##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
   FORM 10-Q (Mark One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2004ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM  TO
 Commission File Number: 001-49713   ACCENTURE SCA (Exact name of Registrant as specified in its charter)
 Luxembourg
    
    98-0351796(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 1 rue Guillaume Kroll
L-1882 Luxembourg
(Address of principal executive offices) (352) 26 42 35 00
(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 þ No o Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act.) Yes þ No o The number of shares of the Registrants Class I common shares, par value $0.0000225 per
share, outstanding as of December 31, 2004 was 888,769,023 (which number does not include 82,524,431 issued shares held by subsidiaries of the Registrant).




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##### 



ACCENTURE SCA INDEX PagePart I.
    
    Financial Information
    
    
    3Item 1.
    
    Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets as of November 30, 2004 and August 31, 2004
    
    
    3Consolidated Income Statements for the three months ended November 30, 2004 and 2003
    
    
    4Consolidated Shareholders Equity and Comprehensive Income Statements for the three months ended November 30, 2004
    
    
    5Consolidated Cash Flows Statements for the three months ended November 30, 2004 and 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    24Part II.
    
    Other Information
    
    
    25Item 1.
    
    Legal Proceedings
    
    
    25Item 2.
    
    Unregistered Sales of Equity
Securities and Use of Proceeds
    
    
    25Item 3.
    
    Defaults under Senior Securities
    
    
    25Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    25Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    26Signatures
 2




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##### 



PART I  FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ACCENTURE SCA CONSOLIDATED BALANCE SHEETS
November 30, 2004 and August 31, 2004
(In thousands of U.S. dollars, except share amounts) November 30, 2004
    
    August 31,(Unaudited)
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,273,522
    
    
    $
    2,552,958Short-term investments
    
    
    591,714
    
    
    
    285,288Receivables
from clients, net of allowances of $41,794 and $40,687
    
    
    1,825,284
    
    
    
    1,662,211Unbilled services
    
    
    1,489,075
    
    
    
    1,049,870Deferred income taxes, net
    
    
    109,201
    
    
    
    105,636Other current assets
    
    
    624,692
    
    
    
    556,053Total current assets
    
    
    6,913,488
    
    
    
    6,212,016NON-CURRENT ASSETS:Unbilled services
    
    
    260,062
    
    
    
    211,705Investments
    
    
    392,595
    
    
    
    340,121Property and equipment, net of accumulated depreciation of $1,276,356 and $1,219,500
    
    
    656,526
    
    
    
    643,946Goodwill
    
    
    230,109
    
    
    
    214,482Deferred income taxes, net
    
    
    317,278
    
    
    
    309,045Other non-current assets
    
    
    142,163
    
    
    
    136,991Total non-current assets
    
    
    1,998,733
    
    
    
    1,856,290TOTAL ASSETS
    
    $
    8,912,221
    
    
    $
    8,068,306LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Short-term bank borrowings
    
    $
    26,765
    
    
    $
    20,103Current portion of long-term debt
    
    
    11,725
    
    
    
    11,612Accounts payable
    
    
    733,112
    
    
    
    523,931Deferred revenues
    
    
    982,407
    
    
    
    980,461Accrued payroll and related benefits
    
    
    1,412,645
    
    
    
    1,508,126Income taxes payable
    
    
    904,203
    
    
    
    795,948Deferred income taxes, net
    
    
    47,020
    
    
    
    42,744Other accrued liabilities
    
    
    648,828
    
    
    
    610,686Total current liabilities
    
    
    4,766,705
    
    
    
    4,493,611NON-CURRENT LIABILITIES:Long-term debt
    
    
    1,508
    
    
    
    2,161Retirement obligation
    
    
    559,696
    
    
    
    532,307Deferred income taxes, net
    
    
    22,416
    
    
    
    18,769Other non-current liabilities
    
    
    697,344
    
    
    
    608,689Total non-current liabilities
    
    
    1,280,964
    
    
    
    1,161,926MINORITY INTEREST
    
    
    41,412
    
    
    
    37,679SHAREHOLDERS EQUITY:Class I common shares, par value 1.25 euros per share, 19,782,549,738 shares authorized, 753,843,192 issued as of
November 30, 2004 and August 31, 2004
    
    
    845,307
    
    
    
    845,307Class I-A common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
    
    
    5,435
    
    
    
    5,435Class I-B common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
    
    
    5,435
    
    
    
    5,435Class I-C common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding
    
    
    10,870
    
    
    
    10,870Class I-D common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding
    
    
    10,870
    
    
    
    10,870Class I-E common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding
    
    
    16,304
    
    
    
    16,304Class I-F common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding
    
    
    16,304
    
    
    
    16,304Class I-G common shares, par value 1.25 euros per share, 20,000,000 shares authorized, issued and outstanding
    
    
    21,739
    
    
    
    21,739Class I-H common shares, par value 1.25 euros per share, 25,000,000 shares authorized, issued and outstanding
    
    
    27,174
    
    
    
    27,174Class I-I common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
    
    
    5,435
    
    
    
    5,435Class I-J common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding
    
    
    5,435
    
    
    
    5,435Class I-K common shares, par value 1.25 euros per share, 16,050,000 shares authorized, issued and outstanding
    
    
    18,074
    
    
    
    18,074Class I-L common shares, par value 1.25 euros per share, 5,025,720 shares authorized, issued and outstanding
    
    
    5,540
    
    
    
    5,540Class I-M common shares, par value 1.25 euros per share, 68,626,707 shares authorized, issued and outstanding
    
    
    78,398
    
    
    
    78,398Class I-N common shares, par value 1.25 euros per share, 12,747,835 shares authorized, issued and outstanding
    
    
    18,301
    
    
    
    18,301Class II common shares, par value 1.25 euros per share, 20,000,000,000 shares authorized, 470,958,308 shares
issued and outstanding
    
    
    529,281
    
    
    
    529,281Restricted share units (related to Accenture Ltd Class A common shares), 32,397,602 and 28,278,704 units issued
and
outstanding as of November 30, 2004 and August 31, 2004, respectively
    
    
    589,049
    
    
    
    475,240Deferred compensation
    
    
    (254,145
    )
    
    
    (150,777
    )Additional paid-in capital
    
    
    2,955,637
    
    
    
    2,976,655Treasury shares, at cost, 79,060,943 and 83,869,278 Class I common shares at November 30, 2004 and August 31,
2004, respectively
    
    
    (1,794,346
    )
    
    
    (1,898,744
    )Investment in Accenture Ltd shares, at cost, 1,621,976 and 1,421,944 shares at November 30, 2004 and August 31,
2004, respectively
    
    
    (40,877
    )
    
    
    (35,697
    )Retained deficit
    
    
    (181,436
    )
    
    
    (497,729
    )Accumulated other comprehensive loss
    
    
    (70,644
    )
    
    
    (113,760
    )Total shareholders equity
    
    
    2,823,140
    
    
    
    2,375,090TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    8,912,221
    
    
    $
    8,068,306
 The accompanying notes are an integral part of these consolidated financial statements. 3




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##### 



ACCENTURE SCA CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended November 30, 2004 and 2003
(In thousands of U.S. dollars)
(Unaudited) 2004
    
    2003REVENUES:Revenues before reimbursements
    
    $
    3,730,355
    
    
    $
    3,261,585Reimbursements
    
    
    341,017
    
    
    
    312,903Revenues
    
    
    4,071,372
    
    
    
    3,574,488OPERATING EXPENSES:Cost of services:Cost of services before reimbursable expenses
    
    
    2,500,439
    
    
    
    2,150,890Reimbursable expenses
    
    
    341,017
    
    
    
    312,903Cost of services
    
    
    2,841,456
    
    
    
    2,463,793Sales and marketing
    
    
    360,943
    
    
    
    350,597General and administrative costs
    
    
    403,815
    
    
    
    339,356Reorganization costs (benefits)
    
    
    7,008
    
    
    
    (86,398
    )Total operating expenses
    
    
    3,613,222
    
    
    
    3,067,348OPERATING INCOME
    
    
    458,150
    
    
    
    507,140Gain on investments, net
    
    
    14,540
    
    
    
    498Interest income
    
    
    20,121
    
    
    
    10,423Interest expense
    
    
    (6,316
    )
    
    
    (5,751
    )Other income (expense)
    
    
    (2,327
    )
    
    
    1,526Equity in losses of affiliates
    
    
    
    
    
    
    (686
    )INCOME BEFORE INCOME TAXES
    
    
    484,168
    
    
    
    513,150Provision for income taxes
    
    
    164,617
    
    
    
    178,576INCOME BEFORE MINORITY INTEREST
    
    
    319,551
    
    
    
    344,574Minority interest
    
    
    (3,258
    )
    
    
    (2,417
    )NET INCOME
    
    $
    316,293
    
    
    $
    332,157
 The accompanying notes are an integral part of these consolidated financial statements. 4




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##### 



ACCENTURE SCA CONSOLIDATED
SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME STATEMENTS
For the Three Months Ended November 30, 2004
(In thousands of U.S. dollars and in thousands of share amounts)
(Unaudited) Class I
    
    Class II
    
    RestrictedCommon
    
    Common
    
    Share Units
    
    
    
    
    
    
    
    
    
    Treasury
    
    Investment in
    
    
    
    
    
    
    
    AccumulatedOtherCompre-Shares
    
    Shares
    
    Common Shares
    
    
    
    
    
    
    
    
    
    Shares
    
    Accenture LtdDeferred
    
    Additional
    
    
    
    
    
    

    
    RetainedNo.
    
