ACCENTURE SCA - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2003

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-49713

ACCENTURE SCA

(Exact name of Registrant as specified in its charter)

Luxembourg		98-0351796
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 rue Guillaume Kroll

L – 1882 Luxembourg

(Address of principal executive offices)

(352) 26 42 35 00

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No x

The number of shares of the Registrant’s Class I common shares, par value €1.25 per share, outstanding as of March 15, 2003 was 904,637,344 (which number does not include 53,908,275 issued shares held by subsidiaries of the Registrant).

ACCENTURE SCA

INDEX

		Page
Part I.	Financial Information

Item 1.	Financial Statements (unaudited)

	Consolidated Balance Sheets as of February 28, 2003 and August 31, 2002	3
	Consolidated Income Statements for the three and six months ended February 28, 2003 and 2002	4
	Consolidated Shareholders’ Equity Statement for the six months ended February 28, 2003	5
	Consolidated Cash Flows Statements for the six months ended February 28, 2003 and 2002	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	28

Part II.	Other Information

Item 1.	Legal Proceedings	28

Item 2.	Changes in Securities and Use of Proceeds	28

Item 6.	Exhibits and Reports on Form 8-K	29

Signature		30

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCENTURE SCA

CONSOLIDATED BALANCE SHEETS

February 28, 2003 and August 31, 2002

(In thousands of U.S. dollars, except share amounts)

	February 28, 2003			August 31, 2002
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,684,576		$	1,316,976
Restricted cash		5,588			79,445
Receivables from clients, net		1,392,494			1,330,642
Unbilled services		923,169			774,214
Due from related parties		10,220			39,488
Deferred income taxes, net		204,769			189,976
Other current assets		281,815			330,347

Total current assets		4,502,631			4,061,088

NON-CURRENT ASSETS:
Unbilled services		120,679			106,162
Investments		47,114			76,017
Property and equipment, net		665,946			716,504
Goodwill		179,036			167,603
Deferred income taxes, net		271,353			283,969
Other non-current assets		64,736			67,605

Total non-current assets		1,348,864			1,417,860

TOTAL ASSETS	$	5,851,495		$	5,478,948

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term bank borrowings	$	52,108		$	57,922
Current portion of long-term debt		2,983			5,177
Accounts payable		363,022			450,208
Deferred revenue		647,181			543,917
Accrued payroll and related benefits		1,150,280			1,139,887
Income taxes payable		631,236			459,836
Deferred income taxes, net		20,163			18,884
Other accrued liabilities		432,652			651,231

Total current liabilities		3,299,625			3,327,062

NON-CURRENT LIABILITIES:
Long-term debt		3,824			3,428
Retirement obligation		405,324			382,180
Deferred income taxes, net		26,474			16,674
Other non-current liabilities		834,365			791,582

Total non-current liabilities		1,269,987			1,193,864

MINORITY INTEREST		31,084			31,972

SHAREHOLDERS’ EQUITY:
Class I common shares, par value 1.25 euros per share, 19,868,950,000 shares authorized, 753,843,192 issued as of February 28, 2003 and August 31, 2002		845,307			845,307
Class I-A common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding		5,435			5,435
Class I-B common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding		5,435			5,435
Class I-C common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding		10,870			10,870
Class I-D common shares, par value 1.25 euros per share, 10,000,000 shares authorized, issued and outstanding		10,870			10,870
Class I-E common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding		16,304			16,304
Class I-F common shares, par value 1.25 euros per share, 15,000,000 shares authorized, issued and outstanding		16,304			16,304
Class I-G common shares, par value 1.25 euros per share, 20,000,000 shares authorized, issued and outstanding		21,739			21,739
Class I-H common shares, par value 1.25 euros per share, 25,000,000 shares authorized, issued and outstanding		27,174			27,174
Class I-I common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding		5,435			5,435
Class I-J common shares, par value 1.25 euros per share, 5,000,000 shares authorized, issued and outstanding		5,435			5,435
Class I-K common shares, par value 1.25 euros per share, 16,050,000 shares authorized, issued and outstanding		18,074			18,074
Class I-L common shares, par value 1.25 euros per share, 5,025,720, shares authorized, issued and outstanding		5,540			5,540
Class I-M common shares, par value 1.25 euros per share, 68,626,707, shares authorized, issued and outstanding		78,398			78,398
Class II common shares, par value 1.25 euros per share, 20,000,000,000 shares authorized, 470,958,308 shares issued and outstanding		529,281			529,281
Restricted share units (related to Class A common shares), 40,929,017 and 58,265,829 units issued and outstanding as of February 28, 2003 and August 31, 2002, respectively		596,414			848,218
Additional paid-in capital		2,771,366			2,944,678
Treasury shares, at cost, 48,165,008 and 54,276,582 shares at February 28, 2003 and August 31, 2002, respectively		(925,046	)		(1,052,900	)
Investment in Accenture Ltd Class A common shares, at cost, 6,930,977 and 13,726,885 shares at February 28, 2003 and August 31, 2002, respectively		(126,498	)		(315,486	)
Accenture Ltd Class A common shares owned by Share Employee Compensation Trust, at cost, 17,457,100 and 12,562,300 shares at February 28, 2003 and August 31, 2002, respectively		(300,208	)		(221,110	)
Retained deficit		(2,281,054	)		(2,798,519	)
Accumulated other comprehensive loss		(85,776	)		(80,432	)

Total shareholders’ equity		1,250,799			926,050

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,851,495		$	5,478,948

The accompanying notes are an integral part of these financial statements.

ACCENTURE SCA

CONSOLIDATED INCOME STATEMENTS

For the Three and Six Months Ended February 28, 2003 and 2002

(In thousands of U.S. dollars)

(Unaudited)

	Three Months Ended						Six Months Ended
	February 28, 2003			February 28, 2002			February 28, 2003			February 28, 2002
REVENUES:
Revenues before reimbursements	$	2,826,196		$	2,913,289		$	5,756,154		$	5,901,919
Reimbursements		362,827			415,148			760,316			767,840

Revenues		3,189,023			3,328,437			6,516,470			6,669,759
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses		1,816,706			1,708,108			3,590,903			3,514,289
Reimbursable expenses		362,827			415,148			760,316			767,840

Cost of services		2,179,533			2,123,256			4,351,219			4,282,129
Sales and marketing		369,631			398,900			725,464			759,135
General and administrative costs		272,038			418,002			642,769			825,959

Total operating expenses		2,821,202			2,940,158			5,719,452			5,867,223

OPERATING INCOME		367,821			388,279			797,018			802,536
Gain (loss) on investments, net		1,465			(210,951	)		5,270			(305,688	)
Interest income		10,824			9,255			19,917			24,040
Interest expense		(4,501	)		(13,774	)		(11,037	)		(23,544	)
Other income		27,385			9,689			25,610			1,756
Equity in losses of affiliates		(9	)		(12,664	)		(539	)		(6,463	)

INCOME BEFORE TAXES		402,985			169,834			836,239			492,637
Provision for taxes		153,134			145,057			317,771			267,722

INCOME BEFORE MINORITY INTEREST		249,851			24,777			518,468			224,915
Minority interest		(1,211	)		1,044			(2,710	)		(577	)

NET INCOME	$	248,640		$	25,821		$	515,758		$	224,338

The accompanying notes are an integral part of these financial statements.

ACCENTURE SCA

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Six Months Ended February 28, 2003

(U.S. dollars and share amounts in thousands)

(Unaudited)

	Class I Common Shares			Class II Common Shares			Restricted Share Units Common Shares					Additional Paid-in Capital			Treasury Shares					Investment in Accenture Ltd					Investment in Accenture Ltd— SECT					Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)
	$		No. Shares	$		No. Shares	$			No. Shares		Additional Paid-in Capital			$			No. Shares		$			No. Shares		$			No. Shares		Retained Earnings (Deficit)						Total
Balance at August 31, 2002	$	1,072,320	958,546	$	529,281	470,958	$	848,218		58,266		$	2,944,678		$	(1,052,900	)	(54,277	)	$	(315,486	)	(13,727	)	$	(221,110	)	(12,562	)	$	(2,798,519	)	$	(80,432	)	$	926,050
Comprehensive income:
Net income																															515,758						515,758
Other comprehensive income (loss):
Unrealized gains on marketable securities, net of reclassification adjustment																																		837			837
Foreign currency translation																																		(6,181	)		(6,181	)

Other comprehensive income (loss)																																		(5,344	)

Comprehensive income																																					510,414
Income tax benefit on stock-based compensation plans													13,189																								13,189
Transfer of Class I common shares to Accenture Ltd:
Employee Share Purchase Plan													(54,450	)		100,653		5,188			28,574		1,188														74,777
Restricted share units								(248,829	)	(17,158	)		(75,871	)		134,890		6,953			189,810		7,681														—
Employee stock options								(927	)	(64	)		(13,327	)		36,637		1,888			9,237		384														31,620
Purchase of Accenture Ltd Class A common shares													(39,557	)							(38,633	)	(2,457	)		(79,098	)	(4,895	)								(157,288	)
Cancellation of restricted share units, net								(2,048	)	(115	)																										(2,048	)
Purchase of Accenture SCA Class I common shares													301			(144,326	)	(7,917	)																		(144,025	)
Contract termination																															1,707						1,707
Minority interest													(3,597	)																							(3,597	)

Balance at February 28, 2003	$	1,072,320	958,546	$	529,281	470,958	$	596,414		40,929		$	2,771,366		$	(925,046	)	(48,165	)	$	(126,498	)	(6,931	)	$	(300,208	)	(17,457	)	$	(2,281,054	)	$	(85,776	)	$	1,250,799

The accompanying notes are an integral part of these financial statements.

