10-Q 1 acn-20130228x10q.htm 10-Q ACN-2013.02.28-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED February 28, 2013
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM             TO   
Commission File Number: 001-34448
Accenture plc
(Exact name of registrant as specified in its charter)
 
Ireland
98-0627530
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1 Grand Canal Square,
Grand Canal Harbour,
Dublin 2, Ireland
(Address of principal executive offices)
(353) (1) 646-2000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  þ
Accelerated filer ¨
Non-accelerated filer  ¨
Smaller reporting company  ¨
 

(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
The number of shares of the registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of March 14, 2013 was 766,264,145 (which number includes 116,186,092 issued shares held by the registrant). The number of shares of the registrant’s Class X ordinary shares, par value $0.0000225 per share, outstanding as of March 14, 2013 was 31,900,311.



ACCENTURE PLC
INDEX
 
 
 
Page

2


PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCENTURE PLC
CONSOLIDATED BALANCE SHEETS
February 28, 2013 and August 31, 2012
(In thousands of U.S. dollars, except share and per share amounts)
 
February 28,
2013
 
August 31,
2012
 
(Unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
5,636,086

 
$
6,640,526

Short-term investments
404

 
2,261

Receivables from clients, net
3,518,104

 
3,080,877

Unbilled services, net
1,457,798

 
1,399,834

Deferred income taxes, net
731,346

 
685,732

Other current assets
673,211

 
778,701

Total current assets
12,016,949

 
12,587,931

NON-CURRENT ASSETS:
 
 
 
Unbilled services, net
10,122

 
12,151

Investments
45,827

 
28,180

Property and equipment, net
810,896

 
779,494

Goodwill
1,439,238

 
1,215,383

Deferred contract costs
537,479

 
537,943

Deferred income taxes, net
843,740

 
808,765

Other non-current assets
654,479

 
695,568

Total non-current assets
4,341,781

 
4,077,484

TOTAL ASSETS
$
16,358,730

 
$
16,665,415

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current portion of long-term debt and bank borrowings
$
13

 
$
11

Accounts payable
883,048

 
903,847

Deferred revenues
2,318,238

 
2,275,052

Accrued payroll and related benefits
2,998,006

 
3,428,838

Accrued consumption taxes
319,251

 
317,622

Income taxes payable
186,586

 
253,527

Deferred income taxes, net
22,460

 
21,916

Other accrued liabilities
637,872

 
908,392

Total current liabilities
7,365,474

 
8,109,205

NON-CURRENT LIABILITIES:
 
 
 
Long-term debt
16

 
22

Deferred revenues relating to contract costs
527,895

 
553,764

Retirement obligation
913,226

 
1,352,266

Deferred income taxes, net
154,649

 
105,544

Income taxes payable
1,141,449

 
1,597,590

Other non-current liabilities
316,150

 
322,596

Total non-current liabilities
3,053,385

 
3,931,782

COMMITMENTS AND CONTINGENCIES

 

SHAREHOLDERS’ EQUITY:
 
 
 
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of February 28, 2013 and August 31, 2012
57

 
57

Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 766,037,365 and 745,749,177 shares issued as of February 28, 2013 and August 31, 2012, respectively
17

 
16

Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 31,900,311 and 43,371,864 issued and outstanding as of February 28, 2013 and August 31, 2012, respectively
1

 
1

Restricted share units
725,840

 
863,714

Additional paid-in capital
2,025,018

 
1,341,576

Treasury shares, at cost: Ordinary, 40,000 shares as of February 28, 2013 and August 31, 2012; Class A ordinary, 116,259,318 and 112,370,409 shares as of February 28, 2013 and August 31, 2012, respectively
(5,767,788
)
 
(5,285,625
)
Retained earnings
9,157,797

 
7,904,242

Accumulated other comprehensive loss
(688,593
)
 
(678,148
)
Total Accenture plc shareholders’ equity
5,452,349

 
4,145,833

Noncontrolling interests
487,522

 
478,595

Total shareholders’ equity
5,939,871

 
4,624,428

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
16,358,730

 
$
16,665,415

The accompanying Notes are an integral part of these Consolidated Financial Statements.

3


ACCENTURE PLC
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended February 28, 2013 and February 29, 2012
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
February 28,
2013
 
February 29,
2012
 
February 28,
2013
 
February 29,
2012
REVENUES:
 
 
 
 
 
 
 
Revenues before reimbursements (“Net revenues”)
$
7,058,042

 
$
6,797,250

 
$
14,278,003

 
$
13,871,747

Reimbursements
435,278

 
462,578

 
883,353

 
977,189

Revenues
7,493,320

 
7,259,828

 
15,161,356

 
14,848,936

OPERATING EXPENSES:
 
 
 
 
 
 
 
Cost of services:
 
 
 
 
 
 
 
Cost of services before reimbursable expenses
4,827,679

 
4,680,884

 
9,681,447

 
9,503,841

Reimbursable expenses
435,278

 
462,578

 
883,353

 
977,189

Cost of services
5,262,957

 
5,143,462

 
10,564,800

 
10,481,030

Sales and marketing
834,047

 
772,338

 
1,702,249

 
1,609,815

General and administrative costs
455,551

 
454,314

 
904,403

 
886,831

Reorganization (benefits) costs, net
(223,767
)
 
415

 
(223,302
)
 
823

Total operating expenses
6,328,788

 
6,370,529

 
12,948,150

 
12,978,499

OPERATING INCOME
1,164,532

 
889,299

 
2,213,206

 
1,870,437

Interest income
9,859

 
9,246

 
18,626

 
19,758

Interest expense
(3,641
)
 
(4,220
)
 
(8,190
)
 
(8,378
)
Other income, net
10,599

 
4,215

 
4,163

 
9,750

INCOME BEFORE INCOME TAXES
1,181,349

 
898,540

 
2,227,805

 
1,891,567

(Benefit from) provision for income taxes
(5,749
)
 
184,350

 
274,676

 
465,620

NET INCOME
1,187,098

 
714,190

 
1,953,129

 
1,425,947

Net income attributable to noncontrolling interests in Accenture SCA and Accenture Canada Holdings Inc.
(78,363
)
 
(60,588
)
 
(137,318
)
 
(122,544
)
Net income attributable to noncontrolling interests – other
(6,933
)
 
(9,679
)
 
(15,192
)
 
(17,394
)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,101,802

 
$
643,923

 
$
1,800,619

 
$
1,286,009

Weighted average Class A ordinary shares:
 
 
 
 
 
 
 
Basic
649,520,337

 
646,452,990

 
644,608,780

 
645,390,718

Diluted
714,807,680

 
729,810,080

 
714,977,392

 
730,310,743

Earnings per Class A ordinary share:
 
 
 
 
 
 
 
Basic
$
1.70

 
$
1.00

 
$
2.79

 
$
1.99

Diluted
$
1.65

 
$
0.97

 
$
2.71

 
$
1.93

Cash dividends per share
$

 
$

 
$
0.81

 
$
0.675

The accompanying Notes are an integral part of these Consolidated Financial Statements.

4


ACCENTURE PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Six Months Ended February 28, 2013 and February 29, 2012
(In thousands of U.S. dollars)
(Unaudited)

 
Three Months Ended
 
Six Months Ended
 
February 28, 2013
 
February 29, 2012
 
February 28, 2013
 
February 29, 2012
NET INCOME
$
1,187,098

 
$
714,190

 
$
1,953,129

 
$
1,425,947

OTHER COMPREHENSIVE (LOSS) INCOME, BEFORE TAX:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(46,007
)
 
112,178

 
(22,722
)
 
(169,862
)
Defined benefit plans:
 
 
 
 
 
 
 
Actuarial gain arising during the period
14,839

 

 
14,839

 

Curtailment gain arising during the period
2,936

 

 
2,936

 

Prior service cost arising during the period
(48,774
)
 

 
(48,774
)
 

Amortization of actuarial loss
5,177

 
8,125

 
19,624

 
17,278

Amortization of prior service cost (credit)
1,826

 
(1,117
)
 
749

 
(2,235
)
Total defined benefit plans
(23,996
)
 
7,008

 
(10,626
)
 
15,043

Unrealized (losses) gains on cash flow hedges:
 
 
 
 
 
 
 
Unrealized (losses) gains during the period
(48,819
)
 
98,167

 
10,989

 
(29,073
)
Reclassification adjustments included in net income
6,691

 
10,435

 
17,192

 
19,430

Total unrealized (losses) gains on cash flow hedges
(42,128
)
 
108,602

 
28,181

 
(9,643
)
Unrealized gains on marketable securities:
 
 
 
 
 
 
 
Unrealized gains during the period

 
556

 

 
242

Total unrealized gains on marketable securities

 
556

 

 
242

TOTAL OTHER COMPREHENSIVE (LOSS) INCOME, BEFORE TAX
(112,131
)
 
228,344

 
(5,167
)
 
(164,220
)
Income tax benefit (expense) related to other comprehensive (loss) income
27,439

 
(42,878
)
 
(5,089
)
 
803

TOTAL OTHER COMPREHENSIVE (LOSS) INCOME
(84,692
)
 
185,466

 
(10,256
)
 
(163,417
)
COMPREHENSIVE INCOME
1,102,406

 
899,656

 
1,942,873

 
1,262,530

Comprehensive income attributable to noncontrolling interests
(78,799
)
 
(85,374
)
 
(152,699
)
 
(124,265
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,023,607

 
$
814,282

 
$
1,790,174

 
$
1,138,265

 The accompanying Notes are an integral part of these Consolidated Financial Statements.


