10-Q 1 acn228201910-q.htm 10-Q Document

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, 2019
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 every Interactive Data File required to be submitted 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 such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  þ
Accelerated filer ¨
Non-accelerated filer  ¨
Smaller reporting company  ¨
Emerging growth company  ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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, 2019 was 670,473,793 (which number includes 32,641,215 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, 2019 was 650,821.



ACCENTURE PLC
INDEX
 
 
 
Page

2


PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCENTURE PLC
CONSOLIDATED BALANCE SHEETS
February 28, 2019 and August 31, 2018
(In thousands of U.S. dollars, except share and per share amounts)
 
February 28,
2019
 
August 31,
2018
 
(Unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
4,464,889

 
$
5,061,360

Short-term investments
3,111

 
3,192

Receivables and contract assets
8,151,411

 
7,496,368

Other current assets
1,213,889

 
1,024,639

Total current assets
13,833,300

 
13,585,559

NON-CURRENT ASSETS:
 
 
 
Contract assets
20,691

 
23,036

Investments
229,085

 
215,532

Property and equipment, net
1,282,765

 
1,264,020

Goodwill
5,782,856

 
5,383,012

Deferred contract costs
702,404

 
705,124

Deferred income taxes, net
4,258,979

 
2,086,807

Other non-current assets
1,280,128

 
1,185,993

Total non-current assets
13,556,908

 
10,863,524

TOTAL ASSETS
$
27,390,208

 
$
24,449,083

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current portion of long-term debt and bank borrowings
$
4,365

 
$
5,337

Accounts payable
1,472,130

 
1,348,802

Deferred revenues
3,335,751

 
2,837,682

Accrued payroll and related benefits
4,016,627

 
4,569,172

Income taxes payable
554,745

 
497,885

Other accrued liabilities
835,431

 
892,873

Total current liabilities
10,219,049

 
10,151,751

NON-CURRENT LIABILITIES:
 
 
 
Long-term debt
19,753

 
19,676

Deferred revenues
607,038

 
618,124

Retirement obligation
1,412,558

 
1,410,656

Deferred income taxes, net
139,792

 
125,729

Income taxes payable
826,188

 
956,836

Other non-current liabilities
437,285

 
441,723

Total non-current liabilities
3,442,614

 
3,572,744

COMMITMENTS AND CONTINGENCIES

 

SHAREHOLDERS’ EQUITY:
 
 
 
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of February 28, 2019 and August 31, 2018
57

 
57

Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 670,312,741 and 663,327,677 shares issued as of February 28, 2019 and August 31, 2018, respectively
15

 
15

Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 650,821 and 655,521 shares issued and outstanding as of February 28, 2019 and August 31, 2018, respectively

 

Restricted share units
954,613

 
1,234,623

Additional paid-in capital
5,783,062

 
4,870,764

Treasury shares, at cost: Ordinary, 40,000 shares as of February 28, 2019 and August 31, 2018; Class A ordinary, 32,399,072 and 24,293,199 shares as of February 28, 2019 and August 31, 2018, respectively
(3,357,665
)
 
(2,116,948
)
Retained earnings
11,421,964

 
7,952,413

Accumulated other comprehensive loss
(1,465,013
)
 
(1,576,171
)
Total Accenture plc shareholders’ equity
13,337,033

 
10,364,753

Noncontrolling interests
391,512

 
359,835

Total shareholders’ equity
13,728,545

 
10,724,588

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
27,390,208

 
$
24,449,083


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, 2019 and 2018
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
February 28, 2019
 
February 28, 2018
 
February 28, 2019
 
February 28, 2018
REVENUES:
 
 
 
 
 
 
 
Revenues
$
10,454,129

 
$
9,909,238

 
$
21,059,675

 
$
19,793,551

OPERATING EXPENSES:
 
 
 
 
 
 
 
Cost of services
7,399,780

 
7,049,698

 
14,707,901

 
13,869,858

Sales and marketing
1,020,036

 
998,823

 
2,090,052

 
2,000,019

General and administrative costs
647,687

 
564,673

 
1,246,084

 
1,129,454

Total operating expenses
9,067,503

 
8,613,194

 
18,044,037

 
16,999,331

OPERATING INCOME
1,386,626

 
1,296,044

 
3,015,638

 
2,794,220

Interest income
19,081

 
9,459

 
38,712

 
20,895

Interest expense
(5,619
)
 
(3,840
)
 
(10,124
)
 
(8,547
)
Other income (expense), net
(23,834
)
 
(56,866
)
 
(57,488
)
 
(67,647
)
INCOME BEFORE INCOME TAXES
1,376,254

 
1,244,797

 
2,986,738

 
2,738,921

Provision for income taxes
235,534

 
325,257

 
554,694

 
630,839

NET INCOME
1,140,720

 
919,540

 
2,432,044

 
2,108,082

Net income attributable to noncontrolling interests in Accenture Holdings plc and Accenture Canada Holdings Inc.
(1,649
)
 
