##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549    FORM 10-Q (Mark One) [x]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2004OR[  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934FOR THE TRANSITION PERIOD FROM _____ TO _____
 Commission File Number: 000-49713    ACCENTURE SCA(Exact name of Registrant as specified in its charter) Luxembourg
    
    98-0351796(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    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 [x] No [  ] Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)
Yes [  ] No [x] The number of shares of the Registrants Class I common shares, par value
1.25 per
share, outstanding as of April 2, 2004 was 873,558,147 (which number does
not include 97,735,307 issued shares held by the Registrant and
subsidiaries of the Registrant).




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##### 



ACCENTURE SCAINDEX PagePart I.
    
    Financial InformationItem 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of February 29, 2004 and August 31, 2003
    
    
    3Consolidated Income Statements for the three and six months ended February 29, 2004 and
February 28, 2003
    
    
    4Consolidated Shareholders Equity Statement for the six months ended February 29, 2004
    
    
    5Consolidated Cash Flows Statements for the six months ended February 29, 2004 and February 28, 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4.
    
    Controls and Procedures
    
    
    32Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    32Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    33Signature
    
    
    
    
    34
 2




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##### 



PART IFINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS ACCENTURE SCA CONSOLIDATED BALANCE SHEETSFebruary 29, 2004 and August 31, 2003
(In thousands of U.S. dollars, except share amounts) February 29,
    
    August 31,2004
    
    2003(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,853,615
    
    
    $
    2,332,161Restricted cash
    
    
    
    
    
    
    83,280Short-term investments
    
    
    125,898
    
    
    
    Receivables from clients, net
    
    
    1,457,191
    
    
    
    1,416,153Unbilled services
    
    
    1,048,276
    
    
    
    828,515Deferred income taxes, net
    
    
    146,451
    
    
    
    147,040Other current assets
    
    
    251,189
    
    
    
    230,062Total current assets
    
    
    5,882,620
    
    
    
    5,037,211NON-CURRENT ASSETS:Unbilled services
    
    
    150,311
    
    
    
    132,522Investments
    
    
    212,105
    
    
    
    33,330Property and equipment, net
    
    
    606,612
    
    
    
    650,455Goodwill
    
    
    209,877
    
    
    
    188,659Deferred income taxes, net
    
    
    344,152
    
    
    
    326,286Other non-current assets
    
    
    113,320
    
    
    
    90,777Total non-current assets
    
    
    1,636,377
    
    
    
    1,422,029TOTAL ASSETS
    
    $
    7,518,997
    
    
    $
    6,459,240LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Short-term bank borrowings
    
    $
    36,090
    
    
    $
    43,500Current portion of long-term debt
    
    
    1,931
    
    
    
    2,662Accounts payable
    
    
    513,669
    
    
    
    573,201Deferred revenues
    
    
    935,433
    
    
    
    676,841Accrued payroll and related benefits
    
    
    1,194,593
    
    
    
    974,319Income taxes payable
    
    
    860,836
    
    
    
    671,026Deferred income taxes, net
    
    
    23,120
    
    
    
    22,390Other accrued liabilities
    
    
    479,798
    
    
    
    387,157Total current liabilities
    
    
    4,045,470
    
    
    
    3,351,096NON-CURRENT LIABILITIES:Long-term debt
    
    
    13,578
    
    
    
    13,955Retirement obligation
    
    
    597,986
    
    
    
    575,973Deferred income taxes, net
    
    
    4,040
    
    
    
    3,572Other non-current liabilities
    
    
    752,676
    
    
    
    836,850Total non-current liabilities
    
    
    1,368,280
    
    
    
    1,430,350MINORITY INTEREST
    
    
    36,216
    
    
    
    34,233SHAREHOLDERS EQUITY:Class I common shares, par value 1.25 euros per share, 19,782,549,738 shares authorized, 753,843,192 issued as of February 29, 2004
and August 31, 2003, respectively
    
    
    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 and 0 shares authorized, issued and outstanding as of February 29, 2004
and August 31, 2003, respectively
    
    
    18,301
    
    
    
    Class 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) 33,762,764 and 33,803,376 units issued and outstanding
as of February 29, 2004 and August 31, 2003, respectively
    
    
    494,690
    
    
    
    495,024Additional paid-in capital
    
    
    3,016,597
    
    
    
    2,687,575Treasury shares, at cost, 86,081,328 and 45,256,961 Class I common shares at February 29, 2004 and August 31, 2003, respectively
    
    
    (1,778,674
    )
    
    
    (846,959
    )Investment in Accenture Ltd shares, at cost, 196,216 and 5,229,487 shares at February 29, 2004 and August 31, 2003, respectively
    
    
    (4,511
    )
    
    
    (88,198
    )Accenture Ltd Class A shares owned by the Accenture Ltd Stock Employee Compensation Trust, at cost, 0 and 18,081,800 shares at
February 29, 2004 and August 31, 2003, respectively
    
    
    
    
    
    
    (308,878
    )Retained deficit
    
    
    (1,157,591
    )
    
    
    (1,708,371
    )Accumulated other comprehensive loss
    
    
    (121,382
    )
    
    
    (188,233
    )Total shareholders equity
    
    
    2,069,031
    
    
    
    1,643,561TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    7,518,997
    
    
    $
    6,459,240
 The accompanying notes are an integral part of these financial statements. 3




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##### 



ACCENTURE SCA CONSOLIDATED INCOME STATEMENTSFor the Three and Six Months Ended February 29, 2004 and February 28, 2003
(In thousands of U.S. dollars)
(Unaudited) Three Months Ended
    
    Six Months EndedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003REVENUES:Revenues before reimbursements
    
    $
    3,302,209
    
    
    $
    2,826,196
    
    
    $
    6,563,794
    
    
    $
    5,756,154Reimbursements
    
    
    380,095
    
    
    
    362,827
    
    
    
    692,998
    
    
    
    760,316Revenues
    
    
    3,682,304
    
    
    
    3,189,023
    
    
    
    7,256,792
    
    
    
    6,516,470OPERATING EXPENSES:Cost of services:Cost of services before reimbursable expenses
    
    
    2,212,547
    
    
    
    1,816,706
    
    
    
    4,363,437
    
    
    
    3,590,903Reimbursable expenses
    
    
    380,095
    
    
    
    362,827
    
    
    
    692,998
    
    
    
    760,316Cost of services
    
    
    2,592,642
    
    
    
    2,179,533
    
    
    
    5,056,435
    
    
    
    4,351,219Sales and marketing
    
    
    358,662
    
    
    
    369,631
    
    
    
    709,259
    
    
    
    725,464General and administrative costs
    
    
    316,133
    
    
    
    286,033
    
    
    
    655,489
    
    
    
    656,764Restructuring costs and reorganization (benefit)
    
    
    107,438
    
    
    
    (13,995
    )
    
    
    21,040
    
    
    
    (13,995
    )Total operating expenses
    
    
    3,374,875
    
    
    
    2,821,202
    
    
    
    6,442,223
    
    
    
    5,719,452OPERATING INCOME
    
    
    307,429
    
    
    
    367,821
    
    
    
    814,569
    
    
    
    797,018Gain on investments, net
    
    
    3,332
    
    
    
    1,465
    
    
    
    3,830
    
    
    
    5,270Interest income
    
    
    15,187
    
    
    
    10,824
    
    
    
    25,610
    
    
    
    19,917Interest expense
    
    
    (5,816
    )
    
    
    (4,501
    )
    
    
    (11,567
    )
    
    
    (11,037
    )Other income
    
    
    17,765
    
    
    
    27,385
    
    
    
    19,291
    
    
    
    25,610Equity in losses of affiliates
    
    
    (516
    )
    
    
    (9
    )
    
    
    (1,202
    )
    
    
    (539
    )INCOME BEFORE TAXES
    
    
    337,381
    
    
    
    402,985
    
    
    
    850,531
    
    
    
    836,239Provision for taxes
    
    
    117,408
    
    
    
    153,134
    
    
    
    295,984
    
    
    
    317,771INCOME BEFORE MINORITY INTEREST
    
    
    219,973
    
    
    
    249,851
    
    
    
    554,547
    
    
    
    518,468Minority interest
    
    
    (1,350
    )
    
    
    (1,211
    )
    
    
    (3,767
    )
    
    
    (2,710
    )NET INCOME
    
    $
    218,623
    
    
    $
    248,640
    
    
    $
    550,780
    
    
    $
    515,758
 The accompanying notes are an integral part of these financial statements. 4




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##### 



ACCENTURE SCA CONSOLIDATED SHAREHOLDERS EQUITY STATEMENT For the Six Months Ended February 29, 2004
(U.S. dollars and share amounts in thousands)
(Unaudited) Class ICommonShares
    
    Class IICommonShares
    
    RestrictedShare UnitsCommonShares
    
    Additional
    
    TreasuryShares
    
    InvestmentLtdin Accenture
    
    InvestmentLtd-SECTin Accenture
    
    Retained
    

Accu-mulatedOtherComp-rehensiveNo.
    
    
    
    
    
    No.
    
    
    
    
    
    No.
    
    Paid-in
    
    
    
    
    
    No.
    
    
    
    
    
    No.
    
    
    
    
    
    No.
    
    Earnings
    
    Income$
    
    Shares
    
    $
    
    Shares
    
    $
    
    Shares
    
    Capital
    
    $
    
    Shares
    
    $
    
    Shares
    
    $
    
    Shares
    
    (Deficit)
    
    (Loss)
    
    TotalBalance at August 31, 2003
    
    $
    1,072,320
    
    
    
    958,546
    
    
    $
    529,281
    
    
    
    470,958
    
    
    $
    495,024
    
    
    
    33,803
    
    
    $
    2,687,575
    
    
    $
    (846,959
    )
    
    
    (45,257
    )
    
    $
    (88,198
    )
    
    
    (5,229
    )
    
    $
    (308,878
    )
    
    
    (18,082
    )
    
    $
    (1,708,371
    )
    
    $
    (188,233
    )
    
    $
    1,643,561Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550,780
    
    
    
    
    
    
    
    550,780Other comprehensive income (loss):Unrealized gains on marketable
securities, net of
reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,618
    
    
    
    1,618Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,077
    
    
    
    65,077Minimum pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156
    
    
    
    156Other comprehensive income
(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,851Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617,631Income tax benefit on stock-based
compensation plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,839
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,839Purchase of Accenture Ltd Class A
common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,590
    )
    
    
    
    
    
    
    
    
    
    
    (20,385
    )
    
    
    (785
    )
    
    
    (78,965
    )
    
    
    (3,500
    )
    
    
    
    
    
    
    
    
    
    
    (108,940
    )Transfer of shares from SECT
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,222
    
    
    
    (92,119
    )
    
    
    (3,707
    )
    
    
    (303,946
    )
    
    
    (17,875
    )
    
    
    387,843
    
    
    
    21,582
    
    
    
    
    
    
    
    
    
    
    
    Vesting of restricted share units, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,537
    
    
    
    310
    
    
    
    460
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,997Purchases/redemptions of Accenture
Class I common shares and Canada
Holdings Inc. exchangeable shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,595
    )
    
    
    (1,671,948
    )
    