5


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Six Months Ended February 28, 2013
(In thousands of U.S. dollars and share amounts)
(Unaudited)
 
Ordinary
Shares
 
Class A
Ordinary
Shares
 
Class X
Ordinary
Shares
 
Restricted
Share
Units
 
Additional
Paid-in
Capital
 
Treasury Shares
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Accenture  plc
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total
Shareholders’
Equity
 
$
 
No.
Shares
 
$
 
No.
Shares
 
$
 
No.
Shares
 
 
 
$
 
No.
Shares
 
 
 
 
 
Balance as of August 31, 2012
$
57

 
40

 
$
16

 
745,749

 
$
1

 
43,372

 
$
863,714

 
$
1,341,576

 
$
(5,285,625
)
 
(112,410
)
 
$
7,904,242

 
$
(678,148
)
 
$
4,145,833

 
$
478,595

 
$
4,624,428

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,800,619

 
 
 
1,800,619

 
152,510

 
1,953,129

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(10,445
)
 
(10,445
)
 
189

 
(10,256
)
Comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,790,174

 
 
 
1,942,873

Income tax benefit on share-based compensation plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
194,447

 
 
 
 
 
 
 
 
 
194,447

 
 
 
194,447

Purchases of Class A ordinary shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40,291

 
(664,746
)
 
(9,708
)
 
 
 
 
 
(624,455
)
 
(40,291
)
 
(664,746
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
278,112

 
20,492

 
 
 
 
 
 
 
 
 
298,604

 
 
 
298,604

Purchases/redemptions of Accenture SCA Class I common shares, Accenture Canada Holdings Inc. exchangeable shares and Class X ordinary shares
 
 
 
 
 
 
 
 

 
(11,472
)
 
 
 
(153,490
)
 
 
 
 
 
 
 
 
 
(153,490
)
 
(11,553
)
 
(165,043
)
Issuances of Class A ordinary shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee share programs
 
 
 
 
1

 
9,911

 
 
 
 
 
(441,705
)
 
519,011

 
182,583

 
5,819

 
 
 
 
 
259,890

 
16,955

 
276,845

Upon redemption of Accenture SCA Class I common shares
 
 
 
 
 
 
10,377

 
 
 
 
 
 
 
47,216

 
 
 
 
 
 
 
 
 
47,216

 
(47,216
)
 

Dividends
 
 
 
 
 
 
 
 
 
 
 
 
25,719

 
 
 
 
 
 
 
(541,889
)
 
 
 
(516,170
)
 
(43,965
)
 
(560,135
)
Other, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,475

 
 
 
 
 
(5,175
)
 
 
 
10,300

 
(17,702
)
 
(7,402
)
Balance as of February 28, 2013
$
57

 
40

 
$
17

 
766,037

 
$
1

 
31,900

 
$
725,840

 
$
2,025,018

 
$
(5,767,788
)
 
(116,299
)
 
$
9,157,797

 
$
(688,593
)
 
$
5,452,349

 
$
487,522

 
$
5,939,871

The accompanying Notes are an integral part of these Consolidated Financial Statements.


6


ACCENTURE PLC
CONSOLIDATED CASH FLOWS STATEMENTS
For the Six Months Ended February 28, 2013 and February 29, 2012
(In thousands of U.S. dollars)
(Unaudited)
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
1,953,129

 
$
1,425,947

Adjustments to reconcile Net income to Net cash provided by operating activities —
 
 
 
Depreciation, amortization and asset impairments
297,190

 
279,635

Reorganization (benefits) costs, net
(223,302
)
 
823

Share-based compensation expense
298,604

 
261,517

Deferred income taxes, net
(52,638
)
 
(61,535
)
Other, net
1,386

 
12,402

Change in assets and liabilities, net of acquisitions —
 
 
 
Receivables from clients, net
(378,655
)
 
(192,300
)
Unbilled services, current and non-current
(27,419
)
 
(72,101
)
Other current and non-current assets
36,595

 
(112,141
)
Accounts payable
(30,382
)
 
(96,897
)
Deferred revenues, current and non-current
1,123

 
248,782

Accrued payroll and related benefits
(449,584
)
 
(242,201
)
Income taxes payable, current and non-current
(375,854
)
 
(110,161
)
Other current and non-current liabilities
(524,784
)
 
(8,699
)
Net cash provided by operating activities
525,409

 
1,333,071

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Proceeds from maturities and sales of available-for-sale investments

 
6,748

Purchases of available-for-sale investments

 
(6,726
)
Proceeds from sales of property and equipment
2,351

 
1,906

Purchases of property and equipment
(176,788
)
 
(166,254
)
Purchases of businesses and investments, net of cash acquired
(297,963
)
 
(162,876
)
Net cash used in investing activities
(472,400
)
 
(327,202
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of ordinary shares
276,845

 
228,879

Purchases of shares
(829,789
)
 
(750,079
)
Repayments of long-term debt, net
(6
)
 
(929
)
Cash dividends paid
(560,135
)
 
(474,896
)
Excess tax benefits from share-based payment arrangements
85,975

 
57,975

Other, net
(15,976
)
 
(26,849
)
Net cash used in financing activities
(1,043,086
)
 
(965,899
)
Effect of exchange rate changes on cash and cash equivalents
(14,363
)
 
(172,302
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(1,004,440
)
 
(132,332
)
CASH AND CASH EQUIVALENTS, beginning of period
6,640,526

 
5,701,078

CASH AND CASH EQUIVALENTS, end of period
$
5,636,086

 
$
5,568,746

The accompanying Notes are an integral part of these Consolidated Financial Statements.

7

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)



1. BASIS OF PRESENTATION
The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies (collectively, 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 U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the SEC on October 30, 2012.
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. The Consolidated Financial Statements 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 28, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2013.
Certain amounts in the Notes to Consolidated Financial Statements that were reported in the previous year have been reclassified to conform to the current-period presentation.
The Company has evaluated events and transactions subsequent to the balance sheet date. Based on this evaluation, the Company is not aware of any events or transactions (other than those disclosed herein) that occurred subsequent to the balance sheet date but prior to filing that would require recognition or disclosure in its Consolidated Financial Statements.
Allowances for Client Receivables and Unbilled Services
As of February 28, 2013 and August 31, 2012, total allowances recorded for client receivables and unbilled services were $75,015 and $64,874, respectively.
Accumulated Depreciation
As of February 28, 2013 and August 31, 2012, total accumulated depreciation was $1,692,729 and $1,548,256, respectively.
Recently Adopted Accounting Pronouncement
In September 2012, the Company adopted guidance issued by the Financial Accounting Standards Board which requires companies to present net income and other comprehensive income in either one continuous statement or in two separate but consecutive statements. The adoption of this guidance resulted in a change in the presentation of the components of comprehensive income, which are now presented in the Consolidated Statements of Comprehensive Income rather than in the Consolidated Shareholders’ Equity Statement, under Item 1, “Financial Statements.”