    
    
    
    
    No.
    
    
    
    
    
    No.
    
    Compen-
    
    Paid-in
    
    
    
    
    
    No.
    
    
    
    
    
    No.
    
    
    
    Earnings
    
    hensive$
    
    Shares
    
    $
    
    Shares
    
    $
    
    Shares
    
    sation
    
    Capital
    
    $
    
    Shares
    
    $
    
    Shares
    
    
    
    (Deficit)
    
    Income (Loss)
    
    TotalBalance at August 31, 2004
    
    $
    1,090,621
    
    
    
    971,294
    
    
    $
    529,281
    
    
    
    470,958
    
    
    $
    475,240
    
    
    
    28,279
    
    
    $
    (150,777
    )
    
    $
    2,976,655
    
    
    $
    (1,898,744
    )
    
    
    (83,869
    )
    
    $
    (35,697
    )
    
    
    (1,422
    )
    
    
    
    $
    (497,729
    )
    
    $
    (113,760
    )
    
    $
    2,375,090Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,293
    
    
    
    
    
    
    
    316,293Other comprehensive income (loss):Unrealized loss on marketable securities, net of
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,877
    )
    
    
    (1,877
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,993
    
    
    
    44,993Other comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,116Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359,409Income tax benefit on stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,720Purchase of Accenture Ltd Class A common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,100
    )
    
    
    
    
    
    
    
    
    
    
    (5,180
    )
    
    
    (200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    (8,280
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,072Purchases/redemptions of Accenture SCA Class I
common shares and Canada Holdings Inc. exchangeable
shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (30,848
    )
    
    
    (1,289
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,849
    )Issuance of Class A common shares:Employee share purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,023
    )
    
    
    82,422
    
    
    
    3,586
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,399Employee stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,746
    )
    
    
    42,570
    
    
    
    2,087
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,824Restricted share units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,809
    
    
    
    4,119
    
    
    
    (121,440
    )
    
    
    (2,623
    )
    
    
    10,254
    
    
    
    424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245
    )Balance at November 30, 2004
    
    $
    1,090,621
    
    
    
    971,294
    
    
    $
    529,281
    
    
    
    470,958
    
    
    $
    589,049
    
    
    
    32,398
    
    
    $
    (254,145
    )
    
    $
    2,955,637
    
    
    $
    (1,794,346
    )
    
    
    (79,061
    )
    
    $
    (40,877
    )
    
    
    (1,622
    )
    
    
    
    $
    (181,436
    )
    
    $
    (70,644
    )
    
    $
    2,823,140
 The accompanying notes are an integral part of these consolidated financial statements. 5




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##### 



ACCENTURE SCA CONSOLIDATED CASH FLOWS STATEMENTS
For the Three Months Ended November 30, 2004 and 2003
(In thousands of U.S. dollars)
(Unaudited) 2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    316,293
    
    
    $
    332,157Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation and amortization
    
    
    52,935
    
    
    
    62,709Reorganization costs (benefits)
    
    
    7,008
    
    
    
    (86,398
    )Gains on investments, net
    
    
    (14,540
    )
    
    
    (498
    )Losses on disposal of property and equipment, net
    
    
    1,791
    
    
    
    1,805Stock-based compensation expense
    
    
    18,072
    
    
    
    14,437Deferred income taxes, net
    
    
    (2,036
    )
    
    
    (4,443
    )Minority interest
    
    
    3,258
    
    
    
    2,417Other items, net
    
    
    4,927
    
    
    
    833Change in assets and liabilities Increase in receivables from clients, net
    
    
    (73,755
    )
    
    
    (46,721
    )Increase in other current assets
    
    
    (39,438
    )
    
    
    (48,229
    )Increase in unbilled services, current and non-current
    
    
    (408,733
    )
    
    
    (175,759
    )Increase in other non-current assets
    
    
    (9,178
    )
    
    
    (12,094
    )Increase (decrease) in accounts payable
    
    
    174,868
    
    
    
    (82,018
    )Decrease in deferred revenues
    
    
    (87,347
    )
    
    
    (27,005
    )(Decrease) increase in accrued payroll and related benefits
    
    
    (165,480
    )
    
    
    71,007Increase in income taxes payable
    
    
    99,372
    
    
    
    118,508Increase (decrease) in other accrued liabilities
    
    
    5,870
    
    
    
    (1,776
    )Increase in other non-current liabilities
    
    
    55,230
    
    
    
    8,665Net cash (used in) provided by operating activities
    
    
    (60,883
    )
    
    
    127,597CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of available-for-sale investments
    
    
    169,567
    
    
    
    5,535Purchases of available-for-sale investments
    
    
    (507,596
    )
    
    
    Proceeds from sales of property and equipment
    
    
    959
    
    
    
    2,241Purchases of property and equipment
    
    
    (54,897
    )
    
    
    (46,738
    )Purchases of businesses and investments, net of cash acquired
    
    
    
    
    
    
    (6,131
    )Net cash used in investing activities
    
    
    (391,967
    )
    
    
    (45,093
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment of retirement benefits to former pre-incorporation partners
    
    
    (2,284
    )
    
    
    (1,710
    )Proceeds from issuance of Accenture Ltd Class A common shares
    
    
    105,223
    
    
    
    1,549,882Purchases of common shares
    
    
    (39,129
    )
    
    
    (1,721,351
    )Proceeds from issuance of long-term debt
    
    
    499
    
    
    
    481Repayments of long-term debt
    
    
    (1,197
    )
    
    
    (1,116
    )Proceeds from issuance of short-term bank borrowings
    
    
    17,217
    
    
    
    27,713Repayments of short-term bank borrowings
    
    
    (11,427
    )
    
    
    (36,823
    )Decrease in restricted cash of Accenture Share Employee Compensation Trust
    
    
    
    
    
    
    78,923Net cash provided by (used in) financing activities
    
    
    68,902
    
    
    
    (104,001
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    104,512
    
    
    
    18,987NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (279,436
    )
    
    
    (2,510
    )CASH AND CASH EQUIVALENTS,beginning of period
    
    
    2,552,958
    
    
    
    2,332,161CASH AND CASH EQUIVALENTS,end of period
    
    $
    2,273,522
    
    
    $
    2,329,651
 The accompanying notes are an integral part of these consolidated financial statements. 6




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of Accenture SCA, a
Luxemburg partnership limited by shares, and its controlled subsidiary companies (together,
Accenture or the Company) have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the SEC) for quarterly reports on Form 10-Q and do not
include all of the information and note disclosures required by accounting principles generally
accepted in the United States of America for complete financial statements. These consolidated
financial statements should therefore be read in conjunction with the consolidated financial
statements and notes thereto for the fiscal year ended August 31, 2004 included in the Companys
Annual Report on Form 10-K filed with the SEC on November 5, 2004. The accompanying unaudited
interim consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and reflect all adjustments of a
normal, recurring nature that are, in the opinion of management, necessary for a fair presentation
of results for these interim periods. The results of operations for the three months ended November
30, 2004 are not necessarily indicative of the results that may be expected for the fiscal year
ending August 31, 2005. Certain prior-period amounts have been reclassified to conform to the
current-period presentation. 7




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) 2. PRO FORMA IMPACT OF EMPLOYEE STOCK OPTIONS AND SHARE PURCHASE PLANS Accenture follows the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, to account for its employee stock options
and share purchase rights. Accordingly, no compensation expense is recognized for share purchase
rights granted in connection with the issuance of stock options under the Companys employee share
incentive plan and through its employee share purchase plan; however, compensation expense is
recognized in connection with the issuance of restricted share units granted under the Companys
share incentive plan. Beginning September 1, 2005, Accenture
will be required to record compensation cost for its employee stock
options and share purchase rights as a result of a revision to SFAS
No. 123 issued in December 2004. Had compensation cost for employee stock options granted under the Companys
share incentive plan and employee share purchase rights under its share purchase plan been
determined based on fair value at the grant date consistent with SFAS No. 123, Accounting for
Stock-Based Compensation,with stock options expensed using the accelerated expense attribution
method, the Companys net income and earnings per share would have been reduced to the pro forma
amounts indicated below: Three Months Ended November 30,2004
    
    2003Net income as reported
    
    $
    316,293
    
    
    $
    332,157Add: Stock-based
compensation expense
already included in
net income as
reported, net of tax
and minority interest
    
    
    16,735
    
    
    
    13,020Deduct: Pro forma
employee compensation
cost related to stock
options, restricted
share units and
employee share purchase
plan, net of tax and
minority interest
    
    
    (38,692
    )
    
    
    (40,442
    )Subtotal
    
    
    (21,957
    )
    
    
    (27,422
    )Pro forma income
    
    $
    294,336
    
    
    $
    304,735
 3. RESTRUCTURING AND REORGANIZATION COSTS (BENEFITS) Restructuring In fiscal 2002, Accenture recognized restructuring costs of $110,524 (Fiscal 2002
Restructuring) related to a global consolidation of office space, consisting of $67,112 to
consolidate various locations and $43,412 to abandon the related fixed assets. In the second
quarter of fiscal 2004, Accenture recognized restructuring costs of $107,256 (Fiscal 2004
Restructuring), primarily in the United States and the United Kingdom, consisting of $89,331 to
consolidate various locations and $17,925 to abandon the related fixed assets. The Companys restructuring activity for the period is as follows: Three months endedNovember 30, 2004Fiscal 2004
    
    Fiscal 2002Restructuring
    
    RestructuringRestructuring liability balance as of August 31, 2004
    
    $
    78,756
    
    
    $
    24,005Payments made
    
    
    (2,892
    )
    
    
    (2,990
    )Other(1)
    
    
    2,520
    
    
    
    670Restructuring liability balance as of November 30, 2004
    
    
    78,384
    
    
    
    21,685Less: Amount classified as other accrued liabilities
    
    
    16,857
    
    
    
    8,034Amount classified as other non-current liabilities
    
    $
    61,527
    
    
    $
    13,651
   (1)
    
    Other represents foreign currency translation, imputed interest and immaterial changes in lease estimates. The recorded liabilities represent the net present value of the estimated remaining obligations related to existing operating leases. 8




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) Reorganization In fiscal 2001, Accenture recognized a reorganization liability in connection with its
transition to a corporate structure. The Companys reorganization activity for the period is as
follows: Three months endedNovember 30,2004
    
    2003Reorganization
liability, August 31
    
    $
    454,042
    
    
    $
    510,149Net expense (benefit) recorded
    
    
    7,008
    
    
    
    (86,398
    )Foreign currency translation
    
    
    41,428
    
    
    
    14,291Reorganization
liability, November 30
    
    
    502,478
    
    
    
    438,042Less: Amount classified as other accrued liabilities.
    
