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| [June 26, 2008] |
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Accenture Reports Strong Third-Quarter Fiscal 2008 Financial Results, With Record Revenues and EPS
NEW YORK --(Business Wire)-- Accenture (NYSE: ACN) reported strong financial results for the third quarter of fiscal 2008, ended May 31, with net revenues of $6.10 billion, a year-over-year increase of 20 percent in U.S. dollars and 12 percent in local currency and the highest quarterly net revenues in the company's history. Consulting and outsourcing revenues were both quarterly records, growing by double digits in U.S. dollars and local currency.
Earnings per share were $0.74, the highest for any quarter in the company's history and an increase of 36 percent over the third quarter of fiscal 2007, driven largely by strong growth in revenue and operating income. In addition, the company has again raised its outlook for earnings per share for the full fiscal year 2008, to a range of $2.63 to $2.65 from its previously guided range of $2.55 to $2.60.
New bookings were $6.77 billion, with record quarterly consulting bookings of $3.98 billion.
The company grew operating income by 27 percent and expanded its operating margin by 70 basis points over the third quarter last year.
William D. Green, Accenture's chairman & CEO, said, "Our excellent results in the third quarter include our highest-ever quarterly revenues and earnings per share. In addition, our disciplined approach to managing our diverse and global business enabled us to expand our operating margin, and the solid bookings we achieved demonstrate continued strong global demand for our services, even in markets experiencing difficult economic conditions.
"We continue to benefit from our long-term relationships with our clients, who seek our help in entering new markets, lowering the cost of doing business and managing increased levels of risk as they work to achieve and maintain high performance. To ensure that we continue to meet and anticipate our clients' needs, we are investing in technological innovation and expanding our skills and capabilities through both organic growth and tactical acquisitions. We see strong momentum in our business as we look to the rest of the fiscal year, and we remain focused on delivering value for our clients, and in turn, our shareholders."
Financial Review
Revenues before reimbursements ("net revenues") for the third quarter of fiscal 2008 were $6.10 billion, compared with $5.08 billion for the third quarter of fiscal 2007, an increase of 20 percent in U.S. dollars and 12 percent in local currency.
-- Consulting net revenues were $3.70 billion, an increase of 20 percent in U.S. dollars and 12 percent in local currency over the third quarter last year.
-- Outsourcing net revenues were $2.40 billion, also an increase of 20 percent in U.S. dollars and 12 percent in local currency over the same period last year.
Diluted EPS for the third quarter were $0.74, compared with $0.54 in the third quarter last year, an increase of 36 percent, driven largely by strong growth in revenue and operating income and, to a lesser extent, by favorable foreign-exchange rates, a lower share count and a lower tax rate compared with the third quarter last year.
Operating income increased 27 percent, to $862 million, or 14.1 percent of net revenues, compared with $682 million, or 13.4 percent of net revenues, in the third quarter last year.
Gross margin (gross profit as a percentage of net revenues) was 31.5 percent, compared with 31.7 percent in the third quarter of fiscal 2007.
Selling, general and administrative expenses were $1.06 billion, or 17.3 percent of net revenues, compared with $921 million, or 18.1 percent of net revenues, in the third quarter last year. The reduction as a percentage of net revenues was primarily due to strong revenue growth and the company's management of general and administrative costs to a growth rate lower than that of its net revenues.
The company's effective tax rate for the third quarter of fiscal 2008 was 30.8 percent, compared with 33.3 percent in the third quarter last year. The reduction in the effective tax rate compared with the third quarter last year was due primarily to changes in the geographic distribution of income.
Income before minority interest for the third quarter was $608 million, compared with $473 million for the same period of fiscal 2007, an increase of 28 percent.
For the three months ended May 31, 2008, operating cash flow was $1,080 million; property and equipment additions were $66 million; and free cash flow, defined as operating cash flow net of property and equipment additions, was $1,014 million.
Accenture's total cash balance at May 31, 2008 was $3.33 billion, compared with $3.31 billion at Aug. 31, 2007. Cash combined with $39 million of fixed-income securities classified as investments on the company's balance sheet was $3.37 billion at May 31, 2008, compared with $3.61 billion at Aug. 31, 2007. Total debt at May 31, 2008 was $7 million.
New Bookings
New bookings for the third quarter of fiscal 2008 were $6.77 billion.
-- Consulting bookings were $3.98 billion, or 59 percent of new bookings.
-- Outsourcing accounted for $2.79 billion, or 41 percent, of new bookings.
