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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 MAY 31, 2004

OR

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

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

     The number of shares of the Registrant’s Class I common shares, par value €1.25 per share, outstanding as of June 30, 2004 was 875,017,237 (which number does not include 96,276,217 issued shares held by the Registrant and by subsidiaries of the Registrant).

 

 

ACCENTURE SCA

INDEX

                 
            Page
Part I.  
Financial Information
        
Item 1.  
Financial Statements (unaudited)
        
       
Consolidated Balance Sheets as of May 31, 2004 and August 31, 2003
     3  
       
Consolidated Income Statements for the three and nine months ended May 31, 2004 and 2003
     4  
       
Consolidated Shareholders’ Equity Statement for the nine months ended May 31, 2004
     5  
       
Consolidated Cash Flows Statements for the nine months ended May 31, 2004 and 2003
     6  
       
Notes to Consolidated Financial Statements
     7  
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     16  
Item 3.  
Quantitative and Qualitative Disclosures About Market Risk
     33  
Item 4.  
Controls and Procedures
     33  
 Part II.  
Other Information
        
Item 1.  
Legal Proceedings
     33  
Item 2.  
Changes in Securities and Use of Proceeds
     34  
Item 6.  
Exhibits and Reports on Form 8-K
     34  
     Signature  
 
     35  

2

 

PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

ACCENTURE SCA

CONSOLIDATED BALANCE SHEETS

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

                 
    May 31,   August 31,
    2004
   2003
    (Unaudited)    
ASSETS
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 3,514,647     $ 2,332,161  
Restricted cash
     —       83,280  
Short-term investments
     325,739       —  
Receivables from clients, net
     1,475,889       1,416,153  
Unbilled services
     1,163,019       828,515  
Deferred income taxes, net
     155,805       147,040  
Other current assets
     278,875       230,062  
 
    
 		      
 		  
Total current assets
     6,913,974       5,037,211  
 
    
 		      
 		  
NON-CURRENT ASSETS:
                
Unbilled services
     171,757       132,522  
Long-term investments
     309,360       33,330  
Property and equipment, net
     608,522       650,455  
Goodwill
     210,852       188,659  
Deferred income taxes, net
     308,940       326,286  
Other non-current assets
     148,523       90,777  
 
    
 		      
 		  
Total non-current assets
     1,757,954       1,422,029  
 
    
 		      
 		  
TOTAL ASSETS
   $ 8,671,928     $ 6,459,240  
 
    
 		      
 		  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
                
Short-term bank borrowings
   $ 45,670     $ 43,500  
Current portion of long-term debt
     11,737       2,662  
Accounts payable
     529,989       573,201  
Deferred revenues
     903,454       676,841  
Accrued payroll and related benefits
     1,318,038       974,319  
Income taxes payable
     927,538       671,026  
Deferred income taxes, net
     22,532       22,390  
Other accrued liabilities
     518,962       387,157  
 
    
 		      
 		  
Total current liabilities
     4,277,920       3,351,096  
 
    
 		      
 		  
NON-CURRENT LIABILITIES:
                
Long-term debt
     3,076       13,955  
Retirement obligation
     526,016       575,973  
Deferred income taxes, net
     3,874       3,572  
Other non-current liabilities
     680,306       836,850  
 
    
 		      
 		  
Total non-current liabilities
     1,213,272       1,430,350  
 
    
 		      
 		  
MINORITY INTEREST
     42,435       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 May 31, 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 May 31, 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) 31,711,809 and 33,803,376 units issued and outstanding as of May 31, 2004 and August 31, 2003, respectively
     462,352       495,024  
Additional paid-in capital
     3,112,363       2,687,575  
Treasury shares, at cost, 50,660,515 and 45,256,961 Class I common shares at May 31, 2004 and August 31, 2003, respectively
     (1,102,888 )     (846,959 )
Investment in Accenture Ltd shares, at cost, 125,722 and 5,229,487 shares at May 31, 2004 and August 31, 2003, respectively
     (3,926 )     (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 May 31, 2004 and August 31, 2003, respectively
     —       (308,878 )
Retained deficit
     (791,951 )     (1,708,371 )
Accumulated other comprehensive loss
     (157,551 )     (188,233 )
 
