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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

     
[x]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2004

   
    OR

   
[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
   

Commission File Number: 000-49713

ACCENTURE SCA
(Exact name of Registrant as specified in its charter)

     
Luxembourg   98-0351796
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

1 rue Guillaume Kroll
L-1882 Luxembourg
(Address of principal executive offices)

(352) 26 42 35 00
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [  ]

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes [  ] No [x]

     The number of shares of the Registrant’s Class I common shares, par value €1.25 per share, outstanding as of April 2, 2004 was 873,558,147 (which number does not include 97,735,307 issued shares held by the Registrant and subsidiaries of the Registrant).

 

 

ACCENTURE SCA

INDEX

                 
            Page
Part I.  
Financial Information
        
                 
Item 1.  
Financial Statements (unaudited)
        
       
Consolidated Balance Sheets as of February 29, 2004 and August 31, 2003
     3  
       
Consolidated Income Statements for the three and six months ended February 29, 2004 and February 28, 2003
     4  
       
Consolidated Shareholders’ Equity Statement for the six months ended February 29, 2004
     5  
       
Consolidated Cash Flows Statements for the six months ended February 29, 2004 and February 28, 2003
     6  
       
Notes to Consolidated Financial Statements
     7  
                 
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     14  
                 
Item 3.  
Quantitative and Qualitative Disclosures About Market Risk
     31  
                 
Item 4.  
Controls and Procedures
     32  
                 
Part II.  
Other Information
        
                 
Item 1.  
Legal Proceedings
     32  
                 
Item 4.  
Submission of Matters to a Vote of Security Holders
     32  
                 
Item 6.  
Exhibits and Reports on Form 8-K
     33  
                 
Signature  
 
     34  

2

 

PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

ACCENTURE SCA

CONSOLIDATED BALANCE SHEETS

February 29, 2004 and August 31, 2003
(In thousands of U.S. dollars, except share amounts)

                 
    February 29,   August 31,
    2004
   2003
    (Unaudited)        
ASSETS
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 2,853,615     $ 2,332,161  
Restricted cash
     —       83,280  
Short-term investments
     125,898       —  
Receivables from clients, net
     1,457,191       1,416,153  
Unbilled services
     1,048,276       828,515  
Deferred income taxes, net
     146,451       147,040  
Other current assets
     251,189       230,062  
 
    
 		      
 		  
Total current assets
     5,882,620       5,037,211  
 
    
 		      
 		  
NON-CURRENT ASSETS:
                
Unbilled services
     150,311       132,522  
Investments
     212,105       33,330  
Property and equipment, net
     606,612       650,455  
Goodwill
     209,877       188,659  
Deferred income taxes, net
     344,152       326,286  
Other non-current assets
     113,320       90,777  
 
    
 		      
 		  
Total non-current assets
     1,636,377       1,422,029  
 
    
 		      
 		  
TOTAL ASSETS
   $ 7,518,997     $ 6,459,240  
 
    
 		      
 		  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
                
Short-term bank borrowings
   $ 36,090     $ 43,500  
Current portion of long-term debt
     1,931       2,662  
Accounts payable
     513,669       573,201  
Deferred revenues
     935,433       676,841  
Accrued payroll and related benefits
     1,194,593       974,319  
Income taxes payable
     860,836       671,026  
Deferred income taxes, net
     23,120       22,390  
Other accrued liabilities
     479,798       387,157  
 
    
 		      
 		  
Total current liabilities
     4,045,470       3,351,096  
 
    
 		      
 		  
NON-CURRENT LIABILITIES:
                
Long-term debt
     13,578       13,955  
Retirement obligation
     597,986       575,973  
Deferred income taxes, net
     4,040       3,572  
Other non-current liabilities
     752,676       836,850  
 
    
 		      
 		  
Total non-current liabilities
     1,368,280       1,430,350  
 
    
 		      
