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Accenture Reports Strong Third-Quarter Fiscal 2014 Results

Accenture (NYSE:ACN) reported strong financial results for the third quarter of fiscal 2014, ended May 31, 2014, with net revenues of $7.74 billion, an increase of 7 percent in both U.S. dollars and local currency over the same period last year, above the company’s guided range of $7.40 billion to $7.65 billion.

Diluted earnings per share were $1.26, compared with $1.21 for the third quarter last year, which included a benefit of $50 million, or $0.07 per share, from a reduction in reorganization liabilities. Excluding this benefit, diluted EPS for the third quarter last year were $1.14. Diluted EPS for the third quarter of fiscal 2014 increased 11 percent from adjusted EPS for the third quarter last year.

Operating income for the quarter was $1.18 billion, or 15.2 percent of net revenues, compared with $1.14 billion, or 15.9 percent of net revenues, for the third quarter last year, which included the benefit of $50 million from the reduction in reorganization liabilities. Excluding this benefit, operating income for the third quarter of fiscal 2013 was $1.09 billion, or 15.2 percent of net revenues.

New bookings for the quarter were $8.8 billion, with consulting bookings of $4.3 billion and outsourcing bookings of $4.5 billion.

Pierre Nanterme, Accenture’s chairman and CEO, said, “We are very pleased with our third-quarter financial results. We delivered strong revenue growth, which was broad-based across the different dimensions of our business, and earnings per share of $1.26, up 11 percent. New bookings of $8.8 billion bring us to $27.6 billion for the first three quarters of the year, and demonstrate that our services continue to be highly relevant to our clients. We generated solid free cash flow and returned $1.1 billion in cash to our shareholders.

“These results clearly demonstrate that we are successfully executing our growth strategy. We are leveraging our unique positioning at the intersection of business and technology, capturing new opportunities in key growth areas—especially digital—and investing to further differentiate our capabilities. At the same time, we are maintaining a disciplined management approach to continue enhancing our competitiveness. We remain confident in our ability to continue driving profitable growth and delivering value for our clients and shareholders.”

Financial Review

Revenues before reimbursements (“net revenues”) for the third quarter of fiscal 2014 were $7.74 billion, compared with $7.20 billion for the third quarter of fiscal 2013, an increase of 7 percent in both U.S. dollars and local currency, and above the company’s guided range of $7.40 billion to $7.65 billion. The foreign-exchange impact for the quarter was approximately zero percent, consistent with the assumption provided in the company’s second-quarter earnings release.

  • Consulting net revenues for the quarter were $4.09 billion, an increase of 6 percent in U.S. dollars and 5 percent in local currency over the third quarter of fiscal 2013.
  • Outsourcing net revenues were $3.65 billion, an increase of 10 percent in U.S. dollars and 9 percent in local currency over the third quarter of fiscal 2013.

Diluted EPS for the quarter were $1.26, compared with $1.21 for the third quarter last year, which included a $0.07 benefit from the reduction in reorganization liabilities. Excluding this benefit, EPS for the third quarter last year were $1.14. The $0.12 increase from adjusted EPS last year reflects:

  • $0.09 from higher revenue and operating results; and
  • $0.04 from a lower share count

partially offset by:

  • $0.01 from lower non-operating income.

Gross margin (gross profit as a percentage of net revenues) for the quarter was 32.8 percent, compared with 33.9 percent for the third quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $1.36 billion, or 17.5 percent of net revenues, compared with $1.35 billion, or 18.7 percent of net revenues, for the third quarter last year.

Operating income for the quarter was $1.18 billion, or 15.2 percent of net revenues, compared with $1.14 billion, or 15.9 percent of net revenues, for the third quarter last year, which included the $50 million reorganization benefit. Excluding the reorganization benefit, operating income for the third quarter last year was $1.09 billion, or 15.2 percent of net revenues. Operating income for the third quarter of fiscal 2014 increased 3 percent on a GAAP basis and 8 percent from adjusted operating income for the third quarter last year.

The company’s effective tax rate for the quarter was 25.0 percent, compared with 23.8 percent for the third quarter last year. Excluding the reorganization benefit, the effective tax rate for the third quarter last year was 24.8 percent.

Net income for the quarter was $882 million, compared with $874 million for the third quarter last year, which included the favorable impact of the $50 million reorganization benefit.

Operating cash flow for the quarter was $1.36 billion, and property and equipment additions were $85 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $1.28 billion. For the same period last year, operating cash flow was $1.50 billion; property and equipment additions were $91 million; and free cash flow was $1.41 billion.