    
 		      
 		  
Total shareholders’ equity
     3,138,301       1,643,561  
 
    
 		      
 		  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 8,671,928     $ 6,459,240  
 
    
 		      
 		  

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

3

 

ACCENTURE SCA

CONSOLIDATED INCOME STATEMENTS

For the Three and Nine Months Ended May 31, 2004 and 2003
(In thousands of U.S. dollars)
(Unaudited)

                                 
    Three Months Ended
   Nine Months Ended
    May 31,   May 31,   May 31,   May 31,
    2004
   2003
   2004
   2003
REVENUES:
                                
Revenues before reimbursements
   $ 3,686,662     $ 3,044,836     $ 10,250,456     $ 8,800,990  
Reimbursements
     363,579       373,593       1,056,577       1,133,909  
 
    
 		      
 		      
 		      
 		  
Revenues
     4,050,241       3,418,429       11,307,033       9,934,899  
OPERATING EXPENSES:
                                
Cost of services:
                                
Cost of services before reimbursable expenses
     2,379,787       1,939,075       6,743,224       5,529,978  
Reimbursable expenses
     363,579       373,593       1,056,577       1,133,909  
 
    
 		      
 		      
 		      
 		  
Cost of services
     2,743,366       2,312,668       7,799,801       6,663,887  
Sales and marketing
     391,233       362,930       1,100,492       1,088,394  
General and administrative costs
     340,549       339,279       996,038       996,043  
Restructuring and reorganization cost (benefit)
     1,936       (570 )     22,976       (14,565 )
 
    
 		      
 		      
 		      
 		  
Total operating expenses
     3,477,084       3,014,307       9,919,307       8,733,759  
 
    
 		      
 		      
 		      
 		  
OPERATING INCOME
     573,157       404,122       1,387,726       1,201,140  
Gain on investments, net
     337       2,286       4,167       7,556  
Interest income
     16,436       10,681       42,046       30,598  
Interest expense
     (5,403 )     (5,232 )     (16,970 )     (16,269 )
Other income (expense)
     (18,705 )     112       586       25,722  
Equity in gains (losses) of affiliates
     (70 )     682       (1,272 )     143  
 
    
 		      
 		      
 		      
 		  
INCOME BEFORE INCOME TAXES
     565,752       412,651       1,416,283       1,248,890  
Provision for income taxes
     196,883       135,576       492,867       453,347  
 
    
 		      
 		      
 		      
 		  
INCOME BEFORE MINORITY INTEREST
     368,869       277,075       923,416       795,543  
Minority interest
     (3,229 )     (4,230 )     (6,996 )     (6,940 )
 
    
 		      
 		      
 		      
 		  
NET INCOME
   $ 365,640     $ 272,845     $ 916,420     $ 788,603  
 
    
 		      
 		      
 		      
 		  

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

4

 

ACCENTURE SCA

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Nine Months Ended May 31, 2004
(U.S. dollars and share amounts in thousands)
(Unaudited)

                                                                                                                                 
    Class I   Class II   Restricted                                                
    Common   Common   Share Units                           Investment in Accenture   Investment in Accenture              
    Shares
   Shares
   Common Shares
           Treasury Shares
   Ltd
   Ltd-SECT
           Accumulated
Other		    
                                                    Additional                                                   Retained   Compre-    
            No.           No.           No.   Paid-in           No.           No.           No.   Earnings   hensive    
    $
   Shares
   $
   Shares
   $
   Shares
   Capital
   $
   Shares
   $
   Shares
   $
   Shares
   (Deficit)
   Income(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
                                                                                                             916,420               916,420  
Other comprehensive income (loss):
                                                                                                                                
Unrealized gains on marketable securities, net of reclassification adjustments
                                                                                                                     (657 )     (657 )
Foreign currency translation adjustments
                                                                                                                     31,183       31,183  
Minimum pension liability adjustment
                                                                                                                     156       156  
 
                                                                                                                    
 		          
Other comprehensive income (loss)
                                                                                                                     30,682          
                                                                                                                             