 		  
MINORITY INTEREST
     36,216       34,233  
 
    
 		      
 		  
SHAREHOLDERS’ EQUITY:
                
Class I common shares, par value 1.25 euros per share, 19,782,549,738 shares authorized, 753,843,192 issued as of February 29, 2004 and August 31, 2003, respectively
     845,307       845,307  
Class I-A common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
     5,435       5,435  
Class I-B common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
     5,435       5,435  
Class I-C common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding
     10,870       10,870  
Class I-D common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding
     10,870       10,870  
Class I-E common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding
     16,304       16,304  
Class I-F common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding
     16,304       16,304  
Class I-G common shares, par value 1.25 euros per share, 20,000,000 shares authorized, issued and outstanding
     21,739       21,739  
Class I-H common shares, par value 1.25 euros per share, 25,000,000 shares authorized, issued and outstanding
     27,174       27,174  
Class I-I common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
     5,435       5,435  
Class I-J common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
     5,435       5,435  
Class I-K common shares, par value 1.25 euros per share, 16,050,000 shares authorized, issued and outstanding
     18,074       18,074  
Class I-L common shares, par value 1.25 euros per share, 5,025,720 shares authorized, issued and outstanding
     5,540       5,540  
Class I-M common shares, par value 1.25 euros per share, 68,626,707 shares authorized, issued and outstanding
     78,398       78,398  
Class I-N common shares, par value 1.25 euros per share, 12,747,835 and 0 shares authorized, issued and outstanding as of February 29, 2004 and August 31, 2003, respectively
     18,301       —  
Class II common shares, par value 1.25 euros per share, 20,000,000,000 shares authorized, 470,958,308 shares issued and outstanding
     529,281       529,281  
Restricted share units (related to Accenture Ltd Class A common shares) 33,762,764 and 33,803,376 units issued and outstanding as of February 29, 2004 and August 31, 2003, respectively
     494,690       495,024  
Additional paid-in capital
     3,016,597       2,687,575  
Treasury shares, at cost, 86,081,328 and 45,256,961 Class I common shares at February 29, 2004 and August 31, 2003, respectively
     (1,778,674 )     (846,959 )
Investment in Accenture Ltd shares, at cost, 196,216 and 5,229,487 shares at February 29, 2004 and August 31, 2003, respectively
     (4,511 )     (88,198 )
Accenture Ltd Class A shares owned by the Accenture Ltd Stock Employee Compensation Trust, at cost, 0 and 18,081,800 shares at February 29, 2004 and August 31, 2003, respectively
     —       (308,878 )
Retained deficit
     (1,157,591 )     (1,708,371 )
Accumulated other comprehensive loss
     (121,382 )     (188,233 )
 
    
 		      
 		  
Total shareholders’ equity
     2,069,031       1,643,561  
 
    
 		      
 		  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 7,518,997     $ 6,459,240  
 
    
 		      
 		  

The accompanying notes are an integral part of these financial statements.

3

 

ACCENTURE SCA

CONSOLIDATED INCOME STATEMENTS

For the Three and Six Months Ended February 29, 2004 and February 28, 2003
(In thousands of U.S. dollars)
(Unaudited)

                                 
    Three Months Ended
   Six Months Ended
    February 29,   February 28,   February 29,   February 28,
    2004
   2003
   2004
   2003
REVENUES:
                                
Revenues before reimbursements
   $ 3,302,209     $ 2,826,196     $ 6,563,794     $ 5,756,154  
Reimbursements
     380,095       362,827       692,998       760,316  
 
    
 		      
 		      
 		      
 		  
Revenues
     3,682,304       3,189,023       7,256,792       6,516,470  
OPERATING EXPENSES:
                                
Cost of services:
                                
Cost of services before reimbursable expenses
     2,212,547       1,816,706       4,363,437       3,590,903  
Reimbursable expenses
     380,095       362,827       692,998       760,316  
 
    
 		      