Net Revenues by Operating Group
Net revenues for Accenture's five operating groups were as follows:
-- Communications & High Tech: $1,388 million, compared with $1,201 million for the third quarter of fiscal 2007, an increase of 16 percent in U.S. dollars and 7 percent in local currency.
-- Financial Services: $1,303 million, compared with $1,108 million for the same period last year, an increase of 18 percent in U.S. dollars and 8 percent in local currency.
-- Products: $1,611 million, compared with $1,280 million for the year-ago period, an increase of 26 percent in U.S. dollars and 19 percent in local currency.
-- Public Service: $756 million, compared with $638 million for the year-ago period, an increase of 19 percent in U.S. dollars and 13 percent in local currency.
-- Resources: $1,038 million, compared with $850 million for the same period last year, an increase of 22 percent in U.S. dollars and 13 percent in local currency.
Net Revenues by Geographic Region
Net revenues by geographic region were as follows:
-- Americas: $2,527 million, compared with $2,157 million for the third quarter of fiscal 2007, an increase of 17 percent in U.S. dollars and 14 percent in local currency.
-- Europe, Middle East and Africa (EMEA): $3,032 million, compared with $2,468 million for the third quarter of fiscal 2007, an increase of 23 percent in U.S. dollars and 11 percent in local currency.
-- Asia Pacific: $543 million, compared with $457 million for the year-ago period, an increase of 19 percent in U.S. dollars and 6 percent in local currency.
Share Repurchase Activity
During the third quarter of fiscal 2008, Accenture repurchased or redeemed 13.1 million shares for a total of $484 million. At May 31, 2008, Accenture had $3.1 billion of share repurchase authority remaining.
Business Outlook
Fourth Quarter Fiscal 2008
Accenture expects net revenues for the fourth quarter of fiscal 2008 to be in the range of $5.9 billion to $6.1 billion, based on a foreign-exchange uplift of 7 percent to 8 percent.
Fiscal Year 2008
For the full fiscal year 2008, Accenture now expects net revenue growth to be toward the upper end of its previously guided range of 9 percent to 12 percent in local currency. The company has increased its outlook for diluted EPS for the full fiscal year to a range of $2.63 to $2.65 from its previously guided range of $2.55 to $2.60.
The company now expects operating cash flow in the range of $2.58 billion to $2.78 billion; property and equipment additions to be $380 million; and free cash flow in the range of $2.2 billion to $2.4 billion, an increase of $200 million over its previously guided range. The company continues to expect its annual effective tax rate to be in the range of 28 percent to 30 percent.
Given new bookings to date and additional bookings expected in the fourth quarter, Accenture now expects new bookings for fiscal 2008 to be in the range of $25 billion to $26 billion.
Conference Call and Webcast Details
Accenture will host a conference call at 4:30 p.m. EDT today to discuss its third-quarter 2008 financial results. To participate, please dial +1 (800) 288-8968 (+1 (612) 332-0632 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 and podcast of the conference call will be available online at www.accenture.com for approximately two weeks beginning at 7:00 p.m. EDT Thursday, June 26. The replay will also be available via telephone by dialing +1 (800) 475-6701 (+1 (320) 365-3844 outside the United States, Puerto Rico and Canada) and entering access code 930162 from 7:00 p.m. EDT Thursday, June 26 through 11:59 p.m. EDT Thursday, July 10, 2008.
About Accenture
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 more than 180,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007. Its home page is www.accenture.com.
Forward-Looking Statements
Except for the historical information and discussions contained herein, statements in this news release 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 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 results of operations could be affected by economic and political conditions and the effects of these conditions on our clients' businesses and levels of business activity; our work with government clients exposes us to additional risks in the government contracting environment; clients may not be satisfied with our services; our business could be negatively affected by legal liability that results from our providing solutions or services; liabilities could arise if our subcontractors or other third parties cannot deliver their project contributions on time or at all; 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 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 business may be adversely affected if we cannot manage the organizational challenges associated with the size and expansion of our company; tax legislation or negative publicity related to Bermuda companies could adversely affect us; consolidation in the industries that we serve could adversely affect our business; the share price of Accenture Ltd Class A common shares could be adversely affected by sales, or the anticipation of future sales, of Class A common shares held by our employees and former employees; 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 and other documents filed with or furnished to the Securities and Exchange Commission. Statements in this press release speak only as of the date they were made, and Accenture undertakes no duty to update any forward-looking statements made in this news release or to conform such statements to actual results or changes in Accenture's expectations.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Accenture's management believes providing investors with this information gives additional insights into Accenture's results of operations. While Accenture's management believes that these non-GAAP financial measures are useful in evaluating Accenture's operations, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.