(37,401
)
 
(3,537
)
 
(86,534
)
Net income attributable to noncontrolling interests – other
(14,622
)
 
(18,436
)
 
(29,338
)
 
(34,185
)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,124,449

 
$
863,703

 
$
2,399,169

 
$
1,987,363

Weighted average Class A ordinary shares:
 
 
 
 
 
 
 
Basic
638,639,729

 
617,854,667

 
638,750,881

 
616,838,561

Diluted
649,170,699

 
656,118,796

 
650,732,700

 
656,381,177

Earnings per Class A ordinary share:
 
 
 
 
 
 
 
Basic
$
1.76

 
$
1.40

 
$
3.76

 
$
3.22

Diluted
$
1.73

 
$
1.37

 
$
3.69

 
$
3.16

Cash dividends per share
$

 
$

 
$
1.46

 
$
1.33


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, 2019 and 2018
(In thousands of U.S. dollars)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
February 28, 2019
 
February 28, 2018
 
February 28, 2019
 
February 28, 2018
NET INCOME
$
1,140,720

 
$
919,540

 
$
2,432,044

 
$
2,108,082

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
 
 
 
 
 
 
 
Foreign currency translation
41,645

 
121,623

 
33,028

 
94,291

Defined benefit plans
6,578

 
7,889

 
26,991

 
14,119

Cash flow hedges
(36,690
)
 
(63,727
)
 
51,654

 
(80,994
)
Investments

 
1,102

 
(515
)
 
1,102

OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ACCENTURE PLC
11,533

 
66,887

 
111,158

 
28,518

Other comprehensive income (loss) attributable to noncontrolling interests
1,625

 
9,100

 
(671
)
 
6,266

COMPREHENSIVE INCOME
$
1,153,878

 
$
995,527

 
$
2,542,531

 
$
2,142,866




 


 
 
 
 
COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,135,982

 
$
930,590

 
$
2,510,327

 
$
2,015,881

Comprehensive income attributable to noncontrolling interests
17,896

 
64,937

 
32,204

 
126,985

COMPREHENSIVE INCOME
$
1,153,878

 
$
995,527

 
$
2,542,531

 
$
2,142,866


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


5


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Three Months Ended February 28, 2019
(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 November 30, 2018
$
57

 
40

 
$
15

 
665,541

 
$

 
651

 
$
1,342,965

 
$
5,176,749

 
$
(2,748,448
)
 
(28,206
)
 
$
10,384,064

 
$
(1,476,546
)
 
$
12,678,856

 
$
376,712

 
$
13,055,568

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,124,449

 
 
 
1,124,449

 
16,271

 
1,140,720

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,533

 
11,533

 
1,625

 
13,158

Purchases of Class A shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,247

 
(995,056
)
 
(6,663
)
 
 
 
 
 
(993,809
)
 
(1,247
)
 
(995,056
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
346,762

 


 
 
 
 
 
 
 
 
 
346,762

 
 
 
346,762

Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares
 
 
 
 
 
 
 
 
 
 


 
 
 
(12,751
)
 
 
 
 
 
 
 
 
 
(12,751
)
 
 
 
(12,751
)
Issuances of Class A shares for employee share programs
 
 
 
 
 
 
4,772

 
 
 
 
 
(733,906
)
 
615,692

 
385,839

 
2,430

 
(87,757
)
 
 
 
179,868

 
227

 
180,095

Dividends
 
 
 
 
 
 
 
 
 
 
 
 
(1,208
)
 
 
 
 
 
 
 
1,208

 
 
 

 


 

Other, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,125

 
 
 
 
 


 
 
 
2,125

 
(2,076
)
 
49

Balance as of February 28, 2019
$
57

 
40

 
$
15

 
670,313

 
$

 
651

 
$
954,613

 
$
5,783,062

 
$
(3,357,665
)
 
(32,439
)
 
$
11,421,964

 
$
(1,465,013
)
 
$
13,337,033

 
$
391,512

 
$
13,728,545

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


6


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Three Months Ended February 28, 2018
(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 November 30, 2017
57

 
40

 
14

 
641,496

 

 
19,915

 
1,187,775

 
3,755,060

 
(2,046,811
)
 
(26,172
)
 
7,339,188

 
(1,133,153
)
 
9,102,130

 
791,307

 
9,893,437

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
863,703

 
 
 
863,703

 
55,837

 
919,540

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66,887

 
66,887

 
9,100

 
75,987

Purchases of Class A ordinary shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28,331

 
(761,075
)
 
(4,903
)
 
 
 