ACCENTURE SCA

CONSOLIDATED CASH FLOWS STATEMENTS

For the Six Months Ended February 28, 2003 and 2002

(In thousands of U.S. dollars)

(Unaudited)

	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	515,758		$	224,338

Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization		123,035			141,591
(Gain) loss on investments, net		(5,270	)		305,688
Equity in losses of affiliates		539			6,463
(Gain) loss on disposal of property and equipment, net		(6,592	)		16,821
Stock-based compensation		23,987			25,500
Deferred income taxes		8,902			(16,780	)
Minority interest		2,710			577
Other items, net		(23,191	)		4,988
Change in assets and liabilities—
(Increase) decrease in receivables from clients, net		(61,852	)		152,161
Decrease in other current assets		21,500			5,110
Increase in unbilled services, current and non-current		(161,290	)		(186,350	)
Increase in other non-current assets		(942	)		(628	)
Decrease in accounts payable		(83,342	)		(6,111	)
Decrease in due from related parties		29,268			—
Increase (decrease) in deferred revenue		109,857			(291,063	)
Increase in accrued payroll and related benefits		38,033			164,410
Increase (decrease) in income taxes payable		171,400			(300,078	)
Decrease in other accrued liabilities		(71,455	)		(78,067	)
(Decrease) increase in other non-current liabilities		(19,183	)		87,306

Net cash provided by operating activities		611,872			255,876

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments		47,418			11,959
Proceeds from sales of property and equipment		14,859			65,718
Purchases of businesses and investments		(3,796	)		(47,800	)
Property and equipment additions		(78,967	)		(90,815	)

Net cash used in investing activities		(20,486	)		(60,938	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution of partners’ pre-incorporation income		—			(763,619	)
Contract termination payment		(147,569	)		—
Issuance of common shares		106,397			—
Purchase of Accenture Ltd Class A common shares		(157,288	)		(124,113	)
Purchase of Accenture SCA Class I common shares		(144,025	)		(7,132	)
Proceeds from issuance of long-term debt		919			5,544
Repayment of long-term debt		(2,800	)		(513	)
Proceeds from issuance of short-term bank borrowings		49,751			250,675
Repayments of short-term bank borrowings		(59,146	)		(286,074	)
Decrease in restricted cash of Accenture Share Employee Compensation Trust		73,857			—

Net cash used in financing activities		(279,904	)		(925,232	)
Effect of exchange rate changes		56,118			(18,358	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		367,600			(748,652	)
CASH AND CASH EQUIVALENTS, beginning of period		1,316,976			1,880,083

CASH AND CASH EQUIVALENTS, end of period	$	1,684,576		$	1,131,431

The accompanying notes are an integral part of these financial statements.

ACCENTURE SCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Accenture SCA, a Luxembourg partnership limited by shares, and its controlled subsidiary companies (together “Accenture” or the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These financial statements should therefore be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended August 31, 2002 included in the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2003. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three and six months ended February 28, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2003. Certain prior-period amounts have been reclassified to conform with the current-period presentation.

2. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Comprehensive income are as follows:

	Three Months Ended February 28,						Six Months Ended February 28,
	2003			2002			2003			2002
Net income	$	248,640		$	25,821		$	515,758		$	224,338
Foreign currency translation adjustments		(5,812	)		(25,786	)		(6,181	)		(18,358	)
Unrealized (losses) gains on marketable securities, net of reclassification adjustments		(2,112	)		2,132			837			8,670

Comprehensive income	$	240,716		$	2,167		$	510,414		$	214,650

The components of Accumulated other comprehensive loss are as follows:

	February 28, 2003			August 31, 2002
Foreign currency translation adjustments	$	(69,826	)	$	(63,645	)
Unrealized losses on marketable securities		(3,385	)		(4,222	)
Minimum pension liability, net of tax		(12,565	)		(12,565	)

Accumulated other comprehensive loss	$	(85,776	)	$	(80,432	)

3. SEGMENT REPORTING

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

Accenture’s chief operating decision maker is the chief executive officer. The operating segments are managed separately because each operating segment represents a strategic business unit that serves different markets. The reportable operating segments are the Company’s five operating groups, which are Communications & High Tech, Financial Services, Government, Products and Resources.

ACCENTURE SCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)

(Unaudited)

In the first quarter of fiscal 2003, we transitioned our Health Services industry group from our Financial Services operating group to our Products operating group. In addition, we changed the format of internal financial information presented to our chief executive officer to reflect changes in our internal accounting method of allocating certain costs to segments from a partner basis to a total controllable cost basis for purposes of determining segment operating income and assessing segment performance. Segment results for all periods presented were revised to reflect these changes.

Reportable Segments


Three Months Ended February 28, 2003	Comm. & High Tech		Financial Services		Government		Products		Resources		Other		Total
Revenues before reimbursements	$	786,444	$	570,249	$	361,560	$	642,190	$	463,717	$	2,036	$	2,826,196
Operating income		91,653		75,718		53,583		106,512		40,355		—		367,821


Three Months Ended February 28, 2002	Comm. & High Tech		Financial Services		Government		Products		Resources		Other		Total
Revenues before reimbursements	$	751,366	$	597,414	$	323,687	$	712,200	$	525,431	$	3,191	$	2,913,289
Operating income		75,582		70,377		36,046		143,798		62,476		—		388,279


Six Months Ended February 28, 2003	Comm. & High Tech		Financial Services		Government		Products		Resources		Other		Total
Revenues before reimbursements	$	1,616,451	$	1,172,171	$	720,498	$	1,291,808	$	950,985	$	4,241	$	5,756,154
Operating income		183,793		173,834		120,360		229,432		89,599		—		797,018


Six Months Ended February 28, 2002	Comm. & High Tech		Financial Services		Government		Products		Resources		Other		Total
Revenues before reimbursements	$	1,494,581	$	1,246,781	$	660,206	$	1,429,369	$	1,066,339	$	4,643	$	5,901,919
Operating income		134,789		173,338		86,792		263,604		144,013		—		802,536

4. ANDERSEN CONTRACTS

In October 2002, Accenture and Arthur Andersen LLP terminated the prior training facility services agreement, as well as the services agreements by which Arthur Andersen LLP and other Arthur Andersen firms were to provide services, including tax services, to Accenture and by which Accenture was to provide Arthur Andersen LLP and other Arthur Andersen firms with consulting services. In conjunction with the termination of all contracts and in settlement of all related matters with Arthur Andersen LLP and other Arthur Andersen firms, Accenture paid Arthur Andersen LLP $190,290. This payment offset previously accrued amounts and resulted in an immaterial gain. In October 2002, Accenture and Arthur Andersen LLP also entered into a new facility services agreement, which provides Accenture with the use of Arthur Andersen LLP’s training facility in St. Charles, Illinois at market rates through July 1, 2007. Accenture has committed to spend a minimum of $135,000 over the five-year period ending July 1, 2007.

5. ACCENTURE SHARE EMPLOYEE COMPENSATION TRUST

As of August 31, 2002, $79,445 of previously authorized contributions to the Accenture share employee compensation trust (“SECT”) remained segregated as Restricted cash on the Company’s Consolidated Balance Sheet. During the three and six months ended February 28, 2003, the SECT purchased approximately 845,500 and 4,894,800 Accenture Ltd Class A common shares, respectively, with aggregate purchase prices totaling $14,232 and $79,098, respectively. At February 28, 2003, $5,588 continued to be available to the SECT for share purchases and is segregated as Restricted cash on the Consolidated Balance Sheet, including $5,000 of additional cash received upon the settlement of transaction fees received and expenses paid in connection with transactions undertaken by our partners under our Share Management Plan in November and December 2002.