 		      
 		      
 		  
Cost of services
     2,592,642       2,179,533       5,056,435       4,351,219  
Sales and marketing
     358,662       369,631       709,259       725,464  
General and administrative costs
     316,133       286,033       655,489       656,764  
Restructuring costs and reorganization (benefit)
     107,438       (13,995 )     21,040       (13,995 )
 
    
 		      
 		      
 		      
 		  
Total operating expenses
     3,374,875       2,821,202       6,442,223       5,719,452  
 
    
 		      
 		      
 		      
 		  
OPERATING INCOME
     307,429       367,821       814,569       797,018  
Gain on investments, net
     3,332       1,465       3,830       5,270  
Interest income
     15,187       10,824       25,610       19,917  
Interest expense
     (5,816 )     (4,501 )     (11,567 )     (11,037 )
Other income
     17,765       27,385       19,291       25,610  
Equity in losses of affiliates
     (516 )     (9 )     (1,202 )     (539 )
 
    
 		      
 		      
 		      
 		  
INCOME BEFORE TAXES
     337,381       402,985       850,531       836,239  
Provision for taxes
     117,408       153,134       295,984       317,771  
 
    
 		      
 		      
 		      
 		  
INCOME BEFORE MINORITY INTEREST
     219,973       249,851       554,547       518,468  
Minority interest
     (1,350 )     (1,211 )     (3,767 )     (2,710 )
 
    
 		      
 		      
 		      
 		  
NET INCOME
   $ 218,623     $ 248,640     $ 550,780     $ 515,758  
 
    
 		      
 		      
 		      
 		  

The accompanying notes are an integral part of these financial statements.

4

 

ACCENTURE SCA

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Six Months Ended February 29, 2004
(U.S. dollars and share amounts in thousands)
(Unaudited)

                                                                                                                                 
    Class I
Common
Shares
   Class II
Common
Shares
   Restricted
Share Units
Common
Shares
   Additional   Treasury
Shares
   Investment
Ltd
in Accenture
   Investment
Ltd-SECT
in Accenture
   Retained   Accu-
mulated
Other
Comp-
rehensive		    
            No.           No.           No.   Paid-in           No.           No.           No.   Earnings   Income    
    $
   Shares
   $
   Shares
   $
   Shares
   Capital
   $
   Shares
   $
   Shares
   $
   Shares
   (Deficit)
   (Loss)
   Total
Balance at August 31, 2003
   $ 1,072,320       958,546     $ 529,281       470,958     $ 495,024       33,803     $ 2,687,575     $ (846,959 )     (45,257 )   $ (88,198 )     (5,229 )   $ (308,878 )     (18,082 )   $ (1,708,371 )   $ (188,233 )   $ 1,643,561  
Comprehensive income
                                                                                                                                
Net income
                                                                                                             550,780               550,780  
Other comprehensive income (loss):
                                                                                                                                
Unrealized gains on marketable securities, net of reclassification adjustment
                                                                                                                     1,618       1,618  
Foreign currency translation adjustments
                                                                                                                     65,077       65,077  
Minimum pension liability adjustment
                                                                                                                     156       156  
 
                                                                                                                    
 		          
Other comprehensive income (loss)
                                                                                                                     66,851          
 
                                                                                                                            
 		  
Comprehensive income
                                                                                                                             617,631  
Income tax benefit on stock-based compensation plans
                                                     11,839                                                                       11,839  
Purchase of Accenture Ltd Class A common shares
                                                     (9,590 )                     (20,385 )     (785 )     (78,965 )     (3,500 )                     (108,940 )
Transfer of shares from SECT
                                                     8,222       (92,119 )     (3,707 )     (303,946 )     (17,875 )     387,843       21,582                       —  
Vesting of restricted share units, net
                                     5,537       310       460                                                                       5,997  
Purchases/redemptions of Accenture Class I common shares and Canada Holdings Inc. exchangeable shares
                                                     (12,595 )     (1,671,948 )     (81,463 )                                                     (1,684,543 )
Issuance of common shares:
                                                                                                                                