    
    158,962
    
    
    
    26,549Amount classified as other non-current liabilities
    
    $
    343,516
    
    
    $
    411,493
 4. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of Accumulated other comprehensive loss are as follows: November 30,
    
    August 31,2004
    
    2004Foreign currency translation adjustments
    
    $
    22,241
    
    
    $
    (22,752
    )Unrealized (losses) gains on marketable
securities, net of reclassification adjustments
    
    
    (1,353
    )
    
    
    524Minimum pension liability adjustments, net of tax
    
    
    (91,532
    )
    
    
    (91,532
    )Accumulated other comprehensive loss
    
    $
    (70,644
    )
    
    $
    (113,760
    )
 Comprehensive income was $359,409 and $358,006 for the three months ended November 30, 2004
and 2003, respectively. 5. GOODWILL The changes in the carrying amount of goodwill by reportable segment are as follows: Comm.& High
    
    FinancialTech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    TotalBalance at August 31, 2004
    
    $
    70,949
    
    
    $
    43,668
    
    
    $
    23,242
    
    
    $
    46,402
    
    
    $
    30,221
    
    
    $
    214,482Additions/Adjustments
    
    
    740
    
    
    
    6,050
    
    
    
    398
    
    
    
    2,251
    
    
    
    429
    
    
    
    9,868Foreign currency translation adjustments
    
    
    2,170
    
    
    
    1,294
    
    
    
    487
    
    
    
    1,065
    
    
    
    743
    
    
    
    5,759Balance at November 30, 2004
    
    $
    73,859
    
    
    $
    51,012
    
    
    $
    24,127
    
    
    $
    49,718
    
    
    $
    31,393
    
    
    $
    230,109
 9




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) 6. PROFIT SHARING AND RETIREMENT PLANS In the United States and certain other countries, Accenture maintains and administers
retirement plans and postretirement medical plans for certain active, retired and resigned
Accenture employees. The components of net periodic pension and postretirement cost are as
follows: Pension BenefitsThree Months EndedNovember 30,2004
    
    2003U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Components of pension expense
    
    Plans
    
    Plans
    
    Plans
    
    PlansService cost
    
    $
    14,000
    
    
    $
    11,113
    
    
    $
    11,312
    
    
    $
    6,952Interest cost
    
    
    8,796
    
    
    
    4,219
    
    
    
    9,065
    
    
    
    2,957Expected return on plan assets
    
    
    (10,723
    )
    
    
    (3,283
    )
    
    
    (6,184
    )
    
    
    (1,715
    )Amortization of transitional obligation
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    (56
    )Amortization of loss/(gain)
    
    
    3,360
    
    
    
    (259
    )
    
    
    5,169
    
    
    
    144Amortization of prior service cost
    
    
    323
    
    
    
    284
    
    
    
    618
    
    
    
    22Special termination benefits charge
    
    
    
    
    
    
    886
    
    
    
    
    
    
    
    Total
    
    $
    15,756
    
    
    $
    13,091
    
    
    $
    19,980
    
    
    $
    8,304
 Postretirement BenefitsThree Months EndedNovember 30,2004
    
    2003U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Components of pension expense
    
    Plans
    
    Plans
    
    Plans
    
    PlansService cost
    
    $
    1,772
    
    
    $
    450
    
    
    $
    1,816
    
    
    $
    449Interest cost
    
    
    1,384
    
    
    
    475
    
    
    
    1,292
    
    
    
    420Expected return on plan assets
    
    
    (334
    )
    
    
    
    
    
    
    (356
    )
    
    
    Amortization of transitional obligation
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    (6
    )Amortization of loss
    
    
    373
    
    
    
    22
    
    
    
    600
    
    
    
    17Amortization of prior service cost
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )
    
    
    Total
    
    $
    3,015
    
    
    $
    947
    
    
    $
    3,172
    
    
    $
    880
 7. MATERIAL TRANSACTIONS AFFECTING SHAREHOLDERS EQUITY Since April 2002, the Board of Directors of Accenture Ltd has authorized and periodically
confirmed a publicly announced open-market share purchase program for acquiring Accenture Ltd Class
A common shares. In addition, the Board of Directors of Accenture Ltd previously authorized funds
for the purchase, redemption and exchange of Accenture shares held by our partners, former partners
and their permitted transferees, as well as the purchase of certain Accenture Ltd Class A common
shares awarded to employees pursuant to restricted share units issued in connection with our
initial public offering. Effective as of October 15, 2004, the Board of Directors of Accenture Ltd
authorized the purchase, redemption and exchange from time to time of up to an additional
$3,000,000 of Accenture shares. The authorization requires that at least $1,000,000 of these funds
be used in connection with the open-market share purchase program. The timing and amount of these
open-market purchases will be at the Companys discretion and will be based on market conditions
and other factors. At November 30, 2004, there was $1,031,097 available for open-market share
purchases and $2,222,506 of previously authorized funds available for the purchase, redemption, and
exchange of Accenture shares held by partners, former partners, their permitted transferees and
employees. 10




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) 8. COMMITMENTS AND CONTINGENCIES Guarantees As a result of our increase in ownership percentage of Accenture HR Services from 50 percent
to 100 percent in February 2002, Accenture may be required to make payments totaling up to $187,500
in additional purchase price over a five-year period starting February 28, 2002, conditional on
Accenture HR Services achieving certain levels of qualifying revenues. During the three months
ended November 30, 2004, Accenture made payments of $11,310. The remaining potential liability at
November 30, 2004 was $174,470. In connection with Accenture increasing its ownership interest in Avanade, Inc. from 50
percent to 78 percent in December 2001, Accenture has the right to purchase substantially all of
the remaining outstanding shares of Avanade, Inc. not owned by Accenture at fair market value but
not less than $28,650 and not to exceed $58,650 anytime after December 31, 2004. Accenture may also
be required to purchase substantially all of the remaining outstanding shares of Avanade, Inc.
anytime after December 31, 2006, or earlier if certain events occur, for fair market value but not
less than $28,650 and not to exceed $58,650. Accenture has various agreements in which it may be obligated to indemnify the other parties
with respect to certain matters. Generally, these indemnification provisions are included in
contracts arising in the normal course of business under which the Company customarily agrees to
hold the indemnified party harmless against losses arising from a breach of representations related
to such matters as title to assets sold and licensed or certain intellectual property rights.
Payments by Accenture under such indemnification clauses are generally conditioned on the other
party making a claim. Such claims are typically subject to challenge by Accenture and to dispute
resolution procedures specified in the particular contract. Further, the Companys obligations
under these agreements may be limited in terms of time and/or amount and, in some instances,
Accenture may have recourse against third parties for certain payments made by the Company. It is
not possible to predict the maximum potential amount of future payments under these indemnification
agreements due to the conditional nature of Accentures obligations and the unique facts of each
particular agreement. Historically, the Company has not made any payments under these agreements
that have been material individually or in the aggregate. As of November 30, 2004, management was
not aware of any obligations arising under indemnification agreements that would require material
payments. From time to time, Accenture enters into contracts with clients whereby it has joint and
several liability with other participants and third parties providing related services and products
to clients. Under these arrangements, Accenture and other parties may assume some responsibility to
the client for the performance of others under the terms and conditions of the contract with or for
the benefit of the client. In some arrangements, the extent of Accentures obligations for the
performance of others is not expressly specified. As of November 30, 2004, Accenture estimates it
had assumed an aggregate potential liability of approximately $666,294 to its clients for the
performance of others under arrangements described in this paragraph. These contracts typically
provide recourse provisions that would allow Accenture to recover from the other parties all but
approximately $44,191 if Accenture is obligated to make payments to the clients that are the
consequence of a performance default by the other parties. To date, Accenture has not been
required to make any payments under any of the contracts described in this paragraph. The
aggregate potential liability of $666,294 at November 30, 2004, increased from $603,582 at August
31, 2004. The increase was primarily due to exchange rate fluctuations, offset by a net decrease
in the extent of Accentures obligations for the performance of others. Legal Contingencies At November 30, 2004, Accenture or its present personnel had been named as a defendant in
various litigation matters. All of these are civil in nature. Based on the present status of these
litigation matters, the management of Accenture believes they will not ultimately have a material
effect on the results of operations, financial position or cash flows of Accenture. 11