ACCENTURE LTD
CONSOLIDATED INCOME STATEMENTS
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
For the Three Months Ended May 31,
-----------------------------------------------
% of Net % of Net
2008 Revenues 2007 Revenues
------------- --------- ------------- ---------
REVENUES:
Revenues before
reimbursements (Net
revenues) $ 6,102,059 100% $ 5,081,804 100%
Reimbursements 491,142 461,880
------------- -------------
Revenues 6,593,201 5,543,684
OPERATING EXPENSES:
Cost of services:
Cost of services
before
reimbursable
expenses 4,179,378 68.5% 3,471,962 68.3%
Reimbursable
expenses 491,142 461,880
------------- -------------
Cost of services 4,670,520 3,933,842
Sales and marketing 605,582 9.9% 499,529 9.8%
General and
administrative costs 450,590 7.4% 421,946 8.3%
Reorganization costs,
net 4,355 6,838
------------- -------------
Total operating
expenses 5,731,047 4,862,155
------------- -------------
OPERATING INCOME 862,154 14.1% 681,529 13.4%
Gain on investments,
net 238 10,146
Interest income 23,756 40,641
Interest expense (4,450) (6,841)
Other expense, net (3,877) (16,090)
------------- -------------
INCOME BEFORE INCOME
TAXES 877,821 14.4% 709,385 14.0%
Provision for income
taxes 270,250 235,968
------------- -------------
INCOME BEFORE MINORITY
INTEREST 607,571 10.0% 473,417 9.3%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (133,930) (121,925)
Minority interest -
other (1) (4,552) (6,092)
------------- -------------
NET INCOME $ 469,089 7.7% $ 345,400 6.8%
============= =============
CALCULATION OF EARNINGS PER SHARE:
Net income $ 469,089 $ 345,400
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 133,930 121,925
------------- -------------
Net income for diluted
earnings per share
calculation $ 603,019 $ 467,325
============= =============
EARNINGS PER SHARE:
- Basic $ 0.77 $ 0.57
- Diluted $ 0.74 $ 0.54
WEIGHTED AVERAGE
SHARES:
- Basic 606,513,399 607,421,151
- Diluted 816,421,753 859,715,775
Cash dividends per
share $ - $ -
For the Nine Months Ended May 31,
-----------------------------------------------
% of Net % of Net
2008 Revenues 2007 Revenues
------------- --------- ------------- ---------
REVENUES:
Revenues before
reimbursements
(Net revenues) $ 17,387,286 100% $ 14,585,730 100%
Reimbursements 1,365,495 1,293,666
------------- -------------
Revenues 18,752,781 15,879,396
OPERATING EXPENSES:
Cost of services:
Cost of services
before
reimbursable
expenses 12,106,478 69.6% 10,138,578 69.5%
Reimbursable
expenses 1,365,495 1,293,666
------------- -------------
Cost of
services 13,471,973 11,432,244
Sales and marketing 1,665,283 9.6% 1,370,752 9.4%
General and
administrative
costs 1,370,426 7.9% 1,206,654 8.3%
Reorganization
costs, net 18,489 19,233
------------- -------------
Total operating
expenses 16,526,171 14,028,883
------------- -------------
OPERATING INCOME 2,226,610 12.8% 1,850,513 12.7%
Gain on investments,
net 6,512 13,033
Interest income 85,646 111,896
Interest expense (17,532) (18,825)
Other expense, net (348) (21,989)
------------- -------------
INCOME BEFORE INCOME
TAXES 2,300,888 13.2% 1,934,628 13.3%
Provision for income
taxes 653,963 642,818
------------- -------------
INCOME BEFORE
MINORITY INTEREST 1,646,925 9.5% 1,291,810 8.9%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (377,593) (349,049)
Minority interest -
other (1) (12,401) (16,407)
------------- -------------
NET INCOME $ 1,256,931 7.2% $ 926,354 6.4%
============= =============
CALCULATION OF
EARNINGS PER SHARE:
Net income $ 1,256,931 $ 926,354
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 377,593 349,049
------------- -------------
Net income for
diluted earnings per
share calculation $ 1,634,524 $ 1,275,403
============= =============
EARNINGS PER SHARE:
- Basic $ 2.06 $ 1.54
- Diluted $ 1.98 $ 1.47
WEIGHTED AVERAGE
SHARES:
- Basic 608,888,487 603,403,840
- Diluted 827,191,207 867,333,374
Cash dividends per
share $ 0.42 $ 0.35
-------------------------------------------------------[FEED_CRLF
](1) Minority interest - other is comprised primarily of minority
interest attributable to the minority shareholders of Avanade, Inc.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada Holdings
Inc. exchangeable shares, respectively, for Accenture Ltd Class A
common shares on a one-for-one basis.