    
    (81,463
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,684,543
    )Issuance of common shares:Employee share purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,137
    )
    
    
    
    
    
    
    
    
    
    
    86,951
    
    
    
    4,394
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,814Employee stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,644
    )
    
    
    78,342
    
    
    
    4,509
    
    
    
    35,638
    
    
    
    1,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,336Restricted share units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,871
    )
    
    
    (350
    )
    
    
    424
    
    
    
    3,419
    
    
    
    190
    
    
    
    2,028
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    In September 2003 offering
    
    
    18,301
    
    
    
    12,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    369,582
    
    
    
    750,591
    
    
    
    39,647
    
    
    
    283,401
    
    
    
    17,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,421,875Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,461Balance at February 29, 2004
    
    $
    1,090,621
    
    
    
    971,294
    
    
    $
    529,281
    
    
    
    470,958
    
    
    $
    494,690
    
    
    
    33,763
    
    
    $
    3,016,597
    
    
    $
    (1,778,674
    )
    
    
    (86,081
    )
    
    $
    (4,511
    )
    
    
    (196
    )
    
    $
    
    
    
    
    
    
    
    $
    (1,157,591
    )
    
    $
    (121,382
    )
    
    $
    2,069,031The accompanying notes are an
integral part of these financial statements.
 5




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##### 



ACCENTURE SCA CONSOLIDATED CASH FLOWS STATEMENTS
For the Six Months Ended February 29, 2004 and February 28, 2003
(In thousands of U.S. dollars)
(Unaudited) 2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    550,780
    
    
    $
    515,758Adjustments to reconcile net income to net cash provided by operating
activitiesDepreciation and amortization
    
    
    142,819
    
    
    
    123,035Reorganization benefit
    
    
    (86,216
    )
    
    
    (13,995
    )Gain on investments, net
    
    
    (3,830
    )
    
    
    (5,270
    )Loss (gain) on disposal of property and equipment, net
    
    
    4,446
    
    
    
    (6,592
    )Stock-based compensation expense
    
    
    31,863
    
    
    
    23,987Deferred income taxes, net
    
    
    (12,518
    )
    
    
    8,902Minority interest
    
    
    3,767
    
    
    
    2,710Other items, net
    
    
    2,771
    
    
    
    (22,652
    )Change in assets and liabilitiesDecrease (increase) in receivables from clients, net
    
    
    47,667
    
    
    
    (61,852
    )Decrease in other current assets
    
    
    1,456
    
    
    
    50,768Increase in unbilled services, current and non-current
    
    
    (178,381
    )
    
    
    (161,290
    )Increase in other non-current assets
    
    
    (23,363
    )
    
    
    (942
    )Decrease in accounts payable
    
    
    (81,697
    )
    
    
    (83,342
    )Increase in deferred revenues
    
    
    214,047
    
    
    
    109,857Increase in accrued payroll and related benefits
    
    
    164,254
    
    
    
    38,033Increase in income taxes payable
    
    
    190,137
    
    
    
    171,400Increase (decrease) in other accrued liabilities
    
    
    47,436
    
    
    
    (71,455
    )Decrease in other non-current liabilities
    
    
    (28,954
    )
    
    
    (5,188
    )Net cash provided by operating activities
    
    
    986,484
    
    
    
    611,872CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of available-for-sale investments
    
    
    103,303
    
    
    
    47,418Proceeds from sales of property and equipment
    
    
    3,114
    
    
    
    14,859Purchases of businesses and investments, net of cash acquired
    
    
    (6,131
    )
    
    
    (3,796
    )Purchases of available-for-sale investments
    
    
    (400,251
    )
    
    
    Purchases of property and equipment
    
    
    (101,240
    )
    
    
    (78,967
    )Net cash used in investing activities
    
    
    (401,205
    )
    
    
    (20,486
    )CASH FLOWS FROM FINANCING ACTIVITIES:Contract termination payment
    
    
    
    
    
    
    (147,569
    )Issuance of Accenture Ltd Class A common shares
    
    
    1,582,025
    
    
    
    106,397Purchase of Accenture Ltd Class A common shares
    
    
    (151,441
    )
    
    
    (157,288
    )Purchase of Accenture SCA Class I common shares
    
    
    (1,642,056
    )
    
    
    (144,026
    )Proceeds from issuance of long-term debt
    
    
    395
    
    
    
    919Repayment of long-term debt
    
    
    (1,912
    )
    
    
    (2,800
    )Proceeds from issuance of short-term bank borrowings
    
    
    72,990
    
    
    
    49,752Repayments of short-term bank borrowings
    
    
    (80,214
    )
    
    
    (59,146
    )Decrease in restricted cash of Accenture Ltd Share Employee
Compensation Trust
    
    
    83,280
    
    
    
    73,857Net cash used in financing activities
    
    
    (136,933
    )
    
    
    (279,904
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    73,108
    
    
    
    56,118NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    521,454
    
    
    
    367,600CASH AND CASH EQUIVALENTS,beginning of period
    
    
    2,332,161
    
    
    
    1,316,976CASH AND CASH EQUIVALENTS,end of period
    
    $
    2,853,615
    
    
    $
    1,684,576
 The accompanying notes are an integral part of these financial statements. 6




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##### 



ACCENTURE SCA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of
Accenture SCA, a Luxembourg 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
(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 financial statements should therefore be read in conjunction with the
consolidated financial statements and notes thereto for the fiscal year ended
August 31, 2003 included in the Companys Annual Report on Form 10-K filed with
the SEC on November 19, 2003. 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 and six months ended February
29, 2004 are not necessarily indicative of the results that may be expected for
the fiscal year ending August 31, 2004. Certain prior-period amounts have been
reclassified to conform to the current-period presentation. 2. RECENTLY ADOPTED ACCOUNTING STANDARDS In November 2002, the Emerging Issues Task Force (EITF) issued a final
consensus on Issue 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables. In May 2003, the EITF issued additional interpretive guidance
regarding the application of Issue 00-21. Issue 00-21, which provides guidance
on how and when to recognize revenues on arrangements requiring delivery of
more than one product or service, is effective prospectively for arrangements
entered into in fiscal periods beginning after June 15, 2003. Effective September 1, 2003, Accenture adopted Issue 00-21 on a
prospective basis. The Company will continue to account for contracts signed on
or before August 31, 2003 under the previous policy for contracts containing
multiple elements, as described in the notes to the consolidated financial
statements in the Companys Annual Report on Form 10-K for the fiscal year
ended August 31, 2003. Revenues for contracts with multiple elements signed or
amended after August 31, 2003 are allocated to each element based on the lesser
of the elements relative fair value or the amount that is not contingent on
future delivery of another element. Revenues allocated to separate elements are recognized for each separate
element in accordance with Accentures accounting policy for that element as
described in the notes to the consolidated financial statements in the
Companys Annual Report on Form 10-K for the fiscal year ended August 31, 2003.
If the amount of non-contingent revenue allocated to a delivered element is
less than the costs to deliver such services, then such costs are deferred and
recognized in future periods when the revenue becomes non-contingent. The adoption of Issue 00-21 has not had a material effect on the Companys
consolidated financial position as of February 29, 2004 or results of
operations for the three- and six-month periods then ended. 3. PRO FORMA IMPACT OF EMPLOYEE STOCK OPTIONS AND SHARE PURCHASE PLANS Accenture follows Accounting Principles Board Opinion No. 25 (APB 25),
Accounting for Stock Issued to Employees, in accounting for its employee
stock options and share purchase rights. Accordingly, no compensation expense
is recognized for stock options and share purchase rights granted under the
Companys employee share incentive and employee share purchase plans. Had
compensation cost for the Companys employee share incentive and employee share
purchase plans been determined based on fair value at the grant date consistent
with Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, the Companys net income would have been reduced
to the pro forma amounts indicated below: 7




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) Three Months Ended
    
    Six Months EndedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Net income as reported
    
    $
    218,623
    
    
    $
    248,640
    
    
    $
    550,780
    
    
    $
    515,758Add: Stock-based compensation expense already included in
net income as reported, net of tax and minority interest
    
    
    15,684
    
    
    
    7,206
    
    
    
    28,704
    
    
    
    16,665Deduct: Pro forma employee compensation cost related to
stock options, restricted share units and employee share
purchase plan, net of tax and minority interest
    
    
    (39,950
    )
    
    
    (38,850
    )
    
    
    (80,392
    )
    
    
    (89,844
    )Pro forma income
    
    $
    194,357
    
    
    $
    216,996
    
    
    $
    499,092
    
    
    $
    442,579
 4. INVESTMENTS Available-for-Sale Investments In February 2004, the Company transferred approximately $1,400,000 of
money-market mutual fund balances to managed investment accounts. All highly liquid investments purchased with an
original maturity of 90 days or less are considered to be cash equivalents and
are recorded at fair market value. Investments with a maturity greater than 90
days, but less than one year, at the time of purchase are considered to be
short-term investments. Investments with a maturity greater than one year at
the time of purchase are considered to be long-term investments. Marketable
short- and long-term investments are classified and accounted for as
available-for-sale. Available-for-sale investments are reported at fair value
with unrealized gains and losses recorded as a separate component of
Accumulated other comprehensive income (loss) in shareholders equity until
realized. Interest and amortization of premiums and discounts for debt
securities are included in interest income. Realized gains and losses on securities are
determined based on the FIFO method and are included in Gain (loss) on
investments, net. The Company does not hold these investments for speculative
or trading purposes. Available-for-sale investments at February 29, 2004 were as follows: Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    EstimatedCost
    
    Gains
    
    (Losses)
    
    Fair ValueU.S. Treasury securities
    
    $
    32,103
    
    
    $
    110
    
    
    $
    
    
    
    $
    32,213Asset-backed securities
    
    
    10,445
    
    
    
    11
    
    
    
    
    
    
    
    10,456Corporate debt securities
    
    
    269,746
    
    
    
    520
    
    
    
    (48
    )
    
    
    270,218Foreign government securities
    
    
    4,008
    
    
    
    43
    
    
    
    
    
    
    
    4,051Total debt securities
    
    
    316,302
    
    
    
    684
    
    
    
    (48
    )
    
    
    316,938Equity securities
    
    
    18,417
    
    
    
    
    
    
    
    (79
    )
    
    
    18,338Non-marketable securities and other
    
    
    2,727
    
    
    
    
    
    
    
    
    
    
    
    2,727Total available-for-sale investments
    
    $
    337,446
    
    
    $
    684
    
    
    $
    (127
    )
    
    $
    338,003
 The amortized cost and estimated fair value of available-for-sale
investments in debt securities at February 29, 2004, by contractual maturity,
were as follows: 8




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) Amortized
    
    Estimated FairCost
    
    ValueDue in 1 year or less
    
    $
    125,903
    
    
    $
    125,898Due in 1-2 years
    
    
    150,606
    
    
    
    151,036Due in 2-3 years
    
    
    11,971
    
    
    
    12,111Due in 3-4 years
    
    
    10,403
    
    
    
    10,409Due in 4-5 years
    
    
    10,222
    
    
    
    10,245Due after 5 years
    
    
    7,197
    
    
    
    7,239Total investments in available-for-sale debt securities
    
    $
    316,302
    
    
    $
    316,938
 The following table summarizes sales of available-for-sale investments for
the three and six months ended February 29, 2004: Three Months
    
