NEW YORK; April 11, 2002 – Accenture (NYSE: ACN) today reported results for the second quarter, ended February 28, 2002, that are consistent with the company’s announcement in March in which it said it would exceed analysts’ expectations for its operating results.
Revenues before reimbursements (“net revenues”) for the second quarter were $2.91 billion, an increase of 1 percent in US dollars and 3 percent in local currency over the second quarter of fiscal 2001. Operating income was $388 million, or 13 percent of net revenues for the quarter.
Net income before minority interest, excluding investment writedowns described below, increased 9 percent, to $236 million, compared to $216 million on a comparable pro forma basis in the same quarter of the previous fiscal year. Diluted earnings per share on the same basis were $0.23, compared to $0.21 on a comparable pro forma basis in the same quarter of the previous fiscal year.
Reported net income, including investment writedowns, was $11 million for the second quarter, and diluted earnings per share on the same basis were $0.02.
“Our resilience in what continues to be a difficult global economic environment enabled us to achieve modest revenue growth and improved operating margins in the second quarter,” said Joe W. Forehand, Accenture chairman and CEO. “In addition, during the first half of fiscal 2002 we had an impressive $9.8 billion in new bookings, nearly half of which represents business transformation outsourcing engagements, demonstrating the strong demand for our unique ability to help clients improve their business performance and bring their ideas to life.”
In terms of the near-term outlook, Accenture said that while there are a number of positive indicators in its business, it, like most other companies, is seeing the overall economic recovery moving very slowly across different industries and geographic regions. Accenture said, however, that it is comfortable with analysts’ consensus earnings estimates of $0.26 per share for the third quarter ending May 31, 2002.
As the company stated in March, it has decided to sell substantially all of its venture and investment portfolio in order to reduce volatility in future earnings. Accenture’s loss on investments in the second quarter includes a charge of $212 million, before and after tax, related to the loss the company expects to incur on the sale transaction. After giving effect to the charge, the venture and investment portfolio had a net book value at February 28, 2002, of $109 million, approximately half of which was hedged.
Accenture expects to receive offers that allow it to retain a modest percentage of ownership in the venture and investment portfolio through an ongoing alliance with the buyer. Any existing alliance or client relationships with portfolio companies will not be affected. Accenture has engaged an investment bank and has completed the initial screening of prospective purchasers. The company hopes to complete the transaction by the end of the calendar year.
Accenture said that, going forward, it will discontinue direct venture-capital investing and will no longer accept illiquid securities from clients or alliance partners.
Strong growth in two of Accenture’s five operating groups, formerly called global market units, contributed to its solid second-quarter results. Net revenues for Accenture’s Government and Resources operating groups were $324 million and $525 million, respectively, increases of 36 percent and 11 percent, respectively, over the second quarter of fiscal 2001.
Accenture’s Products operating group reported net revenues of $647 million, a 1 percent increase over the strong second quarter of fiscal 2001. Second-quarter net revenues for the Communications & High Tech and Financial Services operating groups were $751 million and $663 million, respectively, down 7 percent and 6 percent, respectively, from their second-quarter fiscal 2001 levels. The lower level of revenue decreases in these operating groups, compared to the decreases in the first quarter of fiscal 2002, suggest that the financial services, communications and technology sectors appear to be stabilizing.
Net revenues in Accenture’s Europe, Middle East and Africa (EMEA) geographic region were $1.26 billion, an increase of 12 percent in US dollars and 16 percent in local currency over the second quarter of fiscal 2001. Net revenues in the Asia Pacific region were $178 million, a decrease of 8 percent in US dollars. In local currency, net revenues in the Asia Pacific region were flat. Net revenues in the Americas region were $1.47 billion, a decrease of 6 percent in US dollars and 5 percent in local currency.
Accenture will host a conference call at 8:00 a.m. (EDT) today to discuss its second-quarter fiscal 2002 financial results and other matters. To participate, please dial +1 (877) 260-8899 [+1 (651) 291-0561 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/investor.
A replay of the conference call will be available at www.accenture.com/investor, or by dialing +1 (800) 475-6701 [+1 (320) 365-3844 outside the United States, Puerto Rico and Canada] and entering the passcode 633967 from 11:30 a.m. (EDT) Thursday, April 11 through 11:59 p.m. (EDT) Sunday, April 28.
About Accenture
Accenture is the world’s leading management consulting and technology services organization. Through its network of businesses approach — in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities —Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.44 billion for the fiscal year ended August 31, 2001. Its home page is www.accenture.com.
This press release contains forward-looking statements, the accuracy of which is necessarily subject to risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed under the heading "Forward-Looking Statements and Certain Factors That May Affect Our Business" in the reports and other documents that we file with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed with the Securities and Exchange Commission.