Employee share purchase plan
                                                     (20,137 )                     86,951       4,394                                       66,814  
Employee stock options
                                                     (20,644 )     78,342       4,509       35,638       1,897                                       93,336  
Restricted share units
                                     (5,871 )     (350 )     424       3,419       190       2,028       102                                       —  
In September 2003 offering
     18,301       12,748                                       369,582       750,591       39,647       283,401       17,300                                       1,421,875  
Minority Interest
                                                     1,461                                                                       1,461  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Balance at February 29, 2004
   $ 1,090,621       971,294     $ 529,281       470,958     $ 494,690       33,763     $ 3,016,597     $ (1,778,674 )     (86,081 )   $ (4,511 )     (196 )   $ —       —     $ (1,157,591 )   $ (121,382 )   $ 2,069,031  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     The accompanying notes are an integral part of these financial statements.

5

 

ACCENTURE SCA

CONSOLIDATED CASH FLOWS STATEMENTS
For the Six Months Ended February 29, 2004 and February 28, 2003
(In thousands of U.S. dollars)
(Unaudited)

                 
    2004
   2003
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 550,780     $ 515,758  
 
    
 		      
 		  
Adjustments to reconcile net income to net cash provided by operating activities—
                
Depreciation and amortization
     142,819       123,035  
Reorganization benefit
     (86,216 )     (13,995 )
Gain on investments, net
     (3,830 )     (5,270 )
Loss (gain) on disposal of property and equipment, net
     4,446       (6,592 )
Stock-based compensation expense
     31,863       23,987  
Deferred income taxes, net
     (12,518 )     8,902  
Minority interest
     3,767       2,710  
Other items, net
     2,771       (22,652 )
Change in assets and liabilities—
                
Decrease (increase) in receivables from clients, net
     47,667       (61,852 )
Decrease in other current assets
     1,456       50,768  
Increase in unbilled services, current and non-current
     (178,381 )     (161,290 )
Increase in other non-current assets
     (23,363 )     (942 )
Decrease in accounts payable
     (81,697 )     (83,342 )
Increase in deferred revenues
     214,047       109,857  
Increase in accrued payroll and related benefits
     164,254       38,033  
Increase in income taxes payable
     190,137       171,400  
Increase (decrease) in other accrued liabilities
     47,436       (71,455 )
Decrease in other non-current liabilities
     (28,954 )     (5,188 )
 
    
 		      
 		  
Net cash provided by operating activities
     986,484       611,872  
 
    
 		      
 		  
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from sales of available-for-sale investments
     103,303       47,418  
Proceeds from sales of property and equipment
     3,114       14,859  
Purchases of businesses and investments, net of cash acquired
     (6,131 )     (3,796 )
Purchases of available-for-sale investments
     (400,251 )     —  
Purchases of property and equipment
     (101,240 )     (78,967 )
 
    
 		      
 		  
Net cash used in investing activities
     (401,205 )     (20,486 )
 
    
 		      
 		  
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Contract termination payment
     —       (147,569 )
Issuance of Accenture Ltd Class A common shares
     1,582,025       106,397  
Purchase of Accenture Ltd Class A common shares
     (151,441 )     (157,288 )
Purchase of Accenture SCA Class I common shares
     (1,642,056 )     (144,026 )
Proceeds from issuance of long-term debt
     395       919  
Repayment of long-term debt
     (1,912 )     (2,800 )
Proceeds from issuance of short-term bank borrowings
     72,990       49,752  
Repayments of short-term bank borrowings
     (80,214 )     (59,146 )
Decrease in restricted cash of Accenture Ltd Share Employee Compensation Trust
     83,280       73,857  
 
    
 		      
 		  
Net cash used in financing activities
     (136,933