ACCENTURE SCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)

(Unaudited)

On February 26, 2003, Accenture Ltd’s board of directors approved an additional contribution of up to $150,000 to the SECT. Subsequently, on March 7, 2003, the Company contributed $150,000 to the SECT.

6. RESTRUCTURING

In the fourth quarter of 2002, Accenture recognized restructuring costs of $110,524 related to a global consolidation of office space. At August 31, 2002, the related liability for restructuring costs was $67,112. This liability was reduced by payments made in the three and six months ended February 28, 2003 of $9,534 and $20,644, respectively. The liability was also affected by immaterial changes in lease estimates, imputed interest and foreign currency translation. The liability at February 28, 2003 was $49,579, representing the net present value of the estimated remaining obligations related to exiting operating leases.

7. PRO FORMA IMPACT OF EMPLOYEE STOCK OPTIONS AND SHARE PURCHASE PLANS

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123.” SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The disclosure requirements of this statement are effective for the Company beginning in the second quarter of fiscal 2003.

Accenture elected to follow Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” in accounting for its employee stock options and purchase rights. No compensation expense is recognized for share purchase rights granted under its employee stock options and employee share purchase plan. Had compensation cost for the Company’s employee stock options and employee share purchase plan been determined based on fair value at the grant date consistent with SFAS 123, the Company’s net income would have been reduced to the pro forma amounts indicated below:

	Three Months Ended February 28,						Six Months Ended February 28,
	2003			2002			2003			2002
Net income as reported	$	248,640		$	25,821		$	515,758		$	224,338
Add: Stock-based compensation expense already included in net income as reported		7,206			15,584			16,665			17,705
Deduct: Pro forma employee compensation cost related to stock options, restricted share units and share purchase plan, net of tax and minority interest		(38,850	)		(77,122	)		(89,844	)		(138,114	)

Pro forma income (loss)	$	216,996		$	(35,717	)	$	442,579		$	103,929

8. SUBSEQUENT EVENT

On March 10, 2003, pursuant to a tender offer made to Accenture SCA Class I shareholders on February 7, 2003, Accenture SCA and its wholly-owned subsidiary, Accenture International SARL, redeemed or purchased an aggregate of 5,731,030 Accenture SCA Class I shares at a price of $16.29 per share. At the same time, Accenture International SARL purchased 59,359 Accenture Canada Holdings Inc. exchangeable shares at a price of $16.29 per share. The total cash outlay for these transactions was $94,325. These transactions were undertaken pursuant to our Share Management Plan for our partners, former partners and their permitted transferees.

ACCENTURE SCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)

(Unaudited)

9. NEW ACCOUNTING STANDARDS

Guarantees

In November 2002, the FASB issued Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others.” FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also requires that a guarantor recognize a liability at inception of certain guarantees. The initial recognition and measurement provisions of FIN 45 are applicable to guarantees issued or modified after December 31, 2002. The adoption of FIN 45’s initial recognition and measurement provisions did not have a material effect on the Company’s financial statements.

The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. These disclosure provisions require a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements which the Company is currently required to disclose in accordance with FIN 45.

As disclosed in Note 17 to the consolidated financial statements for the fiscal year ended August 31, 2002, as a result of the increase in its ownership percentage of Accenture HR Services (formerly e-peopleserve Ltd) from 50 percent to 100 percent, Accenture may be required to make payments totaling up to $187,500 in additional purchase price over a five-year period starting February 28, 2002 conditional on Accenture HR Services achieving growth in revenues. As of February 28, 2003, no payments had been made and should any payments be made in the future, they will result in an increase to goodwill.

Accenture has various agreements in which it may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations related to such matters as title to assets sold and licensed or certain intellectual property rights. Payment by Accenture under such indemnification clauses is generally conditioned on the other party making a claim that is subject to challenge by Accenture and dispute resolution procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, Accenture may have recourse against third parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of Accenture’s obligations and the unique facts of each particular agreement. Historically, payments made by the Company under these agreements have not been material. As of February 28, 2003, management was not aware of any indemnification agreements, that would require material payments.

Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” An entity is subject to the consolidation rules of FIN 46 and is referred to as a variable interest entity (“VIE”) if the entity’s equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its operations without additional subordinated financial support.

FIN 46 applies immediately to VIEs created after January 31, 2003. For VIEs created prior to February 1, 2003, an enterprise with an August 31st fiscal year end will apply the provisions beginning September 1, 2003. Additionally, FIN 46 requires disclosure of VIEs in financial statements issued after January 31, 2003 if it is

ACCENTURE SCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands of U.S. dollars, except share amounts or as otherwise disclosed)

(Unaudited)

reasonably possible that as of the transition date: 1) the enterprise will be the primary beneficiary of an existing VIE that will require consolidation or 2) the enterprise will hold a significant variable interest in, or have significant involvement with, an existing VIE.

Accenture does not have any VIEs that it will need to consolidate or disclose.

11. GOODWILL

All of the Company’s goodwill relates to acquisitions subsequent to July 2001 and as such has been accounted for under the provisions of SFAS 142, “Goodwill and Other Intangible Assets,” which does not permit amortization of goodwill. On September 1, 2002, the Company adopted the impairment provisions and disclosure requirements of SFAS 142. The Company performed the required impairment tests of goodwill as of September 1, 2002 and determined that goodwill was not impaired. Goodwill balances by segment were as follows:

	Comm. & High Tech		Financial Services		Government		Products		Resources		Total
February 28, 2003	$	59,517	$	38,618	$	20,102	$	34,893	$	25,906	$	179,036
August 31, 2002	$	55,083	$	36,544	$	19,017	$	32,686	$	24,273	$	167,603

Goodwill changes during the six months ended February 28, 2003 resulted from foreign currency translation adjustments related to non-U.S. dollar denominated goodwill.

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 Combined and Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in our Current Report on Form 8-K filed on March 26, 2003, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Current Report on Form 8-K.

We use the terms “Accenture,” “the Company,” “we,” “our,” and “us” in this report to refer to Accenture SCA and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “2002” or “fiscal year 2002” means the 12-month period that ended on August 31, 2002. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act relating to our operations that are based on our current expectations, estimates and projections. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. The reasons for this include changes in general economic and political conditions, including fluctuations in exchange rates, and the following factors:

•

Should the current significant economic downturn continue to affect our clients, it could have a material adverse effect on our results of operations.

•

Our business will be negatively affected if we are not able to anticipate and keep pace with rapid changes in technology or if growth in the use of technology in business is not as rapid as in the past.

•

We may face damage to our professional reputation or legal liability if our clients are not satisfied with our services.

•

Our services or solutions may infringe upon the intellectual property rights of others.

•

Our engagements with clients may not be profitable.

•

If our affiliates or alliances do not succeed, we may not be successful in implementing our growth strategy.

•

Our global operations pose complex management, foreign currency, legal, tax and economic risks, which we may not adequately address.

•

The consulting, technology and outsourcing markets are highly competitive. The pace of consolidation among competitors in the markets in which we operate continues, with vertical integration of hardware and software vendors and service providers becoming more prevalent. We may not be able to compete effectively if we cannot efficiently respond to these developments in a timely manner.

•

If we are unable to attract and retain employees in appropriate numbers, we will not be able to compete effectively and will not be able to grow our business.

•

Our transition to a corporate structure may adversely affect our ability to recruit, retain and motivate our partners and other key employees, which in turn could adversely affect our ability to compete effectively and to grow our business.

•

We have only a limited ability to protect our intellectual property rights, which are important to our success.

•

Our profitability will suffer if we are not able to maintain our pricing and utilization rates and control our costs. The current significant downturn continues to generate pricing pressures from our competitors and our clients that could result in permanent changes in pricing models, delivery capabilities and expectations in segments of the marketplace in which we compete.

•

Our quarterly revenues, operating results and profitability will vary from quarter to quarter, which may result in increased volatility of the share price of the Accenture Ltd Class A common shares.

•

Our strategy to position ourselves to achieve greater percentages of revenue and growth through substantial business transformational outsourcing engagements could result in higher concentrations of revenue, engagement backlogs and contributions to income being derived from smaller numbers of larger clients. As we continue to accelerate the growth of new outsourcing contracts, including business transformation outsourcing contracts, we may experience increased pressure on margins during the early stages of these contracts.

•

We may be named in lawsuits as a result of Arthur Andersen’s current legal and financial situation based on misconceptions about the nature of our past relationship with Arthur Andersen firms.