 
 
(732,744
)
 
(28,331
)
 
(761,075
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
293,035

 
 
 
 
 
 
 
 
 
 
 
293,035

 
 
 
293,035

Purchases/redemptions of Accenture Holdings plc ordinary shares, Accenture Canada Holdings Inc. exchangeable shares and Class X ordinary shares
 
 
 
 
 
 
 
 
 
 
(196
)
 
 
 
(41,105
)
 
 
 
 
 
 
 
 
 
(41,105
)
 
(1,767
)
 
(42,872
)
Issuances of Class A ordinary shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee share programs
 
 
 
 
 
 
4,986

 
 
 
 
 
(594,994
)
 
524,192

 
255,858

 
2,162

 
(46,902
)
 
 
 
138,154

 
5,341

 
143,495

Upon redemption of Accenture Holdings plc ordinary shares
 
 
 
 
 
 
152

 
 
 
 
 
 
 
1,928

 
 
 
 
 
 
 
 
 
1,928

 
(1,928
)
 
 
Dividends
 
 
 
 
 
 
 
 
 
 
 
 
(834
)
 
 
 
 
 
 
 
834

 
 
 
 
 
 
 
 
Other, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,568
)
 
 
 
 
 
(7,733
)
 
 
 
(9,301
)
 
(73,820
)
 
(83,121
)
Balance as of February 28, 2018
$
57

 
40

 
$
14

 
646,634

 
$

 
19,719

 
$
884,982

 
$
4,266,838

 
$
(2,552,028
)
 
(28,913
)
 
$
8,149,090

 
$
(1,066,266
)
 
$
9,682,687

 
$
755,739

 
$
10,438,426

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


7


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Six Months Ended February 28, 2019
(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, 2018
$
57

 
40

 
$
15

 
663,328

 
$

 
656

 
$
1,234,623

 
$
4,870,764

 
$
(2,116,948
)
 
(24,333
)
 
$
7,952,413

 
$
(1,576,171
)
 
$
10,364,753

 
$
359,835

 
$
10,724,588

Cumulative effect adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,134,818

 
 
 
2,134,818

 
3,158

 
2,137,976

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,399,169

 
 
 
2,399,169

 
32,875

 
2,432,044

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111,158

 
111,158

 
(671
)
 
110,487

Purchases of Class A shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,273

 
(1,782,564
)
 
(11,524
)
 
 
 
 
 
(1,780,291
)
 
(2,273
)
 
(1,782,564
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
561,475

 
31,803

 
 
 
 
 
 
 
 
 
593,278

 
 
 
593,278

Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares
 
 
 
 
 
 
 
 
 
 
(5
)
 
 
 
(13,570
)
 
 
 
 
 
 
 
 
 
(13,570
)
 


 
(13,570
)
Issuances of Class A shares for employee share programs
 
 
 
 
 
 
6,985

 
 
 
 
 
(867,871
)
 
892,731

 
541,847

 
3,418

 
(121,001
)
 
 
 
445,706

 
571

 
446,277

Dividends
 
 
 
 
 
 
 
 
 
 
 
 
26,386

 
 
 
 
 
 
 
(957,846
)
 
 
 
(931,460
)
 
(1,378
)
 
(932,838
)
Other, net
 
 
 
 
 
 
 
 
 
 
 
 


 
(939
)
 
 
 
 
 
14,411

 
 
 
13,472

 
(605
)
 
12,867

Balance as of February 28, 2019
$
57

 
40

 
$
15

 
670,313

 
$

 
651

 
$
954,613

 
$
5,783,062

 
$
(3,357,665
)
 
(32,439
)
 
$
11,421,964

 
$
(1,465,013
)
 
$
13,337,033

 
$
391,512

 
$
13,728,545

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



8


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Six Months Ended February 28, 2018
(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, 2017
$
57

 
40

 
$
14

 
638,966

 
$

 
20,531

 
$
1,095,026

 
$
3,516,399

 
$
(1,649,090
)
 
(23,449
)
 
$
7,081,855

 
$
(1,094,784
)
 
$
8,949,477

 
$
760,723

 
$
9,710,200

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,987,363

 
 
 
1,987,363

 
120,719

 
2,108,082

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28,518

 
28,518

 
6,266

 
34,784

Purchases of Class A ordinary shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48,064

 
(1,284,241
)
 
(8,650
)
 
 
 
 
 
(1,236,177
)
 
(48,064
)
 
(1,284,241
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
476,980

 
28,946

 
 
 
 
 
 
 
 
 
505,926

 
 
 
505,926

Purchases/redemptions of Accenture Holdings plc ordinary shares, Accenture Canada Holdings Inc. exchangeable shares and Class X ordinary shares
 
 
 
 
 
 
 
 
 