Days services outstanding, or DSOs, were 35 days, compared with 31 days at Aug. 31, 2013 and 30 days at May 31, 2013.

Accenture’s total cash balance at May 31, 2014 was $4.0 billion, compared with $5.6 billion at Aug. 31, 2013. The lower cash balance at May 31, 2014 was principally due to share repurchases and cash dividend payments, as well as funds used for business acquisitions.

Utilization for the quarter was 88 percent, compared with 87 percent for the second quarter of fiscal 2014 and 88 percent for the third quarter of fiscal 2013. Attrition for the third quarter of fiscal 2014 was 14 percent, compared with 12 percent for both the second quarter of fiscal 2014 and the third quarter of fiscal 2013.

New Bookings

New bookings for the third quarter were $8.8 billion and reflect a flat foreign-currency impact compared with new bookings in the third quarter last year.

  • Consulting new bookings were $4.3 billion, or 49 percent of total new bookings.
  • Outsourcing new bookings were $4.5 billion, or 51 percent of total new bookings.

Net Revenues by Operating Group

Net revenues by operating group were as follows:

  • Communications, Media & Technology: $1.52 billion, compared with $1.43 billion for the third quarter of fiscal 2013, an increase of 7 percent in both U.S. dollars and local currency.
  • Financial Services: $1.68 billion, compared with $1.57 billion for the third quarter of fiscal 2013, an increase of 7 percent in U.S. dollars and 5 percent in local currency.
  • Health & Public Service: $1.31 billion, compared with $1.19 billion for the third quarter of fiscal 2013, an increase of 10 percent in U.S. dollars and 11 percent in local currency.
  • Products: $1.91 billion, compared with $1.72 billion for the third quarter of fiscal 2013, an increase of 11 percent in U.S. dollars and 10 percent in local currency.
  • Resources: $1.30 billion, compared with $1.28 billion for the third quarter of fiscal 2013, an increase of 2 percent in both U.S. dollars and local currency.

Net Revenues by Geographic Region

Net revenues by geographic region were as follows:

  • Americas: $3.64 billion, compared with $3.44 billion for the third quarter of fiscal 2013, an increase of 6 percent in U.S. dollars and 7 percent in local currency.
  • Europe, Middle East and Africa (EMEA): $3.13 billion, compared with $2.78 billion for the third quarter of fiscal 2013, an increase of 13 percent in U.S. dollars and 7 percent in local currency.
  • Asia Pacific: $969 million, compared with $975 million for the third quarter of fiscal 2013, a decrease of 1 percent in U.S. dollars and an increase of 6 percent in local currency.

Returning Cash to Shareholders

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

Dividend

On May 15, 2014, a semi-annual cash dividend of $0.93 per share was paid on Accenture plc Class A ordinary shares to shareholders of record at the close of business on April 11, 2014, and on Accenture SCA Class I common shares to shareholders of record at the close of business on April 8, 2014.

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

Share Repurchase Activity

During the third quarter of fiscal 2014, Accenture repurchased or redeemed 5.5 million shares, including approximately 4.8 million shares repurchased in the open market, for a total of $441 million. This brings Accenture’s total share repurchases and redemptions for the first three quarters of fiscal 2014 to 24.4 million shares, including 19.4 million shares repurchased in the open market, for a total of $1.9 billion.

Accenture’s total remaining share repurchase authority at May 31, 2014 was approximately $5.3 billion.

At May 31, 2014, Accenture had approximately 671 million total shares outstanding, including 631 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

Fourth Quarter Fiscal 2014

Accenture expects net revenues for the fourth quarter of fiscal 2014 to be in the range of $7.45 billion to $7.70 billion. This range assumes a foreign-exchange impact of positive 1.5 percent compared with the fourth quarter of fiscal 2013.

Full Fiscal Year 2014

For fiscal 2014, the company now expects net revenue growth to be in the range of 4 percent to 5 percent in local currency, compared with 3 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 $4.54, compared with $4.50 to $4.62 previously.

Accenture now expects operating margin for the full fiscal year to be 14.3 percent, a 10 basis-point expansion from the adjusted Non-GAAP operating margin of 14.2 percent for fiscal 2013. The GAAP operating margin for fiscal 2013 of 15.2 percent included a positive impact of 100 basis points from reductions in reorganization liabilities. The company previously expected an operating margin for fiscal 2014 of 14.3 percent to 14.5 percent.

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

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 continues to expect its annual effective tax rate to be in the range of 25.5 percent to 26.5 percent.