8

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


2. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
 
Three Months Ended
 
Six Months Ended
 
February 28,
2013
 
February 29,
2012
 
February 28,
2013
 
February 29,
2012
Basic Earnings per share
 
 
 
 
 
 
 
Net income attributable to Accenture plc
$
1,101,802

 
$
643,923

 
$
1,800,619

 
$
1,286,009

Basic weighted average Class A ordinary shares
649,520,337

 
646,452,990

 
644,608,780

 
645,390,718

Basic earnings per share
$
1.70

 
$
1.00

 
$
2.79

 
$
1.99

Diluted Earnings per share
 
 
 
 
 
 
 
Net income attributable to Accenture plc
$
1,101,802

 
$
643,923

 
$
1,800,619

 
$
1,286,009

Net income attributable to noncontrolling interests in
    Accenture SCA and Accenture Canada Holdings Inc. (1)
78,363

 
60,588

 
137,318

 
122,544

Net income for diluted earnings per share calculation
$
1,180,165

 
$
704,511

 
$
1,937,937

 
$
1,408,553

Basic weighted average Class A ordinary shares
649,520,337

 
646,452,990

 
644,608,780

 
645,390,718

Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1)
46,167,560

 
60,849,809

 
50,091,766

 
61,501,352

Diluted effect of employee compensation related to Class A ordinary shares (2)
19,010,082

 
22,364,899

 
20,193,716

 
23,273,549

Diluted effect of share purchase plans related to Class A ordinary shares
109,701

 
142,382

 
83,130

 
145,124

Diluted weighted average Class A ordinary shares (2)
714,807,680

 
729,810,080

 
714,977,392

 
730,310,743

Diluted earnings per share (2)
$
1.65

 
$
0.97

 
$
2.71

 
$
1.93

 _______________
(1)
Diluted earnings per share assumes the redemption of all Accenture SCA Class I common shares owned by holders of noncontrolling interests and the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis. The income effect does not take into account “Net income attributable to noncontrolling interests — other,” since those shares are not redeemable or exchangeable for Accenture plc Class A ordinary shares.
(2)
Diluted weighted average Accenture plc Class A ordinary shares and earnings per share amounts for the three and six months ended February 29, 2012 have been restated to reflect the impact of the issuance of additional restricted share units to holders of restricted share units in connection with the first quarter of fiscal 2013 payment of cash dividends. This did not result in a change to previously reported Diluted earnings per share.
3. INCOME TAXES
Effective Tax Rate
The Company’s effective tax rates for the three months ended February 28, 2013 and February 29, 2012 were (0.5)% and 20.5%, respectively. The Company’s effective tax rates for the six months ended February 28, 2013 and February 29, 2012 were 12.3% and 24.6%, respectively. During the three months ended February 28, 2013, the Company recorded a benefit of $242,938 related to settlements of U.S. federal tax audits for fiscal years 2006 through 2009. The effective tax rates were also impacted by reorganization benefits of $224,255, which increased income before income taxes without any increase in income tax expense. Absent these items, the effective tax rates would have been 24.8% and 25.8% for the three and six months ended February 28, 2013, respectively.

9

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


4. REORGANIZATION (BENEFITS) COSTS, NET
In fiscal 2001, the Company accrued reorganization liabilities in connection with its transition to a corporate structure. These included liabilities for certain individual income tax exposures related to the transfer of interests in certain entities to the Company as part of the reorganization. The Company has recorded reorganization expense and the related liability where such liabilities are probable. Interest accruals are made to cover reimbursement of interest on such tax assessments.
The Company’s reorganization activity was as follows:
 
Three Months Ended
 
Six Months Ended
 
February 28,
2013
 
February 29,
2012
 
February 28,
2013
 
February 29,
2012
Reorganization liability, beginning of period
$
279,032

 
$
284,465

 
$
268,806

 
$
307,286

Final determinations
(224,255
)
 

 
(224,255
)
 

Interest expense accrued
488

 
415

 
953

 
823

Other adjustments
2,745

 

 
2,745

 

Foreign currency translation adjustments
6,269

 
3,033

 
16,030

 
(20,196
)
Reorganization liability, end of period
$
64,279

 
$
287,913

 
$
64,279

 
$
287,913

As a result of final determinations, certain reorganization liabilities established in connection with our transition to a corporate structure in 2001 are no longer probable. Accordingly, the Company recorded net reorganization benefits of $223,767 during the three months ended February 28, 2013. These benefits included a $224,255 reduction in reorganization liabilities, partially offset by $488 of interest expense associated with carrying these liabilities. As of February 28, 2013, reorganization liabilities of $51,839 were included in Other accrued liabilities because final determinations could occur within 12 months, and reorganization liabilities of $12,440 were included in Other non-current liabilities. Timing of the resolution of tax audits or the initiation of additional litigation and/or criminal tax proceedings may delay final resolution. Final resolution, through settlement, conclusion of legal proceedings or a tax authority’s decision not to pursue a claim, will result in payment by the Company of amounts in settlement or judgment of these matters and/or recording of a reorganization benefit or cost in the Company’s Consolidated Income Statement. As of February 28, 2013, only a small number of countries remain that have active audits/investigations or open statutes of limitations, and only one is significant. In that country, current and former partners, and the Company, have been engaged in disputes with tax authorities in connection with the corporate reorganization in 2001, many of which have been resolved and others of which could result in litigation. These individuals and the Company intend to vigorously defend their positions.

10

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


5. BUSINESS COMBINATIONS AND GOODWILL
During the six months ended February 28, 2013, the Company acquired the net assets of a provider of clinical and regulatory information management solutions and software for the pharmaceutical industry. In addition, the Company completed several individually immaterial acquisitions. The total consideration for all acquisitions was $297,963. In connection with the acquisitions during the six months ended February 28, 2013, the Company recorded goodwill of $228,031, which was allocated among the reportable operating segments. Goodwill also included immaterial adjustments related to prior period acquisitions. The Company also recorded $62,400 in intangible assets, primarily related to customer relationships and technology-related assets. The intangible assets are being amortized over one to 12 years. The pro forma effects on the Company’s operations were not material.
The changes in the carrying amount of goodwill by reportable operating segment were as follows:
 
August 31,
2012
 
Additions/
Adjustments
 
Foreign
Currency
Translation
Adjustments
 
February 28,
2013
Communications, Media & Technology
$
168,413

 
$
27,078

 
$
(4,152
)
 
$
191,339

Financial Services
407,956

 
26,222

 
229

 
434,407

Health & Public Service
285,333

 
10,399

 
(440
)
 
295,292

Products
270,178

 
155,375

 
702

 
426,255

Resources
83,503

 
8,629

 
(187
)
 
91,945

Total
$
1,215,383

 
$
227,703

 
$
(3,848
)
 
$
1,439,238


11

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


6. SHAREHOLDERS’ EQUITY
Other Comprehensive (Loss) Income
The computation of Other comprehensive (loss) income and its components are presented in the Consolidated Statements of Comprehensive Income. The related before tax, income tax benefit (expense) and net of tax amounts for each component were as follows:
 
Three Months Ended
  
February 28, 2013
  
February 29, 2012
  
Before Tax
 
Income Tax Benefit (Expense)
 
Net of Tax
 
Before Tax
 
Income Tax Expense
 
Net of Tax
Foreign currency translation adjustments
$
(46,007
)
 
$
(60
)
 
$
(46,067
)
 
$
112,178

 
$
(1,054
)
 
$
111,124

Defined benefit plans
(23,996
)
 
10,146

 
(13,850
)
 
7,008

 
(2,709
)
 
4,299

Unrealized (losses) gains on cash flow hedges
(42,128
)
 
17,353

 
(24,775
)
 
108,602

 
(39,115
)
 
69,487

Unrealized gains on marketable securities

 

 

 
556

 

 
556

Other comprehensive (loss) income
$
(112,131
)
 
$
27,439

 
$
(84,692
)
 
$
228,344

 
$
(42,878
)
 
$
185,466

 
Six Months Ended
  
February 28, 2013
  
February 29, 2012
  
Before Tax
 
Income Tax Benefit (Expense)
 
Net of Tax
 
Before Tax
 
Income Tax Benefit (Expense)
 
Net of Tax
Foreign currency translation adjustments
$
(22,722
)
 
$
(269
)
 
$
(22,991
)
 
$
(169,862
)
 
$
1,339

 
$
(168,523
)
Defined benefit plans
(10,626
)
 
4,792

 
(5,834
)
 
15,043

 
(5,450
)
 
9,593

Unrealized gains (losses) on cash flow hedges
28,181

 
(9,612
)
 
18,569

 
(9,643
)
 
4,914

 
(4,729
)
Unrealized gains on marketable securities

 

 

 
242

 

 
242

Other comprehensive (loss) income
$
(5,167
)
 
$
(5,089
)
 
$
(10,256
)
 
$
(164,220
)
 
$
803

 
$
(163,417
)
Dividends
The Company’s dividend activity during the six months ended February 28, 2013 was as follows:
 
 
Dividend Per
 
Accenture plc Class A
Ordinary Shares
 
Accenture SCA Class I Common
Shares and Accenture Canada Holdings
Inc. Exchangeable Shares
 
Total Cash
Dividend Payment Date
 
Share
 
Record Date
 
Cash Outlay
 
Record Date
 
Cash Outlay
 
Outlay
November 15, 2012
 
$
0.81

 
October 12, 2012
 
$
516,170

 
October 9, 2012
 
$
43,965

 
$
560,135

The payment of the cash dividends also resulted in the issuance of additional restricted share units to holders of restricted share units. Diluted weighted average Accenture plc Class A ordinary share amounts have been restated for all periods presented to reflect this issuance. For additional information, see Note 2 (Earnings Per Share).
Subsequent Event
On March 27, 2013, the Board of Directors of Accenture plc declared a semi-annual cash dividend of $0.81 per share on Accenture plc Class A ordinary shares for shareholders of record at the close of business on April 12, 2013. Accenture plc will cause Accenture SCA to declare a semi-annual cash dividend of $0.81 per share on its Class I common shares for shareholders of record at the close of business on April 9, 2013. Both dividends are payable on May 15, 2013. The payment of the cash dividends will result in the issuance of an immaterial number of additional restricted share units to holders of restricted share units.