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ACCENTURE SCA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(In thousands of U.S. Dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited) 9. SEGMENT REPORTING Operating segments are defined by SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, as components of an enterprise about which separate financial information
is available that is evaluated regularly by the chief operating decision maker, or decision-making
group, in deciding how to allocate resources and in assessing performance. Accentures chief operating decision maker is its chief executive officer. The operating
segments are managed separately because each operating segment represents a strategic business unit
providing management consulting, technology and outsourcing services that serves clients in
different industries. The reportable operating segments are the five operating groups, which are Communications &
High Tech, Financial Services, Government, Products and Resources. Revenues before reimbursements
and operating income by reportable operating segment are as follows: Comm. &Three Months ended
    
    High
    
    FinancialNovember 30, 2004
    
    Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    972,931
    
    
    $
    806,693
    
    
    $
    523,803
    
    
    $
    862,198
    
    
    $
    564,392
    
    
    $
    338
    
    
    $
    3,730,355Operating income
    
    
    149,329
    
    
    
    95,426
    
    
    
    46,267
    
    
    
    85,868
    
    
    
    81,260
    
    
    
    
    
    
    
    458,150
 Comm. &Three Months ended
    
    High
    
    FinancialNovember 30, 2003
    
    Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    879,010
    
    
    $
    646,049
    
    
    $
    478,219
    
    
    $
    701,141
    
    
    $
    554,627
    
    
    $
    2,539
    
    
    $
    3,261,585Operating income
    
    
    75,032
    
    
    
    103,680
    
    
    
    93,903
    
    
    
    133,837
    
    
    
    100,421
    
    
    
    267
    
    
    
    507,140
 Reorganization (costs) benefits were allocated to the reportable operating segments as
follows: Three Months EndedNovember 30,(Decrease) Increase to Operating Income
    
    2004
    
    2003Communications & High Tech
    
    $
    (1,742
    )
    
    $
    21,710Financial Services
    
    
    (1,534
    )
    
    
    18,951Government
    
    
    (1,116
    )
    
    
    12,709Products
    
    
    (1,623
    )
    
    
    18,934Resources
    
    
    (993
    )
    
    
    14,094Total
    
    $
    (7,008
    )
    
    $
    86,398
 10. SUBSEQUENT EVENTS On December 20, 2004, a tender offer made to Accenture SCA Class I shareholders on November
16, 2004 by Accenture and one of its controlled subsidiaries resulted in redemptions or purchases
of 3,463,488 Accenture SCA Class I common shares at a price of $24.61 per share. The total cash
outlay for these transactions was $85,236. As a result of this transaction, at December 20, 2004,
there was $2,137,270 in remaining authorized funds available for the purchase, redemption and
exchange of Accenture shares held by partners, former partners and their permitted transferees. On December 31, 2004, as a result of favorable final determinations of certain reorganization
liabilities recorded in connection with our transition to a corporate structure in 2001, we
recognized benefits of approximately $41,000. 12




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ITEM 2.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our Consolidated
Financial Statements and related notes included elsewhere in this Quarterly Report onForm 10-Qand
in our Annual Report onForm 10-Kfor the year ended August 31, 2004, and with the information
under the heading Managements Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report onForm 10-Kfor the year ended August 31, 2004. We use the terms Accenture we, our Company, our and us in this report to refer to
Accenture SCA and its subsidiaries. All references to years, unless otherwise noted, refer to our
fiscal year, which ends on August 31. For example, a reference to fiscal 2004 or fiscal year
2004 means the 12-month period that ended on August 31, 2004. All references to quarters, unless
otherwise noted, refer to the quarters of our fiscal year. We use the term partner to refer to
the executive employees of Accenture with the partner title. Disclosure Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
relating to our operations, results of operations and other matters that are based on our current
expectations, estimates and projections. Words such as expects, intends, plans, projects,
believes, estimates and similar expressions are used to identify these forward-looking
statements. These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Forward-looking statements are based
upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results
may differ materially from what is expressed or forecast in these forward-looking statements. The
reasons for this include changes in general economic and political conditions, including
fluctuations in currency exchange rates, and the following factors:  
    Our results of operations are materially affected by economic conditions, levels of business activity and rates of
change in the industries we serve.
    Our business will be negatively affected if we are not able to anticipate and keep pace with rapid changes in
technology or if growth in the use of technology in business is not as rapid as in the past.
    We may face damage to our professional reputation or legal liability if our clients are not satisfied with our services.
    Our engagements with clients may not be profitable or may be terminated by our clients on short notice.
    Our global operations pose complex management, foreign currency, legal, tax and economic risks, which we may not
adequately address.
    The consulting, technology and outsourcing markets are highly competitive and the pace of consolidation, as well as
vertical integration, among our competitors continues to increase. As a result, we may not be able to compete effectively if
we cannot efficiently respond to these developments in a timely manner.
    If we are unable to attract, retain and motivate employees, we will not be able to compete effectively and will not be
able to grow our business.
    Our profitability will suffer if we are not able to maintain our pricing and utilization rates and control our costs. A
continuation of current pricing pressures could result in permanent changes in pricing policies and delivery capabilities.
    Our quarterly revenues, operating results and profitability will vary from quarter to quarter, which may result in
increased volatility of our share price.
    We continue to achieve greater percentages of revenues and growth through outsourcing. This strategy could result in
higher concentrations of revenues and contributions to income from a smaller number of larger clients on customized
outsourcing solutions or, in the case of more-standardized business process outsourcing services provided through our BPO
businesses, from larger portfolios of clients for whom we provide similar services and solutions utilizing standard
operating models. As our outsourcing business continues to grow, we may continue to experience increased pressure on our
overall margins, particularly during the early stages of new outsourcing contracts.
    On certain complex engagements where we partner with third parties, clients are increasingly demanding that we
guarantee the performance of our business partners whom we do not control. 13




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
    If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or attain the
attestation of our auditors as to our internal controls as required by the end of the current fiscal year, our reputation,
our financial results and the market price of our stock could suffer.
    We may experience difficulties with new business and financial systems implemented as of September 1, 2004 that could
disrupt our ability to timely and accurately process and report key components of our results of operations and financial
condition, although, to date, we have not experienced any significant
difficulties.
    Recent tax legislation, future legislation and negative publicity related to Bermuda companies such as Accenture Ltd,
our parent, may lead to an increase in our tax burden or affect our relationships with our clients.
    Our services or solutions may infringe upon the intellectual property rights of others.
    We have only a limited ability to protect our intellectual property rights, which are important to our success.
    If our alliances do not succeed, we may not be successful in implementing our growth strategy.
    We will continue to be controlled by Accenture Ltd, which in turn may continue to be controlled by our partners, whose
interests may differ from those of our other shareholders.
    The share price of Accenture Ltd Class A common shares may decline due to the large number of Class A common shares
eligible for future sale.
    We may need additional capital in the future, and this capital may not be available to us. The raising of additional
capital may dilute shareholders ownership in us.
    We are registered in Luxembourg, and a significant portion of our assets is located outside the United States. As a
result, it may not be possible for shareholders to enforce civil liability provisions of the federal or state securities
laws of the United States.
    Luxembourg law differs from the laws in effect in the United States and may afford less protection to shareholders. For a more detailed discussion of these factors, see the information under the heading
BusinessRisk Factors in our Annual Report on Form 10-K for the year ended August 31, 2004. We
undertake no obligation to update or revise any forward-looking statements. Overview Revenues are driven by the ability of our senior executives to secure contracts for new
engagements and to deliver solutions and services that add value to our clients. Our ability to add
value to clients and therefore drive revenues depends in part on our ability to deliver
market-leading service offerings and to deploy skilled teams of professionals quickly and on a
global basis. Our results of operations are also affected by the economic conditions, levels of business
activity and rates of change in the industries we serve, as well as by the pace of technological
change and the type and level of technology spending by our clients. The ability to identify and
capitalize on these market and technological changes early in their cycles is a key driver of our
performance. The strengthening economic recovery continues to stimulate the technology spending of
many companies. We are continuing to see increasing numbers of opportunities from companies seeking
both revenue-generating and cost-cutting initiatives. Revenue growth rates across our segments
will continue to vary from quarter to quarter during fiscal 2005 as the economic recovery continues
to take hold at different rates in different industries and geographic markets. Revenues before reimbursements for the three months ended November 30, 2004 were $3.73
billion, compared with $3.26 billion for the three months ended November 30, 2003, an increase of
14% in U.S. dollars and 9% in local currency terms. Outsourcing revenues before reimbursements for the three months ended November 30, 2004 were
$1.35 billion, compared with $1.17 billion for the three months ended November 30, 2003, an
increase of 15% in U.S. dollars and 10% in local currency terms. Outsourcing contracts typically
have longer terms than consulting contracts and generally have lower gross margins than consulting
contracts, particularly in the first year. While outsourcing will continue to deliver solid growth
to our business, it is likely to grow overall at a slower rate than it did in fiscal 2004. We have
also recently seen a decrease in the average size of most outsourcing contracts. Our long-term
relationships with many of our clients continue to contribute to our success in growing our
outsourcing business. Maintenance of long-term, complex outsourcing contracts requires ongoing
review of their terms and scope of work, in light of our clients evolving business needs and our
performance expectations. Should the size or number of modifications to these arrangements
increase, as our outsourcing portfolio continues to grow and these contracts evolve, we may
experience increased variability in expected revenues and profitability. 14