Accenture now expects new bookings for the full fiscal year to be in the upper end of its previously guided range of $33 billion to $36 billion.

Conference Call and Webcast Details

Accenture will host a conference call at 8:00 a.m. EDT today to discuss its third-quarter fiscal 2014 financial results. To participate, please dial +1 (800) 230-1059 [+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 10:30 a.m. EDT today, Thursday, June 26, and continuing until Wednesday, Sept. 24, 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 Wednesday, Sept. 24, 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 328224 from 10:30 a.m. EDT Thursday, June 26 through Wednesday, Sept. 24, 2014.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 293,000 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 May 31, Nine Months Ended May 31,
2014 % of Net Revenues   2013   % of Net Revenues   2014   % of Net Revenues   2013   % of Net Revenues
REVENUES:
Revenues before reimbursements (“Net revenues”) $ 7,735,638 100 % $ 7,198,140 100 % $ 22,225,054 100 % $ 21,476,143 100 %
Reimbursements   504,542     509,795     1,382,305     1,393,148  
Revenues 8,240,180 7,707,935 23,607,359 22,869,291
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses 5,199,281 67.2 % 4,760,121 66.1 % 15,009,208 67.5 % 14,441,568 67.2 %
Reimbursable expenses   504,542     509,795     1,382,305     1,393,148  
Cost of services 5,703,823 5,269,916 16,391,513 15,834,716
Sales and marketing 899,250 11.6 % 886,641 12.3 % 2,664,715 12.0 % 2,588,890 12.1 %
General and administrative costs 458,341 5.9 % 458,631 6.4 % 1,347,999 6.1 % 1,363,034 6.3 %
Reorganization benefits, net   -   %   (49,224 ) (0.7 %)   (18,015 ) (0.1 %)   (272,526 ) (1.3 %)
Total operating expenses   7,061,414     6,565,964     20,386,212     19,514,114  
 
OPERATING INCOME 1,178,766 15.2 % 1,141,971 15.9 % 3,221,147 14.5 % 3,355,177 15.6 %
Interest income 7,513 7,251 22,229 25,877
Interest expense (4,290 ) (3,588 ) (12,296 ) (11,778 )
Other (expense) income, net   (6,051 )   951     (21,437 )   5,114  
 
INCOME BEFORE INCOME TAXES 1,175,938 15.2 % 1,146,585 15.9 % 3,209,643 14.4 % 3,374,390 15.7 %
Provision for income taxes   294,125     272,522     793,853     547,198  
 
NET INCOME 881,813 11.4 % 874,063 12.1 % 2,415,790 10.9 % 2,827,192 13.2 %

Net income attributable to noncontrolling interests in Accenture SCA

and Accenture Canada Holdings Inc. (51,523 ) (53,177 ) (143,470 ) (190,495 )
Net income attributable to noncontrolling interests – other (1)   (12,954 )   (10,628 )   (31,838 )   (25,819 )
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC $ 817,336   10.6 % $ 810,258   11.3 % $ 2,240,482   10.1 % $ 2,610,878   12.2 %
 
CALCULATION OF EARNINGS PER SHARE:
Net income attributable to Accenture plc $ 817,336 $ 810,258 $ 2,240,482 $ 2,610,878
Net income attributable to noncontrolling interests in Accenture SCA

and Accenture Canada Holdings Inc. (2)

  51,523     53,177     143,470     190,495  
Net income for diluted earnings per share calculation $ 868,859   $ 863,435   $ 2,383,952   $ 2,801,373  
 
EARNINGS PER SHARE:
-Basic $ 1.29 $ 1.25 $ 3.53 $ 4.04
-Diluted (3) $ 1.26 $ 1.21 $ 3.44 $ 3.92
 
WEIGHTED AVERAGE SHARES:
-Basic 633,128,417 650,625,931 635,231,759 646,617,365
-Diluted (3) 691,038,145 715,628,354 693,943,009 715,542,879
Cash dividends per share $ 0.93 $ 0.81 $ 1.86 $ 1.62
 
(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 May 31,

Percent

Increase

(Decrease)

U.S. dollars

Percent

Increase

(Decrease)

Local

Currency

2014 2013        
OPERATING GROUPS
Communications, Media & Technology $   1,524,898 $   1,425,655 7% 7%
Financial Services 1,677,066 1,574,479