12

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


7. DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments to manage foreign currency exchange rate risk. The Company’s derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts.
The activity related to the change in net unrealized (losses) gains on cash flow hedges in Accumulated other comprehensive loss was as follows:
 
Six Months Ended
 
February 28,
2013
 
February 29,
2012
Net unrealized (losses) gains on cash flow hedges, beginning of period
$
(31,752
)
 
$
52,315

Change in fair value
10,989

 
(29,073
)
Reclassification adjustments into Cost of services
17,192

 
19,430

Portion attributable to Noncontrolling interests
(1,751
)
 
825

Net unrealized (losses) gains on cash flow hedges, end of period
$
(5,322
)
 
$
43,497

As of February 28, 2013, $(16,624) of the amounts related to derivatives designated as cash flow hedges and recorded in Accumulated other comprehensive loss is expected to be reclassified into earnings in the next 12 months. The ineffective portion of the change in fair value of a cash flow hedge is recognized immediately in Other income, net in the Consolidated Income Statement and, for the three and six months ended February 28, 2013, was not material. In addition, the Company did not discontinue any cash flow hedges during the three and six months ended February 28, 2013.
Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net loss of $(15,764) and a net gain of $20,923 for the three and six months ended February 28, 2013, respectively. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net gain of $53,918 and a net loss of $(84,860) for the three and six months ended February 29, 2012, respectively. Gains and losses on these contracts are recorded in Other income, net in the Consolidated Income Statement and are offset by gains and losses on the related hedged items.
Fair Value of Derivative Instruments
The notional and fair values of all derivative instruments were as follows:
 
February 28,
2013
 
August 31,
2012
Assets
 
 
 
Cash Flow Hedges
 
 
 
Other current assets
$
27,620

 
$
15,392

Other non-current assets
25,134

 
36,106

Other Derivatives
 
 
 
Other current assets
6,795

 
9,988

Total assets
$
59,549

 
$
61,486

Liabilities
 
 
 
Cash Flow Hedges
 
 
 
Other accrued liabilities
$
37,771

 
$
59,458

Other non-current liabilities
18,233

 
23,471

Other Derivatives
 
 
 
Other accrued liabilities
10,567

 
11,147

Total liabilities
$
66,571

 
$
94,076

Total fair value
$
(7,022
)
 
$
(32,590
)
Total notional value
$
4,809,278

 
$
4,853,191


13

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


8. COMMITMENTS AND CONTINGENCIES
Commitments
The Company has the right to purchase or may also be required to purchase substantially all of the remaining outstanding shares of its Avanade Inc. subsidiary (“Avanade”) not owned by the Company at fair value if certain events occur. Certain holders of Avanade common stock and options to purchase the stock have put rights that, under certain circumstances and conditions, would require Avanade to redeem shares of its stock at fair value. As of February 28, 2013 and August 31, 2012, the Company has reflected the fair value of $89,679 and $95,957, respectively, related to Avanade’s redeemable common stock and the intrinsic value of the options on redeemable common stock in Other accrued liabilities on the Consolidated Balance Sheet.
Indemnifications and Guarantees
In the normal course of business and in conjunction with certain client engagements, the Company has entered into contractual arrangements through which it may be obligated to indemnify clients with respect to certain matters. These arrangements with clients can include provisions whereby the Company has joint and several liability in relation to the performance of certain contractual obligations along with third parties also providing services and products for a specific project. In addition, our consulting arrangements may include warranty provisions that our solutions will substantially operate in accordance with the applicable system requirements. Indemnification provisions are also included in arrangements under which the Company agrees to hold the indemnified party harmless with respect to third-party claims related to such matters as title to assets sold or licensed or certain intellectual property rights.
Typically, the Company has contractual recourse against third parties for certain payments made by the Company in connection with arrangements where third-party nonperformance has given rise to the client’s claim. Payments by the Company under any of the arrangements described above are generally conditioned on the client making a claim, which may be disputed by the Company typically under dispute resolution procedures specified in the particular arrangement. The limitations of liability under these arrangements may be expressly limited or may not be expressly specified in terms of time and/or amount.
As of February 28, 2013 and August 31, 2012, the Company’s aggregate potential liability to its clients for expressly limited guarantees involving the performance of third parties was approximately $739,000 and $596,000, respectively, of which all but approximately $18,000 and $21,000, respectively, may be recovered from the other third parties if the Company is obligated to make payments to the indemnified parties that are the consequence of a performance default by the other third parties. For arrangements with unspecified limitations, the Company cannot reasonably estimate the aggregate maximum potential liability, as it is inherently difficult to predict the maximum potential amount of such payments, due to the conditional nature and unique facts of each particular arrangement.
To date, the Company has not been required to make any significant payment under any of the arrangements described above. The Company has assessed the current status of performance/payment risk related to arrangements with limited guarantees, warranty obligations, unspecified limitations and/or indemnification provisions and believes that any potential payments would be immaterial to the Consolidated Financial Statements, as a whole.
Legal Contingencies
As of February 28, 2013, the Company or its present personnel had been named as a defendant in various litigation matters. The Company and/or its personnel also from time to time are involved in investigations by various regulatory or legal authorities concerning matters arising in the course of its business around the world. Based on the present status of these matters, management believes the range of reasonably possible losses in addition to amounts accrued, net of insurance recoveries, will not have a material effect on the Company’s results of operations or financial condition.

14

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
(Unaudited)


9. SEGMENT REPORTING
The Company’s reportable operating segments are the five operating groups, which are Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources. Information regarding the Company’s reportable operating segments is as follows:
 
Three Months Ended
 
February 28,
2013
 
February 29,
2012
 
Net
Revenues
 
Operating
Income
 
Net
Revenues
 
Operating
Income
Communications, Media & Technology
$
1,411,489

 
$
225,744

 
$
1,481,378

 
$
203,406

Financial Services
1,508,865

 
244,158

 
1,376,619

 
142,714

Health & Public Service
1,192,698

 
188,218

 
1,055,879

 
99,593

Products
1,680,719

 
264,234

 
1,584,596

 
184,257

Resources
1,251,874

 
242,178

 
1,293,201

 
259,329

Other
12,397

 

 
5,577

 

Total
$
7,058,042

 
$
1,164,532

 
$
6,797,250

 
$
889,299


 
Six Months Ended
 
February 28,
2013
 
February 29,
2012
 
Net
Revenues
 
Operating
Income
 
Net
Revenues
 
Operating
Income
Communications, Media & Technology
$
2,870,275

 
$
408,792

 
$
3,016,564

 
$
431,933

Financial Services
3,071,807

 
485,256

 
2,860,458

 
357,569

Health & Public Service
2,367,408

 
331,677

 
2,110,181

 
212,427

Products
3,379,262

 
499,926

 
3,254,149

 
403,032

Resources
2,573,339

 
487,555

 
2,620,076

 
465,476

Other
15,912

 

 
10,319

 