 
(812
)
 
 
 
(78,006
)
 
 
 
 
 
 
 
 
 
(78,006
)
 
(4,838
)
 
(82,844
)
Issuances of Class A ordinary shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee share programs
 
 
 
 
 
 
7,316

 
 
 
 
 
(713,863
)
 
770,228

 
381,303

 
3,186

 
(68,656
)
 
 
 
369,012

 
14,213

 
383,225

Upon redemption of Accenture Holdings plc ordinary shares
 
 
 
 
 
 
352

 
 
 
 
 
 
 
3,741

 
 
 
 
 
 
 
 
 
3,741

 
(3,741
)
 

Dividends
 
 
 
 
 
 
 
 
 
 
 
 
26,839

 
 
 
 
 
 
 
(844,080
)
 
 
 
(817,241
)
 
(36,373
)
 
(853,614
)
Other, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(22,534
)
 
 
 
 
 
(7,392
)
 
 
 
(29,926
)
 
(53,166
)
 
(83,092
)
Balance as of February 28, 2018
$
57

 
40

 
$
14

 
646,634

 
$

 
19,719

 
$
884,982

 
$
4,266,838

 
$
(2,552,028
)
 
(28,913
)
 
$
8,149,090

 
$
(1,066,266
)
 
$
9,682,687

 
$
755,739

 
$
10,438,426

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


9


ACCENTURE PLC
CONSOLIDATED CASH FLOWS STATEMENTS
For the Six Months Ended February 28, 2019 and 2018
(In thousands of U.S. dollars)
(Unaudited)
 
February 28, 2019
 
February 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
2,432,044

 
$
2,108,082

Adjustments to reconcile Net income to Net cash provided by (used in) operating activities —
 
 
 
Depreciation, amortization and asset impairments
431,283

 
453,297

Share-based compensation expense
593,278

 
505,926

Deferred income taxes, net
(49,624
)
 
58,562

Other, net
(79,425
)
 
61,615

Change in assets and liabilities, net of acquisitions —
 
 
 
Receivables and contract assets, current and non-current
(481,936
)
 
(467,462
)
Other current and non-current assets
(282,588
)
 
(287,588
)
Accounts payable
28,730

 
(179,438
)
Deferred revenues, current and non-current
438,293

 
139,545

Accrued payroll and related benefits
(555,875
)
 
(543,604
)
Income taxes payable, current and non-current
(77,969
)
 
(27,485
)
Other current and non-current liabilities
(9,053
)
 
108,445

Net cash provided by (used in) operating activities
2,387,158

 
1,929,895

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(217,488
)
 
(266,248
)
Purchases of businesses and investments, net of cash acquired
(515,082
)
 
(344,104
)
Proceeds from sales of businesses and investments, net of cash transferred
1,809

 
(398
)
Other investing, net
6,218

 
6,115

Net cash provided by (used in) investing activities
(724,543
)
 
(604,635
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of ordinary shares
446,277

 
383,225

Purchases of shares
(1,796,134
)
 
(1,367,085
)
Proceeds from (repayments of) long-term debt, net
(872
)
 
264

Cash dividends paid
(932,838
)
 
(853,614
)
Other, net
(10,524
)
 
(45,014
)
Net cash provided by (used in) financing activities
(2,294,091
)
 
(1,882,224
)
Effect of exchange rate changes on cash and cash equivalents
35,005

 
25,183

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(596,471
)
 
(531,781
)
CASH AND CASH EQUIVALENTS, beginning of period
5,061,360

 
4,126,860

CASH AND CASH EQUIVALENTS, end of period
$
4,464,889

 
$
3,595,079

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
Income taxes paid, net
$
645,379

