Accenture Reports Third-Quarter Results

NEW YORK; July 12, 2002 – Accenture (NYSE: ACN) today reported results for the third quarter of fiscal 2002, ended May 31, 2002.

Revenues before reimbursements ("net revenues") for the third quarter were $2.98 billion. This represents an increase of 1 percent in US dollars and 3 percent in local currency over the third quarter of fiscal 2001. Operating income for the quarter was $435 million, or 14.6 percent of net revenues. Operating cash flow for the quarter was $291 million.

Income before minority interest for the third quarter was $274 million, compared to $262 million on a pro forma basis, adjusted to exclude losses on investments, in the same quarter of fiscal 2001. Diluted earnings per share were $0.27, compared to $0.26 on an adjusted pro forma basis in the same quarter of fiscal 2001 and exceeding analysts’ expectations of $0.26.

Net income for the third quarter was $114 million, compared to $105 million on a pro forma basis in the same quarter last year.

“Given what continues to be a challenging economic situation, we are pleased that our clients continue to call on the talents of our people to design and bring about the changes necessary to improve their business performance,” said Joe W. Forehand, Accenture chairman and CEO. “Our company remains financially strong, and we continue to focus on controlling costs and investing in our business for future growth.”

As stated in the third-quarter Form 10-Q it plans to file with the Securities and Exchange Commission on July 15, the company said, “In response to the continued difficult economic conditions, we increased our focus to further reduce our cost structure. As a result of expense management efforts, including executive level workforce actions, we reduced previously recognized annual bonus expense and recorded modest amounts of severance and other costs. The net effect of these actions was a decrease in operating expenses of approximately $30 million.”

The company expects diluted earnings per share for the fourth quarter of fiscal 2002 to be approximately $0.16, consistent with the analysts’ consensus estimate. For the full fiscal year 2002, Accenture expects diluted earnings per share to be $0.65 on a reported basis, or $0.91 when adjusted to exclude net gains or losses on investments. Accenture also said that it is comfortable with earnings estimates of $1.05 for fiscal year 2003.

Strong growth in two of Accenture’s five operating groups contributed to its solid third-quarter results. Net revenues for the Government and Communications & High Tech operating groups were $328 million and $883 million, respectively, increases of 19 percent and 8 percent, respectively, over the third quarter of fiscal 2001. The improvement in Communications & High Tech reflects the benefit of large transformational outsourcing contracts booked during the first half of fiscal 2002.

Third-quarter net revenues for the Products and Resources operating groups were $612 million and $507 million, respectively, representing in each case an increase of 3 percent over the third quarter of fiscal 2001. The Financial Services operating group reported net revenues of $646 million, down 16 percent from third-quarter fiscal 2001 levels. The decrease in the Financial Services operating group’s revenues reflects the continued weakness of the capital markets and banking industries.

Net revenues in the Americas region were $1.53 billion, representing flat growth in US dollars and 1 percent growth in local currency over the third quarter of fiscal 2001. Net revenues in Accenture’s Europe, Middle East and Africa (EMEA) geographic region were $1.26 billion, an increase of 4 percent in US dollars and 6 percent in local currency. Net revenues in the Asia Pacific region were $190 million, a decrease of 8 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 third-quarter fiscal 2002 financial results. To participate, please dial +1 (888) 276-0010 [+1 612-333-4911 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.

A replay of the conference call will be available at www.accenture.com, or by dialing +1 800-475-6701 [+1 320-365-3844 outside the United States, Puerto Rico and Canada] and entering the passcode 642706 from 1:15 p.m. EDT Friday, July 12 through 11:59 p.m. EDT Friday, July 26.

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.

NOTES TO CONSOLIDATED AND COMBINED PRO FORMA INCOME STATEMENTS

1. (1) For the three months and nine months ended May 31, 2001 Partnership Income (Loss) Before Partner Distributions, as reported under generally accepted accounting principles, was ($190,795) and $1,427,185, respectively. Earnings per share were not presented because Accenture operated as a series of related partnerships and corporations under the control of the partners.
   
   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 $495,000 for the three months ended May 31, 2001 and $508,000 for the nine months ended May 31, 2001 relating to our transition to a corporate structure, rebranding costs of $93,000 for the three months ended May 31, 2001 and $269,000 for the nine months ended May 31, 2001 to rename the organization, and income of $188,000 for the nine months ended May 31, 2001 due to the adoption of SFAS 133. Adjustments to reflect the transition to a corporate structure include $249,000 for the three months ended May 31, 2001 and $1,059,000 for the nine months ended May 31, 2001 of operating expenses for partner compensation and $5,000 for the three months ended May 31, 2001 and $15,000 for the nine months ended May 31, 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 May 31, 2001 and nine months ended May 31, 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.
   
   
2. (2) Income before minority interest represents the consolidated income of Accenture Ltd earned through its subsidiary, Accenture SCA, without regard to Accenture Ltd’s ownership percentage in Accenture SCA. The minority interest expense eliminates the income earned by the partners who have an equity ownership directly in Accenture SCA. The resulting net income of Accenture Ltd represents the income attributable to the shareholders of Accenture Ltd.

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