ACCENTURE LTD
SUMMARY OF REVENUES
(In thousands of U.S. dollars)
(Unaudited)
Percent
For the Three Months of Fiscal
Ended Percent 2008
----------------------- Percent Increase Quarterly
May 31, May 31, Increase Local Net
2008 2007 US$ Currency Revenues
----------- ----------- -------- -------- ---------
OPERATING GROUPS
Communications &
High Tech $ 1,387,790 $ 1,200,761 16% 7% 23%
Financial
Services 1,302,942 1,107,506 18% 8% 21%
Products 1,611,009 1,279,838 26% 19% 27%
Public Service 756,348 638,058 19% 13% 12%
Resources 1,037,785 849,673 22% 13% 17%
Other 6,185 5,968 n/m n/m -
----------- ----------- ---------
TOTAL Net Revenues 6,102,059 5,081,804 20% 12% 100%
=========
Reimbursements 491,142 461,880 6%
----------- -----------
TOTAL REVENUES $ 6,593,201 $ 5,543,684 19%
=========== ===========
GEOGRAPHY
Americas $ 2,527,067 $ 2,157,054 17% 14% 41%
EMEA 3,031,552 2,467,683 23% 11% 50%
Asia Pacific 543,440 457,067 19% 6% 9%
----------- ----------- ---------
TOTAL Net Revenues $ 6,102,059 $ 5,081,804 20% 12% 100%
=========== =========== =========
TYPE OF WORK
Consulting $ 3,701,141 $ 3,075,681 20% 12% 61%
Outsourcing 2,400,918 2,006,123 20% 12% 39%
----------- ----------- ---------
TOTAL Net Revenues $ 6,102,059 $ 5,081,804 20% 12% 100%
=========== =========== =========
Percent
For the Nine Months of Fiscal
Ended Percent 2008
----------------------- Percent Increase Total
May 31, May 31, Increase Local Net
2008 2007 US$ Currency Revenues
----------- ----------- -------- -------- ---------
OPERATING GROUPS
Communications &
High Tech $ 4,038,933 $ 3,383,315 19% 11% 23%
Financial
Services 3,756,135 3,225,420 16% 8% 22%
Products 4,522,867 3,639,600 24% 18% 26%
Public Service 2,139,830 1,920,950 11% 6% 12%
Resources 2,912,342 2,400,083 21% 13% 17%
Other 17,179 16,362 n/m n/m -
----------- ----------- ---------
TOTAL Net Revenues 17,387,286 14,585,730 19% 12% 100%
=========
Reimbursements 1,365,495 1,293,666 6%
----------- -----------
TOTAL REVENUES $18,752,781 $15,879,396 18%
=========== ===========
GEOGRAPHY
Americas $ 7,169,655 $ 6,290,016 14% 11% 41%
EMEA 8,705,710 7,104,116 23% 12% 50%
Asia Pacific 1,511,921 1,191,598 27% 16% 9%
----------- ----------- ---------
TOTAL Net Revenues $17,387,286 $14,585,730 19% 12% 100%
=========== =========== =========
TYPE OF WORK
Consulting $10,511,188 $ 8,818,641 19% 11% 60%
Outsourcing 6,876,098 5,767,089 19% 12% 40%
----------- ----------- ---------
TOTAL Net Revenues $17,387,286 $14,585,730 19% 12% 100%
=========== =========== =========
------------------
n/m = not meaningful
ACCENTURE LTD
OPERATING INCOME BY OPERATING GROUP (OG)
(In thousands of U.S. dollars)
(Unaudited)
For the Three Months Ended
-----------------------------------------
May 31, 2008 May 31, 2007
-------------------- --------------------
Percent Percent
of of
Operating OG Net Operating OG Net Increase
OPERATING GROUPS Income Revenues Income Revenues (Decrease)
---------- --------- ---------- --------- -----------
Communications &
High Tech $ 161,332 12% $ 168,021 14% $ (6,689)
Financial
Services 189,690 15% 106,144 10% 83,546
Products 253,070 16% 192,813 15% 60,257
Public Service 98,536 13% 74,408 12% 24,128
Resources 159,526 15% 140,143 16% 19,383
---------- ---------- -----------
Total $ 862,154 14.1% $ 681,529 13.4% $ 180,625
========== ========== ===========
For the Nine Months Ended
-----------------------------------------
May 31, 2008 May 31, 2007
-------------------- --------------------
Percent Percent
of of
Operating OG Net Operating OG Net Increase
OPERATING GROUPS Income Revenues Income Revenues (Decrease)
---------- --------- ---------- --------- -----------
Communications &
High Tech $ 474,290 12% $ 416,022 12% $ 58,268
Financial
Services 512,006 14% 343,845 11% 168,161
Products 634,001 14% 540,223 15% 93,778
Public Service 189,357 9% 195,399 10% (6,042)
Resources 416,956 14% 355,024 15% 61,932