•

Negative publicity about Bermuda companies may lead to new tax legislation that could increase our tax burden and may affect our relationships with our clients.

•

We will continue to be controlled by Accenture Ltd, which in turn will continue to be controlled by our partners, whose interests may differ from those of our other shareholders.

•

The share price of Accenture Ltd Class A common shares may decline due to the large number of Class A common shares eligible for future sale.

•

We may need additional capital in the future, and this capital may not be available to us. The raising of additional capital may dilute our shareholders’ ownership in us.

•

Accenture SCA is registered in Luxembourg, and a significant portion of our assets are located outside the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the federal or state securities laws of the United States.

•

Luxembourg law differs from the laws in effect in the United States and may afford less protection to shareholders.

For a more detailed discussion of these factors, see the information under the heading “Business—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2002. We undertake no obligation to update or revise any forward-looking statements.

Overview

Our results of operations are affected by the economic conditions, level of business activity and level of change in the industries we serve. Our business is also driven, in part, by the pace of technological change and the type and level of technology spending by our clients. The ability to identify and capitalize on these technological and market changes early in their cycles is a key driver of our performance. Prior to May 31, 2001, we operated as a series of related partnerships and corporations under the control of our partners. We now operate in a corporate structure. As a business, whether in partnership form or in a corporate structure, our profitability is driven by many of the same factors.

Revenues are driven by our partners’ and senior executives’ ability to secure contracts for new engagements and to deliver solutions and services that add value to our clients. Our ability to add value to clients and therefore drive revenues depends in part on our ability to offer market-leading service offerings and to deploy skilled teams of professionals quickly and on a global basis.

The primary categories of operating expenses include cost of services, sales and marketing and general and administrative costs. Cost of services is primarily driven by the cost of client-service personnel, which consists mainly of compensation, sub-contractor and other personnel costs, and 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 productivity of our client-service workforces and the level of non-payroll costs associated with the continuing accelerated growth of new outsourcing contracts. Sales and marketing expense is driven primarily by business development activities; the development of new service offerings; the level of concentration of clients in a particular industry or market; and client targeting, image development and brand-recognition activities. General and administrative costs primarily include costs for non-client-facing personnel, information systems and office space, which we seek to manage in line with changes in activity levels in our business.

We continue to experience increasing pricing pressures from competitors as well as from clients facing pressure to control costs under continuing uncertain global economic and political conditions. The pace of consolidation, as well as vertical integration, among competitors in the markets in which we operate continues to increase. We continue to see clients reduce or defer their expenditures or defer the start of work already contracted. We are continuing to monitor possible implications of the recently reported severe acute respiratory syndrome (SARS) outbreak, but at this time it is hard to quantify the impact on our business. Although new contract bookings were strong in fiscal 2002, new contract bookings for the first quarter of fiscal 2003 decreased 27% compared to the first quarter of fiscal 2002. Bookings improved in the second fiscal quarter of 2003 as compared with the first quarter of fiscal 2003; however, they decreased 27% from record new bookings for the fiscal quarter ended February 28, 2002, primarily due to booking large business transformational outsourcing orders in that quarter. The consulting and systems integration markets remain depressed due to the continuing uncertain global economic and political environment and the lack of a new wave of technology to stimulate spending. We continue to position ourselves to achieve a greater percentage of our revenue and growth through outsourcing, including business transformation outsourcing, our approach that combines outsourcing, including business process outsourcing, with our other capabilities to help clients transform key processes, applications and infrastructure to improve business performance. Outsourcing contracts typically have longer contract terms than consulting contracts and may not generate revenue or margins as quickly in the early stages of the contract. As we continue to accelerate the growth of new business transformation outsourcing contracts, we may experience increased pressure on margins during the early stages of these contracts.

As continuation of current pricing pressures could result in permanent changes in pricing policies and delivery capabilities, we must continuously improve our management of costs. Our cost-management strategy is to anticipate changes in demand for our services and to identify cost-management initiatives that enable us to manage costs as a percentage of revenues. We aggressively plan and manage our payroll costs and headcount to meet the anticipated demand for our services, and we have implemented cost-management programs that have generally enabled us to maintain or improve consolidated operating margins, excluding one-time charges. For instance, we have increased variable compensation as a percentage of our executives’ total compensation and continue to take actions to reduce our consulting workforce, including at the executive level, in markets where both supply and demand and skill level imbalances have not been resolved, while continuing our hiring at entry-level positions. We continue to take actions to reduce our administrative and sales and marketing costs. We continue to build and use our network of delivery centers and capabilities around the world as part of a more cost-effective delivery model. The growing use of globally sourced lower-cost service delivery capabilities within our industry continues to be a source of pressure on our revenues and operating margins. Our cost-management initiatives may not be sufficient to maintain our consolidated operating margins if the current challenging economic and political environment continues for several quarters.

Presentation

As a result of a restructuring in 1989, we and our “member firms,” which are now our subsidiaries, became legally separate and distinct from the Arthur Andersen firms. Thereafter, until August 7, 2000, we had

contractual relationships with an administrative entity, Andersen Worldwide, and indirectly with the separate Arthur Andersen firms. Under these contracts, called member firm agreements, we and our member firms, on the one hand, and the Arthur Andersen firms, on the other hand, were two stand-alone business units linked through such agreements to Andersen Worldwide for administrative and other services. In addition, during this period our partners individually were members of Andersen Worldwide. Following arbitration proceedings between us and Andersen Worldwide and the Arthur Andersen firms that were completed in August 2000, the tribunal terminated our contractual relationships with Andersen Worldwide and all the Arthur Andersen firms. On January 1, 2001, we began to conduct business under the name Accenture.

Because we historically operated as a series of related partnerships and corporations under the control of our partners, our partners generally participated in profits, rather than receiving salaries. Therefore, our historical financial statements for periods ended on or prior to May 31, 2001 do not reflect any compensation or benefit costs for services rendered by them. Following our transition to a corporate structure, operating expenses include partner compensation, which consists of salary, variable cash compensation, restricted share compensation, stock options and benefits. Similarly, in periods when we operated primarily in the form of partnerships, our partners paid income tax on their shares of the partnerships’ income. Therefore, our historical financial statements for periods ended on or prior to May 31, 2001 do not reflect the income tax liability that we would have paid as a corporation. Since our transition to a corporate structure, we have been subject to corporate tax on our income.

Segments

Our five reportable operating segments are our operating groups (formerly referred to as global market units), which are Communications & High Tech, Financial Services, Government, Products and Resources. Operating groups are managed on the basis of revenues before reimbursements because our management believes it is a better indicator of operating group performance than revenues. Generally, operating expenses for each operating group have similar characteristics and are subject to the same drivers, pressures and challenges. However, the current economic environment and its continuing effects on the industries served by our operating segments affect operating expenses within our operating segments to different degrees. Personnel reductions have not been taken uniformly across our operating segments in part due to an increased need on behalf of some of our operating groups to tailor their workforces to the needs of their businesses. Our segments’ shift to outsourcing engagements is not uniform and, consequently, neither are the impacts on operating group revenues caused by these transitions. Local currency fluctuations also tend to affect our operating groups differently, depending on the historical and current geographic concentrations and locations of their businesses.

Revenues

Revenues include all amounts that are billable to clients. Revenues are recognized on a time-and-materials, straight-line, or percentage-of-completion basis, depending on the contract, as services are provided by employees and subcontractors.

Revenues before reimbursements include the margin earned on computer hardware and software resale contracts, as well as revenues from alliance agreements, neither of which is material to us. Reimbursements, including those relating to travel and out-of-pocket expenses, and other similar third-party costs, such as the cost of hardware and software resales, are included in revenues, and an equivalent amount of reimbursable expenses is included in cost of services.

Client prepayments (even if nonrefundable) are deferred, i.e., classified as a liability, and recognized over future periods as services are delivered or performed.

Generally, our contracts are terminable by the client on short notice or without notice. Accordingly, we do not believe it is appropriate to characterize these contracts as backlog. Normally if a client terminates a project, the client remains obligated to pay for commitments we have made to third parties in connection with the project, services performed and reimbursable expenses incurred by us through the date of termination.

We have many types of contracts, including time-and-materials contracts, fixed-price contracts and contracts with features of both of these contract types. We estimate that a majority of our contracts have some fixed-price, incentive-based or other pricing terms that condition our fee on our ability to deliver defined goals such as incentives related to costs incurred, benefits produced and our adherence to schedule. The trend to include greater incentives in our contracts related to costs incurred, benefits produced or adherence to schedule may increase the variability in revenues and margins earned on such contracts. We conduct rigorous reviews prior to signing such contracts to evaluate whether these incentives are reasonably achievable.