 
$
666,387

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

10

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 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. We use the terms “Accenture,” “we” and “our” in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries. 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, 2018 included in our Annual Report on Form 10-K filed with the SEC on October 24, 2018.
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 we 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, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2019.
On March 13, 2018, Accenture Holdings plc merged with and into Accenture plc, with Accenture plc as the surviving entity. As a result, all of the assets and liabilities of Accenture Holdings plc were acquired by Accenture plc, and Accenture Holdings plc ceased to exist. In connection with this internal merger, shareholders of Accenture Holdings plc (other than Accenture entities that held shares of Accenture Holdings plc), who primarily consisted of current and former members of Accenture Leadership and their permitted transferees, received one Class A ordinary share of Accenture plc for each share of Accenture Holdings plc that they owned, and Accenture plc redeemed all Class X ordinary shares of Accenture plc owned by such shareholders.
Allowances for Client Receivables
As of February 28, 2019 and August 31, 2018, total allowances recorded for client receivables were $53,616 and $49,913, respectively.
Depreciation and Amortization
Depreciation expense was $110,635 and $213,348 for the three and six months ended February 28, 2019, respectively, and $107,445 and $213,596 for the three and six months ended February 28, 2018, respectively. As of February 28, 2019 and August 31, 2018, total accumulated depreciation was $2,027,164 and $1,862,098, respectively. Deferred transition amortization expense was $68,209 and $137,088 for the three and six months ended February 28, 2019, respectively, and $71,288 and $153,142 for the three and six months ended February 28, 2018, respectively. See Note 6 (Goodwill and Intangible Assets) to these Consolidated Financial Statements for intangible asset amortization balances.
Recently Adopted Accounting Pronouncements
Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”)
On September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced most existing revenue recognition guidance. The core principle of Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. Topic 606 has been applied to contracts that were not completed as of September 1, 2018. Results for reporting periods beginning after September 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. See Note 2 (Revenues) to these Consolidated Financial Statements for further details.
In connection with the adoption of Topic 606, we are now presenting total revenues and no longer reporting revenues before reimbursements. Prior period results have been revised to reflect this change in presentation. As a result of this change, for the three and six months ended February 28, 2018, both total revenues and cost of services

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)


decreased by $158,594 and $328,774, respectively, for hardware/software resale previously included in reimbursements. This change had no impact on operating income.
The impact of adopting the new standard was not material to our Consolidated Financial Statements. The primary impacts included additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from client contracts, including judgments and changes in estimates. Upon adoption, we recorded a decrease to retained earnings of $6,451, net of a tax impact of $3,071, as of September 1, 2018.
The impact of adopting the new standard for the three and six months ended February 28, 2019 was an increase to revenues of approximately $6.9 million and $19.4 million, respectively. The impact on our balance sheet as of February 28, 2019 was not material with the exception of the classification of $2.2 billion of receivables and $571.8 million of contract assets, which were previously classified as Unbilled services, net.
FASB ASU No. 2016-16
On September 1, 2018, we adopted FASB ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. Upon adoption, we recorded deferred tax assets and an increase in retained earnings of $2,144,427, and we will recognize incremental income tax expense as these deferred tax assets are utilized. Our fiscal 2019 annual effective tax rate is expected to be approximately 3.3% higher due to the adoption. The adoption had no impact on cash flows.
The impact of adoption as of September 1, 2018 of FASB ASU No. 2014-09 (Topic 606) and No. 2016-16 (Topic 740) on our Consolidated Balance Sheets was as follows:
 
Balance as of
August 31, 2018
 
Adjustments Due to ASU 2014-09 (Topic 606)
 
Adjustments Due to ASU 2016-16 (Topic 740)
 
Balance as of September 1, 2018
Balance Sheet
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
Receivables from clients, net
$
4,996,454

 
$
2,100,402

 
$

 
$
7,096,856

Unbilled services, net
2,499,914

 
(2,499,914
)
 

 

Contract assets

 
547,809

 

 
547,809

Receivables and contract assets
$
7,496,368

 
$
148,297

 
$

 
$
7,644,665

NON-CURRENT ASSETS
 
 
 
 
 
 
 
Unbilled services, net
$
23,036

 
$
(23,036
)
 
$

 
$

Contract assets

 
23,036

 

 
23,036

Deferred contract costs
705,124

 
(2,867
)
 

 
702,257

Deferred income taxes, net
2,086,807

 
3,071

 
2,144,427

 
4,234,305

 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
Deferred revenues
2,837,682

 
154,952

 

 
2,992,634

SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Retained earnings
7,952,413

 
(6,451
)
 
2,144,427

 
10,090,389

FASB ASU No. 2017-07
On September 1, 2018, we adopted FASB ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance amends certain presentation and disclosure requirements for employers with defined benefit pension and post-retirement medical plans. The standard requires the service cost component of the net benefit cost to be in the same line item as other compensation in operating income and the other components of net benefit cost to be presented outside of operating income on a retrospective basis. Upon adoption, we reclassified $13 million and $26 million for the three and six months ended February 28, 2018, respectively and $58 million for fiscal 2018 of operating expenses to non-operating expense to conform with the fiscal 2019 treatment of these expenses.

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)


FASB ASU No. 2016-01
On September 1, 2018, we adopted FASB ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The standard requires investments previously accounted for under the cost method of accounting to be measured at fair value with changes in fair value recognized in net income. Investments in equity securities that do not have readily determinable fair values will be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions. We adopted this standard using the prospective method. The adoption did not have a material impact on our Consolidated Financial Statements.
New Accounting Pronouncement
The following standard, issued by the FASB, will result in a change in practice and will have a financial impact on our Consolidated Financial Statements:
Standard
 
Description
 
Accenture Adoption Date
 
Impact on the Financial Statements or Other Significant Matters
2016-02: Leases and related updates (Topic 842)
 
The guidance amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose additional quantitative and qualitative information about leasing arrangements. The guidance requires either a modified retrospective transition method or a cumulative effect adjustment to opening retained earnings in the period of adoption.
 