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Consulting revenues before reimbursements for the three months ended November 30, 2004 were
$2.38 billion, compared with $2.10 billion for the three months ended November 30, 2003, an
increase of 14% in U.S. dollars and 8% in local currency terms. The demand for our consulting
services is continuing, with emphasis on consulting contracts of $50 million or less and consulting
services associated with outsourcing opportunities of $100 million to $200 million. We continue to experience ongoing pricing pressures from competitors as well as from clients
facing pressure to control costs. The pace of consolidation and of vertical integration among our
competitors continues to increase and to affect our revenues and operating margins. In addition,
the growing use of off-shore resources to provide lower-cost service delivery capabilities within
our industry continues to be a source of pressure on our revenues and operating margins. While we
have recently experienced increases in demand for our services, and while margins in our consulting
business have recently stabilized, it is too early to tell if these developments will translate
into sustainable improvements in our pricing or margins over the long term. As a global company, our revenues are denominated in multiple currencies and may be
significantly affected by currency exchange-rate fluctuations. In the first quarter of this fiscal
year, the strengthening of various currencies versus the U.S. dollar continued to result in
favorable currency translation and increased our reported revenues, operating expenses and
operating income. If the U.S. dollar strengthens against other currencies, the resulting
unfavorable currency translation could lower reported U.S. dollar revenues, operating expenses and
operating income and result in U.S. dollar revenue growth lower than growth in local currency
terms. While some limited favorable currency translations may continue, we do not expect them to
continue to contribute to U.S. dollar growth rates comparable to those experienced in fiscal 2004. The primary categories of operating expenses include cost of services, sales and marketing
costs, and general and administrative costs. Cost of services is primarily driven by the cost of
client-service personnel, which consists mainly of compensation, sub-contractor and other personnel
costs, and non-payroll outsourcing costs. Cost of services as a percentage of revenues is driven by
the prices we obtain for our solutions and services; the chargeability, or utilization, of our
client-service workforces; and the level of non-payroll costs associated with the continuing
accelerated growth of new outsourcing contracts. Chargeability, or utilization, represents the
percentage of our professionals time spent on billable work. Sales and marketing expense is driven
primarily by business-development activities; the development of new service offerings; the level
of concentration of clients in a particular industry or market; and client-targeting,
image-development and brand-recognition activities. General and administrative costs primarily
include costs for non-client-facing personnel, information systems and office space, which we seek
to manage at levels consistent with changes in activity levels in our business. Operating expenses
include restructuring costs and reorganization benefits, which may vary substantially from quarter
to quarter. Gross margins (revenues less cost of services) for the three months ended November 30, 2004
were 33% of revenues before reimbursements, compared with 34% for the three months ended November
30, 2003. The decline is primarily due to higher labor costs
resulting from greater increases in compensation effective September
1, 2004 (as compared to the prior year) and short-term staffing inefficiencies driven by the
increased demand for our services and higher resource utilization
levels. Our cost-management strategy continues to be to anticipate changes in demand for our services
and to identify cost-management initiatives. We aggressively plan and manage our payroll costs to
meet the anticipated demand for our services, given that payroll costs are the most significant
portion of our operating expenses. We continue to experience higher-than-planned attrition as global economic conditions
continue to improve and the market for skilled professionals becomes increasingly competitive.
Our attrition rate for the three months ended November 30, 2004
was 20%, comparable to the attrition rate for the fourth quarter of
fiscal 2004. Increasing competition for scarce talent will likely present us with supply-and-demand and
skill-level imbalance challenges in certain industry segments, skill sets and geographic regions
for the remainder of fiscal 2005. As a result, we continue to add substantial numbers of new
employees and will continue to actively recruit new employees to balance our mix of skills and
resources to meet current and projected future demands, replace departing employees and expand our
global sourcing approach, which includes our network of delivery centers and other capabilities
around the world. We may need to continue to adjust compensation over the course of the year in
certain industry segments, skill sets and geographies in order to attract and retain appropriate
numbers of qualified employees. Our ability to grow our business could also be adversely affected
if we do not effectively assimilate substantial numbers of new employees into our workforces.
These compensation adjustments and the additional costs of recruiting, hiring, training and
assimilating increasing numbers of new employees could adversely affect our operating margins. In
cases where we are unable to attain skill-level balances over the near term, our labor resource
costs may be higher as we seek to mitigate these shortages in how we provide services on particular
contracts. 15




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##### 



As
a result of our ongoing cost-management initiatives and improved
efficiencies, sales and marketing and general and
administrative costs as a percentage of revenues before reimbursements were 20.5% for the three
months ended November 30, 2004, compared with 21.2% for the three months ended November 30, 2003. Operating income as a percentage of revenues before reimbursements for the three months ended
November 30, 2004 decreased to 12% from 16% for the three months ended November 30, 2003. This
decrease was primarily related to a benefit of $86 million recorded in fiscal 2004 resulting from a
decrease in certain liabilities established in connection with our transition to a corporate
structure in 2001. Excluding this benefit, operating income would have been 13% of revenues before
reimbursements for the three months ended November 30, 2003. This 1% decline reflects lower gross
margins. Bookings and Backlog New
contract bookings for the three months ended November 30, 2004
were $4,030 million,
compared with $5,051 million for the three months ended
November 30, 2003, a decrease of $1,021
million, or 20%. Consulting bookings for the three months ended November 30, 2004 were $1,963
million, compared with $2,073 million for the three months ended November 30, 2003, a decrease of
$110 million, or 5%. Outsourcing bookings for the three months ended November 30, 2004 were $2,067
million, compared with $2,978 million for the three months ended November 30, 2003, a decrease of
$911 million, or 31%. The size and scope of many of our new outsourcing contract bookings have
decreased when compared to outsourcing contract bookings for the three months ended November 30,
2003. We provide information regarding our bookings because we believe doing so provides useful
trend information regarding changes in the volume of our new business over time. However, the
timing of large bookings can significantly affect the level of bookings in a particular quarter.
Information regarding our new bookings is not comparable to, nor should it be substituted for, an
analysis of our revenues over time. The majority of our contracts are terminable by the client on short notice or without notice.
Accordingly, we do not believe it is appropriate to characterize bookings attributable to these
contracts as backlog. Normally, if a client terminates a project, the client remains obligated to
pay for commitments we have made to third parties in connection with the project, services
performed and reimbursable expenses incurred by us through the date of termination. Critical Accounting Policies and Estimates For a complete description of our critical accounting policies and estimates, refer to our
Annual Report on Form 10-K for the year ended August 31, 2004. Segments/Operating Groups Our five reportable operating segments are our operating groups, which are Communications &
High Tech, Financial Services, Government, Products and Resources. Operating groups are managed on
the basis of revenues before reimbursements because our management believes these are a better
indicator of operating group performance than revenues. From time to time, our operating groups
work together to sell and implement certain contracts. The resulting revenues and costs from these
contracts may be apportioned among the participating operating groups. Generally, operating
expenses for each operating group have similar characteristics and are subject to the same factors,
pressures and challenges. However, the economic environment and its effects on the industries
served by our operating groups affect revenues and operating expenses within our operating groups
to differing degrees. Decisions relating to staffing levels are not made uniformly across our
operating groups, due in part to an increased need on behalf of some of our operating groups to
tailor their workforces to the needs of their businesses. The shift in mix toward outsourcing
contracts is not uniform among our operating groups and, consequently, neither is the impact on
operating group results caused by this shift. Local currency fluctuations also tend to affect our
operating groups differently, depending on the geographic concentrations and locations of their
businesses. 16




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##### 



Revenues for each of our operating groups, geographic regions and types of work are as
follows: Percent
    
    Percent of TotalIncrease/
    
    Revenues BeforePercent
    
    (Decrease)
    
    Reimbursement for theThree Months
    
    Increase
    
    Local
    
    Three Months EndedEnded November 30,
    
    US $
    
    Currency
    
    November 30,2004
    
    2003
    
    
    
    
    
    
    
    
    
    2004
    
    2003(in millions)OPERATING GROUPSCommunications & High Tech
    
    $
    973
    
    
    $
    879
    
    
    
    11
    %
    
    
    6
    %
    
    
    26
    %
    
    
    27
    %Financial Services
    
    
    807
    
    
    
    646
    
    
    
    25
    
    
    
    17
    
    
    
    22
    
    
    
    20Government
    
    
    524
    
    
    
    478
    
    
    
    10
    
    
    
    5
    
    
    
    14
    
    
    
    15Products
    
    
    862
    
    
    
    701
    
    
    
    23
    
    
    
    17
    
    
    
    23
    
    
    
    21Resources
    
    
    564
    
    
    
    555
    
    
    
    2
    
    
    
    (4
    )
    
    
    15
    
    
    
    17Other
    
    
    
    
    
    
    2
    
    
    
    n/m
    
    
    
    n/m
    
    
    
    0
    
    
    
    0TOTAL Revenues Before Reimbursements
    
    
    3,730
    
    
    
    3,261
    
    
    
    14
    
    
    
    9
    
    
    
    100
    %
    
    
    100
    %Reimbursements
    
    
    341
    
    
    
    313
    
    
    
    9TOTAL REVENUES
    
    $
    4,071
    
    
    $
    3,574
    
    
    
    14
    %GEOGRAPHYAmericas
    
    $
    1,542
    
    
    $
    1,491
    
    
    
    3
    %
    
    
    3
    %
    
    
    41
    %
    
    
    46
    %EMEA (1)
    
    
    1,918
    
    
    
    1,550
    
    
    
    24
    
    
    
    12
    
    
    
    52
    
    
    
    47Asia Pacific
    
    
    270
    
    
    
    220
    
    
    
    23
    
    
    
    19
    
    
    
    7
    
    
    
    7TOTAL Revenues Before Reimbursements
    
    
    3,730
    
    
    
    3,261
    
    
    
    14
    
    
    
    9
    
    
    