Operating Expenses

Operating expenses include variable and fixed direct and indirect costs that are incurred in the delivery of our solutions and services to clients. The primary categories of operating expenses include cost of services, sales and marketing, and general and administrative costs.

We provide variable compensation and bonuses, including performance options, to our partners and other senior employees based on our quarterly and annual results as compared to our budgets and taking into account other factors, including industry-wide results and the general economic environment. In fiscal 2003, we extended a variable component of compensation to our managers and reduced the quarterly component of variable partner cash compensation. Based on fiscal 2002 performance, we did not award performance options to partners in fiscal 2003.

Cost of Services

Cost of services includes the direct costs to provide services to our clients. Such costs generally consist of compensation for client-service personnel, the cost of subcontractors hired as part of client service teams, costs directly associated with the provision of client service, such as facilities for outsourcing contracts and the recruiting, training, personnel development and scheduling costs of our client-service personnel. Reimbursements, including those relating to travel and other out-of-pocket expenses, and other similar third-party costs, such as the cost of hardware and software resales, are included in revenues, and an equivalent amount of reimbursable expenses is included in cost of services.

Sales and Marketing

Sales and marketing expense is affected by economic conditions and is driven by business development activities; the development of new service offerings; the level of concentration of clients in a particular industry or market; and client-targeting, image-development and brand-recognition activities.

General and Administrative Costs

General and administrative costs primarily include costs for non-client-service personnel, information systems and office space.

Gain (Loss) on Investments

Gain (loss) on investments primarily represents gains and losses on the sales of marketable securities and writedowns on investments in securities. These fluctuate over time, are not predictable and may not recur.

Interest Income

Interest income represents interest earned on cash and cash equivalents. Interest income also includes interest earned on a limited number of client engagement receivables when we agree in advance to finance those receivables for our clients beyond the normal billing and collection period.

Interest Expense

Interest expense reflects interest incurred on borrowings, retirement obligations and other non-current liabilities.

Other Income (Expense)

Other income (expense) consists of currency exchange gains (losses) and the recognition of income from the vesting of options for service by our personnel on the boards of directors of some of those companies in which we have invested. In general, we earn revenues and incur related costs in the same currency. We hedge significant planned movements of funds between countries, which potentially give rise to currency exchange gains (losses).

Equity in Gains (Losses) of Affiliates

Equity in gains (losses) of affiliates represents our share of the operating results of non-consolidated companies over which we have significant influence.

Provision for Taxes

Tax provisions are recorded at statutory rates for taxable items included in the Consolidated Income Statements regardless of the period for which such items are reported for tax purposes. Deferred income taxes are recognized for temporary differences between the financial reporting and income tax bases of assets and liabilities.

Minority Interest

Minority interest eliminates the income earned or expense incurred attributable to the equity interest that some of our partners, former partners and their permitted transferees have in our subsidiary, Accenture Canada Holdings Inc. See “Business—Accenture Organizational Structure” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2002. The resulting net income of Accenture SCA represents the income attributable to the shareholders of Accenture SCA. Effective January 2002, minority interest also includes immaterial amounts attributable to minority shareholders in our Avanade, Inc. subsidiary.

Critical Accounting Policies and Estimates

Revenue Recognition

Revenues from contracts for management consulting and technology service offerings that we develop and implement for our clients are recognized on a time-and-materials basis or on a percentage-of-completion basis as services are provided by our employees and, to a lesser extent, subcontractors. Revenues from time-and-materials service contracts are recognized as the services are provided. Revenues from long-term system integration contracts are recognized based on the percentage of services provided during the period compared to the total estimated services to be provided over the duration of the contract. This method is followed where reasonably dependable estimates of the revenues and costs applicable to various elements of a contract can be made. Estimates of total contract revenues and costs are continuously monitored during the term of the contract, and

recorded revenues and costs are subject to revision as the contract progresses. Such revisions, which may result in increases or decreases to revenues and income, are reflected in the financial statements in the period in which they are first identified.

Each contract has different terms based on the scope, deliverables and complexity of the engagement, the terms of which frequently require us to make judgments and estimates about recognizing revenue. We have many types of contracts including time-and-materials contracts, fixed-price contracts and contracts with features of both of these contract types. We estimate that a majority of our contracts have some fixed-price, incentive-based or other pricing terms that condition some or all of our fees on our ability to deliver defined goals such as costs incurred, benefits produced, goals attained or our adherence to schedule. For systems integration contracts, estimated revenues for applying the percentage-of-completion method include estimated incentives for which achievement of defined goals is deemed probable. Incentives relating to non-systems integration projects are recorded when the contingency is satisfied.

In recent years, our outsourcing business has increased significantly. Determining revenue and costs on outsourcing contracts requires judgment. Typically the terms of these contracts span several years. In a number of these arrangements we hire client employees and become responsible for client obligations. Revenues are recognized on a straight-line basis as services are performed or as transactions are processed in accordance with contractual terms. Costs on outsourcing contracts are generally charged to expense as incurred. Outsourcing contracts can also include incentive payments for benefits delivered to clients and/or charges for failure to meet schedule or deliver agreed benefits, which may create variability in these revenues and related margin percentages. Revenues relating to such incentive payments are recorded when the contingency is satisfied.

Contracts containing multiple products and/or services, such as consulting and outsourcing, are segmented into separate units of accounting where the separate elements represent separate earnings processes. Revenues are allocated among the elements based on the relative fair values of the elements and are recognized in accordance with our accounting policies for the separate elements unless the undelivered elements are essential to the functionality of the delivered elements. In circumstances where an undelivered element is essential to the functionality of the delivered element, no revenue is recognized for the delivered element until the undelivered element is delivered. While identifying separate elements requires considerable judgment, generally the separate elements are readily identifiable, as we also provide those elements unaccompanied by the other elements in many contracts.

Income Taxes

Determining the consolidated provision for income taxes, deferred tax assets and liabilities and related valuation allowance involves judgment. As a global company, we are required to calculate and provide for income taxes in each of the tax jurisdictions where we operate. This involves estimating current tax exposures in each jurisdiction as well as making judgments regarding the recoverability of deferred tax assets. Tax exposures can involve complex issues and may require an extended period to resolve. Changes in geographic mix or estimated level of annual pre-tax income can affect our overall effective tax rate.

Variable Compensation

We record compensation expense for payments to be made in later fiscal periods to our partners and other senior employees under the variable compensation portions of our overall compensation programs. Determining the amount of expense to recognize as operating expenses for variable compensation at interim and annual reporting dates involves judgment. Expenses accrued for variable compensation are based on actual quarterly and annual performance versus plan targets and other factors. Amounts accrued are subject to change in future periods if future performance is below plan targets or is below the performance levels anticipated in prior periods. Management believes it makes reasonable judgments using all significant information available. The

liability recorded as of February 28, 2003 for variable compensation was $55 million. The following table shows variable compensation expense (benefit) for the past six fiscal quarters.

	First Quarter 2002		Second Quarter 2002		Third Quarter 2002		Fourth Quarter 2002			First Quarter 2003		Second Quarter 2003
	(in millions)
Variable Compensation	$	86	$	151	$	8	$	(140	)	$	17	$	(6	)

The benefit recorded in the second quarter of fiscal 2003 related to an adjustment to estimated payouts accrued for fiscal 2002. We did not accrue additional fiscal 2003 variable compensation expense during the second quarter of fiscal 2003. In the fourth quarter of fiscal 2002, as a result of the difficult economic environment and higher expenses partly relating to increased severance costs, we reversed $140 million of previously accrued 2002 variable partner compensation.

Operating Group Revenues

We provide services through five operating groups. The following table provides unaudited financial information for each of these operating groups.

	Three Months Ended February 28,						Six Months Ended February 28,
	2003			2002			2003			2002
	(in millions, except percentages)
Revenues:
Communications & High Tech	$	786		$	751		$	1,617		$	1,495
Financial Services		570			597			1,172			1,247
Government		362			324			720			660
Products		642			712			1,292			1,429
Resources		464			526			951			1,066
Other		2			3			4			5

Total revenues before reimbursements		2,826			2,913			5,756			5,902
Reimbursements		363			415			760			768

Total	$	3,189		$	3,328		$	6,516		$	6,670

Revenues as a percentage of total:
Communications & High Tech		25	%		23	%		25	%		22	%
Financial Services		18			18			18			19
Government		11			10			11			10
Products		20			21			20			21
Resources		15			16			14			16
Other		n/m			n/m			n/m			n/m

Total revenues before reimbursements		89			88			88			88
Reimbursements		11			12			12			12

Total		100	%		100	%		100	%		100	%

n/m = not meaningful

Geographic Information

Revenues are attributed to geographic areas based on where client services are supervised. The following table provides unaudited geographic financial information.

