Accenture Streamlines Real Estate and Realigns Workforce to Position Company for Future Growth
Will record $247 million restructuring charge in fourth quarter
NEW YORK; Aug. 20, 2009 — Continuing the execution of its strategy to drive future growth and profitability, Accenture (NYSE: ACN) is taking steps to reduce excess real estate capacity and to realign its workforce. These actions will result in a pre-tax restructuring charge of approximately $247 million in the fourth quarter of fiscal 2009, ending Aug. 31.
Approximately $119 million of the charge is related primarily to the reduction of excess office space globally, which will increase the productivity of the company’s fixed cost base and generate ongoing savings.
Approximately $128 million of the charge is for severance and related costs of workforce actions, primarily at the senior-executive level, which are designed to ensure that the company’s global workforce is properly aligned to best serve the evolving needs of its clients and its business. Accenture said that these actions will reduce its senior-executive ranks by approximately 7 percent.
“As part of our drive to deliver high performance — both for Accenture and for our clients — and the implementation of our comprehensive human capital strategy, which defines our global talent and leadership models, we are acting boldly to better position Accenture for both short-term economic improvement and for long-term growth and profitability,” said William D. Green, Accenture’s chairman & CEO. “In addition to continuing to manage Accenture with great discipline in a challenging environment, we’re taking proactive steps to ensure that we have the right cost structure to support our business going forward and that our organization is properly aligned to most effectively capture future growth opportunities. At the same time, we’re making strategic investments in high-value growth areas that will enable us to extend our leadership in the market.
“The realignment of our senior-executive workforce will help ensure that Accenture has the right people, skills and capabilities, at the right levels and in the right places. The affected executives are highly skilled and valued professionals, and we will be working with them, as appropriate, to help them find new opportunities outside of Accenture that take advantage of their experience and expertise.”
The company expects the space reductions to be completed by the end of the current fiscal year and the workforce actions to be substantially completed during the first quarter of fiscal year 2010.
Accenture continues to expect net revenues for the fourth quarter of fiscal 2009 to be in the range of $5.0 billion to $5.2 billion. The pre-tax restructuring charge includes approximately $22 million of non-cash asset impairments principally related to the global consolidation of excess office space. The remaining $225 million comprises cash-related expenditures primarily for workforce- and office-lease-related costs, the majority of which will affect the company’s cash flows in the first quarter of fiscal 2010. The charge, which will be reflected on a separate line item above operating income entitled “Restructuring Cost and Reorganization Benefit” on the company’s consolidated income statement, is expected to have a negative impact of approximately 110 basis points on its operating margin for the full 2009 fiscal year. Absent the impact of the restructuring charge, the company continues to expect operating margin for the full fiscal year to be, as it has previously stated, at the lower end of its guided range of 13.4 percent to 13.7 percent. The company expects the restructuring charge to reduce EPS for both the fourth quarter and full 2009 fiscal year by $0.24.
Accenture is a global management consulting, technology services and outsourcing company. 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. With approximately 177,000 people serving clients in more than 120 countries, the company generated net revenues of US$23.39 billion for the fiscal year ended Aug. 31, 2008. Its home page is www.accenture.com.
Except for the historical information and discussions contained herein, statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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: our results of operations could be adversely affected by economic and political conditions and the effects of these conditions on our clients’ businesses and levels of business activity; our results of operations could be negatively affected if we cannot expand and develop our services and solutions in response to changes in technology and client demand; the consulting, systems integration and technology and outsourcing markets are highly competitive and we might not be able to compete effectively; our work with government clients exposes us to additional risks in the government contracting environment; clients may not be satisfied with our services; our results of operations could be adversely affected if our clients terminate their contracts with us on short notice; our outsourcing services subject us to operational and financial risk; our results of operations may be adversely affected by the type and level of technology spending by our clients; our profitability may suffer if we are not able to maintain favorable pricing rates and utilization rates, if we cannot control our costs, or if we cannot anticipate the cost and complexity of performing our work; our business could be negatively affected by legal liability that results from our providing solutions or services; the anticipated benefits of the new Health & Public Service operating group, Technology growth platform and Business Process Outsourcing growth platform may not be achieved; the introduction of organizational changes and appointment of new executive leadership team members may not help us achieve desired results; we may not be able to effectively drive future growth and profitability including if our efforts to reduce excess real estate capacity and realign our workforce do not go as anticipated; our global operations are subject to complex risks, some of which might be beyond our control; our growth and our ability to compete may be adversely affected if we cannot attract, retain and motivate our employees or efficiently utilize their skills; our ability to attract and retain business may depend on our reputation in the marketplace; as well as the risks, uncertainties and other factors discussed under the “Risk Factors” heading in our most recent annual report on Form 10-K, our quarterly report on Form 10-Q for the period ended May 31, 2009, and other documents filed with or furnished to the Securities and Exchange Commission. Statements contained herein speak only as of the date they were made, and Accenture undertakes no duty to update any forward-looking statements made herein or to conform such statements to actual results or changes in Accenture’s expectations.
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