September 1, 2019
 
While we are continuing to assess the potential impact of this ASU, we currently believe the most significant impact relates to our accounting for office space operating leases. We anticipate this ASU will have a material impact on our Consolidated Balance Sheets but will not have a material impact on our other Consolidated Financial Statements or footnotes. We will apply the cumulative effect method.
2. REVENUES
We account for revenue in accordance with Topic 606, which we adopted on September 1, 2018 using the modified retrospective method.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of accounting in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on the relative standalone selling price. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service based on margins for similar services sold on a standalone basis. While determining relative standalone selling price and identifying separate performance obligations require judgment, generally relative standalone selling prices and the separate performance obligations are readily identifiable as we sell those performance obligations unaccompanied by other performance obligations. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications, requirements or duration. If a contract modification results in the addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from the services provided prior to the modification, the modification is accounted for separately. If the modified services are not distinct, they are accounted for as part of the existing contract.
Our revenues are derived from contracts for outsourcing services, technology integration consulting services and non-technology consulting services. These contracts have different terms based on the scope, performance obligations and complexity of the engagement, which frequently require us to make judgments and estimates in recognizing revenues. We have many types of contracts, including time-and-materials contracts, fixed-price contracts, fee-per-transaction contracts and contracts with multiple fee types.

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)


The nature of our contracts gives rise to several types of variable consideration, including incentive fees. Many contracts include incentives or penalties related to costs incurred, benefits produced or adherence to schedules that may increase the variability in revenues and margins earned on such contracts. These variable amounts generally are awarded or refunded upon achievement of or failure to achieve certain performance metrics, milestones or cost targets and can be based upon client discretion. We include these variable fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee and it is not probable a significant reversal of revenue will occur. These estimates reflect the expected value of the variable fee and are based on an assessment of our anticipated performance, historical experience and other information available at the time.
Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenues are recognized over time based on the extent of progress towards satisfying our performance obligations. The selection of the method to measure progress towards completion requires judgment and is based on the contract and the nature of the services to be provided.
Outsourcing Contracts
Our outsourcing contracts typically span several years. Revenues are generally recognized on outsourcing contracts over time because our clients benefit from the services as they are performed. Outsourcing contracts require us to provide a series of distinct services each period over the contract term. Revenues from unit-priced contracts are recognized as transactions are processed. When contractual billings represent an amount that corresponds directly with the value provided to the client (e.g., time-and-materials contracts), revenues are recognized as amounts become billable in accordance with contract terms.
Technology Integration Consulting Services
Revenues from contracts for technology integration consulting services where we design/redesign, build and implement new or enhanced systems and related processes for our clients are recognized over time as control of the system is transferred continuously to the client. Contracts for technology integration consulting services generally span six months to two years. Generally, revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Revenues, including estimated fees, are recorded proportionally as costs are incurred. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the client.
Non-Technology Integration Consulting Services
Our contracts for non-technology integration consulting services are typically less than a year in duration. Revenues are generally recognized over time as our clients benefit from the services as they are performed, or the contract includes termination provisions enabling payment for performance completed to date. When contractual billings represent an amount that corresponds directly with the value provided to the client (e.g. time-and-materials contracts), revenues are recognized as amounts become billable in accordance with contract terms. Revenues from fixed-price contracts are generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the client. For non-technology integration consulting contracts which do not qualify to recognize revenue over time, we recognize revenues at a point in time when we satisfy our performance obligations and the client obtains control of the promised good or service.
Remaining Performance Obligations
On February 28, 2019, we had approximately $19 billion of remaining performance obligations. Our remaining performance obligations represent the amount of transaction price for which work has not been performed and revenue has not been recognized. The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice. Under Topic 606, only the non-cancelable portion of these contracts is included in our performance obligations. Additionally, our performance obligations only include variable consideration if we assess it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. Based on the terms of our contracts, a significant portion of what we consider contract bookings is not included in our remaining performance obligations. We expect to recognize approximately 57% of our remaining performance obligations as revenue in fiscal 2019, an additional 24% in fiscal 2020, and the balance thereafter.
See Note 11 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.