	Three Months Ended February 28,						Six Months Ended February 28,
	2003			2002			2003			2002
	(in millions, except percentages)
Revenues:
Americas	$	1,345		$	1,471		$	2,738		$	2,912
EMEA (1)		1,290			1,265			2,620			2,591
Asia Pacific		191			177			398			399

Total revenues before reimbursements		2,826			2,913			5,756			5,902
Reimbursements		363			415			760			768

Total	$	3,189		$	3,328		$	6,516		$	6,670

Revenues as a percentage of total:
Americas		42	%		44	%		42	%		43	%
EMEA (1)		41			38			40			39
Asia Pacific		6			6			6			6

Total revenues before reimbursements		89			88			88			88
Reimbursements		11			12			12			12

Total		100	%		100	%		100	%		100	%

(1)

EMEA includes Europe, the Middle East and Africa

Three Months Ended February 28, 2003 Compared to Three Months Ended February 28, 2002

Revenues

Revenues for the three months ended February 28, 2003 were $3,189 million, a decrease of $139 million from the three months ended February 28, 2002. Revenues before reimbursements for the three months ended February 28, 2003 were $2,826 million, a decrease of $87 million, or 3%, from the three months ended February 28, 2002. In local currency terms, revenues before reimbursements for the three months ended February 28, 2003 decreased 9% from the three months ended February 28, 2002. Our revenues before reimbursements in Europe, the Middle East and Africa grew 2% in U.S. dollars and declined 13% in local currency terms, and revenues before reimbursements in the Americas decreased 9% in U.S. dollars and 6% in local currency terms. Revenues before reimbursements in Asia/Pacific grew 7% in U.S. dollars and were flat in local currency terms.

As a result of the continuing difficult global economic and political environment, clients continue to reduce or defer expenditures for consulting services, and we continue to experience pricing pressure, which has eroded our revenues. Growth in outsourcing revenues largely offset lower consulting revenues. Outsourcing revenues for the three months ended February 28, 2003 grew by 33% over the three months ended February 28, 2002, led by strong growth in Communications & High Tech and Government. Outsourcing represented 29% of revenues before reimbursements for the three months ended February 28, 2003, compared with 21% for the corresponding period last year. Consulting revenues declined by 15% from the second quarter of fiscal 2002, a slightly higher rate of decline than in the first quarter of fiscal 2003, when consulting revenue declined by 13% versus the first quarter of fiscal 2002.

Our Communications & High Tech operating group achieved revenues before reimbursements of $786 million in the three months ended February 28, 2003, an increase of 5% over the three months ended February 28, 2002, primarily due to increased revenues from large outsourcing contracts, particularly with respect to strong revenue growth with an existing communications client, which offset lower consulting revenues. Our Financial Services operating group achieved revenues before reimbursements of $570 million in the three months ended February 28, 2003, a decrease of 5% from the three months ended February 28, 2002, primarily due to the continued impact of the economic downturn on the capital markets and insurance industries. Our Government operating group achieved revenues before reimbursements of $362 million in the three months ended February 28, 2003, an increase of 12% over the three months ended February 28, 2002. This increase was primarily driven by growth in North America and Western Europe. Our Products operating group achieved revenues before reimbursements of $642 million in the three months ended February 28, 2003, a decrease of 10% from the three months ended February 28, 2002, primarily as a result of reductions in activity in our Retail industry group in Europe and in most industry groups in North America. Our Resources operating group achieved revenues before reimbursements of $464 million in the three months ended February 28, 2003, a decrease of 12% from the three months ended February 28, 2002. Growth in our Utilities industry group partly offset declines in our Chemical and Energy industry groups. The significant challenges and difficult environment that these industries are currently confronting may continue for several quarters.

Operating Expenses

Operating expenses for the three months ended February 28, 2003 were $2,821 million, a decrease of $119 million, or 4%, from the three months ended February 28, 2002 and remained constant as a percentage of revenues at 88% over the same period. As a percentage of revenues before reimbursements, operating expenses before reimbursable expenses remained constant at 87% for the three months ended February 28, 2003 and 2002.

In response to continued pricing pressures affecting our business and to the faster growth in outsourcing, where we generally experience lower margins in the early stages of contracts, we continue to focus on managing our cost structure and on anticipating and correcting supply-and-demand, skill and pay-level imbalances in our workforce. Our long-term and short-term cost-management initiatives are aimed at managing operating expenses as a percentage of revenues. Our long-term initiatives focus on global reductions in delivery and infrastructure costs. Our short-term initiatives focus on managing payroll costs, through headcount reductions and variable compensation plans, and reducing other costs, such as limiting travel and meeting costs, and reducing infrastructure and corporate expenses principally through increased hiring scrutiny and the deferral of non-critical initiatives. Our cost-management initiatives may not be sufficient to maintain our margins if current uncertain economic and political conditions continue for several quarters.

During the three months ended February 28, 2003, no variable compensation was accrued for fiscal 2003 as compared with $151 million of variable compensation expense recorded in last year’s quarter. In the second half of fiscal 2002, we recorded a benefit $132 million from the reversal of previously accrued variable compensation as a result of reducing 2002 variable compensation to approximately 35% of the 2002 planned amount due to the difficult economic environment and higher expenses partly related to increased severance costs. This benefit will not recur in the second half of fiscal 2003.

Cost of Services

Cost of services was $2,179 million in the three months ended February 28, 2003, an increase of $56 million, or 3%, over the three months ended February 28, 2002 and an increase as a percentage of revenues from 64% to 68% over the same period. Cost of services before reimbursable expenses was $1,817 million in the three months ended February 28, 2003, an increase of $109 million, or 6%, over the three months ended February 28, 2002 and increased as a percentage of revenues before reimbursements from 59% to 64% over the same period. Higher outsourcing costs of $218 million, partly offset by lower variable compensation expenses of

$108 million, primarily drove the increase over the corresponding quarter last year. Of the $218 million increase in outsourcing costs, $31 million was driven by higher payroll costs and $187 million was due to an increase in non-payroll costs.

Sales and Marketing

Sales and marketing expense was $370 million in the three months ended February 28, 2003, a decrease of $29 million, or 7%, from the three months ended February 28, 2002 and decreased as a percentage of revenues before reimbursements from 14% to 13% over the same period, reflecting $42 million of lower variable compensation expenses.

General and Administrative Costs

General and administrative costs were $272 million in the three months ended February 28, 2003, a decrease of $146 million, or 35% from the three months ended February 28, 2002, and decreased as a percentage of revenues before reimbursements from 14% to 10% over the same period. This decrease is primarily due to lower geographic facility and technology costs of $50 million, as well as $41 million of lower bad debt expense and $7 million of lower variable compensation expenses. Although we continue to manage our cost structure, we do not expect the level of expense reductions in General and administrative costs realized during the three months ended February 28, 2003 to continue at the same rate throughout the remainder of fiscal 2003.

Operating Income

Operating income was $368 million in the three months ended February 28, 2003, a decrease of $20 million, or 5% from the three months ended February 28, 2002, and remained constant as a percentage of revenues at 12% over the same period. Operating income as a percentage of revenues before reimbursements declined slightly from 13.3% in the second quarter of fiscal 2002 to 13.0% in the second quarter of fiscal 2003.

Gain (Loss) on Investments

Gain on investments totaled $1 million in the three months ended February 28, 2003, compared with a loss of $211 million in the three months ended February 28, 2002. The loss on investments in the three months ended February 28, 2002 included a charge of $212 million to recognize investment writedowns.

Other Income (Expense)

Other income (expense) was $27 million in the three months ended February 28, 2003, an increase of $18 million, or 183%, over the three months ended February 28, 2002, primarily reflecting foreign currency gains caused by the devaluation of the U.S. dollar compared with the Euro and British pound during the three months ended February 28, 2003.

Provision for Taxes

The effective tax rates for the three months ended February 28, 2003 and 2002 were 38% and 85%, respectively. Excluding the charge to write down investments, the effective tax rate for the three months ended February 28, 2002 was 38%.