Total
$
14,278,003

 
$
2,213,206

 
$
13,871,747

 
$
1,870,437



15


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 on Form 10-Q and in our Annual Report on Form 10-K for the year ended August 31, 2012, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended August 31, 2012.
We use the terms “Accenture,” “we,” the “Company,” “our” and “us” in this report to refer to Accenture plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “fiscal 2013” means the 12-month period that will end on August 31, 2013. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
We use the term “in local currency” so that certain financial results may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of business performance. Financial results “in local currency” are calculated by restating current period activity into U.S. dollars using the comparable prior year period’s foreign currency exchange rates. This approach is used for all results where the functional currency is not the U.S. dollar.
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our operations, results of operations and other matters that are based on our current expectations, estimates, assumptions and projections. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” 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. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include, but are not limited to:
Our results of operations could be adversely affected by volatile, negative or uncertain economic conditions and the effects of these conditions on our clients’ businesses and levels of business activity.
Our business depends on generating and maintaining ongoing, profitable client demand for our services and solutions, and a significant reduction in such demand could materially affect our results of operations.
If we are unable to keep our supply of skills and resources in balance with client demand around the world and attract and retain professionals with strong leadership skills, our business, the utilization rate of our professionals and our results of operations may be materially adversely affected.
The markets in which we compete are highly competitive, and we might not be able to compete effectively.
We could have liability or our reputation could be damaged if we fail to protect client and/or Accenture data or information systems as obligated by law or contract or if our information systems are breached.
As a result of our geographically diverse operations and our growth strategy to continue geographic expansion, we are more susceptible to certain risks.
Our Global Delivery Network is increasingly concentrated in India and the Philippines, which may expose us to operational risks.
Our results of operations could materially suffer if we are not able to obtain sufficient pricing to enable us to meet our profitability expectations.
If our pricing estimates do not accurately anticipate the cost, risk and complexity of performing our work or third parties upon whom we rely do not meet their commitments, then our contracts could have delivery inefficiencies and be unprofitable.
Our work with government clients exposes us to additional risks inherent in the government contracting environment.
Our business could be materially adversely affected if we incur legal liability in connection with providing our services and solutions.
Our results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates.

16


Our results of operations and ability to grow could be materially negatively affected if we cannot adapt and expand our services and solutions in response to ongoing changes in technology and offerings by new entrants.
Our alliance relationships may not be successful or may change, which could adversely affect our results of operations.
Outsourcing services and the continued expansion of our other services and solutions into new areas subject us to different operational risks than our consulting and systems integration services.
Our services or solutions could infringe upon the intellectual property rights of others or we might lose our ability to utilize the intellectual property of others.
We have only a limited ability to protect our intellectual property rights, which are important to our success.
Our ability to attract and retain business and employees may depend on our reputation in the marketplace.
We might not be successful at identifying, acquiring or integrating businesses or entering into joint ventures.
Our profitability could suffer if our cost-management strategies are unsuccessful, and we may not be able to improve our profitability through improvements to cost-management to the degree we have done in the past.
Many of our contracts include payments that link some of our fees to the attainment of performance or business targets and/or require us to meet specific service levels. This could increase the variability of our revenues and impact our margins.
Changes in our level of taxes, and audits, investigations and tax proceedings, or changes in our treatment as an Irish company, could have a material adverse effect on our results of operations and financial condition.
If we are unable to manage the organizational challenges associated with our size, we might be unable to achieve our business objectives.
If we are unable to collect our receivables or unbilled services, our results of operations, financial condition and cash flows could be adversely affected.
Our share price and results of operations could fluctuate and be difficult to predict.
Our results of operations and share price could be adversely affected if we are unable to maintain effective internal controls.
We are incorporated in Ireland and a significant portion of our assets are located outside the United States. As a result, it might not be possible for shareholders to enforce civil liability provisions of the federal or state securities laws of the United States. We may also be subject to criticism and negative publicity related to our incorporation in Ireland.
Irish law differs from the laws in effect in the United States and might afford less protection to shareholders.
We might be unable to access additional capital on favorable terms or at all. If we raise equity capital, it may dilute our shareholders’ ownership interest in us.
For a more detailed discussion of these factors, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2012. We undertake no obligation to update or revise any forward-looking statements.

17


Overview
Revenues are driven by the ability of our executives to secure new contracts and to deliver solutions and services that add value relevant to our clients’ current needs and challenges. The level of revenues we achieve is based on our ability to deliver market-leading service offerings and to deploy skilled teams of professionals quickly and on a global basis.
Our results of operations are affected by economic conditions, including macroeconomic conditions, credit market conditions and levels of business confidence. There continues to be significant volatility in markets around the world, as well as economic and geopolitical uncertainty in many of the markets where we operate, which is impacting, and we expect will continue to impact, our business. Such volatility and uncertainty adversely affects our clients and the levels of business activities in some industries and geographies where we operate. This has also impacted the types of services our clients are demanding; for example, clients are requesting a higher volume of outsourcing services, placing a greater emphasis on cost savings initiatives and procuring services over longer time frames. These changing demand patterns could have a material adverse effect on our new contract bookings and results of operations. We continue to monitor this volatility and uncertainty and seek to manage our costs in order to respond to changing conditions.
Revenues before reimbursements (“net revenues”) for the second quarter of fiscal 2013 were $7.06 billion, compared with $6.80 billion for the second quarter of fiscal 2012, an increase of 4% in both U.S. dollars and local currency. Net revenues for the six months ended February 28, 2013 were $14.28 billion, compared with $13.87 billion for the six months ended February 29, 2012, an increase of 3% in U.S. dollars and 5% in local currency. During the second quarter of fiscal 2013, Health & Public Service, Financial Services and Products experienced year-over-year revenue growth in local currency, while Communications, Media & Technology and Resources experienced year-over-year revenue declines in local currency. Revenue growth in local currency was strong in outsourcing, while consulting revenue declined slightly during the second quarter of fiscal 2013. We expect quarterly year-over-year revenues to continue to increase modestly in the second half of fiscal 2013 and continue to vary across operating groups and geographic regions, with growth in certain areas of our business partially offset by lower growth or declines in other areas.
In our consulting business, net revenues for the second quarter of fiscal 2013 were $3.75 billion, compared with $3.78 billion for the second quarter of fiscal 2012, a decrease of 1% in both U.S. dollars and local currency. Net consulting revenues for the six months ended February 28, 2013 were $7.71 billion, compared with $7.86 billion for the six months ended February 29, 2012, a decrease of 2% in U.S. dollars and flat in local currency. Health & Public Service experienced strong consulting revenue growth in local currency during the second quarter of fiscal 2013. Year-over-year consulting revenue growth in local currency was slight in Financial Services, flat in Products and declined in Communications, Media & Technology and Resources. In our consulting business in these four operating groups, clients reduced their demand for short to medium term projects compared to the second quarter of fiscal 2012. At the same time, we continued to experience year-over-year increased demand for larger transformational projects that were of longer duration and are converting to revenue at a slower rate. Based on new contract bookings and future contracted revenues, we expect to return to positive consulting revenue growth in the second half of fiscal 2013. Clients continued to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to integrate their global operations and grow and transform their businesses. We continue to experience demand for our services in emerging technologies, including analytics, cloud computing and mobility. Compared to fiscal 2012, we continued to provide a greater proportion of systems integration consulting through use of lower-cost resources in our Global Delivery Network, and we expect this trend to continue. While the business environment remained competitive, pricing was relatively stable.
In our outsourcing business, net revenues for the second quarter of fiscal 2013 were $3.31 billion, compared with $3.02 billion for the second quarter of fiscal 2012, an increase of 9% in U.S. dollars and 10% in local currency. Net outsourcing revenues for the six months ended February 28, 2013 were $6.56 billion, compared with $6.01 billion for the six months ended February 29, 2012, an increase of 9% in U.S. dollars and 11% in local currency. Year-over-year outsourcing revenue growth in local currency was strong during the second quarter of fiscal 2013, driven by Financial Services, Products and Health & Public Service. Outsourcing net revenues as a percentage of total net revenues increased to 47% in the second quarter of fiscal 2013 from 44% in the second quarter of fiscal 2012, driven by higher demand for outsourcing services, particularly in Financial Services and Products. We expect outsourcing revenue growth for fiscal 2013 to continue to moderate from the significant year-over-year growth that we experienced in fiscal 2012. Clients continue to be focused on transforming their operations to improve effectiveness and save costs. Growth in outsourcing was driven by higher volumes, scope and geographic expansions and new work at existing clients and services for new clients. Compared to fiscal 2012, we provided a greater proportion of application outsourcing through use of lower-cost resources in our Global Delivery Network.
As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange-rate fluctuations. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues and revenue growth in U.S. dollars may be higher. If the U.S. dollar strengthens against other currencies, resulting in unfavorable currency translation, our revenues and revenue growth in U.S. dollars may be lower. When compared to the second

