636,086   $     3,680,274   $     5,636,086  
 

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