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)


Contract Estimates
Estimates of total contract revenues and costs are continuously monitored over the life of our contracts, and recorded revenues and cost estimates are subject to revision as the contract progresses. If at any time the estimate of contract profitability indicates an anticipated loss on a technology integration consulting contract, we recognize the loss in the quarter it first becomes probable and reasonably estimable.
Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods increased our revenues by approximately $37 million and $38 million for the three and six months ended February 28, 2019, respectively. No adjustment on any one contract was material to our Consolidated Financial Statements for the three and six months ended February 28, 2019.
Contract Balances
The timing of revenue recognition, billings and cash collections results in Receivables, Contract assets, and Deferred revenues (Contract liabilities) on our Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones. Our receivables are rights to consideration that are conditional only upon the passage of time as compared to our contract assets, which are rights to consideration conditional upon additional factors. When we bill or receive payments from our clients before revenue is recognized, we record Contract liabilities. Contract assets and liabilities are reported on our Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period.
For some outsourcing contracts, we receive payments for transition or set-up activities, which are deferred and recognized as revenue as the services are provided. These advance payments are typically not a significant financing component because they are used to meet working capital demands in the early stages of a contract and to protect us from the other party failing to complete its obligations under the contract. Deferred transition revenues were $587,356 and $581,395 as of February 28, 2019 and August 31, 2018, respectively, and are included in Non-current deferred revenues. Costs related to these activities are also deferred and are expensed as the services are provided. Generally, deferred amounts are protected in the event of early termination of the contract and are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows of the related contract are not sufficient to recover the carrying amount of contract assets. Deferred transition costs were $702,404 and $690,868 as of February 28, 2019 and August 31, 2018, respectively, and are included in Deferred contract costs.
The following table provides information about the balances of our Receivables, Contract assets and Contract liabilities (Deferred revenues):
 
February 28, 2019
 
As of September 1, 2018 (as adjusted)
Receivables, net of allowance
$
7,579,589

 
$
7,096,856

Contract assets (current)
571,822

 
547,809

Receivables and contract assets (current)
8,151,411

 
7,644,665

Contract assets (non-current)
20,691

 
23,036

Deferred revenues (current)
3,335,751

 
2,992,634

Deferred revenues (non-current)
607,038

 
618,124

Changes in the contract asset and liability balances during the six months ended February 28, 2019, were a result of normal business activity and not materially impacted by any other factors.
Revenues recognized during the three and six months ended February 28, 2019 that were included in Deferred revenues as of November 30, 2018 and September 1, 2018 were $1.5 billion and $2.4 billion, respectively.

15

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)


3. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
 
Three Months Ended
 
Six Months Ended
 
February 28, 2019
 
February 28, 2018
 
February 28, 2019
 
February 28, 2018
Basic Earnings per share
 
 
 
 
 
 
 
Net income attributable to Accenture plc
$
1,124,449

 
$
863,703

 
$
2,399,169

 
$
1,987,363

Basic weighted average Class A ordinary shares
638,639,729

 
617,854,667

 
638,750,881

 
616,838,561

Basic earnings per share
$
1.76

 
$
1.40

 
$
3.76

 
$
3.22

Diluted Earnings per share
 
 
 
 
 
 
 
Net income attributable to Accenture plc
$
1,124,449

 
$
863,703

 
$
2,399,169

 
$
1,987,363

Net income attributable to noncontrolling interests in Accenture Holdings plc and Accenture Canada Holdings Inc. (1)
1,649

 
37,401

 
3,537

 
86,534

Net income for diluted earnings per share calculation
$
1,126,098

 
$
901,104

 
$
2,402,706

 
$
2,073,897

Basic weighted average Class A ordinary shares
638,639,729

 
617,854,667

 
638,750,881

 
616,838,561

Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1)
936,572

 
26,754,491

 
940,978

 
27,010,093

Diluted effect of employee compensation related to Class A ordinary shares
9,405,244

 
11,250,825

 
10,756,722

 
12,279,965

Diluted effect of share purchase plans related to Class A ordinary shares
189,154

 
258,813

 
284,119

 
252,558

Diluted weighted average Class A ordinary shares
649,170,699

 
656,118,796

 
650,732,700

 
656,381,177

Diluted earnings per share
$
1.73

 
$
1.37

 
$
3.69

 
$
3.16

_______________
(1)
Diluted earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis and the redemption of all Accenture Holdings plc ordinary shares owned by holders of noncontrolling interests prior to March 13, 2018, when these were redeemed for Accenture plc Class A ordinary shares. 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.