    Six MonthsEnded
    
    EndedFebruary 29,
    
    February 29,2004
    
    2004Proceeds from sales
    
    
    97,758
    
    
    
    103,303Gross realized gains
    
    
    3,265
    
    
    
    8,838Gross realized losses
    
    
    (221
    )
    
    
    (571
    )
 5. GOODWILL A summary of the changes in the carrying amount of goodwill by segment for
the six months ended February 29, 2004 is as follows: Comm.& High
    
    FinancialTech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    TotalBeginning balance at August 31, 2003
    
    $
    60,265
    
    
    $
    40,509
    
    
    $
    21,519
    
    
    $
    38,724
    
    
    $
    27,642
    
    
    $
    188,659Goodwill additions
    
    
    3,902
    
    
    
    341
    
    
    
    252
    
    
    
    370
    
    
    
    293
    
    
    
    5,158Foreign currency translation adjustments
    
    
    6,529
    
    
    
    2,726
    
    
    
    1,428
    
    
    
    3,169
    
    
    
    2,208
    
    
    
    16,060Ending balance at February 29, 2004
    
    $
    70,696
    
    
    $
    43,576
    
    
    $
    23,199
    
    
    $
    42,263
    
    
    $
    30,143
    
    
    $
    209,877
 6. REORGANIZATION BENEFITS/COSTS During the three and six months ended February 29, 2004, Accenture
recorded expense of $182 and a benefit of $86,216, respectively, primarily
resulting from final determinations of certain reorganization liabilities
established in connection with Accentures transition to a corporate structure
in 2001. For the six months ended February 28, 2003, the reorganization
benefit was $13,995. The carrying amount of the reorganization liabilities was
$461,963 at February 29, 2004 and $510,149 at August 31, 2003. The remaining
change in the reorganization liabilities during the six months ended February
29, 2004 was due to foreign currency translation. The reorganization
liabilities are recorded as a component of Other accrued liabilities and Other
non-current liabilities on the Consolidated Balance Sheet. 7. RESTRUCTURING COSTS In the fourth quarter of 2002, Accenture recognized restructuring costs of
$110,524 related to a global consolidation of office space. At August 31, 2003,
the related liability for restructuring costs was $40,327. This liability was
reduced by payments made in the three and six months ended February 29, 2004 of
$4,885 and $10,054, respectively. The liability was also affected by immaterial
changes in lease estimates, imputed interest and foreign currency translation.
The liability at February 29, 2004 was $30,901, representing the net present
value of the estimated remaining obligations related to exiting operating
leases. 9




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) In the second quarter of 2004, Accenture management approved a real estate
consolidation plan, which was substantially completed during the second quarter
of fiscal 2004, primarily in the United States and the United Kingdom.
Accenture recognized restructuring costs of $107,256, consisting of $89,331 to
consolidate various locations and $17,925 to abandon the related fixed assets.
Payments totaling $774 were made in the three months ended February 29, 2004.
The liability was also affected by immaterial changes in lease estimates,
imputed interest and foreign currency translation. At February 29, 2004, the
related liability for restructuring costs was $89,042 and was recorded as a
component of Other accrued liabilities and Other non-current liabilities. 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of Comprehensive income are as follows: Three Months Ended
    
    Six Months EndedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Net income
    
    $
    218,623
    
    
    $
    248,640
    
    
    $
    550,780
    
    
    $
    515,758Foreign currency translation adjustments
    
    
    40,347
    
    
    
    (5,812
    )
    
    
    65,077
    
    
    
    (6,181
    )Unrealized
gains (losses) on marketable securities, net of
reclassification adjustments
    
    
    499
    
    
    
    (2,112
    )
    
    
    1,618
    
    
    
    837Minimum pension liability adjustment
    
    
    156
    
    
    
    
    
    
    
    156
    
    
    
    Comprehensive income
    
    $
    259,625
    
    
    $
    240,716
    
    
    $
    617,631
    
    
    $
    510,414
 The components of Accumulated other comprehensive income (loss) are as follows: February 29,
    
    August 31,2004
    
    2003Foreign currency translation adjustments
    
    $
    (1,987
    )
    
    $
    (67,064
    )Unrealized gains (losses) on marketable securities
    
    
    557
    
    
    
    (1,061
    )Minimum pension liability, net of tax
    
    
    (119,952
    )
    
    
    (120,108
    )Accumulated other comprehensive loss
    
    $
    (121,382
    )
    
    $
    (188,233
    )
 9. ACCENTURE SHARE EMPLOYEE COMPENSATION TRUST On December 19, 2003, the Accenture Stock Employee Compensation Trust was
terminated. A subsidiary of Accenture Ltd that is not a subsidiary of
Accenture SCA created a new Share Employee Compensation Trust (SECT).
Substantially all treasury shares purchased by the predecessor trust that had
not been used to fund employee share awards were transferred to the new SECT.
Accenture SCA and its subsidiaries will continue to provide funding to the SECT
in exchange for the redemption by Accenture SCA of Accenture SCA Class I shares
held by Accenture Ltd. Accenture Ltd will transfer proceeds from those
redemptions to the SECT. In a series of open-market purchases during the three and six months ended
February 29, 2004, the SECT and its predecessor trust acquired 1,813,050 and
5,313,050 Accenture Ltd Class A common shares, respectively, at aggregate
purchase prices of $42,501 and $121,466, respectively, for use in conjunction
with employee equity awards. At February 29, 2004, the SECT had $110,662 of
previously authorized contributions available for share purchases. 10




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) 10. ANDERSEN CONTRACTS In October 2002, Accenture and Arthur Andersen LLP terminated the prior
training facility services agreement, as well as the services agreements by
which Arthur Andersen LLP and other Arthur Andersen firms were to provide
services to Accenture and by which Accenture was to provide Arthur Andersen LLP
and other Arthur Andersen firms with services. In conjunction with the
termination of all contracts and in settlement of all related matters with
Arthur Andersen LLP and other Arthur Andersen firms, Accenture paid Arthur
Andersen LLP $190,290. This payment offset previously accrued amounts and
resulted in an immaterial gain. 11. GUARANTEES As a result of Accenture increasing its 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 growth in revenues. During the three and six months ended
February 29, 2004, Accenture made payments totaling $0 and $1,720,
respectively. The remaining potential liability at February 29, 2004 was
$185,780. 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 or earlier if certain events
occur. Accenture may also be required to purchase substantially all of the
remaining outstanding shares of Avanade, Inc. not owned by Accenture 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 party 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 other
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
February 29, 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 February 29, 2004, Accenture estimates it
had assumed an aggregate potential liability of approximately
$262,000 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 $42,000 if Accenture is obligated to make payments to the clients that are the
consequence of a performance default by the other parties. In some of these contracts, the guarantee is contractually given
to the client by one of the other parties providing services to the client. In
the event of Accentures performance default, Accenture could be responsible
for repayment to the other party. To date, Accenture has not been required to
make any payments under any of the contracts described in this paragraph; and
we believe that, if we were to incur a loss in the future in connection with
any one of these arrangements, such a loss should not have a material effect on
Accentures financial condition or results of operations. 11




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) 12. 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 the chief executive officer.
The operating segments are managed separately because each operating segment
represents a strategic business unit that serves clients in different
industries. The reportable operating segments are the Companys five operating
groups, which are Communications & High Tech, Financial Services, Government,
Products and Resources. Financial information for the Companys reportable segments is as follows: Comm. &
    
    FinancialThree Months Ended February 29, 2004
    
    High Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    930,812
    
    
    $
    647,531
    
    
    $
    467,926
    
    
    $
    715,386
    
    
    $
    538,268
    
    
    $
    2,286
    
    
    $
    3,302,209Operating income (loss)
    
    $
    59,488
    
    
    $
    62,139
    
    
    $
    43,271
    
    
    $
    96,015
    
    
    $
    46,783
    
    
    $
    (267
    )
    
    $
    307,429
 Comm. &
    
    FinancialThree Months Ended February 28, 2003
    
    High Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    786,444
    
    
    $
    570,249
    
    
    $
    361,560
    
    
    $
    642,190
    
    
    $
    463,717
    
    
    $
    2,036
    
    
    $
    2,826,196Operating income
    
    $
    91,653
    
    
    $
    75,718
    
    
    $
    53,583
    
    
    $
    106,512
    
    
    $
    40,355
    
    
    $
    
    
    
    $
    367,821
 Comm. &
    
    FinancialSix Months Ended February 29, 2004
    
    High Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    1,809,822
    
    
    $
    1,293,580
    
    
    $
    946,145
    
    
    $
    1,416,527
    
    
    $
    1,092,895
    
    
    $
    4,825
    
    
    $
    6,563,794Operating income
    
    $
    134,520
    
    
    $
    165,819
    
    
    $
    137,174
    
    
    $
    229,852
    
    
    $
    147,204
    
    
    $
    
    
    
    $
    814,569
 Comm. &
    
    FinancialSix Months Ended February 28, 2003
    
    High Tech
    
    Services
    
    Government
    
    Products
    
    Resources
    
    Other
    
    TotalRevenues before reimbursements
    
    $
    1,616,451
    
    
    $
    1,172,171
    
    
    $
    720,498
    
    
    $
    1,291,808
    
    
    $
    950,985
    
    
    $
    4,241
    
    
    $
    5,756,154Operating income
    
    $
    183,793
    
    
    $
    173,834
    
    
    $
    120,360
    
    
    $
    229,432
    
    
    $
    89,599
    
    
    $
    
    
    
    $
    797,018
 Restructuring and reorganization costs for the three months ended February
29, 2004 were $107,438 while restructuring costs and reorganization benefit for
the six months ended February 29, 2004 were $21,040. For the six months ended
February 28, 2003, the reorganization benefit was $13,995. These amounts were
allocated to the operating groups affecting their operating income by the
following amounts: Three Months Ended
    
    Six Months EndedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,Increase (Decrease) to Operating Income
    
    2004
    
    2003
    
    2004
    
    2003Communications & High Tech
    
    $
    (26,998
    )
    
    $
    3,484
    
    
    $
    (5,288
    )
    
    $
    3,484Financial Services
    
    
    (23,619
    )
    
    
    2,879
    
    
    
    (4,668
    )
    
    
    2,879Government
    
    
    (15,801
    )
    
    
    2,070
    
    
    
    (3,092
    )
    
    
    2,070Products
    
    
    (23,531
    )
    
    
    3,094
    
    
    
    (4,597
    )
    
    
    3,094Resources
    
    
    (17,489
    )
    
    
    2,468
    
    
    
    (3,395
    )
    
    
    2,468Total
    
    $
    (107,438
    )
    
    $
    13,995
    
    
    $
    (21,040
    )
    
    $
    13,995
 13. SUBSEQUENT EVENT On March 17, 2004, a tender offer made to Accenture SCA Class I
shareholders on February 13, 2004 by Accenture SCA and one of its controlled
subsidiaries resulted in the redemption or purchase of an aggregate of
11,803,861 Accenture SCA Class I common shares at a price of $22.98 per share.
At the same time, a subsidiary of Accenture SCA purchased 12




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##### 



ACCENTURE SCANOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)
(Unaudited) 749,073 Accenture Canada Holdings Inc. exchangeable shares at a price of
$22.98 per share. The total cash outlay for these transactions was $288,466. 13




---



##### 



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 fiscal year ended August 31, 2003, 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 fiscal year
ended August 31, 2003. We use the terms Accenture, the Company, we, 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 2003 or fiscal year 2003 means the 12-month period
that ended on August 31, 2003. 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 and Section 21E of the
Exchange Act 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 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 services or solutions may infringe upon the intellectual property rights of others.  
    