18


quarter of fiscal 2012, there was no aggregate foreign currency translation impact during the second quarter of fiscal 2013, resulting in U.S. dollar revenue growth that was the same as our revenue growth in local currency. When compared to the six months ended February 29, 2012, the U.S. dollar strengthened against many currencies during the six months ended February 28, 2013. This resulted in unfavorable currency translation and U.S. dollar revenue growth that was approximately 2% lower than our revenue growth in local currency for the six months ended February 28, 2013. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2013, we estimate the foreign-exchange impact to our full fiscal 2013 revenue growth will be approximately 1% lower growth in U.S. dollars than our growth in local currency.
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, subcontractor and other personnel costs, and non-payroll outsourcing costs. Cost of services as a percentage of revenues is driven by the prices we obtain for our solutions and services, the utilization of our client-service personnel and the level of non-payroll costs associated with outsourcing contracts. Utilization primarily represents the percentage of our consulting professionals’ time spent on billable work. Utilization for the second quarter of fiscal 2013 was approximately 88%, flat with the first quarter of fiscal 2013, and within our target range. This level of utilization reflects continued strong demand for resources in our Global Delivery Network and in most countries. We continue to hire to meet current and projected future demand.
We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services, given that compensation costs are the most significant portion of our operating expenses. Based on current and projected future demand, we have increased our headcount, the majority of which serve our clients, to more than 261,000 as of February 28, 2013, compared with approximately 259,000 as of November 30, 2012 and 246,000 as of February 29, 2012. The year-over-year increase in our headcount reflects an overall increase in demand for our services, including those delivered through our Global Delivery Network in lower-cost locations. Annualized attrition, excluding involuntary terminations, for the second quarter of fiscal 2013 was 11%, flat with the first quarter of fiscal 2013 and down from 12% in the second quarter of fiscal 2012. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as means to keep our supply of skills and resources in balance with increases or decreases in client demand. In addition, we adjust compensation in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees, and we may need to continue to adjust compensation in the future. For the majority of our personnel, compensation increases for fiscal 2013 became effective September 1, 2012. As in prior fiscal years, we strive to adjust pricing and/or the mix of resources to reduce the impact of compensation increases on our gross margin. Our ability to grow our revenues and increase our margins could be adversely affected if we are unable to keep our supply of skills and resources in balance with changes in the types or amounts of services clients are demanding, such as the increase in demand for various outsourcing services; deploy our employees globally on a timely basis; manage attrition; recover increases in compensation; and/or effectively assimilate and utilize new employees.
Gross margin (Net revenues less Cost of services before reimbursable expenses as a percentage of Net revenues) for the second quarter of fiscal 2013 was 31.6%, compared with 31.1% for the second quarter of fiscal 2012. Gross margin for the six months ended February 28, 2013 was 32.2%, compared with 31.5% for the six months ended February 29, 2012. The increase in gross margin for the six months ended February 28, 2013 was principally due to higher outsourcing contract profitability, partially offset by higher payroll costs associated with holiday time and investments in offerings.
Sales and marketing and general and administrative costs as a percentage of net revenues were 18.3% for both the second quarter of fiscal 2013 and the six months ended February 28, 2013, compared with 18.0% for both the second quarter of fiscal 2012 and the six months ended February 29, 2012. Sales and marketing costs are driven primarily by compensation costs for business-development activities, investment in offerings, and marketing- and advertising-related activities. General and administrative costs primarily include costs for non-client-facing personnel, information systems and office space. We continuously monitor these costs and implement cost-management actions, as appropriate. For the six months ended February 28, 2013 compared to the six months ended February 29, 2012, sales and marketing costs as a percentage of net revenues increased 30 basis points as a result of higher selling and other business development costs associated with generating higher new contract bookings and replenishing our pipeline of business opportunities. Our margins could be adversely affected if our cost-management actions are not sufficient to maintain sales and marketing and general and administrative costs at or below current levels as a percentage of net revenues.
Operating expenses in the second quarter of fiscal 2013 included reorganization benefits of $224 million as a result of final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure in 2001. For additional information, see Note 4 (Reorganization (Benefits) Costs, Net) to our Consolidated Financial Statements under Item 1, "Financial Statements."
Operating income for the second quarter of fiscal 2013 was $1,165 million, compared with $889 million for the second quarter of fiscal 2012. Operating income for the six months ended February 28, 2013 was $2,213 million, compared with $1,870 million for the six months ended February 29, 2012. Operating margin (Operating income as a percentage of Net revenues) for the second

19


quarter of fiscal 2013 was 16.5%, compared with 13.1% for the second quarter of fiscal 2012. Operating margin for the six months ended February 28, 2013 was 15.5%, compared with 13.5% for the six months ended February 29, 2012. Reorganization benefits of $224 million recorded in the second quarter of fiscal 2013 increased operating margin by 320 and 160 basis points for the second quarter of fiscal 2013 and six months ended February 28, 2013, respectively. Excluding the effects of the reorganization benefits, operating margin would have been 13.3% for the second quarter of fiscal 2013 and 13.9% for the six months ended February 28, 2013, increases of 20 and 40 basis points, respectively, compared with the same periods in fiscal 2012.
The effective tax rates for the second quarter of fiscal 2013 and the six months ended February 28, 2013 were (0.5)% and 12.3%, respectively. During the second quarter of fiscal 2013, we recorded a benefit of $243 million related to settlements of U.S. federal tax audits for fiscal years 2006 through 2009. The effective tax rate was also impacted by reorganization benefits of $224 million, which increased income before income taxes without any increase in income tax expense. Absent these items, our effective tax rates for the second quarter of fiscal 2013 and the six months ended February 28, 2013 would have been 24.8% and 25.8%, respectively.
Diluted earnings per share were $1.65 for the second quarter of fiscal 2013, compared with $0.97 for the second quarter of fiscal 2012. The $0.68 increase in our earnings per share included the impact of the $243 million tax benefit related to settlements of U.S. federal tax audits, which increased earnings per share by $0.34, and reorganization benefits of $224 million, which increased earnings per share by $0.31. Excluding the impact of these benefits, earnings per share increased $0.03 compared with the second quarter of fiscal 2012.
Our Operating income and Earnings per share are also affected by currency exchange-rate fluctuations on revenues and costs. Most of our costs are incurred in the same currency as the related net revenues. Where practical, we also seek to manage foreign currency exposure for costs not incurred in the same currency as the related net revenues, such as the cost of our Global Delivery Network, by using currency protection provisions in our customer contracts and through our hedging programs. We seek to manage our costs taking into consideration the residual positive and negative effects of changes in foreign exchange rates on those costs.
On December 1, 2012, we ceased using the designation “senior executive.” The majority of our leaders are now designated “managing directors,” and a select group of our most experienced leaders are “senior managing directors.” Managing directors and senior managing directors, along with members of the Accenture global management committee (the Company’s primary management and leadership team, which consists of 18 of our most senior leaders), comprise “Accenture Leadership.”

20


Bookings and Backlog
New contract bookings for the second quarter of fiscal 2013 were $9.12 billion, with consulting bookings of $4.40 billion and outsourcing bookings of $4.72 billion. New contract bookings for the six months ended February 28, 2013 were $16.59 billion, with consulting bookings of $8.56 billion and outsourcing bookings of $8.03 billion.
We provide information regarding our new contract bookings because we believe doing so provides useful trend information regarding changes in the volume of our new business over time. However, new bookings can vary significantly quarter to quarter depending in part on the timing of the signing of a small number of large outsourcing contracts. Clients continue to seek flexibility by using a phased approach to contracting work. Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. There are no third-party standards or requirements governing the calculation of bookings. New contract bookings involve estimates and judgments regarding new contracts as well as renewals, extensions and changes to existing contracts. We do not update our new bookings for material subsequent terminations or reductions related to bookings originally recorded in prior fiscal years. New contract bookings are recorded using then-existing foreign currency exchange rates and are not subsequently adjusted for foreign currency exchange rate fluctuations.
The majority of our contracts are terminable by the client on short notice, and some without notice. Accordingly, we do not believe it is appropriate to characterize bookings attributable to these contracts as backlog. Normally, if a client terminates a project, the client remains obligated to pay for commitments we have made to third parties in connection with the project, services performed and reimbursable expenses incurred by us through the date of termination.
Revenues by Segment/Operating Group
Our five reportable operating segments are our operating groups, which are Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources. Operating groups are managed on the basis of net revenues because our management believes net revenues are a better indicator of operating group performance than revenues. In addition to reporting net revenues by operating group, we also report net revenues by two types of work: consulting and outsourcing, which represent the services sold by our operating groups. Consulting net revenues, which include management and technology consulting and systems integration, reflect a finite, distinct project or set of projects with a defined outcome and typically a defined set of specific deliverables. Outsourcing net revenues typically reflect ongoing, repeatable services or capabilities provided to transition, run and/or manage operations of client systems or business functions.
From time to time, our operating groups work together to sell and implement certain contracts. The resulting revenues and costs from these contracts may be apportioned among the participating operating groups. Generally, operating expenses for each operating group have similar characteristics and are subject to the same factors, pressures and challenges. However, the economic environment and its effects on the industries served by our operating groups affect revenues and operating expenses within our operating groups to differing degrees. The mix between consulting and outsourcing is not uniform among our operating groups. Local currency fluctuations also tend to affect our operating groups differently, depending on the geographic concentrations and locations of their businesses.
While we provide discussion about our results of operations below, we cannot measure how much of our revenue growth in a particular period is attributable to changes in price or volume. Management does not track standard measures of unit or rate volume. Instead, our measures of volume and price are extremely complex, as each of our services contracts is unique, reflecting a customized mix of specific services that does not fit into standard comparability measurements. Pricing for our services is a function of the nature of each service to be provided, the skills required and outcome sought, as well as estimated cost, risk, contract terms and other factors.