---------- ---------- -----------
Total $2,226,610 12.8% $1,850,513 12.7% $ 376,097
========== ========== ===========
ACCENTURE LTD
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
August 31,
May 31, 2008 2007
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,326,423 $ 3,314,396
Short-term investments 28,225 231,278
Receivables from clients, net 2,838,388 2,409,299
Unbilled services, net 1,619,980 1,290,035
Other current assets 800,534 726,170
------------ ------------
Total current assets 8,613,550 7,971,178
------------ ------------
NON-CURRENT ASSETS:
Unbilled services, net 52,544 63,995
Investments 25,085 81,935
Property and equipment, net 819,054 808,069
Other non-current assets 2,407,172 1,821,985
------------ ------------
Total non-current assets 3,303,855 2,775,984
------------ ------------
TOTAL ASSETS $ 11,917,405 $10,747,162
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank
borrowings $ 4,232 $ 23,795
Accounts payable 1,008,382 985,071
Deferred revenues 1,851,931 1,785,286
Accrued payroll and related benefits 2,550,400 2,274,098
Other accrued liabilities 1,131,138 1,894,366
------------ ------------
Total current liabilities 6,546,083 6,962,616
------------ ------------
NON-CURRENT LIABILITIES:
Long-term debt 2,490 2,565
Other non-current liabilities 2,180,690 978,463
------------ ------------
Total non-current liabilities 2,183,180 981,028
------------ ------------
MINORITY INTEREST 723,828 740,186
SHAREHOLDERS' EQUITY 2,464,314 2,063,332
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,917,405 $10,747,162
============ ============
ACCENTURE LTD
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands of U.S. dollars)
(Unaudited)
For the Three Months
Ended For the Nine Months Ended
----------------------- -------------------------
May 31, May 31,
2008 2007 May 31, 2008 May 31, 2007
----------- ----------- ------------ ------------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $ 469,089 $ 345,400 $ 1,256,931 $ 926,354
Depreciation,
amortization and
asset
impairments 118,251 79,482 354,464 328,928
Share-based
compensation
expense 105,190 82,234 282,111 228,858
Minority interest 138,482 128,017 389,994 365,456
Change in assets
and liabilities
/ Other, net 249,033 342,385 (510,932) 3,928
----------- ----------- ------------ ------------
Net cash
provided by
operating
activities 1,080,045 977,518 1,772,568 1,853,524
----------- ----------- ------------ ------------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchases of
property and
equipment (66,316) (82,007) (233,634) (225,051)
Purchases of
businesses and
investments, net
of cash acquired (46,850) (27,949) (244,468) (33,616)
Other investing,
net 91,822 (71,575) 279,952 142,698
----------- ----------- ------------ ------------
Net cash used
in operating
activities (21,344) (181,531) (198,150) (115,969)
----------- ----------- ------------ ------------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Proceeds from
issuance of common
shares 160,818 146,912 362,986 429,750
Purchases of common
shares (483,973) (835,182) (1,652,390) (1,906,929)
Cash dividends paid - - (333,685) (293,059)
Other financing,
net (10,488) 2,266 (14,073) (9,019)
----------- ----------- ------------ ------------
Net cash used in
financing
activities (333,643) (686,004) (1,637,162) (1,779,257)
Effect of exchange
rate changes on
cash and cash
equivalents 17,226 23,712 74,771 68,348
----------- ----------- ------------ ------------
NET INCREASE IN CASH
AND CASH
EQUIVALENTS 742,284 133,695 12,027 26,646
CASH AND CASH
EQUIVALENTS,
beginning of period 2,584,139 2,959,939 3,314,396 3,066,988
----------- ----------- ------------ ------------
CASH AND CASH
EQUIVALENTS, end of
period $3,326,423 $3,093,634 $ 3,326,423 $ 3,093,634
=========== =========== ============ ============
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