    Our engagements with clients may not be profitable.  
    
    If our alliances do not succeed, we may not be successful in implementing our growth strategy.  
    
    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.  
    
    We have only a limited ability to protect our intellectual property rights, which are important to our success.  
    
    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 the share price of the Accenture Ltd Class A common shares.  
    
    We continue to position ourselves to achieve increasing 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 14




---



##### 



clients on customized outsourcing solutions or, in the case
of our BPO businesses, from larger portfolios of clients for whom we provide
similar services and solutions utilizing standard operating models. As we continue to accelerate the growth of new outsourcing contracts,
we may experience increased pressure on our overall margins during the early stages of these contracts.  
    
    On certain complex engagements where we partner with others, clients are increasingly demanding that we guarantee
the performance of our business partners whom we do not control. New accounting pronouncements may also affect
when and how we report revenues associated with certain engagements.  
    
    We may be named in lawsuits as a result of Arthur Andersens current legal and financial situation based on
misconceptions about the nature of our past relationship with Arthur Andersen firms.  
    
    Negative publicity about Bermuda companies, such as our parent, Accenture Ltd, may lead to new tax or other
legislation that could increase our tax burden and may affect our relationships with our clients.  
    
    We will continue to be controlled by Accenture Ltd, which in turn will 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 are 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
fiscal year ended August 31, 2003. We undertake no obligation to update or
revise any forward-looking statements. Overview Our results of operations are affected by the economic conditions, levels
of business activity and rates of change in the industries we serve. Our
business is also driven, in part, by the pace of technological change and the
type and amount 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. Revenues are driven by the ability of our partners and other 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. As a global company, our revenues are
denominated in multiple currencies and may be significantly affected by
currency exchange-rate fluctuations. The strengthening of various currencies
versus the U.S. dollar has resulted in favorable currency translation and
increased our reported revenues. Revenues before reimbursements increased 17%
and 14% in U.S. dollars for the three and six months ended February 29, 2004,
respectively, from the comparable periods last year. In local currency terms,
revenues before reimbursements for the three and six months ended February 29,
2004 increased 8% and 6%, respectively, from the comparable periods last year. We continue to achieve an increasing percentage of our revenues and growth
through business transformation outsourcing, our approach that combines
outsourcing, including business process outsourcing, with our other
capabilities to help clients transform and outsource key processes,
applications and infrastructure to improve business performance. For both the
three and six months ended February 29, 2004, outsourcing revenues before
reimbursements increased 46% in U.S. dollars and 37% in local currency terms
compared with the same periods last year. Outsourcing contracts typically have
longer contract terms than consulting contracts; may not generate revenues as
quickly in the early stages of the contract; and generally have lower gross
margins than consulting contracts, particularly in the first year. As our
outsourcing business continues to grow, we are seeing an increase in the size,
geographic scope and/or delivery complexity of many of our outsourcing
contracts. These contracts increasingly have complex pricing models that often
tie portions of our fees to 15




---



##### 



achieving improvements in various business metrics. In some cases,
portions of our fees are affected by the level of a clients business activity,
which is outside of our control. Often such contracts also have major
transformational components or transitional activities, such as hiring large
numbers of new employees, the timely implementation of which can have a
significant impact on the timing and/or amount of costs incurred and revenues
recognized. Global economic and political conditions are continuing to cause companies
to be cautious about increasing their use of consulting services, but as their
profit margins begin to recover and companies return to focusing on improving
business performance, we are beginning to see an upturn in demand for our
consulting services. For the three months ended February 29, 2004, consulting
revenues before reimbursements increased by 4% in U.S. dollars and decreased by
5% in local currency terms compared to the second quarter of fiscal 2003.
Growth of our consulting business continues to be a critical part of our
strategy. 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. The primary categories of operating expenses include cost of services,
sales and marketing, 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 nonpayroll
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. Gross margins (revenues less cost of services) for the three and six
months ended February 29, 2004 decreased to 33% and 34%, respectively, of
revenues before reimbursements from 36% and 38%, respectively, for the same
periods last year. The declines reflect the continuing shift in our mix of
business toward outsourcing; ongoing pricing pressures; and increased variable
compensation expense. The three Communications & High Tech contracts with
lower-than-expected margins identified in the first quarter of this fiscal year
did not have a material effect on gross margins in the second quarter and
should not affect the Companys ability to meet earnings and cash flow targets
for the fiscal year. 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, as operating expenses can be significantly affected by
variable compensation and severance costs. We continue to take actions to
create a more variable cost structure. During the three months ended February
29, 2004, Accenture recorded restructuring costs of $107 million relating to
the global consolidation of office space, primarily in the United States and
the United Kingdom. This real estate consolidation will reduce fixed costs and
produce ongoing savings. While our chargeability levels are at or near all-time
highs, we continue to have supply-and-demand and skill-level imbalances in
certain industry segments and/or countries. We continue to take actions to
balance our mix of skills and resources to meet current and projected future
demand in each of our markets and will use our global sourcing approach, which
includes our network of delivery centers and other capabilities around the
world, as part of our cost effective delivery model. However, we continue to
hire substantial numbers of new employees and currently expect to hire
approximately 30,000 this fiscal year. Our ability to grow our business could
be adversely affected if we do not effectively assimilate these new employees
into our workforces. As a result of our ongoing cost-management initiatives and the continued
shift in our mix of business toward outsourcing, sales and marketing and
general and administrative costs decreased as a percentage of revenues before
reimbursements to 20% and 21% for the three and six months ended February 29,
2004, respectively, from 23% and 24%, respectively, for the same periods last
year. Operating income as a percentage of revenues before reimbursements
decreased 16




---



##### 



to 9.3% for the three months ended February 29, 2004 from 13.0% for the
three months ended February 28, 2003. This decrease was due to the decline in
gross margins as described above, increased variable compensation expense, and
$107 million of restructuring costs relating to real estate
consolidation. Restructuring costs had the effect of reducing operating income
as a percentage of revenues before reimbursements by 3.3 percentage points for the three months ended
February 29, 2004. Operating income as a percentage of revenues before
reimbursements decreased to 12.4% for the six months ended February 29, 2004
from 13.8% for the six months ended February 28, 2003. This decrease was due to
the factors described above for the three-month period, partly offset by income
of $86 million primarily resulting from final determinations of certain
reorganization liabilities established in connection with our transition to a
corporate structure in 2001. Bookings and Backlog New contract bookings for the three months ended February 29, 2004 were
$7,649 million, an increase of $2,899 million, or 61%, over new bookings of
$4,750 million for the three months ended February 28, 2003, with consulting
bookings increasing 20% to $2,889 million and outsourcing bookings increasing
103% to $4,761 million. The new contract bookings for the three months ended
February 29, 2004 include $3.12 billion for two new engagements with a client
in the United Kingdom. For the six months ended February 29, 2004, bookings
increased by 76% over bookings for the six months ended February 28, 2003, with
consulting bookings increasing by 18% and outsourcing bookings increasing by
156%. For the twelve months ended February 29, 2004, bookings increased by 60%
over bookings for the twelve months ended February 28, 2003, with consulting
bookings increasing by 17% and outsourcing bookings increasing by 120%. We provide information regarding our bookings because we believe doing so
provides useful information regarding changes in the volume of our new business
over time. However, information regarding our new bookings is not comparable
to, nor should it be substituted for, an analysis of our revenues. 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 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 income statement line items and
accounting policies, see our Annual Report on Form 10-K for the fiscal year
ended August 31, 2003. The preparation of our consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires us
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses. Our estimates, judgments and assumptions are continually
evaluated based on available information and experience. Because the use of
estimates is inherent in the financial reporting process, actual results could
differ from those estimates. Certain of our accounting policies require higher
degrees of judgment than others in their application. These include certain
aspects of accounting for revenue recognition, income taxes, variable
compensation and defined benefit pension plans. Revenue Recognition Our contracts have different terms based on the scope, deliverables and
complexity of the engagement, the terms of which frequently require Accenture
to make judgments and estimates in recognizing revenues. We have many types of
contracts, including time-and-materials contracts, fixed-price contracts and
contracts with features of both of these contract types. In addition, there is
a trend to include greater incentives in our contracts related to costs
incurred, benefits produced or adherence to schedule that may increase the
variability in revenues and margins earned on such contracts. We conduct
rigorous reviews prior to signing such contracts to evaluate whether these
incentives are reasonably achievable. For technology integration contracts,
estimated revenues for applying the percentage-of-completion method include
estimated incentives for which achievement of defined goals is deemed probable.
For non-technology integration consulting and outsourcing contracts, revenues
relating to such incentive payments are recorded when the contingency is
satisfied and when acceptance, where applicable, and delivery of agreed
benefits have occurred in accordance with SEC Staff Accounting Bulletin No.
104, Revenue Recognition in Financial Statements. 17




---



##### 



We recognize revenues from technology integration consulting contracts
using the percentage-of-completion method pursuant to the American Institute of
Certified Public Accountants Statement of Position 81-1, Accounting for
Performance of Construction Type and Certain Production Type Contracts.
Percentage-of completion accounting involves calculating the percentage of
services provided during the reporting period compared with the total estimated
services to be provided over the duration of the contract. This method is
followed where reasonably dependable estimates of revenues and costs can be
made. Estimates of total contract revenues and costs are continuously monitored
during the term of the contract, and recorded revenues and costs are subject to
revision as the contract progresses. Such revisions may result in increases or
decreases to revenues and income and are reflected in the financial statements
in the periods in which they are first identified. Outsourcing contracts typically span several years and involve complex
delivery, often through multiple workforces in different geographies. We
continuously review and reassess our estimates of contract profitability. If
our estimates indicate that a contract loss will occur, a loss accrual is
recorded in the consolidated financial statements in the period it is first
identified. Circumstances that could potentially result in contract losses over
the life of the contract include decreases in volumes of transactions or other
inputs/outputs on which we are paid, failure to deliver agreed benefits,
variances from planned internal/external costs to deliver our services, and
other factors affecting revenues and costs. Revenues for contracts with multiple elements are allocated based on the
fair value of the elements. Fair value is determined based on the prices
charged when each element is sold separately. Revenues are recognized in
accordance with our accounting policies for the separate elements when the
services have value on a stand-alone basis, fair value of the separate elements
exists and, in arrangements that include a general right of refund relative to
the delivered element, performance of the undelivered element is considered
probable and substantially in our control. While determining fair value and
identifying separate elements requires judgment, generally fair value and the
separate elements are readily identifiable as we also provide those elements
unaccompanied by the other elements in many contracts. Effective September 1,
2003, we adopted EITF Issue 00-21, Accounting for Revenue Arrangements with
Multiple Deliverables. As such, for contracts signed or amended after August
31, 2003, revenues are allocated to each element based on the lesser of fair
value or the amount that is not contingent on future delivery of another
element. If the amount of non-contingent revenue allocated to a delivered
element is less than the costs to deliver such services, then such costs are
deferred and recognized in future periods when the revenue becomes
non-contingent. Income Taxes Determining the consolidated provision for income tax expense, deferred
tax assets and liabilities and related valuation allowance involves judgment.
As a global company, we are required to calculate and provide for income taxes
in each of the tax jurisdictions where we operate. This involves estimating
current tax exposures in each jurisdiction as well as making judgments
regarding the recoverability of deferred tax assets. Tax exposures can involve
complex issues and may require an extended period to resolve. Changes in the
geographic mix or estimated level of annual pre-tax income can affect the
overall effective tax rate. Our effective tax rates for both the three and six
months ended February 29, 2004 were 34.8% as compared to 38.0% for both the
three and six months ended February 28, 2003. Variable Compensation We record compensation expense for payments to be made in later fiscal
periods to our partners and other senior employees under the variable
compensation portions of our overall compensation programs. Determining the
amount of expense to recognize as operating expenses for variable compensation
at interim and annual reporting dates involves judgment. Expenses accrued for
variable compensation are based on actual quarterly and annual operational
performance versus plan targets and other factors. Amounts accrued are subject
to change in future periods if future performance is below plan targets or is
below the performance levels anticipated in prior periods. Management believes
it makes reasonable judgments using all significant information available. The
liability recorded as of February 29, 2004 for variable compensation was $82
million, of which we expect to pay approximately $12 million in the third
quarter of fiscal 2004 with the remainder payable in subsequent quarters
provided performance targets are met. The following table shows quarterly
variable compensation expense (benefit). 18