16

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. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc:
 
Three Months Ended
 
Six Months Ended
 
February 28, 2019
 
February 28, 2018
 
February 28, 2019
 
February 28, 2018
Foreign currency translation
 
 
 
 
 
 
 
    Beginning balance
$
(1,083,885
)
 
$
(797,375
)
 
$
(1,075,268
)
 
$
(770,043
)
             Foreign currency translation
46,008

 
134,318

 
33,612

 
103,561

             Income tax benefit (expense)
(2,685
)
 
(1,257
)
 
(1,361
)
 
(183
)
             Portion attributable to noncontrolling interests
(1,678
)
 
(11,438
)
 
777

 
(9,087
)
             Foreign currency translation, net of tax
41,645

 
121,623

 
33,028

 
94,291

    Ending balance
(1,042,240
)
 
(675,752
)
 
(1,042,240
)
 
(675,752
)
 
 
 
 
 
 
 
 
Defined benefit plans
 
 
 
 
 
 
 
    Beginning balance
(398,871
)
 
(434,389
)
 
(419,284
)
 
(440,619
)
             Pension settlement

 
2,119

 

 
2,119

             Reclassifications into net periodic pension and
post-retirement expense (1)
8,435

 
9,036

 
31,329

 
18,797

             Income tax benefit (expense)
(1,850
)
 
(2,933
)
 
(4,301
)
 
(6,192
)
             Portion attributable to noncontrolling interests
(7
)
 
(333
)
 
(37
)
 
(605
)
             Defined benefit plans, net of tax
6,578

 
7,889

 
26,991

 
14,119

    Ending balance
(392,293
)
 
(426,500
)
 
(392,293
)
 
(426,500
)
 
 
 
 
 
 
 
 
Cash flow hedges
 
 
 
 
 
 
 
    Beginning balance
4,334

 
97,368

 
(84,010
)
 
114,635

             Unrealized gain (loss)
(38,653
)
 
(53,710
)
 
77,025

 
(45,385
)
             Reclassification adjustments into Cost of services
(8,138
)
 
(32,105
)
 
(6,260
)
 
(60,721
)
             Income tax benefit (expense)
10,041

 
19,370

 
(19,041
)
 
21,639

             Portion attributable to noncontrolling interests
60

 
2,718

 
(70
)
 
3,473

             Cash flow hedges, net of tax
(36,690
)
 
(63,727
)
 
51,654

 
(80,994
)
    Ending balance (2)
(32,356
)
 
33,641

 
(32,356
)
 
33,641

 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
    Beginning balance
1,876

 
1,243

 
2,391

 
1,243

             Unrealized gain (loss)

 
1,454

 
(516
)
 
1,454

             Income tax benefit (expense)

 
(305
)
 

 
(305
)
             Portion attributable to noncontrolling interests

 
(47
)
 
1

 
(47
)
             Investments, net of tax

 
1,102

 
(515
)
 
1,102

    Ending balance
1,876

 
2,345

 
1,876

 
2,345

 
 
 
 
 
 
 
 
Accumulated other comprehensive loss
$
(1,465,013
)
 
$
(1,066,266
)
 
$
(1,465,013
)
 
$
(1,066,266
)
_______________
(1)
Reclassifications into net periodic pension and post-retirement expense are recognized in Cost of services, Sales and marketing, General and administrative costs and non-operating expenses.
(2)
As of February 28, 2019, $38 of net unrealized gains related to derivatives designated as cash flow hedges is expected to be reclassified into Cost of services in the next twelve months.

17

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
During the six months ended February 28, 2019, we completed individually immaterial acquisitions for total consideration of $495,618, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.
6. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill by reportable operating segment were as follows:
 
August 31,
2018
 
Additions/
Adjustments
 
Foreign
Currency
Translation
 
February 28,
2019
Communications, Media & Technology
$
865,509

 
$
49,770

 
$
(2,618
)
 
$
912,661

Financial Services
1,162,066

 
123,793

 
1,648

 
1,287,507

Health & Public Service
959,048

 
37,729

 
(34
)
 
996,743

Products
1,948,401

 
164,273

 
(3,663
)
 
2,109,011

Resources
447,988

 
28,679

 
267

 
476,934

Total
$
5,383,012

 
$
404,244

 
$
(4,400
)
 
$
5,782,856

Goodwill includes immaterial adjustments related to prior period acquisitions.
Intangible Assets
Our definite-lived intangible assets by major asset class were as follows:
 
 
August 31, 2018
 
February 28, 2019
Intangible Asset Class
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Customer-related
 
$
862,418

 
$
(299,702
)
 
$
562,716

 
$
912,857

 
$
(306,886
)
 
$
605,971

Technology
 
94,844

 
(55,690
)
 
39,154

 
85,271

 
(47,051
)
 
38,220

Patents
 
128,179

 
(66,659
)
 
61,520

 
128,750

 
(67,055
)
 
61,695

Other
 
50,490

 
(26,770
)
 
23,720

 
47,844

 
(21,847
)
 
25,997

Total
 
$
1,135,931

 
$
(448,821
)
 
$
687,110

 
$
1,174,722

 
$
(442,839
)
 
$
731,883

Total amortization related to our intangible assets was $40,754 and $80,847 for the three and six months ended February 28, 2019, respectively. Total amortization related to our intangible assets was $41,931 and $86,559 for the three and six months ended February 28, 2018