Six Months Ended February 28, 2003 Compared to Six Months Ended February 28, 2002

Revenues

Revenues for the six months ended February 28, 2003 were $6,516 million, a decrease of $153 million, or 2%, from the six months ended February 28, 2002. Revenues before reimbursements for the six months ended February 28, 2003 were $5,756 million, a decrease of $146 million, or 2%, from the six months ended February 28, 2002. In local currency terms, revenues before reimbursements for the six months ended

February 28, 2003 decreased 6% from the six months ended February 28, 2002. Our revenues before reimbursements in Europe, the Middle East and Africa grew by 1% in U.S. dollars and decreased 9% in local currency terms; revenues before reimbursements in the Americas declined by 6% in U.S. dollars and 4% in local currency terms; and revenues before reimbursements in Asia/Pacific remained constant in U.S. dollars while decreasing 4% in local currency terms.

As a result of the continuing difficult global economic and political environment, clients continue to reduce or defer expenditures for consulting services, and we continue to experience pricing pressure, which has eroded our revenues. Growth in transformational outsourcing offset lower consulting revenues. Outsourcing revenues grew by 35% over the six months ended February 28, 2002, led by strong growth in our Communications & High Tech and Government operating groups. Outsourcing represented 27% of revenues before reimbursements for the six months ended February 28, 2003, compared with 20% for the corresponding period last year. Consulting revenues for the six months ended February 28, 2003 declined by 14% from the same period last year.

Our Communications & High Tech operating group achieved revenues before reimbursements of $1,617 million in the six months ended February 28, 2003, an increase of 8% over the six months ended February 28, 2002, primarily due to increased revenues from large outsourcing contracts, particularly with respect to strong revenue growth with an existing communications client in North America, which offset lower consulting revenues. Our Financial Services operating group achieved revenues before reimbursements of $1,172 million in the six months ended February 28, 2003, a decrease of 6% from the six months ended February 28, 2002, primarily due to the continued impact of the economic downturn on the capital markets and insurance industries. Our Government operating group achieved revenues before reimbursements of $720 million in the six months ended February 28, 2003, an increase of 9% over the six months ended February 28, 2002, primarily driven by strong growth in North America and Western Europe. Our Products operating group achieved revenues before reimbursements of $1,292 million in the six months ended February 28, 2003, a decrease of 10% from the six months ended February 28, 2002, primarily as a result of reductions in activity in our Retail industry group in Europe and our Health Services and Travel and Transportation industry groups in North America. Our Resources operating group achieved revenues before reimbursements of $951 million in the six months ended February 28, 2003, a decrease of 11% from the six months ended February 28, 2002. Growth in our Utilities industry group partly offset declines in all other industry groups within our Resources operating group. The significant challenges and difficult environment that these industries are currently confronting may continue for several quarters.

Operating Expenses

Operating expenses in the six months ended February 28, 2003 were $5,719 million, a decrease of $148 million, or 3%, from the six months ended February 28, 2002, and remained constant as a percentage of revenues at 88% over the same period. As a percentage of revenues before reimbursements, operating expenses before reimbursable expenses remained constant at 86% for the six months ended February 28, 2003 and 2002.

During the six months ended February 28, 2003, we accrued $17 million of variable compensation for fiscal 2003 as compared with $237 million of variable compensation expense recorded in the first half of fiscal 2002.

In the second half of fiscal 2002, we recorded a benefit of $132 million from the reversal of previously accrued variable compensation as a result of reducing 2002 variable compensation to approximately 35% of the 2002 planned amount due to the difficult economic environment and higher expenses partly related to increased severance costs. This benefit will not recur in the second half of fiscal 2003.

Cost of Services

Cost of services was $4,351 million in the six months ended February 28, 2003, an increase of $69 million, or 2%, over the six months ended February 28, 2002 and an increase as a percentage of revenues from 64% to 67% over the same period. Cost of services before reimbursable expenses was $3,591 million in the six months ended February 28, 2003, an increase of $77 million, or 2%, over the six months ended February 28, 2002 and an increase as a percentage of revenues before reimbursements from 60% to 62% over the same period. The primary driver of the increase in cost of services was higher outsourcing costs of $378 million, which were largely offset by lower employee compensation costs resulting from lower variable compensation expenses of $156 million and reduced headcount.

Sales and Marketing

Sales and marketing expense was $725 million in the six months ended February 28, 2003, a decrease of $34 million, or 4%, from the six months ended February 28, 2002, reflecting lower variable compensation expense of $61 million. As a percentage of revenues before reimbursements, sales and marketing expense remained constant at 13% for the six months ended February 28, 2003 and 2002.

General and Administrative Costs

General and administrative costs were $643 million in the six months ended February 28, 2003, a decrease of $183 million, or 22% from the six months ended February 28, 2002, and decreased as a percentage of revenues before reimbursements from 14% to 11% over the same period. Key drivers of the decline were geographic facility and technology expense reductions of $85 million, lower bad debt expenses of $61 million and lower variable compensation expenses of $9 million. Although we continue to manage our cost structure, we do not expect the level of expense reductions in General and administrative costs realized during the six months ended February 28, 2003 to continue at the same rate throughout the remainder of fiscal 2003.

Operating Income

Operating income was $797 million in the six months ended February 28, 2003, a decrease of $6 million, or 1%, from the six months ended February 28, 2002, and remained constant as a percentage of revenues at 12% over the same period. Operating income as a percentage of revenues before reimbursements remained constant at 14% for the six months ended February 28, 2003 and 2002.

Gain (Loss) on Investments

Gains on investments totaled $5 million for the six months ended February 28, 2003, compared with a loss on investments of $306 million for the six months ended February 28, 2002. This loss included a charge of $212 million recorded in the second quarter of fiscal 2002 for investment writedowns and other-than-temporary impairment writedowns of $90 million recorded in the first quarter of fiscal 2002.

Other Income (Expense)

Other income (expense) was $26 million in the six months ended February 28, 2003, an increase of $24 million over the six months ended February 28, 2002, primarily reflecting foreign currency gains caused by the devaluation of the U.S. dollar compared with the Euro and British pound.

Provision for Taxes

The effective tax rates for the six months ended February 28, 2003 and 2002 were 38% and 54%, respectively. Excluding the charge to write down investments, the effective tax rate for the six months ended February 28, 2002 was 38%.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flow from operations, debt capacity available under various credit facilities and available cash reserves. Cash flows generated by operating activities in the six months ended February 28, 2003 totaled $612 million. Cash and cash equivalents were $1,685 million at February 28, 2003 and total debt was $59 million. We may also be able to raise additional funds through public or private debt or equity financings in order to:

•

take advantage of opportunities, including more rapid expansion;

•

acquire complementary businesses or technologies;

•

develop new services or solutions;

•

respond to competitive pressures; or

•

facilitate share dispositions by our partners, former partners and their permitted transferees pursuant to our Share Management Plan and certain purchases from our other employees.

For a more detailed description of our Share Management Plan, see the information under the heading “Certain Transactions and Relationships” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2002.

At February 28, 2003, our balance of cash and cash equivalents was $1,685 million, an increase of $368 million, or 28%, from August 31, 2002. The increase is largely attributable to cash provided by operations, proceeds from the issuance of Accenture Ltd Class A common shares to employees and proceeds from the sale of investments. These inflows were partially offset by share repurchases, a contract termination payment to Arthur Andersen LLP and property and equipment additions.

Net cash provided by operating activities was $612 million in the six months ended February 28, 2003, an increase of $356 million from the six months ended February 28, 2002, primarily due to lower net income tax payments. Operating cash benefited from a decrease in net client balances (receivables, unbilled services and deferred revenue combined), however, this was offset by reductions in accrued payroll, accounts payable and other liabilities. In the six months ended February 28, 2002, operating cash flow was significantly reduced by income tax payments related to the Company’s initial corporate tax year ended August 31, 2001 and its transition to a corporate structure on May 31, 2001. In October 2002, we paid Arthur Andersen LLP $190 million in conjunction with the termination of all services and facility contracts subsequent to our final arbitration award in August 2000 and in settlement of all related matters with Arthur Andersen LLP and other Arthur Andersen firms. A portion of this payment reduced net cash provided by operating activities by $42 million.

Net cash used in investing activities was $20 million in the six months ended February 28, 2003, compared with $61 million of cash used in investment activities in the prior-year period. A decrease in proceeds from sales of property and equipment was largely offset by proceeds from sales of our minority interests in our investment portfolio in fiscal 2003 and lower capital spending on property and equipment and businesses in 2003. The reduction in capital spending for businesses reflects the acquisition of Accenture HR Services (formerly e-peopleserve Ltd.) in the prior-year period.

Net cash used in financing activities was $280 million in the six months ended February 28, 2003, a decrease of $645 million from the six months ended February 28, 2002, that was primarily due to pre-incorporation earnings distributions of $764 million to our partners in the prior-year period. For the six months ended February 28, 2003, cash used in financing activities included $301 million of Class A and Class I common share repurchases and $148 million of the $190 million payment to Arthur Andersen LLP described above. These payments were partially offset by proceeds of $106 million from the issuance of Class A common shares under the Company’s employee share purchase and employee share incentive plans and a $74 million decrease in the restricted cash of our Share Employee Compensation Trust.