---



##### 



Second
    
    First
    
    Fourth
    
    Third
    
    Second
    
    FirstQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(in millions)
    
    2004
    
    2004
    
    2003
    
    2003
    
    2003
    
    2003Variable Compensation
    
    $
    64
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6
    )
    
    $
    17
 We reversed $4 million of previously accrued variable compensation during
the first quarter of fiscal 2004 and accrued $64 million of variable
compensation expense during the second quarter of fiscal 2004, bringing the
year-to-date-accrual to $60 million, compared with $11 million in the first six
months of fiscal 2003. In fiscal 2004, we increased the variable component of
target compensation for larger proportions of our global workforce. Effective
December 1, 2003, as part of the changes to our partner compensation model, we
increased the variable component of our partners target compensation as a
percentage of our partners total compensation. Defined Benefit Pension Plans In the United States and certain other countries, Accenture maintains and
administers defined benefit pension plans. The annual cost of these plans can
be significantly affected by changes in assumptions and differences between
expected and actual experience. Pension expense was $57 million and $34 million
for the first six months of fiscal 2004 and 2003, respectively. The pension
assumptions used to determine annual pension expense for fiscal 2004 and fiscal
2003 are as follows: Fiscal 2004
    
    Fiscal 2003U.S. Plans
    
    Non-U.S. Plans
    
    U.S. Plans
    
    Non-U.S. PlansDiscount rate
    
    
    6.00
    %
    
    
    4.85
    %
    
    
    7.25
    %
    
    
    4.92
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    5.66
    %
    
    
    8.50
    %
    
    
    5.35
    %
 A one-percentage-point increase in the discount rate would decrease our
annual pension expense by $31 million. A one-percentage-point decrease in the
discount rate would increase our annual pension expense by $40 million. A one-percentage-point increase in our return on plan assets would
decrease our annual pension expense by $5 million. A one-percentage point
decrease in our return on plan assets would increase our annual pension expense
by $5 million. SFAS 87 requires recognition of a minimum pension liability if the fair
value of pension assets is less than the accumulated benefit obligation. During
fiscal 2003, we recorded a charge to equity of $108 million representing an
adjustment to increase our pension liability by $180 million, net of a tax
benefit of $72 million. This charge was included in accumulated other
comprehensive loss in the shareholders equity section of our balance sheet.
Additional charges to equity may be required in the future depending on future
contributions to our pension plans, returns on pension plan assets and interest
rates. Revenues by Segment / Operating Group 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 it is a better indicator of
operating group performance than is revenues. From time to time, our operating
groups work together to sell and implement certain engagements. The resulting
revenues and costs from these engagements 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 current economic environment
and its continuing effects on the industries served by our operating segments
affect revenues and operating expenses within our operating segments to
different degrees. Personnel reductions have not been taken uniformly across
our operating segments, 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 to outsourcing engagements is not uniform among our
operating groups and, consequently, neither is the impact on operating group
revenues caused by these transitions. Local currency fluctuations also tend to
affect our operating groups differently, depending on the historical and
current geographic concentrations and locations of their businesses. 19




---



##### 



The following tables provide revenues for each of these operating groups. Three Months Ended
    
    PercentageIncrease
    
    PercentageIncrease(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyRevenues:Communications & High Tech
    
    $
    931
    
    
    $
    786
    
    
    
    18
    %
    
    
    12
    %Financial Services
    
    
    648
    
    
    
    570
    
    
    
    14
    
    
    
    4Government
    
    
    468
    
    
    
    362
    
    
    
    29
    
    
    
    23Products
    
    
    715
    
    
    
    642
    
    
    
    11
    
    
    
    3Resources
    
    
    538
    
    
    
    464
    
    
    
    16
    
    
    
    8Other
    
    
    2
    
    
    
    2
    
    
    
    12
    
    
    
    n/mTotal revenues before reimbursements
    
    
    3,302
    
    
    
    2,826
    
    
    
    17
    %
    
    
    8
    %Reimbursements
    
    
    380
    
    
    
    363Total
    
    $
    3,682
    
    
    $
    3,189Revenues as a percentage of total:Communications & High Tech
    
    
    25
    %
    
    
    25
    %Financial Services
    
    
    18
    
    
    
    18Government
    
    
    13
    
    
    
    11Products
    
    
    19
    
    
    
    20Resources
    
    
    15
    
    
    
    15Other
    
    
    n/m
    
    
    
    n/mTotal revenues before reimbursements
    
    
    90
    
    
    
    89Reimbursements
    
    
    10
    
    
    
    11Total
    
    
    100
    %
    
    
    100
    %
 Six Months Ended
    
    PercentageIncrease
    
    PercentageIncrease(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyRevenues:Communications & High Tech
    
    $
    1,810
    
    
    $
    1,617
    
    
    
    12
    %
    
    
    6
    %Financial Services
    
    
    1,294
    
    
    
    1,172
    
    
    
    10
    
    
    
    1Government
    
    
    946
    
    
    
    720
    
    
    
    31
    
    
    
    25Products
    
    
    1,417
    
    
    
    1,292
    
    
    
    10
    
    
    
    2Resources
    
    
    1,093
    
    
    
    951
    
    
    
    15
    
    
    
    7Other
    
    
    5
    
    
    
    4
    
    
    
    14
    
    
    
    n/mTotal revenues before reimbursements
    
    
    6,564
    
    
    
    5,756
    
    
    
    14
    %
    
    
    6
    %Reimbursements
    
    
    693
    
    
    
    760Total
    
    $
    7,257
    
    
    $
    6,516Revenues as a percentage of total:Communications & High Tech
    
    
    25
    %
    
    
    25
    %Financial Services
    
    
    18
    
    
    
    18Government
    
    
    13
    
    
    
    11Products
    
    
    19
    
    
    
    20Resources
    
    
    15
    
    
    
    14Other
    
    
    n/m
    
    
    
    n/mTotal revenues before reimbursements
    
    
    90
    
    
    
    88Reimbursements
    
    
    10
    
    
    
    12Total
    
    
    100
    %
    
    
    100
    %
   n/m
    
    = not meaningful 20




---



##### 



Geographic Information Revenues are attributed to geographic areas based on where client services
are supervised. Three Months Ended
    
    PercentageIncrease
    
    PercentageIncrease(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyRevenues:Americas
    
    $
    1,501
    
    
    $
    1,346
    
    
    
    12
    %
    
    
    9
    %EMEA (1)
    
    
    1,576
    
    
    
    1,289
    
    
    
    22
    
    
    
    7Asia/Pacific
    
    
    225
    
    
    
    191
    
    
    
    18
    
    
    
    6Total revenues before reimbursements
    
    
    3,302
    
    
    
    2,826
    
    
    
    17
    %
    
    
    8
    %Reimbursements
    
    
    380
    
    
    
    363Total
    
    $
    3,682
    
    
    $
    3,189Revenues as a percentage of total:Americas
    
    
    41
    %
    
    
    42
    %EMEA (1)
    
    
    43
    
    
    
    41Asia/Pacific
    
    
    6
    
    
    
    6Total revenues before reimbursements
    
    
    90
    
    
    
    89Reimbursements
    
    
    10
    
    
    
    11Total
    
    
    100
    %
    
    
    100
    %
 Six Months Ended
    
    PercentageIncrease
    
    PercentageIncrease(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyRevenues:Americas
    
    $
    2,993
    
    
    $
    2,738
    
    
    
    9
    %
    
    
    7
    %EMEA (1)
    
    
    3,126
    
    
    
    2,620
    
    
    
    19
    
    
    
    5Asia/Pacific
    
    
    445
    
    
    
    398
    
    
    
    12
    
    
    
    1Total revenues before reimbursements
    
    
    6,564
    
    
    
    5,756
    
    
    
    14
    %
    
    
    6
    %Reimbursements
    
    
    693
    
    
    
    760Total
    
    $
    7,257
    
    
    $
    6,516Revenues as a percentage of total:Americas
    
    
    41
    %
    
    
    42
    %EMEA (1)
    
    
    43
    
    
    
    40Asia/Pacific
    
    
    6
    
    
    
    6Total revenues before reimbursements
    
    
    90
    
    
    
    88Reimbursements
    
    
    10
    
    
    
    12Total
    
    
    100
    %
    
    
    100
    %
   (1)
    
    EMEA includes Europe, the Middle East and Africa 21




---



##### 



Revenues by Type of Work The following table presents revenues before reimbursements by types of services. PercentageThree Months Ended
    
    PercentageIncrease
    
    Increase(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyConsulting
    
    $
    2,026
    
    
    $
    1,952
    
    
    
    4
    %
    
    
    (5
    )%Outsourcing
    
    
    1,277
    
    
    
    875
    
    
    
    46
    
    
    
    37Revenues before reimbursements
    
    
    3,302
    
    
    
    2,826
    
    
    
    17
    %
    
    
    8
    %Reimbursements
    
    
    380
    
    
    
    363Revenues
    
    $
    3,682
    
    
    $
    3,189
   Note:
    
    For the three months ended February 28, 2003, $79 million of
revenues before reimbursements previously classified as Other have
been reclassified to Consulting or Outsourcing type of work to
conform to the current presentation. PercentageSix Months Ended
    
    PercentageIncrease
    
    Increase(Decrease)February 29,
    
    February 28,
    
    (Decrease)
    
    Local(in millions, except for percentages)
    
    2004
    
    2003
    
    US$
    
    CurrencyConsulting
    
    $
    4,121
    
    
    $
    4,077
    
    
    