SUMMARY OF REVENUES
For the Three Months Ended February 28, 2002 and 2001 and
For the Six Months Ended February 28, 2002 and 2001
(unaudited)
(In thousands of U.S. dollars)
Three Months Ended
February 28,
2002 2001% increase/
(decrease) US$% increase/
(decrease) Local
currency% of Total
2002 Net
Revenues
OPERATING GROUPS
Communication & High Tech
$751,366
$809,447
(7)%
-
26%
Financial Services
662,639
706,139
(6)
-
23
Government
323,687
237,794
36
-
11
Products
646,975
642,423
1
-
22
Resources
525,431
473,994
11
-
18
Other
3,191
11,901
(73)
-
0
TOTAL Net Revenues
2,913,289
2,881,698
1
-
100
Reimbursements
496,813
502,361
(1)
-
-
TOTAL REVENUES
$3,410,102
$3,384,059
1
-
-
GEOGRAPHY
Americas
1,470,726
1,563,973
(6)
(5)
51
EMEA
1,264,846
1,124,827
12
16
43
Asia Pacific
177,717
192,898
(8)
0
6
TOTAL Net Revenues
2,913,289
2,881,698
1
3
100
Reimbursements
496,813
502,361
(1)
-
-
TOTAL REVENUES
$ 3,410,102
$ 3,384,059
1
-
-
Six Months Ended
February 28,
2002 2001% increase/
(decrease) US$% increase/
(decrease) Local
currency% of Total
2002 Net
Revenues
OPERATING GROUPS
Communication & High Tech
$ 1,494,581
$ 1,674,317
(11)%
-
25%
Financial Services
1,379,346
1,464,702
(6)
-
24
Government
660,206
450,897
46
-
11
Products
1,296,804
1,174,827
10
-
22
Resources
1,066,339
934,744
14
-
18
Other
4,643
13,509
(66)
-
0
TOTAL Net Revenues
5,901,919
5,712,996
3
-
100
Reimbursements
916,693
909,355
1
-
-
TOTAL REVENUES
$ 6,818,612
$ 6,622,351
3 %
-
-
GEOGRAPHY
Americas
2,912,064
3,115,064
(7)
(5)
49
EMEA
2,591,292
2,180,761
19
19
44
Asia Pacific
398,563
417,171
(4)
3
7
TOTAL Net Revenues
5,901,919
5,712,996
3
5
100
Reimbursements
916,693
909,355
1
-
-
TOTAL REVENUES
$ 6,818,612
$ 6,622,351
3 %
-
-
CONSOLIDATED INCOME STATEMENT
COMBINED PRO FORMA INCOME STATEMENT
For the Three Months Ended February 28, 2002 and 2001
(unaudited)
(In thousands of U.S. dollars except share data)
Consolidated
Income Statement 2002Combined Pro forma
Income Statement 2001 (1)
% of Net Revenues
% of Net Revenues
REVENUES:
Revenues before reimbursements (Net revenues)
$ 2,913,289
100%
$ 2,881,698
100%
Reimbursements
496,813
17
502,361
17
Revenues
3,410,102
117
3,384,059
117
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable
1,708,108
59
1,791,484
62
Reimbursable expenses
496,813
17
502,361
17
Cost of services
2,204,921
76
2,293,845
80
Sales and marketing
398,900
14
345,160
12
General and administrative costs
418,002
14
391,860
14
Total operating expenses
3,021,823
104
3,030,865
105
OPERATING INCOME
388,279
13
353,194
12
Gain (loss) on investments, net
(210,951)
(7)
(29,945)
(1)
Interest income
9,255
0
19,846
1
Interest expense
(13,774)
0
(10,680)
0
Other income (expense)
9,689
0
16,838
1
Equity in losses of affiliates
(12,664)
0
(21,220)
(1)
INCOME BEFORE TAXES
169,834
6
328,033
11
Provision for taxes
145,057
5
129,568
4
INCOME BEFORE MINORITY INTEREST (2)
24,777
1%
198,465
7%
Minority interest
(14,166)
0
(117,572)
(4)
NET INCOME
10,611
0
80,893
3
EARNINGS PER SHARE:
-Basic
$0.03
$0.20
-Diluted
$0.02
$0.20
ADJUSTED TO EXCLUDE GAIN (LOSS) ON INVESTMENTS, NET
INCOME BEFORE MINORITY INTEREST AS REPORTED
$24,777
$198,465
Add Back: Gain (loss) on investments, net of tax impact
(211,350)
(17,373)
ADJUSTED INCOME BEFORE MINORITY INTEREST
236,127
215,838
ADJUSTED EARNINGS PER SHARE:
-Basic
$0.24
$0.21
-Diluted
$0.23
$0.21
WEIGHTED AVERAGE SHARES:
-Basic
409,576,609
412,705,954
-Diluted
1,035,794,758
1,008,163,290
CONSOLIDATED INCOME STATEMENT
COMBINED PRO FORMA INCOME STATEMENT
For the Six Months Ended February 28, 2002 and 2001
(unaudited)
(In thousands of U.S. dollars except share data)
Consolidated
Income Statement 2002Combined Pro forma
Income Statement 2001 (1)
% of Net Revenues
% of Net Revenues
REVENUES:
Revenues before reimbursements (Net revenues)
$5,901,919
100%
$5,712,996
100%
Reimbursements
916,693
16
909,355
16
Revenues
6,818,612
116
6,622,351
116
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable
3,514,289
60
3,502,074
61
Reimbursable expenses
916,693
16
909,355
16
Cost of services
4,430,982
75
4,411,429
77
Sales and marketing
759,135
13
671,978
12
General and administrative costs
825,959
14
