ACCENTURE LTD - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2003

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-16565

ACCENTURE LTD

(Exact name of Registrant as specified in its charter)

Bermuda

98-0341111

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Cedar House

41 Cedar Avenue

Hamilton HM12, Bermuda

(Address of principal executive offices)

(441) 296-8262

(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 x No ¨

The number of shares of the Registrant’s Class A common shares, par value $0.0000225 per share, outstanding as of June 13, 2003 was 429,408,489 (which number does not include 22,702,071 issued shares held by subsidiaries of the Registrant). The number of shares of the Registrant’s Class X common shares, par value $0.0000225 per share, outstanding as of June 13, 2003 was 508,723,411.

ACCENTURE LTD

INDEX

		Page
Part I.	Financial Information

Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of May 31, 2003 and August 31, 2002	3
	Consolidated Income Statements for the three and nine months ended May 31, 2003 and 2002	4
	Consolidated Shareholders’ Equity Statement for the nine months ended May 31, 2003	5
	Consolidated Cash Flows Statements for the nine months ended May 31, 2003 and 2002	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	33

Item 6.	Exhibits and Reports on Form 8-K	33

Signature		34

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCENTURE LTD

CONSOLIDATED BALANCE SHEETS

May 31, 2003 and August 31, 2002

(In thousands of U.S. dollars, except share and per share amounts)

	May 31, 2003			August 31, 2002
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	1,962,194		$	1,316,976
Restricted cash		150,928			79,445
Receivables from clients, net		1,460,229			1,330,642
Unbilled services		941,164			774,214
Due from related parties		8,249			39,488
Deferred income taxes, net		197,529			189,976
Other current assets		252,252			330,347

Total current assets		4,972,545			4,061,088


NON-CURRENT ASSETS:
Unbilled services		127,291			106,162
Investments		48,936			76,017
Property and equipment, net		664,699			716,504
Goodwill		189,031			167,603
Deferred income taxes, net		278,113			283,969
Other non-current assets		86,592			67,605

Total non-current assets		1,394,662			1,417,860

TOTAL ASSETS	$	6,367,207		$	5,478,948


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Short-term bank borrowings	$	51,000		$	57,922
Current portion of long-term debt		4,602			5,177
Accounts payable		434,123			450,208
Deferred revenue		689,885			543,917
Accrued payroll and related benefits		1,107,806			1,139,887
Income taxes payable		693,465			459,836
Deferred income taxes, net		33,848			18,884
Other accrued liabilities		478,895			651,231

Total current liabilities		3,493,624			3,327,062


NON-CURRENT LIABILITIES:
Long-term debt		13,240			3,428
Retirement obligation		413,751			382,180
Deferred income taxes, net		29,276			16,674
Other non-current liabilities		878,429			791,582

Total non-current liabilities		1,334,696			1,193,864

MINORITY INTEREST		811,796			519,396


SHAREHOLDERS’ EQUITY:
Preferred shares, 2,000,000,000 shares authorized, 0 shares issued and outstanding		—			—
Class A common shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 451,974,174 and 433,695,621 issued as of May 31, 2003 and August 31, 2002, respectively		10			10
Class X common shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 510,678,501 and 524,094,456 shares issued and outstanding as of May 31, 2003 and August 31, 2002, respectively		11			13
Restricted share units (related to Class A common shares), 40,900,437 and 58,265,829 units issued and outstanding as of May 31, 2003 and August 31, 2002, respectively		596,400			848,218
Additional paid-in capital		1,411,866			1,397,828
Treasury shares, at cost, 4,869,801 and 13,726,885 shares at May 31, 2003 and August 31, 2002, respectively		(82,233	)		(315,486	)
Treasury shares owned by Accenture Ltd Share Employee Compensation Trust, at cost, 17,757,100 and 12,562,300 shares at May 31, 2003 and August 31, 2002, respectively		(305,204	)		(221,110	)
Retained deficit		(810,975	)		(1,190,415	)
Accumulated other comprehensive loss		(82,784	)		(80,432	)

Total shareholders’ equity		727,091			438,626

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,367,207		$	5,478,948

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

ACCENTURE LTD

CONSOLIDATED INCOME STATEMENTS

For the Three and Nine Months Ended May 31, 2003 and 2002

(In thousands of U.S. dollars, except share and per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003			May 31, 2002
REVENUES:
Revenues before reimbursements	$	3,044,836		$	2,980,678		$	8,800,990		$	8,882,597
Reimbursements		373,593			369,982			1,133,909			1,137,822

Revenues		3,418,429			3,350,660			9,934,899			10,020,419

OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses		1,939,075			1,752,922			5,529,978			5,267,211
Reimbursable expenses		373,593			369,982			1,133,909			1,137,822

Cost of services		2,312,668			2,122,904			6,663,887			6,405,033
Sales and marketing		362,930			413,897			1,088,394			1,173,032
General and administrative costs		338,709			378,873			981,478			1,204,832

Total operating expenses		3,014,307			2,915,674			8,733,759			8,782,897


OPERATING INCOME		404,122			434,986			1,201,140			1,237,522
Gain (loss) on investments, net		2,286			(918	)		7,556			(306,606	)
Interest income		10,681			9,510			30,598			33,550
Interest expense		(5,232	)		(12,712	)		(16,269	)		(36,256	)
Other income		112			13,170			25,722			14,926
Equity in gains (losses) of affiliates		682			(2,425	)		143			(8,888	)


INCOME BEFORE TAXES		412,651			441,611			1,248,890			934,248
Provision for taxes		135,576			167,813			453,347			435,535


INCOME BEFORE MINORITY INTEREST		277,075			273,798			795,543			498,713
Minority interest		(144,934	)		(159,337	)		(417,810	)		(291,965	)


NET INCOME	$	132,141		$	114,461		$	377,733		$	206,748


Weighted Average Class A Common Shares:
Basic		466,294,836			414,463,440			467,170,112			411,525,404
Diluted		985,618,380			1,027,990,942			995,224,416			1,026,971,327
Earnings Per Class A Common Share:
Basic	$	0.28		$	0.28		$	0.81		$	0.50
Diluted	$	0.28		$	0.27		$	0.80		$	0.49

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

ACCENTURE LTD

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Nine Months Ended May 31, 2003

(U.S. dollars and share amounts in thousands)

(Unaudited)

Class A
Common
Shares

Class X
Common
Shares

Restricted
Share Units
Common Shares

Additional
Paid-in
Capital

Treasury Shares

Treasury Shares—
SECT

Retained
Earnings
(Deficit)

Accumulated
Other
Compre-
hensive
Income(Loss)

Total

Preferred
Shares

No.
Shares

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