21


Results of Operations for the Three Months Ended February 28, 2013 Compared to the Three Months Ended February 29, 2012
Net revenues (by operating group, geographic region and type of work) and reimbursements were as follows:
  
Three Months Ended
 
Percent
Increase
(Decrease)
U.S. Dollars
 
Percent
Increase
(Decrease)
Local
Currency
 
Percent of Total Net Revenues
for the Three Months Ended
  
February 28,
2013
 
February 29,
2012
 
 
 
February 28,
2013
 
February 29,
2012
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
OPERATING GROUPS
 
 
 
 
 
 
 
 
 
 
 
Communications, Media & Technology
$
1,411

 
$
1,481

 
(5
)%
 
(4
)%
 
20
%
 
22
%
Financial Services
1,509

 
1,377

 
10

 
10

 
21

 
20

Health & Public Service
1,193

 
1,056

 
13

 
13

 
17

 
16

Products
1,681

 
1,585

 
6

 
6

 
24

 
23

Resources
1,252

 
1,293

 
(3
)
 
(3
)
 
18

 
19

Other
12

 
6

 
n/m

 
n/m

 

 

TOTAL NET REVENUES (1)
7,058

 
6,797

 
4
 %
 
4
 %
 
100
%
 
100
%
Reimbursements
435

 
463

 
(6
)
 
 
 
 
 
 
TOTAL REVENUES
$
7,493

 
$
7,260

 
3
 %
 
 
 
 
 
 
GEOGRAPHIC REGIONS
 
 
 
 
 
 
 
 
 
 
 
Americas
$
3,280

 
$
3,028

 
8
 %
 
9
 %
 
46
%
 
45
%
EMEA (2)
2,800

 
2,798

 

 
(1
)
 
40

 
41

Asia Pacific
978

 
971

 
1

 
2

 
14

 
14

TOTAL NET REVENUES
$
7,058

 
$
6,797

 
4
 %
 
4
 %
 
100
%
 
100
%
TYPE OF WORK
 
 
 
 
 
 
 
 
 
 
 
Consulting
$
3,753

 
$
3,775

 
(1
)%
 
(1
)%
 
53
%
 
56
%
Outsourcing
3,305

 
3,022

 
9

 
10

 
47

 
44

TOTAL NET REVENUES
$
7,058

 
$
6,797

 
4
 %
 
4
 %
 
100
%
 
100
%
_______________ 
n/m = not meaningful
(1)
May not total due to rounding.
(2)
EMEA includes Europe, the Middle East and Africa.
Net Revenues
Revenue growth in local currency was strong in outsourcing during the second quarter of fiscal 2013, driven by Financial Services, Products and Health & Public Service. Consulting revenues declined slightly in local currency during the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. Health & Public Service experienced strong consulting revenue growth in local currency during the second quarter of fiscal 2013. Year-over-year consulting revenue growth in local currency was slight in Financial Services, flat in Products and declined in Communications, Media & Technology and Resources.
The following net revenues commentary discusses local currency net revenue changes for the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012:
Operating Groups
Communications, Media & Technology net revenues decreased 4% in local currency. Outsourcing revenues reflected slight growth, driven by Media & Entertainment across all geographic regions and Communications in Americas and Asia Pacific. This growth was partially offset by a significant decline in Electronics & High Tech in EMEA, principally due to an expected year-over-year revenue decline from one contract. The revenue decline on this contract is expected to result in a slight decline in outsourcing revenues in the near term. Consulting revenues declined significantly, due to Electronics & High Tech in EMEA and Asia Pacific, Communications in Americas and Asia Pacific, and Media & Entertainment across all geographic regions. These declines were partially offset by strong growth in Electronics & High Tech in Americas. Some of our clients continued to reduce and/or defer their investment in consulting, which had a negative impact on our consulting revenues in the second quarter of fiscal 2013. We expect our revenue growth to continue to be challenged in the near term.

22


Financial Services net revenues increased 10% in local currency. Outsourcing revenues reflected significant growth, driven by all industry groups in Americas and Banking and Insurance in EMEA. Consulting revenues reflected slight growth, with significant growth in Insurance in Americas, Capital Markets in EMEA and all industry groups in Asia Pacific. These increases were partially offset by declines in Banking in EMEA and Americas and Insurance in EMEA. Changes in the banking and capital markets industries continue to influence the business needs of our clients. This is resulting in higher current demand for outsourcing services, including transformational projects, and lower demand for short-term consulting services, particularly in Banking.
Health & Public Service net revenues increased 13% in local currency. Consulting revenues reflected strong growth, led by Public Service in Asia Pacific and Health in Americas and EMEA. This growth was partially offset by a decline in Public Service in EMEA. Outsourcing revenues also reflected strong growth, led by Public Service in Americas and Health in Asia Pacific.
Products net revenues increased 6% in local currency. Outsourcing revenues reflected strong growth, driven by growth across all geographic regions and industry groups, led by Retail, Industrial Equipment and Life Sciences. Consulting revenues were flat, as growth in Americas in Life Sciences and Industrial Equipment and EMEA in Life Sciences was offset by declines in Asia Pacific across most industry groups, Americas in Consumer Goods & Services and Air, Freight & Travel Services, and EMEA in Retail.
Resources net revenues decreased 3% in local currency. Outsourcing revenues reflected slight growth, driven by all industry groups in EMEA and Utilities in Asia Pacific. This growth was partially offset by declines in Utilities and Energy in Americas. Consulting revenues decreased, due to declines in Natural Resources in Americas and Asia Pacific, Energy in Americas and Utilities in EMEA. These decreases were partially offset by growth in Chemicals in Americas. Some of our clients, primarily in Natural Resources and Utilities, are reducing their level of consulting investments, as several projects have ended or have transitioned to smaller phases. Additionally, demand for our outsourcing services has moderated. These trends negatively impacted our revenues in the second quarter of fiscal 2013, and we expect this to continue in the near term.
Geographic Regions
Americas net revenues increased 9% in local currency, led by the United States.
EMEA net revenues decreased 1% in local currency. We experienced a significant decline in Finland, principally due to an expected year-over-year decline from one contract in Communications, Media & Technology, as well as declines in Sweden and the United Kingdom. These declines were offset by growth in most countries across the remainder of the region, led by South Africa, Germany, the Netherlands, Italy, Switzerland and Ireland.
Asia Pacific net revenues increased 2% in local currency, driven by growth in Australia, China and Singapore, partially offset by declines in Japan, Malaysia and South Korea.
Operating Expenses
Operating expenses for the second quarter of fiscal 2013 were $6,329 million, a decrease of $42 million from the second quarter of fiscal 2012, and decreased as a percentage of revenues to 84.5% from 87.8% during this period. Operating expenses before reimbursable expenses for the second quarter of fiscal 2013 were $5,894 million, a decrease of $14 million from the second quarter of fiscal 2012, and decreased as a percentage of net revenues to 83.5% from 86.9% during this period.
Cost of Services
Cost of services for the second quarter of fiscal 2013 was $5,263 million, an increase of $119 million, or 2%, over the second quarter of fiscal 2012, and decreased as a percentage of revenues to 70.2% from 70.8% during this period. Cost of services before reimbursable expenses for the second quarter of fiscal 2013 was $4,828 million, an increase of $147 million, or 3%, over the second quarter of fiscal 2012, and decreased as a percentage of net revenues to 68.4% from 68.9% during this period. Gross margin for the second quarter of fiscal 2013 increased to 31.6% from 31.1% for the second quarter of fiscal 2012, principally due to higher outsourcing contract profitability, partially offset by higher payroll costs associated with holiday time and investments in offerings.
Sales and Marketing
Sales and marketing expense for the second quarter of fiscal 2013 was $834 million, an increase of $62 million, or 8%, over the second quarter of fiscal 2012, and increased as a percentage of net revenues to 11.8% from 11.4% during this period. The increase as a percentage of net revenues was primarily driven by higher selling and other business development costs associated with generating higher new contract bookings and expanding our pipeline of business opportunities.