    100
    %
    
    
    100
    %Reimbursements
    
    
    341
    
    
    
    313
    
    
    
    9TOTAL REVENUES
    
    $
    4,071
    
    
    $
    3,574
    
    
    
    14
    %TYPE OF WORKConsulting
    
    $
    2,385
    
    
    $
    2,095
    
    
    
    14
    %
    
    
    8
    %
    
    
    64
    %
    
    
    64
    %Outsourcing
    
    
    1,345
    
    
    
    1,166
    
    
    
    15
    
    
    
    10
    
    
    
    36
    
    
    
    36TOTAL Revenues Before Reimbursements
    
    
    3,730
    
    
    
    3,261
    
    
    
    14
    
    
    
    9
    
    
    
    100
    %
    
    
    100
    %Reimbursements
    
    
    341
    
    
    
    313
    
    
    
    9TOTAL REVENUES
    
    $
    4,071
    
    
    $
    3,574
    
    
    
    14
    %
   (1)
    
    EMEA includes Europe, the Middle East and Africa. Three Months Ended November 30, 2004 Compared to Three Months Ended November 30, 2003 Revenues Our Europe, Middle East and Africa region (EMEA) achieved revenues before reimbursements for
the three months ended November 30, 2004 of $1,918 million, compared with $1,550 million for the
three months ended November 30, 2003, an increase of 24% in U.S. dollars and 12% in local currency
terms. A key contributor to this growth was our business in the United Kingdom, where revenues
before reimbursements grew 50% in U.S. dollars and 36% in local currency terms over the same period
in fiscal 2004. The growth in the United Kingdom was primarily due to several large contracts that
were sold during fiscal 2004. Also contributing to this strong growth was our business in Spain,
the Netherlands and Germany, as well as the continued strengthening of the Pound Sterling and Euro
against the U.S. dollar. Our Americas region achieved revenues before reimbursements for the three months ended
November 30, 2004 of $1,542 million, compared with $1,491 million for the three months ended
November 30, 2003, an increase of 3% in U.S. dollars and in local currency terms. This growth
was due to strong growth in our Brazilian business and 4% growth in the United States, and was
partially offset by a decline in our Canadian business. Our Asia Pacific region achieved revenues before reimbursements for the three months ended
November 30, 2004 of $270 million, compared with $220 million for the three months ended November
30, 2003, an increase of 23% in U.S. dollars and 19% in local currency terms. Our business in
Australia and Japan continue to drive the growth in our Asia Pacific region. 17




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##### 



Our Communications & High Tech operating group achieved revenues before reimbursements for the
three months ended November 30, 2004 of $973 million, compared with $879 million for the three
months ended November 30, 2003, an increase of 11% in U.S. dollars and 6% in local currency terms.
The increase was primarily due to growth in consulting revenues across all three industry groups
and geographic regions, particularly in our Communications industry group in the Americas and Asia
Pacific regions. Outsourcing revenue growth in our EMEA region across all industry groups was
offset by a decline in our Communications industry groups revenues in North America. This decline
was due partly to a substantial reduction, which began in fiscal 2004, in the scope of our work
with a major telecommunications client as a result of that clients changing business strategies
and may continue to adversely affect the operating groups growth rates in outsourcing revenues for
the next two fiscal quarters as compared to the corresponding quarters of fiscal 2004. Our Financial Services operating group achieved revenues before reimbursements for the three
months ended November 30, 2004 of $807 million, compared with $646 million for the three months
ended November 30, 2003, an increase of 25% in U.S. dollars and 17% in local currency terms. Growth
was driven mainly by the strength of our business in the United Kingdom. Each of our three industry
groups achieved strong revenue growth, led by Capital Markets and Insurance. Our Government operating group achieved revenues before reimbursements for the three months
ended November 30, 2004 of $524 million, compared with $478 million for the three months ended
November 30, 2003, an increase of 10% in U.S. dollars and 5% in local currency terms. Results were
primarily driven by strong growth in consulting revenues for clients in Europe, particularly in the
United Kingdom, which was partly offset by a decrease in consulting revenues from clients in the
United States. Outsourcing revenues remained relatively flat, with slight growth experienced in our
Asia Pacific region. Our Products operating group achieved revenues before reimbursements for the three months
ended November 30, 2004, of $862 million, compared with $701 million for the three months ended
November 30, 2003, an increase of 23% in U.S. dollars and 17% in local currency terms. Results
were primarily driven by strong growth in both outsourcing and consulting revenues, particularly in
our Retail & Consumer industry group in North America. Our Resources operating group achieved revenues before reimbursements for the three months
ended November 30, 2004 of $564 million, compared with $555 million for the three months ended
November 30, 2003, an increase of 2% in U.S. dollars and a decrease of 4% in local currency terms.
We experienced growth in our EMEA region and in our Energy and Metals & Mining industry groups,
offset by declines in North America and in our Chemicals and Utilities industry groups. The
decrease in local currency revenues was primarily driven by lower bookings of new outsourcing
contracts in fiscal 2004 compared with strong outsourcing bookings in fiscal 2003. Operating Expenses Operating expenses for the three months ended November 30, 2004 were $3,613 million, an
increase of $546 million, or 18%, over the three months ended November 30, 2003. Operating
expenses before reimbursable expenses increased as a percentage of revenues before reimbursements
from 84% for the three months ended November 30, 2003 to 88% for the three months ended November
30, 2004. The increase in operating expenses as a percentage of revenues before reimbursements was
primarily due to reorganization benefits recorded in fiscal 2004. For the three months ended
November 30, 2003, operating expense included benefits of $86 million, resulting primarily from the
final determinations of certain reorganization liabilities established in connection with our
transition to a corporate structure in 2001. The strengthening of various currencies against the U.S. dollar increased reported operating
expenses for the three months ended November 30, 2004, compared with the three months ended
November 30, 2003, partially offsetting corresponding increases in reported revenues. During
the three months ended November 30, 2004, we recorded $47 million of variable
compensation expense, compared with a $4 million variable compensation benefit for the three months
ended November 30, 2003. Cost of Services Cost of services for the three months ended November 30, 2004, was $2,841 million, an increase
of $378 million, or 15%, over the three months ended November 30, 2003, and increased as a
percentage of revenues from 69% for the three months ended November 30, 2003 to 70% for the three
months ended November 30, 2004. Cost of services before reimbursable expenses for the three months
ended November 30, 2004, was $2,500 million, an increase of $350 million, or 16%, over the three
months 18




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##### 



ended November 30, 2003 and increased as a percentage of revenues before reimbursements from
66% for the three months ended November 30, 2003 to 67% for the three months ended November 30,
2004. Gross margins (revenues less cost of services) for the three months ended November 30, 2004
decreased to 33% of revenues before reimbursements from 34% for the three months ended November 30,
2003. The primary drivers of the increase in cost of services and the decrease in gross margins as a
percentage of revenues before reimbursements were higher
labor costs resulting from greater increases in compensation effective
September 1, 2004 (as compared to the prior year) and short-term staffing inefficiencies
driven by the increased demand for our services and higher resource
utilization levels. Sales and Marketing Sales and marketing expense for the three months ended November 30, 2004 was $361 million, an
increase of $10 million, or 3%, over the three months ended November 30, 2003, and decreased as a
percentage of revenues before reimbursements from 11% for the three months ended November 30, 2003
to 10% for the three months ended November 30, 2004, reflecting continued cost management. General and Administrative Costs General and administrative costs for the three months ended November 30, 2004 were $404
million, an increase of $64 million, or 19%, over the three months ended November 30, 2003, and
increased as a percentage of revenues before reimbursements from 10% for the three months ended
November 30, 2003 to 11% for the three months ended November 30, 2004. The increase in general and
administrative costs was primarily due to increased payroll costs. Reorganization Costs (Benefits) During the three months ended November 30, 2004, we recorded reorganization costs of $7
million, compared with a benefit of $86 million for the three months ended November 30, 2003. The
prior-year benefit was primarily driven by final determinations of certain reorganization costs
established in connection with our transition to a corporate structure in 2001. At November 30,
2004, the remaining liability for reorganization liabilities was $502 million, of which $159
million is classified as current liabilities because final determinations could occur within 12
months. Operating Income Operating income for the three months ended November 30, 2004 was $458 million, a decrease of
$49 million, or 10%, over the three months ended November 30, 2003, and decreased as a percentage
of revenues before reimbursements from 16% for the three months ended November 30, 2003, to 12% for
the three months ended November 30, 2004. The decrease in operating income as a percentage of
revenues before reimbursements was primarily driven by reorganization benefits recorded in fiscal
2004. For the three months ended November 30, 2003, operating income included a benefit of $86
million resulting from a decrease in certain liabilities established in connection with our
transition to a corporate structure in 2001. This benefit had the
effect of increasing operating income as a percentage of revenues
before reimbursements by 3%. 19




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##### 



Operating income for each of the operating groups was as follows: Operating IncomeThree Months Ended November 30,Increase2004
    
    2003
    
    (Decrease)(in millions)Communications & High Tech
    
    $
    149
    
    
    $
    75
    
    
    $
    74Financial Services
    
    
    96
    
    
    
    104
    
    
    
    (8
    )Government
    
    
    46
    
    
    
    94
    
    
    
    (48
    )Products
    
    
    86
    
    
    
    134
    
    
    
    (48
    )Resources
    
    
    81
    
    
    
    100
    
    
    