797,337
14
Total operating expenses
6,016,076
102
5,880,744
103
OPERATING INCOME
802,536
14
741,607
13
Gain (loss) on investments, net
(305,688)
(5)
189,159
3
Interest income
24,040
0
42,395
1
Interest expense
(23,544)
0
(20,110)
0
Other income (expense)
1,756
0
23,513
0
Equity in losses of affiliates
(6,463)
0
(41,661)
(1)
INCOME BEFORE TAXES
492,637
8
934,903
16
Provision for taxes
267,722
5
373,961
7
INCOME BEFORE MINORITY INTEREST (2)
224,915
4
560,942
10
Minority interest
(132,628)
(2)
(331,572)
(6)
NET INCOME
92,287
2
229,370
4
EARNINGS PER SHARE:
-Basic
$0.23
$0.56
-Diluted
$0.22
$0.56
ADJUSTED TO EXCLUDE GAIN (LOSS) ON INVESTMENTS, NET
INCOME BEFORE MINORITY INTEREST AS REPORTED
$224,915
$560,942
Add Back: Gain (loss) on investments, net of tax impact
(269,387)
113,495
ADJUSTED INCOME BEFORE MINORITY INTEREST
494,302
447,447
ADJUSTED EARNINGS PER SHARE:
-Basic
$0.50
$0.44
-Diluted
$0.48
$0.44
WEIGHTED AVERAGE SHARES:
-Basic
410,027,002
412,705,954
-Diluted
1,027,557,818
1,008,163,290
NOTES TO CONSOLIDATED AND COMBINED PRO FORMA INCOME STATEMENTS
(All figures in thousands of U.S. dollars)
Pro forma results for fiscal 2001 reflect adjustments to (1) eliminate the effects of one-time events directly attributable to our transition to a corporate structure and our initial public offering and related transactions and (2) present results as if our transition to a corporate structure had occurred on September 1, 2000. One-time items eliminated include reorganization costs of $8,000 for the three months ended February 28, 2001 and $13,000 for the six months ended February 28, 2001 relating to our transition to a corporate structure, rebranding costs of $151,000 for the three months ended February 28, 2001 and $176,000 for the six months ended February 28, 2001 to rename the organization, and income of $188,000 for the six months ended February 28, 2001 due to the adoption of SFAS 133. Adjustments to reflect the transition to a corporate structure include $329,000 for the three months ended February 28, 2001 and $810,000 for the six months ended February 28, 2001 of operating expenses for partner compensation and $5,000 for the three months ended February 28, 2001 and $10,000 for the six months ended February 28, 2001 of interest expense related to retirement benefits payable to the partners.
Provision for taxes has been adjusted to include the tax effect on the pro forma adjustments and to reflect an estimated corporate tax expense to present results on a corporate basis. Minority interest has been adjusted as if the minority had existed for the three months ended February 28, 2001 and six months ended February 28, 2001. Minority interest and earnings per Class A share are based on the assumption that shares and share equivalents outstanding as of August 31, 2001, were outstanding for the entire fiscal year ended August 31, 2001.
Additional information is provided in Accenture’s filings with the Securities and Exchange Commission.
CONSOLIDATED BALANCE SHEETS
August 31, 2001 and February 28, 2002
(In thousands of U.S. dollars)
August 31, 2001
February 28, 2002
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$1,880,083
$1,131,431
Receivables from clients
1,498,812
1,385,721
Unbilled services
731,802
923,461
Other current assets
468,940
418,442
Total current assets
4,579,637
3,859,055
NON-CURRENT ASSETS:
Investments
324,139
109,170
Property and equipment, net
822,318
747,197
Other non-current assets
335,262
483,648
Total non-current assets
1,481,719
1,340,015
TOTAL ASSETS
6,061,356
5,199,070
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt
190,669
160,659
Accounts payable
371,794
409,678
Deferred revenues
810,043
508,962
Accrued payroll and related benefits
1,050,385
1,268,154
Other accrued liabilities
1,755,929
659,933
Total current liabilities
4,178,820
3,007,386
NON-CURRENT LIABILITIES:
Long-term debt
1,090
4,263
Other non-current liabilities
1,191,332
1,358,062
Total non-current liabilities
1,192,422
1,362,325
MINORITY INTEREST
407,926
567,642
EQUITY:
Shareholders’ equity
282,188
261,717
Total equity
282,188
261,717
TOTAL LIABILITIES AND EQUITY
$6,061,356
$5,199,070