23


General and Administrative Costs
General and administrative costs for the second quarter of fiscal 2013 were $456 million, an increase of $1 million over the second quarter of fiscal 2012, and decreased as a percentage of net revenues to 6.5% from 6.7% during this period.
Reorganization (Benefits) Costs, net
We recorded net reorganization benefits of $224 million during the second quarter of fiscal 2013 as a result of final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure in 2001. As of February 28, 2013, the remaining liability for reorganization costs was $64 million, of which $52 million was classified as current liabilities because expirations of statutes of limitations or other final determinations could occur within 12 months. For additional information, refer to Note 4 (Reorganization (Benefits) Costs, Net) to our Consolidated Financial Statements above under Item 1, "Financial Statements."

24


Operating Income and Operating Margin
Operating income for the second quarter of fiscal 2013 was $1,165 million, an increase of $275 million, or 31%, over the second quarter of fiscal 2012, and increased as a percentage of net revenues to 16.5% from 13.1% during this period. The reorganization benefits of $224 million recorded in the second quarter of fiscal 2013 increased operating margin by 320 basis points. Excluding the effects of the reorganization benefits, operating margin for the second quarter of fiscal 2013 increased 20 basis points compared with the second quarter of fiscal 2012.
Operating income and operating margin for each of the operating groups were as follows:
  
Three Months Ended
  
February 28,
2013
 
February 29,
2012
  
Operating
Income
 
Operating
Margin
 
Operating
Income
 
Operating
Margin
 
 (in millions of U.S. dollars)
Communications, Media & Technology
$
226

 
16
%
 
$
203

 
14
%
Financial Services
244

 
16

 
143

 
10

Health & Public Service
188

 
16

 
100

 
9

Products
264

 
16

 
184

 
12

Resources
242

 
19

 
259

 
20

Total (1)
$
1,165

 
16.5
%
 
$
889

 
13.1
%
 _______________ 
(1)
May not total due to rounding.

Operating Income and Operating Margin Excluding Reorganization Benefits (Non-GAAP)
 
Three Months Ended
 
 
 
February 28, 2013
 
February 29, 2012
 
 
 
 
 
Operating Income and Operating Margin
Excluding Reorganization Benefits
(Non-GAAP)
 
Operating Income and Operating Margin as Reported (GAAP)
 
 
 
 
 
 
 
 
 
Operating
Income
(GAAP)
 
Reorganization
Benefits (1)
 
Operating
Income (2) (3)
 
Operating
Margin (2)
 
Operating
Income
 
Operating
Margin
 
Increase
(Decrease) (3)
 
(in millions of U.S. dollars)
Communications, Media & Technology
$
226

 
$
43

 
$
182

 
13
%
 
$
203

 
14
%
 
$
(21
)
Financial Services
244

 
48

 
196

 
13

 
143

 
10

 
53

Health & Public Service
188

 
39

 
149

 
12

 
100

 
9

 
49

Products
264

 
53

 
211

 
13

 
184

 
12

 
27

Resources
242

 
40

 
202

 
16

 
259

 
20

 
(58
)
Total (3)
$
1,165

 
$
224

 
$
940

 
13.3
%
 
$
889

 
13.1
%
 
$
51

 _______________ 
(1)
Represents reorganization benefits related to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure during 2001.
(2)
We have presented Operating income and operating margin excluding reorganization benefits, as we believe the effect of the reorganization benefits on Operating income and operating margin facilitates understanding as to both the impact of these benefits and our operating performance.
(3)
May not total due to rounding.
During the second quarter of fiscal 2013, each operating group recorded a portion of the $224 million in reorganization benefits. The commentary below provides additional insight into operating group performance and operating margin for the second quarter of fiscal 2013, exclusive of the reorganization benefits, compared with the second quarter of fiscal 2012. See “—Reorganization (Benefits) Costs, net.”

25


Communications, Media & Technology operating income decreased, primarily due to a decline in consulting revenue and higher sales and marketing costs as a percentage of net revenues, partially offset by improved outsourcing contract profitability.
Financial Services operating income increased, primarily due to strong outsourcing revenue growth and improved outsourcing contract profitability. Operating income for the second quarter of fiscal 2012 included the impact of costs related to acquisitions.
Health & Public Service operating income increased, primarily due to revenue growth and improved outsourcing contract profitability.
Products operating income increased, primarily due to strong outsourcing revenue growth and improved outsourcing and consulting contract profitability.
Resources operating income decreased, primarily due to a decline in consulting revenue and higher sales and marketing costs as a percentage of net revenues.
Other Income, net
Other income, net for the second quarter of fiscal 2013 was $11 million, an increase of $6 million over the second quarter of fiscal 2012. The change was primarily driven by investment gains during the second quarter of fiscal 2013, partially offset by net foreign exchange losses during the second quarter of fiscal 2013 compared to net foreign exchange gains during the second quarter of fiscal 2012.
(Benefit from) Provision for Income Taxes
The effective tax rate for the second quarter of fiscal 2013 was (0.5)%, compared with 20.5% for the second quarter of fiscal 2012. During the second quarter of fiscal 2013, we recorded a benefit of $243 million related to settlements of U.S. federal tax audits for fiscal years 2006 through 2009. The effective tax rate was also impacted by reorganization benefits of $224 million, which increased income before income taxes without any increase in income tax expense. Absent these items, our effective tax rate for the second quarter of fiscal 2013 would have been 24.8%.
Our provision for income taxes is based on many factors and subject to volatility year to year. As a result of these benefits, we expect the fiscal 2013 annual effective tax rate to be in the range of 19% to 20%. The fiscal 2012 annual effective tax rate was 27.6%.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests for the second quarter of fiscal 2013 was $85 million, an increase of $15 million, or 21%, over the second quarter of fiscal 2012. The increase was due to higher Net income of $473 million, partially offset by a reduction in the Accenture SCA Class I common shares and Accenture Canada Holdings Inc. exchangeable shares average noncontrolling ownership interest to 7% for the second quarter of fiscal 2013 from 9% for the second quarter of fiscal 2012.
Earnings Per Share
Diluted earnings per share were $1.65 for the second quarter of fiscal 2013, compared with $0.97 for the second quarter of fiscal 2012. The $0.68 increase in our earnings per share included the impact of the $243 million tax benefit related to settlements of U.S. federal tax audits, which increased earnings per share by $0.34, and reorganization benefits of $224 million, which increased earnings per share by $0.31. Excluding the impact of these benefits, earnings per share increased $0.03 compared with the second quarter of fiscal 2012, due to increases of $0.06 from higher revenues and operating results, $0.02 from lower weighted average shares outstanding and $0.01 from higher non-operating income. These increases were partially offset by a decrease of $0.06 from a higher effective tax rate, excluding the impact of the tax benefit related to settlements of U.S. federal tax audits and reorganization benefits. For information regarding our earnings per share calculations, see Note 2 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

26


Results of Operations for the Six Months Ended February 28, 2013 Compared to the Six Months Ended February 29, 2012
Net revenues (by operating group, geographic region and type of work) and reimbursements were as follows:
  
Six Months Ended
 
Percent
Increase
(Decrease)
U.S. Dollars
 
Percent
Increase
(Decrease)
Local
Currency
 
Percent of Total Net Revenues
for the Six Months Ended
  
February 28,
2013
 
February 29,
2012
 
 
 
February 28,
2013
 
February 29,
2012
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
OPERATING GROUPS
 
 
 
 
 
 
 
 
 
 
 
Communications, Media & Technology
$
2,870

 
$
3,017

 
(5
)%
 
(3
)%
 
20
%
 
22
%
Financial Services
3,072

 
2,860

 
7

 
10