    (19
    )Total
    
    $
    458
    
    
    $
    507
    
    
    $
    (49
    )
 Reorganization benefits of $86 million for the months ended November 30, 2003 and costs
of $7 million for the three months ended November 30, 2004 were allocated to operating groups. The
net effect of these allocations on each operating groups operating income is shown below: Three Months Ended November 30,(Decrease) Increase to Operating Income
    
    2004
    
    2003
    
    (Decrease)(in millions)Communications & High Tech
    
    $
    (2
    )
    
    $
    22
    
    
    $
    (24
    )Financial Services
    
    
    (1
    )
    
    
    19
    
    
    
    (20
    )Government
    
    
    (1
    )
    
    
    12
    
    
    
    (13
    )Products
    
    
    (2
    )
    
    
    19
    
    
    
    (21
    )Resources
    
    
    (1
    )
    
    
    14
    
    
    
    (15
    )Total
    
    $
    (7
    )
    
    $
    86
    
    
    $
    (93
    )
 Excluding the effects of reorganization costs and benefits, operating income would have
increased $44 million reflecting increases in Communications & High Tech and Financial Services,
which were partially offset by decreases in Government, Products and Resources. The following
amounts exclude the effects of reorganization costs and benefits. Communications & High Tech
operating income increased by $98 million, primarily due to lower-than-expected margins on three
contracts in last years first quarter and higher gross margins in this years first quarter
reflecting a higher proportion of consulting revenues. Financial Services operating income
increased by $12 million, primarily due to increased revenues. Government operating income
decreased by $35 million, partly reflecting lower margins at the early stages of new significant
contracts. Products operating income decreased by $27 million, driven by larger contracts with
lower gross margins in the early stages. Gain on Investments, Net Gain on investments, net was $15 million for the three months ended November 30, 2004, an
increase of $14 million over the three months ended November 30, 2003. This reflects a gain on our
retained interests in our venture and investment portfolio that was sold in fiscal 2003. Interest Income Interest income for the three months ended November 30, 2004, was $20 million, an increase of
$10 million, or 93%, over the three months ended November 30, 2003. The increase resulted primarily
from an increase in interest rates, as well as an increase in our average short-term and
non-current investment balance during the three months ended November 30, 2004, compared with the
average balance for the three months ended November 30, 2003. 20




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##### 



Provision for Income Taxes The effective tax rate for the three months ended November 30, 2004 was 34%, compared with
34.8% for the three months ended November 30, 2003. The effective tax rate declined from 34.8% to
32.0% during fiscal 2004 primarily as a result of a reduction in valuation allowances and changes
in our geographic mix of income. Liquidity and Capital Resources Our primary sources of liquidity are cash flows from operations, debt capacity available under
various credit facilities and available cash reserves. Cash flow used in operating activities for
the three months ended November 30, 2004 totaled $61 million. At November 30, 2004, cash and cash
equivalents totaled $2,274 million, while total debt was $40 million. Cash and cash equivalents,
combined with $939 million of liquid fixed-income securities and classified as investments on our
Consolidated Balance Sheet, totaled $3,213 million at November 30, 2004. We may also be able to
raise additional funds through public or private debt or equity financings in order to:  
    take advantage of opportunities, including more rapid expansion;
    acquire complementary businesses or technologies;
    develop new services and solutions;
    respond to competitive pressures; or
    facilitate purchases, redemptions and exchanges of Accenture shares held by our
partners, former partners and their permitted transferees as previously authorized by the
Board of Directors of Accenture Ltd and certain other share purchases from our other
employees. For a more detailed description of our Share Management Plan, see Share Purchases and
RedemptionsShare Management Plan and RSU Sell-Back Program Transactions. Net cash used in operating activities for the three months ended November 30, 2004, was $61
million, compared with net cash provided by operating activities of $128 million for the three
months ended November 30, 2003. This $189 million decrease was primarily due to an increase in
net client balances (receivables from clients, unbilled services (current and non-current) and
deferred revenues) and by planned variable compensation payments of
$216 million, partially offset by an increase in accounts
payable. The increase in net client balances was due to growth in
revenues; increases in client financing; a shift in the mix of our
work to Europe and Asia, where payment cycles are longer; the amortization of
prepayments from clients; and some temporary delays in billings. Net cash used in investing activities for the three months ended November 30, 2004 was $392
million, compared with net cash used in investing activities of $45 million for the three months
ended November 30, 2003. This $347 million increase was primarily due to purchases of marketable
securities, partially offset by increased proceeds from sales of investments. Net cash provided by financing activities for the three months ended November 30, 2004 was $69
million, compared with net cash used in financing activities of $104 million for the three months
ended November 30, 2003. Contributing to this $173 million increase were net proceeds from the
issuance of common shares, partly offset by a net decrease in
restricted cash of the predecessor to the Accenture Share Employee
Compensation Trust. 21




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##### 



At November 30, 2004, we had the following borrowing capacity available for general working
capital purposes, including the issuance of letters of credit: BorrowingsFacility Amount
    
    Outstanding(in millions)Syndicated loan facility
    
    $
    1,500
    
    
    $
    Separate bilateral, uncommitted, unsecured
multicurrency revolving credit facilities
    
    
    251
    
    
    
    16Local guaranteed and non-guaranteed lines of credit
    
    
    240
    
    
    
    Other short-term borrowings
    
    
    n/a
    
    
    
    11Total
    
    $
    1,991
    
    
    $
    27
 The terms of the facilities have not materially changed from those disclosed in our Annual
Report on Form 10-K for the year ended August 31, 2004, and we continue to be in compliance with
those terms. Interest rate terms on the bilateral revolving facilities and local lines of credit
are at market rates prevailing in the relevant local markets. During the three months ended November 30, 2004 and 2003, we invested $55 million and $47
million, respectively, in capital expenditures, primarily for technology assets, furniture and
equipment, and leasehold improvements to support our operations. We expect that our capital
expenditures will be approximately $400 million in fiscal 2005. In isolated circumstances, we agree to extend financing to clients. The terms vary by
contract, but generally we contractually link payment for services to the achievement of specified
performance milestones. We finance these client obligations primarily with existing working capital
and bank financing in the country of origin. Information pertaining to client financing is as
follows: November 30, 2004
    
    August 31, 2004(in millions, except number of clients)Number of clients
    
    
    44
    
    
    
    40Client financing
included in current
unbilled services
    
    $
    356
    
    
    $
    243Client financing
included in non-current
unbilled services
    
    
    260
    
    
    
    212Total client financing
    
    $
    616
    
    
    $
    455
 The increase in client financing from August 31, 2004 is primarily due to balances increasing
at certain large contracts that were signed in fiscal 2004. Share Purchases and Redemptions Effective as of October 15, 2004, the Board of Directors of Accenture Ltd authorized the
purchase, redemption and exchange from time to time of up to an additional $3 billion of Accenture
shares through the Companys open-market purchase program and through purchases, redemptions and
exchanges of Accenture shares held by partners, former partners and their permitted transferees, as
well as the purchase of certain Accenture Ltd Class A common shares awarded to employees pursuant
to restricted share units issued in connection with our initial public offering. The
authorization requires that at least $1 billion of these funds be used for open-market share
purchases. The timing and amount of these open-market purchases will be at the Companys
discretion and will be based on market conditions and other factors. Open-Market Purchases As part of our publicly announced open-market purchase program, during the three months ended
November 30, 2004, the Accenture Share Employee Compensation Trust acquired 1,275,000
Accenture Ltd Class A common shares at an aggregate purchase price of $30 million for use in
conjunction with employee equity awards. At November 30, 2004, there was $1,031 million of
previously authorized contributions available for these open-market purchases. Accenture SCA
continues to fund these share purchases by redeeming Accenture SCA Class I common shares held by
Accenture Ltd. 22




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Share Management Plan and RSU Sell-Back Program Transactions The Board of Directors of Accenture Ltd previously granted authority to acquire shares from
partners, former partners and their permitted transferees and to acquire certain Accenture Ltd
Class A common shares awarded to employees pursuant to restricted share units awarded in connection
with our initial public offering. Of these previously authorized amounts, $2 million was utilized
during the three months ended November 30, 2004 to purchase 76,604 shares under the RSU Sell-Back
Program. No Share Management Plan transactions were concluded in the three months ended November 30,
2004. During the three months ended November 30, 2004, $0.4 million was used to facilitate
isolated redemptions of Accenture SCA Class I common shares from former partners or their permitted
transferees in accordance with the terms of the Accenture SCA Class I common shares. At November
30, 2004, the amount available for future purchases, redemptions and exchange by Accenture of
shares held by its partners, former partners and their permitted transferees and for the RSU
Sell-Back Program was $2,223 million. As we have previously announced, we intend for the remainder of fiscal 2005 to enable
quarterly transactions to provide partners, former partners and their permitted transferees with
the opportunity to dispose of those shares that are currently eligible for transfer under the terms
of the transfer restrictions. We may also approve the inclusion of additional shares that will
become eligible for transfer on or before July 24, 2005 in these quarterly transactions. We do not
expect to permit the aggregate number of Accenture Ltd Class A common shares sold in any quarterly
transaction in fiscal 2005 to exceed the average weekly volume of trading in the Accenture Ltd
Class A common shares on the New York Stock Exchange for the four weeks prior to the start of these
transactions. In connection with each quarterly transaction, we also expect to offer to redeem or
purchase substantially larger numbers of Accenture SCA Class I common shares and Accenture Canada
Holdings, Inc. exchangeable preferred shares from our partners, former partners and their permitted
transferees than we have in the past. For a more detailed description of our Share Management Plan, see Certain Transactions and
RelationshipsShare Management Plan in our Annual Report on Form 10-K for the year ended August
31, 2004 and Annex C: Share Management Plan in our proxy statement for the 2005 annual general
meeting of shareholders. Senior Executive Compensation As previously announced, Accenture is enhancing its compensation program for senior executives
so it can continue to attract and retain the industrys most talented people and to more closely
align the interests of its senior executives and public shareholders. In the second quarter of
fiscal 2005, Accenture intends to award up to $170 million worth of stock options to its
highest-performing partners. Beginning in fiscal 2006, the enhanced program for senior executives
will expand the use of equity in the form of restricted stock units, relative to cash and stock
options, both as a reward at the time of a promotion and to recognize outstanding performance
measured on an annual basis. Other Redemptions and Purchases During the three months ended November 30, 2004, Accenture acquired Accenture Ltd Class A
common shares for a cost of $6 million from employees electing net share delivery under the
Accenture Ltd 2001 Employee Share Purchase Plan and Accenture Ltd 2001 Share Incentive Plan. Subsequent Developments On December 20, 2004, a tender offer made to Accenture SCA Class I shareholders on November
16, 2004, by Accenture SCA and one of its controlled subsidiaries resulted in redemptions or
purchases of 3,463,488 Accenture SCA Class I common shares at a price of $24.61 per share. The
total cash outlay for these transactions was $85 million and the amount of remaining authorized
funds available for purchases, redemptions and exchanges of shares held by partners, former
partners and their permitted transferees was $2,137 million at December 20, 2004. On December 31, 2004, as a result of favorable final determinations of certain reorganization
liabilities recorded in connection with our transition to a corporate structure in 2001, we
recognized benefits of approximately $41 million. Off-Balance Sheet Arrangements We have various agreements by which we may be obligated to indemnify the other party with
respect to certain matters. Generally, these indemnification provisions are included in contracts
arising in the normal course of business under which we 23