    1
    %
    
    
    (7
    )%Outsourcing
    
    
    2,443
    
    
    
    1,679
    
    
    
    46
    
    
    
    37Revenues before reimbursements
    
    
    6,564
    
    
    
    5,756
    
    
    
    14
    %
    
    
    6
    %Reimbursements
    
    
    693
    
    
    
    760Revenues
    
    $
    7,257
    
    
    $
    6,516
   Note:
    
    For the six months ended February 28, 2003, $148 million of revenues
before reimbursements previously classified as Other have been
reclassified to Consulting or Outsourcing type of work to conform to
the current presentation. Three Months Ended February 29, 2004 Compared to Three Months Ended February 28, 2003 Revenues Revenues for the three months ended February 29, 2004 were $3,682 million,
an increase of $493 million, or 15%, over the three months ended February 28,
2003. Revenues before reimbursements for the three months ended February 29,
2004 were $3,302 million, an increase of $476 million, or 17%, over the three
months ended February 28, 2003 in U.S. dollars. In local currency terms,
revenues before reimbursements for the three months ended February 29, 2004
increased 8% over the three months ended February 28, 2003. Our Communications & High Tech operating group achieved revenues before
reimbursements of $931 million for the three months ended February 29, 2004, an
increase of 18% over the three months ended February 28, 2003, primarily due to
favorable currency translation and increased revenues from large outsourcing
contracts. Our Financial Services operating group revenues before reimbursements were
$648 million for the three months ended February 29, 2004, an increase of 14%
over the three months ended February 28, 2003, primarily due to outsourcing
revenue growth and the strength of the Euro. Revenue growth in our Capital
Markets industry group and clients in the United Kingdom also contributed to
the revenue growth within Financial Services. Our Government operating group achieved revenues before reimbursements of
$468 million for the three months ended February 29, 2004, an increase of 29%
over the three months ended February 28, 2003, reflecting strong revenue growth
in both new consulting and outsourcing engagements and growth across all
geographical areas, particularly from U.S. Federal government clients, and
clients in the United Kingdom and Asia Pacific region. 22




---



##### 



Our Products operating group achieved revenues before reimbursements of
$715 million for the three months ended February 29, 2004, an increase of 11%
over the three months ended February 28, 2003, reflecting revenue growth across
most industry groups, particularly in our Pharmaceuticals & Medical Products
industry group, partly offset by decreases in our Transportation & Travel
Services industry group. The increase also reflects the strengthening of the
Euro and British pound. Our Resources operating group achieved revenues before reimbursements of
$538 million for the three months ended February 29, 2004, an increase of 16%
over the three months ended February 28, 2003, as a result of strong growth in
outsourcing and favorable currency translation. Growth in our Utilities,
Natural Resources and Energy industry groups more than offset declines in our
Chemicals industry group and the Asia Pacific region. Operating Expenses Operating expenses for the three months ended February 29, 2004 were
$3,375 million, an increase of $554 million, or 20%, over the three months
ended February 28, 2003, and increased as a percentage of revenues from 88% for
the three months ended February 28, 2003 to 92% for the three months ended
February 29, 2004. As a percentage of revenues before reimbursements, operating
expenses before reimbursable expenses increased from 87% to 91% over this
period. This increase was primarily due to restructuring costs of $107 million
relating to the Companys global consolidation of office space. As a percentage
of revenues before reimbursements, operating expenses before reimbursable
expenses would have been 3.3 percentage points lower had these restructuring
costs not been included. The strengthening of various currencies against the
U.S. dollar also increased reported operating expenses for the three months
ended February 29, 2004 compared to the same three-month period last year,
partially offsetting corresponding increases in reported revenues. Cost of Services Cost of services was $2,593 million for the three months ended February
29, 2004, an increase of $413 million, or 19%, over the three months ended
February 28, 2003, and an increase as a percentage of revenues from 68% to 70%
over this period. Cost of services before reimbursable expenses was $2,213
million for the three months ended February 29, 2004, an increase of $396
million, or 22%, over the three months ended February 28, 2003. Cost of
services before reimbursable expenses increased as a percentage of revenues
before reimbursements from 64% to 67% over this period. The primary drivers of
the increase in cost of services were higher outsourcing costs resulting from a
46% increase in outsourcing revenues and from higher variable compensation
expense. The strengthening of various currencies against the U.S. dollar also
contributed to the $396 million increase. Gross margins (revenues less cost of services) in the three months ended
February 29, 2004 decreased to 33% of revenues before reimbursements from 36%
in the three months ended February 28, 2003. This decrease resulted from the
continuing shift in our mix of business toward outsourcing; ongoing pricing
pressures; and increased variable compensation expense. The three
Communications & High Tech contracts with lower-than-expected margins
identified in the first quarter of fiscal 2004 did not have a material effect
on gross margins in the second quarter and should not affect the Companys
ability to meet earnings and cash flow targets for the fiscal year. Sales and Marketing Sales and marketing expense was $359 million for the three months ended
February 29, 2004, a decrease of $11 million, or 3%, from the three months
ended February 28, 2003, and decreased as a percentage of revenues before
reimbursements from 13% to 11% over this period. The decline reflects a $13
million decrease in business development and market development costs and a $4
million decrease in market management costs, partly offset by a $10 million
increase in variable compensation expense, as well as the effect of currency
translation. General and Administrative Costs General and administrative costs were $316 million for the three months
ended February 29, 2004, an increase of $30 million, or 11%, from the three
months ended February 28, 2003, and remained constant as a percentage of
revenues before reimbursements at 10%. Key drivers of the increase include a $9
million reduction in bad debt expense in the prior 23




---



##### 



year, a $7 million increase in geographic facility and technology costs, a
$7 million increase in business protection costs, as well as the effect of
currency translation. Restructuring Costs and Reorganization Benefit During the three months ended February 29, 2004, Accenture recorded
restructuring costs of $107 million relating to the Companys global
consolidation of office space, primarily in the United States and the United
Kingdom. These costs include losses on operating leases and write-downs of
related assets such as leasehold improvements resulting from abandoned office
space. During the three months ended February 28, 2003, Accenture recorded a
benefit of $14 million resulting from a decrease in certain reorganization
liabilities established in connection with our transition to a corporate
structure in 2001. Operating Income Operating income was $307 million for the three months ended February 29,
2004, a decrease of $60 million, or 16%, from the three months ended February
28, 2003. Operating income decreased as a percentage of revenues before
reimbursements from 13.0% to 9.3% over this period. For the three months ended
February 29, 2004, operating income included restructuring costs of $107
million as discussed above, which reduced operating income as a percentage of
revenues before reimbursements by 3.3 percentage points. Lower gross margins
and higher variable compensation expense offset savings in sales and marketing
and favorable currency translation due to strengthening of various currencies
against the U.S. dollar. Operating income for each of the operating groups is as follows (in
millions): Three Months EndedFebruary 29,
    
    February 28,
    
    IncreaseOperating Income
    
    2004
    
    2003
    
    (Decrease)Communications & High Tech
    
    $
    59
    
    
    $
    91
    
    
    $
    (32
    )Financial Services
    
    
    62
    
    
    
    76
    
    
    
    (14
    )Government
    
    
    43
    
    
    
    53
    
    
    
    (10
    )Products
    
    
    96
    
    
    
    107
    
    
    
    (11
    )Resources
    
    
    47
    
    
    
    40
    
    
    
    7Total
    
    $
    307
    
    
    $
    367
    
    
    $
    (60
    )
 The $107 million in restructuring charges for the three months ended
February 29, 2004 and the $14 million decrease in reorganization liabilities
for the three months ended February 28, 2003 were allocated to the operating
groups, affecting their operating income by the following amounts (in
millions): Three Months EndedFebruary 29,
    
    February 28,
    
    IncreaseIncrease (Decrease) to Operating Income
    
    2004
    
    2003
    
    (Decrease)Communications & High Tech
    
    $
    (26
    )
    
    $
    4
    
    
    $
    (30
    )Financial Services
    
    
    (24
    )
    
    
    3
    
    
    
    (27
    )Government
    
    
    (16
    )
    
    
    2
    
    
    
    (18
    )Products
    
    
    (24
    )
    
    
    3
    
    
    
    (27
    )Resources
    
    
    (17
    )
    
    
    2
    
    
    
    (19
    )Total
    
    $
    (107
    )
    
    $
    14
    
    
    $
    (121
    )
 Excluding the restructuring costs and reorganization benefit, operating
income for the three months ended February 29, 2004 would have increased by $61
million over the three months ended February 28, 2003. This $61 million
increase reflects increases of $13 million, $8 million, $16 million and $26
million in the Financial Services, Government, Products and 24




---



##### 



Resources operating groups, respectively, partially offset by a decrease
of $2 million in the Communications & High Tech operating group. The increases
in Financial Services and Products operating income reflect increases in
revenues before reimbursements of 14% and 11%, respectively, which were partly
offset by lower gross margins reflecting the shift in the mix of our business
toward outsourcing. The increase in Resources operating income was driven by a
16% increase in revenues before reimbursements, improved chargeability and
savings from cost-management initiatives. Government operating income increased
primarily due to a 29% increase in revenues before reimbursements, partly
offset by higher business development costs in support of large contracts.
Communications & High Tech operating income decreased as lower margins offset
revenue increases. Other Income (Expense) Other income (expense) for the three months ended February 29, 2004 was
$18 million, a decrease of $10 million, or 35%, from the three months ended
February 28, 2003, due to lower foreign currency gains during the three months
ended February 28, 2004, as the Euro and British pound strengthened against the
U.S. dollar. Provision for Taxes The effective tax rate for the three months ended February 29, 2004 was
34.8%. We expect our effective tax rate for fiscal 2004 to be 34.8%. The
decrease in reorganization liabilities during the three months ended November
30, 2003 reduced the 2004 projected annual effective tax rate by 1.8 percentage
points. The decrease in reorganization liabilities has the effect of increasing
pre-tax income in fiscal 2004 without a corresponding increase in the provision
for income taxes. The effective tax rate for the three months ended February 28, 2003 was
38.0%, while the effective tax rate for the fiscal year ended August 31, 2003
was 35.1%. The rate declined from 38.0% to 35.1% during fiscal 2003 as a result
of a reversal of previously accrued taxes following the favorable settlement of
certain prior-year non-U.S. income tax liabilities and lower-than-estimated
non-U.S. withholding tax requirements. The decrease from 38.0% for the three months ended February 28, 2003 to
34.8% for the three months ended February 29, 2004 resulted from the tax effect
of the reduction in reorganization liabilities and a reduction of prior-year
income tax liabilities as a result of a favorable settlement of a non-U.S. tax
audit in fiscal 2004. Six Months Ended February 29, 2004 Compared to Six Months Ended February 28, 2003 Revenues Revenues for the six months ended February 29, 2004 were $7,257 million,
an increase of $740 million, or 11%, over the six months ended February 28,
2003. Revenues before reimbursements for the six months ended February 29, 2004
were $6,564 million, an increase of $808 million, or 14%, over the six months
ended February 28, 2003 in U.S. dollars. In local currency terms, revenues
before reimbursements for the six months ended February 29, 2004 increased 6%
over the six months ended February 28, 2003. Our Communications & High Tech operating group achieved revenues before
reimbursements of $1,810 million for the six months ended February 29, 2004, an
increase of 12% over the six months ended February 28, 2003, primarily due to
favorable currency translation and increased revenues from large outsourcing
contracts, which offset lower consulting revenues. Our Financial Services operating group achieved revenues before
reimbursements of $1,294 million for the six months ended February 29, 2004, an
increase of 10% over the six months ended February 28, 2003, primarily due to
outsourcing revenue growth and the strength of the Euro, which offset lower
consulting revenues. Revenue growth in our Capital Markets industry group and
clients in the United Kingdom also contributed to the revenue growth within
Financial Services. Our Government operating group achieved revenues before reimbursements of
$946 million for the six months ended February 29, 2004, an increase of 31%
over the six months ended February 28, 2003, reflecting strong revenue growth
in both new consulting and outsourcing engagements and growth across all
geographical areas, particularly from U.S. Federal government clients, and
clients in the United Kingdom and Asia Pacific region. 25