7

5
Health & Public Service 1,313,840 1,191,070 10 11
Products 1,914,539 1,724,596 11 10
Resources 1,301,774 1,279,221 2 2
Other     3,521     3,119 n/m n/m
TOTAL Net Revenues 7,735,638 7,198,140 7% 7%
Reimbursements     504,542     509,795 (1)
TOTAL REVENUES $   8,240,180 $   7,707,935 7%
GEOGRAPHY
Americas $ 3,636,722 $ 3,444,412 6% 7%
EMEA 3,130,273 2,778,408 13 7
Asia Pacific     968,643     975,320 (1) 6
TOTAL Net Revenues $   7,735,638 $   7,198,140 7% 7%
TYPE OF WORK
Consulting $ 4,086,455 $ 3,866,682 6% 5%
Outsourcing     3,649,183     3,331,458 10 9
TOTAL Net Revenues $   7,735,638 $   7,198,140 7% 7%
 

 

 

Nine Months Ended May 31,

 

Percent

Increase

(Decrease)

U.S. dollars

Percent

Increase

(Decrease)

Local

Currency

 

2014 2013    
OPERATING GROUPS
Communications, Media & Technology $ 4,344,497 $ 4,295,930 1% 2%
Financial Services 4,838,687 4,646,286 4 4
Health & Public Service 3,727,642 3,558,478 5 6
Products 5,461,116 5,103,858 7 7
Resources 3,841,678 3,852,560 1
Other     11,434     19,031 n/m n/m
TOTAL Net Revenues 22,225,054 21,476,143 3% 4%
Reimbursements     1,382,305     1,393,148 (1)
TOTAL REVENUES $   23,607,359 $   22,869,291 3%
GEOGRAPHY
Americas $ 10,432,055 $ 10,057,308 4% 5%
EMEA 8,913,628 8,403,663 6 3
Asia Pacific     2,879,371     3,015,172 (5) 5
TOTAL Net Revenues $   22,225,054 $   21,476,143 3% 4%
TYPE OF WORK
Consulting $ 11,721,038 $ 11,580,323 1% 2%
Outsourcing     10,504,016     9,895,820

6

7
TOTAL Net Revenues $   22,225,054 $   21,476,143

3%

4%
__________________
n/m = not meaningful
 
 
ACCENTURE PLC
For the Three Months Ended May 31, 2014 and 2013
(In thousands of U.S. dollars)
(Unaudited)
                                   
OPERATING INCOME BY OPERATING GROUP
 
Operating Income as Reported (GAAP)
Three Months Ended May 31,
2014   2013
Operating

Income

Operating

Margin

Operating

Income

Operating

Margin

Communications, Media & Technology $ 222,957   15% $   213,359   15%
Financial Services 252,928 15 275,730 18
Health & Public Service 213,099 16 167,524 14
Products 253,357

13

263,978 15
Resources   236,425   18     221,380   17
Total $ 1,178,766   15.2% $   1,141,971   15.9%
 
 
Three Months Ended May 31,
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 $   222,957 15% $   213,359 $ 9,550 $ 203,809 14% $ 19,148
Financial Services 252,928 15 275,730 10,638 265,092 17 (12,164 )
Health & Public Service 213,099 16 167,524 8,756 158,768 13 54,331
Products 253,357 13 263,978 11,762 252,216 15 1,141
Resources     236,425 18     221,380   8,984     212,396   17     24,029  
Total $   1,178,766 15.2% $   1,141,971 $ 49,690 $   1,092,281   15.2% $   86,485  
 
 
 
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 May 31,
2014 2013  
Net Income

Diluted

Earnings

Per Share

Net Income

Diluted

Earnings

Per Share

As reported (GAAP) $ 881,813 $ 1.26 $ 874,063 $ 1.21
Less impact of reorganization benefits (1)(2)             (49,690 )     (0.07 )
As adjusted (Non-GAAP) $ 881,813 $   1.26   $   824,373   $   1.14  
 
(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 Nine Months Ended May 31, 2014 and 2013
(In thousands of U.S. dollars)
(Unaudited)
                           
OPERATING INCOME BY OPERATING GROUP
 
Operating Income as Reported (GAAP)
Nine Months Ended May 31,
2014   2013
Operating

Income

Operating

Margin

Operating

Income

Operating

Margin

Communications, Media & Technology $   558,140   13% $   622,151   14%
Financial Services 725,634 15 760,986 16
Health & Public Service 538,018 14 499,201 14
Products 706,270 13 763,904 15
Resources     693,085 18     708,935   18
Total $   3,221,147 14.5% $   3,355,177   15.6%
 