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customarily agree to hold the indemnified
party harmless against losses arising from a breach of representations related to such matters as
title to assets sold and licensed or certain intellectual property rights. Payments by us under
such indemnification clauses are generally conditioned on the other party making a claim. Such
claims are generally subject to challenge by us and dispute resolution procedures specified in the
particular contract. Furthermore, our obligations under these arrangements may be limited in terms
of time and/or amount and, in some instances, we may have recourse against third parties for
certain payments made by us. It is not possible to predict the maximum potential amount of future
payments under these indemnification agreements due to the conditional nature of our obligations
and the unique facts of each particular agreement. Historically, the Company has not made any
payments under these agreements that have been material individually or in the aggregate. As of
November 30, 2004, we were not aware of any obligations under such indemnification agreements that
would require material payments. From time to time, Accenture enters into contracts with clients whereby it has joint and
several liability with other participants and third parties providing related services and products
to the client. Under these arrangements, Accenture and other parties may assume some responsibility
to the client for the performance of others under the terms and conditions of the contract with or
for the benefit of the client. To date, Accenture has not been required to make any payments under
any of the contracts described in this paragraph. For further discussion of these transactions,
please see Footnote 8 (Commitments and Contingencies) to our consolidated financial statements
above under Item 1, Financial Statements (unaudited). Newly Issued Accounting Standards In
December 2004, the Financial Accounting Standards Board
(FASB)
issued Statement of Financial Accounting Standards No. 123R, Share
Based Payment (SFAS 123R). This Statement is a revision of SFAS No.
123, Accounting for Stock-Based Compensation, and supersedes
Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and its related implementation guidance. SFAS
No. 123R focuses primarily on accounting for transactions in which an
entity obtains employee services in share-based payment transactions.
The Statement requires entities to recognize compensation expense for
awards of equity instruments to employees based on the grant-date
fair value of those awards (with limited exceptions). SFAS No. 123R
is effective for the first interim or annual reporting period that
begins after June 15, 2005. Accenture
expects to adopt SFAS No. 123R on September 1, 2005, using the
Statements modified prospective application method. Adoption of SFAS
No. 123R will not affect Accentures cash flows or financial
position, but it will reduce reported income and earnings per share
because Accenture currently uses the intrinsic value method as
permitted by Opinion No. 25. Accordingly, no compensation expense is
currently recognized for share purchase rights granted under the
Companys employee stock option and employee share purchase plans.
Specifically, adopting SFAS No. 123R will result in Accenture
recording compensation cost for employee stock options and employee
share purchase rights. Had Accenture expensed employee stock options
and employee share purchase rights under SFAS No. 123 for the quarter
ended November 30, 2004, the following reported items would have been
reduced: income before income taxes by $32 million; income before
minority interest by $22 million; and net income by $22 million.
Assuming the continuation of current programs, our preliminary
estimate is that stock option expense for fiscal 2006 will be in the
range between $155 million and $175 million. This estimate includes
expenses for fiscal 2006 related to the grant of up to $170 million
in stock options that Accenture intends to grant in the second
quarter of fiscal 2005 as part of its compensation program for senior
executives. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During the three months ended November 30, 2004, there were no material changes in our market
risk exposure. For a discussion of our market risk associated with foreign currency risk,
interest rate risk and equity price risk as of August 31, 2004, see Quantitative and Qualitative
Disclosures about Market Risk in Part II, Item 7A, of Accenture SCAs Annual Report on Form 10-K
for the year ended August 31, 2004. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Based on their evaluation as of a date as of the end of the period covered by this Quarterly
Report on Form 10-Q, the chief executive officer and the chief financial officer of Accenture Ltd
have concluded that Accenture SCAs disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. Transition of Business and
Financial Systems As of September 1, 2004, we transitioned certain of our business and financial systems to new
platforms. Implementation of the new systems necessarily involves changes to our procedures for
control over financial reporting. The new systems were subjected to
testing prior to and after September 1, 2004 and are functioning to ensure that information required to be disclosed by Accenture SCA in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commissions rules and forms. We have not experienced any
significant difficulties to date in connection with the
implementation or operation of the new systems. 24




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PART II  OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are involved in a number of judicial and arbitration proceedings concerning matters arising
in the ordinary course of our business. We do not expect that any of these matters, individually or in the
aggregate, will have a material impact on our results of operations or financial condition. As previously reported in July 2003, we became aware of an incident of possible noncompliance
with the Foreign Corrupt Practices Act and/or with Accentures internal controls in connection with
certain of our operations in the Middle East. In 2003, we voluntarily reported the incident to the
appropriate authorities in the United States promptly after its discovery. Shortly thereafter, the
SEC advised us it would be undertaking an informal investigation of this incident, and the U.S.
Department of Justice indicated it would also conduct a review. Since that time, there have been no
further developments. We do not believe that this incident will have any material impact on our
results of operations or financial condition. We currently maintain the types and amounts of insurance customary in the industries and
countries in which we operate, including coverage for professional liability, general liability and
management liability. We consider our insurance coverage to be adequate both as to the risks and
amounts for the businesses we conduct. ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS The following table provides information relating to the Companys purchases of common shares
for the first quarter of fiscal 2005. For further discussion of the Companys share purchase
activity, including the purchase and redemption of Accenture SCA Class I common shares by the
Companys subsidiaries, see Managements Discussion and Analysis of Financial Condition and
Results of OperationsLiquidity and Capital Resources. Approximate DollarTotal Number of
    
    Value of SharesShares Purchased as
    
    that May Yet BePart of Publicly
    
    Purchased UnderTotal Number of
    
    Average Price
    
    Announced Plans or
    
    Publicly AnnouncedPeriod
    
    Shares Purchased
    
    Paid per Share
    
    Programs
    
    Plans or Programs(in thousands, except share and per share amounts)September 1, 2004  September 30, 2004Class I common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    October 1, 2004  October 31, 2004Class I common shares
    
    
    1,288,630
    
    
    $
    23.94
    
    
    
    
    
    
    
    November 1, 2004  November 30, 2004Class I common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
Class I common shares(1)(2)
    
    
    1,288,630
    
    
    $
    23.94
    
    
    
    
    
    
    
    
   (1)
    
    During the first quarter of fiscal 2005, Accenture SCA redeemed or purchased an aggregate
of 13,630 Accenture SCA Class I common shares at the request of former partners or the estates of deceased partners in
transactions on terms similar to those provided in Articles of
Association of Accenture SCA. These redemptions or purchases were
made in transactions unrelated to publicly announced share plans or
programs.(2)
    
    During the first quarter of fiscal 2005,
Accenture SCA purchased 1,275,000 Accenture SCA Class I common shares
in conjunction with Accenture Ltds publicly announced
open-market share purchase program. These purchases were made in
transactions unrelated to publicly announced share plans or programs. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 25




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ITEM 5. OTHER INFORMATION (a) None. (b) None. ITEM 6. EXHIBITS (a) Exhibit Index ExhibitNumber4.1
    
    Form of RSU grant for senior executives pursuant to the
Accenture 2001 Employee Share Incentive Plan4.2
    
    Form of stock option grant for senior executives
pursuant to the Accenture 2001 Employee Share Incentive
Plan10.1
    
    Amendment No. 1, dated as of
November 22, 2004, to the Voting Agreement, dated as of
April 18, 2001, among Accenture Ltd and the covered persons
party thereto.31.1
    
    Certification of the Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    Certification of the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).32.1
    
    Certification of the Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).32.2
    
    Certification of the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
 26




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. Date:  January 7, 2005
    ACCENTURE SCA ,
represented by its general partner, Accenture Ltd,
itself represented by its duly authorized signatory.By:
    /s/  Michael G. McGrathName:
    Michael G. McGrathTitle:
    Chief Financial Officer of Accenture
Ltd, General Partner of Accenture SCA