---



##### 



Our Products operating group achieved revenues before reimbursements of
$1,417 million for the six months ended February 29, 2004, an increase of 10%
over the six months ended February 28, 2003, primarily as a result of
outsourcing revenue growth, as well as growth in our Pharmaceuticals & Medical
Products industry group, partly offset by decreases in our Transportation &
Travel Services industry group. The increase also reflects the strengthening of
the Euro and British pound. Our Resources operating group achieved revenues before reimbursements of
$1,093 million for the six months ended February 29, 2004, an increase of 15%
over the six months ended February 28, 2003, as strong growth in outsourcing
and favorable currency translation more than offset decreases in our consulting
revenues. Growth in our Utilities, Natural Resources and Energy industry groups
more than offset declines in our Chemicals industry group and the Asia Pacific
region. Operating Expenses Operating expenses for the six months ended February 29, 2004 were $6,442
million, an increase of $723 million, or 13%, over the six months ended
February 28, 2003, and increased as a percentage of revenues from 88% for the
six months ended February 28, 2003 to 89% for the six months ended February 29,
2004. As a percentage of revenues before reimbursements, operating expenses
before reimbursable expenses increased from 86% to 88% over this period. For
the six months ended February 29, 2004, operating expenses included
restructuring costs of $107 million relating to the Companys global
consolidation of office space and a benefit of $86 million primarily resulting
from final determinations of certain reorganization liabilities established in
connection with our transition to a corporate structure in 2001. As a
percentage of revenues before reimbursements, operating expenses before
reimbursable expenses for the six months ended February 29, 2004 would have
been 0.3 of a percentage point lower had these items not been included. The
strengthening of various currencies against the U.S. dollar increased reported
operating expenses for the six months ended February 29, 2004 compared to the
same six-month period last year, partially offsetting corresponding increases
in reported revenues. Cost of Services Cost of services was $5,056 million for the six months ended February 29,
2004, an increase of $705 million, or 16%, over the six months ended February
28, 2003, and increased as a percentage of revenues from 67% to 70% over this
period. Cost of services before reimbursable expenses was $4,363 million for
the six months ended February 29, 2004, an increase of $773 million, or 22%,
over the six months ended February 28, 2003. Cost of services before
reimbursable expenses increased as a percentage of revenues before
reimbursements from 62% to 66% over this period. The primary drivers of the
increase in cost of services were higher outsourcing costs resulting from a 46%
increase in outsourcing revenues and higher costs on three contracts. The
strengthening of various currencies against the U.S. dollar also contributed to
the $773 million increase. Gross margins (revenues less cost of services) in the six months ended
February 29, 2004 decreased to 34% of revenues before reimbursements from 38%
in the six months ended February 28, 2003. This decrease resulted from the
continuing shift in our mix of business toward outsourcing; ongoing pricing
pressures; increased variable compensation expense; and lower-than-expected
margins during the first quarter of fiscal 2004 from three contracts within our
Communications & High Tech operating group. The unplanned reduction in margins
on the three contracts reduced gross margins by approximately $50 million and
reduced gross margins as a percentage of revenues before reimbursements by 1.2
percentage points during the first quarter of fiscal 2004. These three
contracts did not have a material effect on gross margins in the second quarter
and should not affect the Companys ability to meet earnings and cash flow
targets for the fiscal year. Sales and Marketing Sales and marketing expense was $709 million for the six months ended
February 29, 2004, a decrease of $16 million, or 2%, from the six months ended
February 28, 2003, and decreased as a percentage of revenues before
reimbursements from 13% to 11% over this period. Key drivers of the decline
include a $20 million decrease in business development and market development
costs, partly offset by the effect of currency translation. 26




---



##### 



General and Administrative Costs General and administrative costs were $655 million for the six months
ended February 29, 2004, a decrease of $1 million from the six months ended
February 28, 2003, and decreased as a percentage of revenues before
reimbursements from 11% to 10% over this period. Key drivers of the decline
include a $10 million decrease in geographic facility and technology costs, a
$7 million decrease in corporate function costs, as well as the effect of
currency translation. These decreases were partly offset by a $24 million
increase in business protection costs. Restructuring Costs and Reorganization Benefit During the six months ended February 29, 2004, Accenture recorded
restructuring costs of $107 million relating to the Companys global
consolidation of office space, primarily in the United States and the United
Kingdom. These costs include losses on operating leases and write-downs of
related assets such as leasehold improvements resulting from abandoned office
space. During the first quarter of fiscal 2004, the Company recorded income of
$86 million primarily resulting from final determinations of certain
reorganization liabilities established in connection with our transition to a
corporate structure in 2001. During the six months ended February 28, 2003, Accenture recorded a
benefit of $14 million resulting primarily from a decrease in certain
reorganization liabilities established in connection with our transition to a
corporate structure in 2001. Operating Income Operating income was $815 million for the six months ended February 29,
2004, an increase of $18 million, or 2%, over the six months ended February 28,
2003. Operating income decreased as a percentage of revenues before
reimbursements from 13.8% to 12.4% over this period. For the six months ended
February 29, 2004, operating income included restructuring costs of $107
million and a reorganization benefit of $86 million as discussed above, which
reduced operating income as a percentage of revenues before reimbursements by
0.3 of a percentage point. Lower gross margins and higher variable compensation
expense offset savings in sales and marketing, general and administrative
costs, and favorable currency translation due to strengthening of various
currencies against the U.S. dollar. Operating income for each of the operating groups is as follows (in
millions): Six Months EndedFebruary 29,
    
    February 28,
    
    IncreaseOperating Income
    
    2004
    
    2003
    
    (Decrease)Communications & High Tech
    
    $
    135
    
    
    $
    184
    
    
    $
    (49
    )Financial Services
    
    
    166
    
    
    
    174
    
    
    
    (8
    )Government
    
    
    137
    
    
    
    120
    
    
    
    17Products
    
    
    230
    
    
    
    229
    
    
    
    1Resources
    
    
    147
    
    
    
    90
    
    
    
    57Total
    
    $
    815
    
    
    $
    797
    
    
    $
    18
 Restructuring costs and reorganization benefit totaling $21 million for
the six months ended February 29, 2004 and the $14 million decrease in
reorganization liabilities for the six months ended February 28, 2003 were
allocated to the operating groups, affecting their operating income by the
following amounts (in millions): 27




---



##### 



Six Months EndedFebruary 29,
    
    February 28,
    
    IncreaseIncrease (Decrease) to Operating Income
    
    2004
    
    2003
    
    (Decrease)Communications & High Tech
    
    $
    (5
    )
    
    $
    4
    
    
    $
    (9
    )Financial Services
    
    
    (5
    )
    
    
    3
    
    
    
    (8
    )Government
    
    
    (3
    )
    
    
    2
    
    
    
    (5
    )Products
    
    
    (5
    )
    
    
    3
    
    
    
    (8
    )Resources
    
    
    (3
    )
    
    
    2
    
    
    
    (5
    )Total
    
    $
    (21
    )
    
    $
    14
    
    
    $
    (35
    )
 Excluding the restructuring costs and reorganization benefits, operating
income for the six months ended February 29, 2004 would have increased by $53
million over the six months ended February 28, 2003. This $53 million increase
reflects increases of $22 million, $8 million and $63 million in the
Government, Products, and Resources operating groups, respectively, partially
offset by a decrease of $40 million in the Communications & High Tech operating
group. Government operating income increased primarily due to a 31% increase in
revenues before reimbursements, partly offset by higher business development
costs in support of large contracts. Products operating income increased
primarily due to a 10% increase in revenues before reimbursements, partly
offset by lower gross margins, reflecting the shift in the mix of our business
toward outsourcing. The increase in Resources operating income was driven by a
15% increase in revenues before reimbursements, improved chargeability and
savings from cost-management initiatives. Communications & High Tech operating
income decreased as lower margins offset revenue increases. Other Income (Expense) Other income (expense) for the six months ended February 29, 2004 was $19
million, a decrease of $6 million, or 25%, from the six months ended February
28, 2003, resulting from lower currency exchange gains. Provision for Taxes The effective tax rate for the six months ended February 29, 2004 was
34.8%. We expect our effective tax rate for fiscal 2004 to be 34.8%. The
decrease in reorganization liabilities during the six months ended February 29,
2004 reduced the 2004 annual effective tax rate by 1.8 percentage points. The
decrease in reorganization liabilities has the effect of increasing pre-tax
income in fiscal 2004 without a corresponding increase in the provision for
income taxes. The effective tax rate for the six months ended February 28, 2003 was
38.0%, while the effective tax rate for the fiscal year ended August 31, 2003
was 35.1%. The rate declined from 38.0% to 35.1% during fiscal 2003 as a result
of a reversal of previously accrued taxes following the favorable settlement of
certain prior-year non-U.S. income tax liabilities and lower-than-estimated
non-U.S. withholding tax requirements. The decrease from 38.0% for the six months ended February 28, 2003 to
34.8% for the six months ended February 29, 2004 resulted from the tax effect
of the reduction in reorganization liabilities and a reduction of prior-year
income tax liabilities as a result of a favorable settlement of a non-U.S. tax
audit in fiscal 2004 . 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 generated by operating activities for the six months ended
February 29, 2004 totaled $986 million. At February 29, 2004, cash and cash
equivalents totaled $2,854 million, while total debt was $52 million. Cash and
cash equivalents combined with $305 million of liquid fixed-income securities,
which were classified as investments on our Consolidated Balance Sheet, totaled
$3,159 million. We may also raise additional funds through public or private
debt or equity financings in order to:  
    
    take advantage of opportunities, including more rapid expansion; 28




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
    
    acquire complementary businesses or technologies;
    
    develop new services and solutions;
    