 
Nine Months Ended May 31,      
  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 $   558,140 13% $   622,151 $ 52,854 $ 569,297 13% $ (11,157 )
Financial Services 725,634 15 760,986 58,808 702,178

15

23,456
Health & Public Service 538,018 14 499,201 48,202 450,999 13 87,019
Products 706,270 13 763,904 64,686 699,218 14 7,052
Resources     693,085 18     708,935     49,395     659,540   17     33,545  
Total $   3,221,147 14.5% $   3,355,177 $   273,945 $   3,081,232   14.3% $   139,915  
 
 
 
RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE, AS REPORTED (GAAP), TO NET INCOME AND DILUTED

EARNINGS PER SHARE, AS ADJUSTED (NON-GAAP)

 
 
Nine Months Ended May 31,
2014 2013
Net Income

Diluted

Earnings

Per Share

Net Income

Diluted

Earnings

Per Share

As reported (GAAP) $ 2,415,790 $ 3.44 $ 2,827,192 $ 3.92
Less impact of reorganization benefits (1)(2) (273,945 ) (0.38 )
Less benefit from final determinations of U.S. federal tax liabilities               (242,938 )     (0.34 )
As adjusted (Non-GAAP) $   2,415,790 $   3.44   $   2,310,309   $   3.20  
 
(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)
 
May 31, 2014 August 31, 2013
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $   4,048,859 $   5,631,885
Short-term investments 2,687 2,525
Receivables from clients, net 3,804,826 3,333,126
Unbilled services, net 1,765,235 1,513,448
Other current assets     1,513,086     1,363,194
Total current assets     11,134,693     11,844,178
NON-CURRENT ASSETS:
Unbilled services, net 27,593 18,447
Investments 70,405 43,631
Property and equipment, net 786,599 779,675
Other non-current assets     4,983,094     4,181,118
Total non-current assets     5,867,691     5,022,871
TOTAL ASSETS $   17,002,384 $   16,867,049
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings $ 139 $ -
Accounts payable 957,633 961,851
Deferred revenues 2,308,594 2,230,615
Accrued payroll and related benefits 3,015,460 3,460,393
Other accrued liabilities     1,334,342     1,508,131
Total current liabilities     7,616,168     8,160,990
NON-CURRENT LIABILITIES:
Long-term debt 26,534 25,600
Other non-current liabilities     3,214,384     3,252,630

Total non-current liabilities

    3,240,918     3,278,230
TOTAL ACCENTURE PLC SHAREHOLDERS’ EQUITY 5,603,631 4,960,186
NONCONTROLLING INTERESTS     541,667     467,643
TOTAL SHAREHOLDERS’ EQUITY     6,145,298     5,427,829
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $   17,002,384 $   16,867,049
 
     
ACCENTURE PLC
                               
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands of U.S. dollars)
(Unaudited)
 
Three Months Ended May 31, Nine Months Ended May 31,
2014 2013 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $   881,813 $   874,063 $   2,415,790 $   2,827,192
Depreciation, amortization and asset impairments 162,197 142,131 456,664 439,321
Reorganization benefits, net - (49,224 ) (18,015 ) (272,526 )
Share-based compensation expense 186,303 174,713 519,989 473,317
Change in assets and liabilities/other, net     132,947       360,526       (1,537,555 )     (1,439,686 )
Net cash provided by operating activities     1,363,260       1,502,209       1,836,873       2,027,618  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (85,287 ) (90,576 ) (220,413 ) (267,364 )
Purchases of businesses and investments, net of cash acquired (65,631 ) (71,182 ) (675,220 ) (369,145 )
Other investing, net     2,591       10,529       4,095       12,880  
Net cash used in investing activities     (148,327 )     (151,229 )     (891,538 )     (623,629 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares 194,948 181,249 487,768 458,094
Purchases of shares (441,115 ) (617,749 ) (1,901,867 ) (1,447,538 )
Cash dividends paid (624,682 ) (561,603 ) (1,254,916 ) (1,121,738 )
Other financing, net     4,869       (804 )     88,440       69,189  
Net cash used in financing activities (865,980 ) (998,907 ) (2,580,575 ) (2,041,993 )
Effect of exchange rate changes on cash and cash equivalents     19,632       (50,074 )     52,214       (64,437 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 368,585 301,999 (1,583,026 ) (702,441 )
CASH AND CASH EQUIVALENTS, beginning of period     3,680,274       5,636,086       5,631,885       6,640,526  
CASH AND CASH EQUIVALENTS, end of period $   4,048,859   $   5,938,085   $   4,048,859   $   5,938,085  
 

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