 		  
Comprehensive income
                                                                                                                             947,102  
Income tax benefit on stock-based compensation plans
                                                     14,849                                                                       14,849  
Purchase of Accenture Ltd Class A common shares
                                                     (18,357 )                     (31,890 )     (1,223 )     (78,965 )     (3,500 )                     (129,212 )
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
                                     10,164       494       914                                                                       11,078  
Purchases/redemptions of Accenture Class I common shares and Canada Holdings Inc. exchangeable shares
                                                     (9,751 )     (2,002,292 )     (95,664 )                                                     (2,012,043 )
Issuance of common shares:
                                                                                                                                
Employee share purchase plan
                                                     (15,783 )     63,522       3,293       86,951       4,394                                       134,690  
Employee stock options
                                                     (30,021 )     102,793       5,763       44,181       2,256                                       116,953  
Restricted share units
                                     (42,836 )     (2,585 )     (1,651 )     38,912       2,003       5,575       251                                       —  
In September 2003 secondary offering
     18,301       12,748                                       369,582       750,591       39,647       283,401       17,300                                       1,421,875  
In May 2004 secondary offering
                                                     105,509       882,664       43,261                                                       988,173  
Minority Interest
                                                     1,275                                                                       1,275  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Balance at May 31, 2004
   $ 1,090,621       971,294     $ 529,281       470,958     $ 462,352       31,712     $ 3,112,363     $ (1,102,888 )     (50,661 )   $ (3,926 )     (126 )   $ —       —     $ (791,951 )   $ (157,551 )   $ 3,138,301  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

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

5

 

ACCENTURE SCA

CONSOLIDATED CASH FLOWS STATEMENTS
For the Nine Months Ended May 31, 2004 and 2003
(In thousands of U.S. dollars)
(Unaudited)

                 
    2004
   2003
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 916,420     $ 788,603  
 
    
 		      
 		  
Adjustments to reconcile net income to net cash provided by operating activities—
                
Depreciation and amortization
     197,958       179,458  
Reorganization benefit
     (84,280 )     (14,565 )
Gain on investments, net
     (4,167 )     (7,556 )
Loss (gain) on disposal of property and equipment, net
     7,560       (5,881 )
Stock-based compensation expense
     47,126       37,796  
Deferred income taxes, net
     9,972       29,122  
Minority interest
     6,996       6,940  
Other items, net
     7,225       13,931  
Change in assets and liabilities—
                
(Increase) decrease in receivables from clients, net
     (13,406 )     3,089  
(Increase) decrease in other current assets
     (28,741 )     62,420  
Increase in unbilled services, current and non-current
     (343,619 )     (121,397 )
Increase in other non-current assets
     (53,462 )     (28,441 )
Decrease in accounts payable
     (54,335 )     (38,383 )
Increase in deferred revenues
     207,470       89,137  
Increase (decrease) in accrued payroll and related benefits
     317,817       (86,091 )
Increase in income taxes payable
     266,432       213,882  
Increase (decrease) in other accrued liabilities
     93,487       (28,560 )
Decrease in other non-current liabilities
     (133,819 )     (14,625 )
 
    
 		      
 		  
Net cash provided by operating activities
     1,362,634       1,078,879  
 
    
 		      
 		  
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from sales of investments
     210,599       102,772  
Proceeds from sales of property and equipment
     4,618       17,241  
Purchases of businesses and investments, net of cash acquired
     (17,950 )     (8,403 )
Purchases of available-for-sale investments
     (815,294 )     —  
Purchases of property and equipment
     (179,891 )     (133,761 )
 
    
 		      
 		  
Net cash used in investing activities
     (797,918 )     (22,151 )
 
    
 		      
 		  
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Contract termination payment
     —       (147,569 )
Distribution of partners’ pre-incorporation retirement benefits
     (13,194 )     —  
Issuance of Accenture Ltd Class A common shares
     2,661,691       196,315  
Purchase of Accenture Ltd Class A common shares
     (216,162 )     (179,976 )
Purchase of Accenture SCA Class I common shares
     (1,925,113 )