    respond to competitive pressures; or
    
    facilitate share dispositions by our partners, former partners and
their permitted transferees pursuant to our Share Management Plan and
certain purchases from our other employees. For a more detailed description of our Share Management Plan, see Certain
Transaction and RelationshipsShare Management Plan in our Annual Report on
Form 10-K for the fiscal year ended August 31, 2003. Net cash provided by operating activities was $986 million for the six
months ended February 29, 2004, an increase of $375 million over the six months
ended February 28, 2003. This increase was primarily attributable to a decrease
in net client balances (receivables, unbilled services and deferred revenues
combined), an increase in accrued payroll and related benefits, a
decrease in other current assets, and an increase in other accrued liabilities. Net cash used in investing activities was $401 million for the six months
ended February 29, 2004, an increase of $381 million over the six months ended
February 28, 2003. The increase was primarily due to purchases of marketable
securities, lower proceeds from sales of investments and increased capital
spending on property and equipment. Net cash used in financing activities was $137 million for the six months
ended February 29, 2004, a decrease of $143 million from the six months ended
February 28, 2003. Increases in proceeds from the issuance of Accenture Ltd
Class A common shares and the absence of contract termination payments in
fiscal 2004 were partially offset by increased purchases of Accenture SCA Class
I common shares. We have two $537.5 million syndicated facilities, including one 364-day
facility and one three-year facility, providing unsecured, revolving borrowing
capacity for general working capital purposes, including, in the case of the
three-year facility, the issuance of letters of credit on behalf of Accenture
affiliates. Financing is provided under these facilities at the prime rate or
at the London Interbank Offered Rate plus a spread, and bid option financing is
available. These facilities require us to: (1) limit liens placed on our assets
to (a) liens incurred in the ordinary course of business (subject to certain
limitations) and (b) other liens securing aggregate amounts not in excess of
30% of our total assets; and (2) maintain a debt-to-cash-flow ratio not
exceeding 1.75 to 1.00. We are in compliance with these terms. As of February
29, 2004, we had no borrowings under either facility and $90 million in letters
of credit outstanding under the three-year facility. We also maintain four separate bilateral, uncommitted, unsecured
multicurrency revolving credit facilities. As of February 29, 2004, these
facilities provided for up to $251 million of local currency financing in
countries where we cannot readily access our syndicated facilities. We also
maintain local guaranteed and non-guaranteed lines of credit. As of February
29, 2004, amounts available under these facilities totaled $233 million. At
February 29, 2004, we had $30 million outstanding under these various
facilities and $6 million of other short-term borrowings. 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 six months ended February 29, 2004 and February 28, 2003, we
invested $101 million and $79 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 in the range of $300 million to $350 million in fiscal
2004. In limited circumstances, we agree to extend financing to clients. The
terms vary by engagement, 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. As of February 29, 2004 and August 31,
2003, $326 million and $336 million were outstanding for 34 and 35 clients,
respectively. As of February 29, 2004 and August 31, 2003, $176 million and
$203 million, respectively, were included in current unbilled services and $150
million and $133 million, respectively, were included in non-current unbilled
services on our Consolidated Balance Sheet. 29




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Share Purchases and Redemptions Open-Market Repurchases On December 19, 2003, the Accenture Stock Employee Compensation Trust was
terminated. A subsidiary of Accenture Ltd that is not a subsidiary of
Accenture SCA created a new Share Employee Compensation Trust (SECT).
Substantially all treasury shares purchased by the predecessor trust that had
not been used to fund employee share awards were transferred to the new SECT.
Accenture SCA and its subsidiaries will continue to provide funding to the SECT
in exchange for the redemption by Accenture SCA of Accenture SCA Class I shares
held by Accenture Ltd. Accenture Ltd will transfer proceeds from those
redemptions to the SECT. In a series of open-market purchases during the three and six months ended
February 29, 2004, the SECT and its predecessor trust acquired 1,813,050 and
5,313,050 Accenture Ltd Class A common shares, respectively, at aggregate
purchase prices of $42 million and $121 million, respectively, for use in conjunction
with employee equity awards. At February 29, 2004, the SECT had
$111 million of
previously authorized contributions available for share purchases. Share Management Plan and RSU Sell Back Program Transactions During the three and six months ended February 29, 2004, Accenture
purchased 75,985 and 340,013, respectively, Accenture Ltd Class A common shares
delivered pursuant to restricted share units for approximately $2 million and
$8 million, respectively. At February 29, 2004, the amount available for future share redemptions
and purchases by Accenture under the Share Management Plan and RSU Sell Back
Program was $692 million. Other Redemptions and Purchases Additionally, we continue to redeem or purchase certain Accenture SCA
Class I common shares in isolated transactions conducted outside of our Share
Management Plan in accordance with the redemption provisions applicable to the
Accenture SCA Class I common shares pursuant to their terms or in purchase
transactions on comparable terms. These transactions do not require further
approval by the Accenture Ltd board of directors, and funds used in these
transactions do not reduce other specific authorizations made by the Accenture
Ltd board of directors for various share purchase or reduction activities. To
date, these transactions have consisted primarily of redemptions or purchases
of shares held by the beneficiaries and estates of deceased partners and former
partners and, to a lesser extent, by charitable foundations. During the three
and six months ended February 24, 2004, $16 million and $41 million,
respectively, was used for these purposes. Equity Compensation Deferral The
Voluntary Equity Investment Plan for partners, as well as the grant
of equity awards in satisfaction of a portion of the compensation
payable pursuant to performance units to certain of our most senior
partners, each as previously described in Accenture Ltds most
recent proxy statement, have been deferred pending further design
review. Neither of these actions will have a material effect on
Accentures Results of operations, cash flows or financial
position. Subsequent Event On March 17, 2004, a tender offer made to Accenture SCA Class I
shareholders on February 13, 2004 by Accenture SCA and one of its controlled
subsidiaries resulted in the redemption or purchase of an aggregate of
11,803,861 Accenture SCA Class I common shares at a price of $22.98 per share.
At the same time, a subsidiary of Accenture SCA purchased 749,073 Accenture
Canada Holdings Inc. exchangeable shares at a price of $22.98 per share. The
total cash outlay for these transactions was $288 million. Obligations and Commitments As of February 29, 2004, we had the following obligations and commitments
to make future payments under contracts, contractual obligations and commercial
commitments: 30




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##### 



Payments due by periodLess thanContractual Cash Obligations
    
    Total
    
    1 year
    
    1-3 years
    
    4-5 years
    
    After 5 years(in millions)Long-term debt
    
    $
    16
    
    
    $
    2
    
    
    $
    14
    
    
    $
    
    
    
    $
    Operating leases
    
    
    2,026
    
    
    
    238
    
    
    
    402
    
    
    
    326
    
    
    
    1,060Training facility services agreement
    
    
    81
    
    
    
    32
    
    
    
    42
    
    
    
    7
    
    
    
    Retirement obligations (a)
    
    
    312
    
    
    
    34
    
    
    
    72
    
    
    
    39
    
    
    
    167Other purchase commitments (b)
    
    
    633
    
    
    
    226
    
    
    
    332
    
    
    
    73
    
    
    
    2Total
    
    $
    3,068
    
    
    $
    532
    
    
    $
    862
    
    
    $
    445
    
    
    $
    1,229
   (a)
    This represents projected payments under our Basic Retirement Benefit and
Early Retirement Plans. Both of these plans are unfunded and as such we
pay these benefits directly. These plans were eliminated for active
partners after May 15, 2001.  (b)
    Other purchase commitments include, among other things, information
technology, software support and maintenance obligations as well as other
obligations in the ordinary course of business that we cannot cancel or
where we would be required to pay a termination fee in the event of
cancellation. Amounts shown do not include recourse we may have to recover
termination fees or penalties from clients. 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 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 to dispute resolution procedures specified in the particular
contract. Further, 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 February 29, 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. In some arrangements, the extent of
Accenture's obligations for the performance of others is not
expressly specified. As of February 29, 2004, Accenture estimates it
had assumed an aggregate potential liability of approximately $262
million 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
$42 million if Accenture is obligated to make payments to the clients that are
the consequence of a performance default by the other parties. In some of these contracts, the guarantee is contractually
given to the client by one of the other parties providing services to the
client. In the event of Accentures performance default, Accenture could be
responsible for repayment to the other party. To date, Accenture has not been
required to make any payments under any of the contracts described in this
paragraph; and we believe that, if we were to incur a loss in the future in
connection with any one of these arrangements, such a loss should not have a
material effect on Accentures financial condition or results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For a discussion of our market risk associated with foreign currency risk,
interest rate risk and equity price risk as of August 31, 2003, 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 fiscal year ended
August 31, 2003. During the six months ended February 29, 2004, there were no
material changes in our market risk exposure. 31




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##### 



ITEM 4. 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 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 SECs rules and forms. There has been no change in Accenture SCAs internal control over
financial reporting that occurred during the three months ended February 29,
2004 that has materially affected, or is reasonably likely to materially
affect, Accenture SCAs internal control over financial reporting. Implementation of the transition of certain of our business and financial
systems to new platforms is ongoing. We continue to monitor resource and
personnel requirements to ensure that our internal controls are not adversely
affected during this transition. 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 Accentures
operations in the Middle East. We have voluntarily reported the incident to the
appropriate authorities in the United States. The SEC has advised us it will be
undertaking an informal investigation of this incident, which is also under
review by the U.S. Department of Justice. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On February 5, 2004, Accenture Ltd held its 2004 Annual General Meeting of
Shareholders, at which the shareholders voted upon: (1) the appointment of
Dennis F. Hightower, William L. Kimsey, Robert I. Lipp and Wulf von
Schimmelmann as Class III directors for terms expiring at the 2007 Annual
General Meeting of Shareholders; and (2) the re-appointment of KPMG LLP as
independent auditors of Accenture Ltd for a term expiring at the 2005 Annual
General Meeting of Shareholders and the authorization of the board of directors
(acting by its audit committee) to determine KPMG LLPs remuneration. Accenture Ltds shareholders appointed all four nominees as directors.
Accenture Ltds shareholders also appointed KPMG LLP as independent auditors of
Accenture Ltd and authorized the board of directors (acting by its audit
committee) to determine KPMG LLPs remuneration. The number of votes cast for,
against or withheld and the number of abstentions and broker non-votes with
respect to each matter voted upon, as applicable, is set forth below. 32




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##### 



Against /
    
    
    
    
    
    BrokerFor
    
    Withheld
    
    Abstain
    
    Non-Votes1.
    
    
    Appointment of Directors:Dennis F. Hightower
    
    
    757,435,903
    
    
    
    8,024,795
    
    
    
    *
    
    
    
    *William L. Kimsey
    
    
    759,457,031
    
    
    
    6,003,667
    
    
    
    *
    
    
    
    *Robert I. Lipp
    
    
    759,274,078
    
    
    
    6,186,620
    
    
    
    *
    
    
    
    *Wulf von Schimmelmann
    
    
    758,734,635
    
    
    
    6,726,063
    
    
    
    *
    
    
    
    *2.
    
    
    Re-appointment of KPMG LLP
    
    
    760,848,385
    
    
    
    4,065,900
    
    
    
    546,413
    
    
    
    0
   *
    
    Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit Index: 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).
 (b) Reports on Form 8-K: During the quarter ended February 29, 2004, no report on Form 8-K was
filed by the Registrant. 33




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##### 



SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf on April 7,
2004 by the undersigned, thereunto duly authorized. ACCENTURE SCABy:
    /s/    HARRY L. YOUHarry L. YouChief Financial Officer of Accenture Ltd, General Partner of
Accenture SCA
(principal financial and accounting officer) 34