We have two syndicated credit facilities, each of $537.5 million, providing unsecured, revolving borrowing capacity for general working capital purposes. The facilities consist of 364 day and three-year committed facilities. Financing is provided under these facilities at the prime rate or at the London Interbank Offered Rate plus a spread, and bid option financing is available. These facilities require us to (1) limit liens placed on our assets to (a) liens incurred in the ordinary course of business (subject to certain limitations) and (b) other liens securing aggregate amounts not in excess of 30% of our total assets and (2) maintain a debt-to-cash flow ratio not exceeding 1.75 to 1.00. We are in compliance with these terms. As of February 28, 2003, we had no borrowings under either facility and $71 million in letters of credit outstanding under the three-year facility.

We also maintain four separate bilateral, uncommitted, unsecured multicurrency revolving credit facilities. As of February 28, 2003, these facilities provided for up to $384 million of local currency financing in countries that cannot readily access our syndicated facilities. We also maintain local guaranteed and non-guaranteed lines of credit. As of February 28, 2003, amounts available under these lines of credit facilities totaled $187 million. At February 28, 2003, we had $32 million outstanding under these various facilities and $20 million of other short-term borrowings. Interest rate terms on the bilateral revolving facilities and local lines of credit are at market rates prevailing in the relevant local markets.

During the six months ended February 28, 2003 and 2002, we made $79 million and $91 million in capital expenditures, respectively, primarily for technology assets, furniture and equipment and leasehold improvements to support our operations. We currently expect that our capital expenditures in fiscal 2003 will approximate fiscal 2002 spending levels.

In limited circumstances, we agree to extend financing to clients. The terms vary by engagement, but generally we contractually link payment for services to the achievement of specified performance milestones. We finance these client obligations primarily with existing working capital and bank financing in the country of origin. As of February 28, 2003 and August 31, 2002, $298 million and $265 million were outstanding for 32 and 25 clients, respectively. As of February 28, 2003, $177 million was included in current unbilled services and $121 million was included in non-current unbilled services. As of August 31, 2002, $159 million was included in current unbilled services and $106 million was included in non-current unbilled services on our Consolidated Balance Sheet.

Accenture SCA’s shareholders’ equity includes investments in Accenture Ltd Class A common shares. The Accenture share employee compensation trust (“SECT”) made repurchases of 4,894,800 Accenture Ltd Class A common shares totaling $79 million in the six months ended February 28, 2003. At February 28, 2003, the SECT had an additional $6 million available for share repurchases, which is segregated as Restricted cash on the Consolidated Balance Sheet, including $5 million of additional cash received upon the settlement of transaction fees received and expenses paid in connection with transactions undertaken by our partners under our Share Management Plan in November and December 2002. In addition, on February 26, 2003, Accenture Ltd’s board of directors approved an additional contribution of up to $150 million to the SECT. Subsequently, on March 7, 2003, the Company contributed $150 million to the SECT.

In addition to our ongoing open-market share repurchases, we expect to redeem or purchase certain Class A and Class I common shares pursuant to our Share Management Plan. In November 2002, Accenture Ltd’s board

of directors granted additional discretionary authority to a committee of officers to utilize a portion of $600 million previously authorized for acquisitions of shares from partners, former partners and their permitted transferees for acquisitions of certain Class A common shares previously awarded to employees pursuant to restricted share units issued in connection with our initial public offering, provided appropriate local regulatory approvals are first obtained to permit such acquisitions. In January 2003, we began offering this program in most countries in which we operate, including the United States. Of the $600 million share repurchase authorization, $154 million had been utilized and $446 million remained available for share repurchase at February 28, 2003.

On March 10, 2003, pursuant to a tender offer made to Accenture SCA Class I shareholders on February 7, 2003, Accenture SCA and its wholly-owned subsidiary, Accenture International SARL, redeemed or purchased an aggregate of 5,731,030 Accenture SCA Class I common shares at a price of $16.29 per share. At the same time, Accenture International SARL purchased 59,359 Accenture Canada Holdings Inc. exchangeable shares at a price of $16.29 per share. The total cash outlay for these transactions was $94,325. These transactions were undertaken pursuant to our Share Management Plan for our partners, former partners and their permitted transferees.

Obligations and Commitments

As of February 28, 2003, we had the following obligations and commitments to make future payments under contracts, contractual obligations and commercial commitments:

	Payments due by period
Contractual Cash Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
	(in thousands)
Long-term debt	$	6,807	$	2,983	$	3,824	$	—	$	—
Operating leases		1,964,072		233,860		389,979		276,289		1,063,944
Training facility services agreement		122,466		40,799		55,667		26,000		—
Retirement obligations		326,375		38,489		68,798		39,169		179,919

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, 2002, see “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the Company’s Annual Report on Form 10-K for the fiscal year then ended. During the six months ended February 28, 2003, there were no material changes in our market risk exposure.

Newly Issued Accounting Standards

In June 2002, the FASB issued SFAS 146,“Accounting for Costs Associated with Exit or Disposal Activities.” Exit or disposal activities addressed by the standard include one-time involuntary employee termination benefits, contract termination costs and costs to consolidate facilities or relocate employees. SFAS 146 requires that a liability for costs associated with exit or disposal activities to be recognized and measured at fair value only when the liability has been incurred, generally the “communication date” for one-time termination benefits and the contract termination or “cease use date” for contract costs. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002, and thus we adopted SFAS 146 on January 1, 2003. The adoption of SFAS 146 did not materially affect our results of operations or financial condition.

In November 2002, the Emerging Issues Task Force issued a final consensus on Issue 00-21: “Accounting for Revenue Arrangements with Multiple Deliverables.” Issue 00-21 provides guidance on how and when to recognize revenues on arrangements requiring delivery of more than one product or service. Issue 00-21 is

effective prospectively for arrangements entered into in fiscal periods beginning after June 15, 2003. Companies may also elect to apply the provisions of Issue 00-21 to existing arrangements and record the income statement impact as the cumulative effect of a change in accounting principle. We currently intend to adopt Issue 00-21 prospectively for contracts beginning after September 1, 2003. We are evaluating Issue 00-21 to determine its impact, if any, on our results of operations.

ITEM 4. CONTROLS AND PROCEDURES

(a) Based on their evaluation as of a date within 90 days of the filing date of this Quarterly Report on Form 10-Q, the chief executive officer and the chief financial officer of Accenture have concluded that Accenture’s disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by Accenture in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Based on the current knowledge of the chief executive officer and chief financial officer of Accenture, including information from recent inquiries of officers responsible for establishing and maintaining disclosure controls and procedures and other personnel, there have been no significant changes made, or significant deficiencies or material weaknesses identified in Accenture’s internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation identified in the previous paragraph. Implementation of the transition of certain of our business and financial systems to new platforms is ongoing. We continue to monitor resource and personnel requirements to ensure that our internal controls are not adversely affected during this transition.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in a number of judicial and arbitration proceedings concerning matters arising in the ordinary course of our business. We do not expect that any of these matters, individually or in the aggregate, will have a material impact on our results of operations or financial condition.

As described under “Legal Proceedings” in Accenture Ltd’s Form 10-Q for the quarter ended May 31, 2002, we had previously signed agreements with the lead plaintiffs in the Houston class actions on behalf of shareholders and employees of Enron extending any statute of limitations or similar deadlines by which we had to be added as a party to such lawsuits. In March 2003, we entered into extensions of these tolling agreements in order to permit the settlement described below to be completed and approved. These lawsuits all involved allegations concerning the auditing and other services provided by separate and independent Arthur Andersen firms, and we originally entered into the tolling agreements so that we would have time to inform the plaintiffs that adding us as a defendant in such actions would be misdirected and without merit. Subsequently, Andersen Worldwide and certain Arthur Andersen firms entered into an agreement to settle all claims and disputes in these lawsuits. Although we were not a party to this agreement, we have confirmed that, under the terms of the proposed settlement with the class plaintiffs, Accenture will be released from all claims that were brought, or might have been brought, by these plaintiff groups once the settlement is finally approved by the court. The settlement is subject to normal contingencies, including the negotiation of a definitive agreement and final approval by the federal court in Houston.

We currently maintain the types and amounts of insurance customary in the industries and countries in which we operate, including coverage for professional liability, general liability and management liability. We consider our insurance coverage to be adequate both as to the risks and amounts for the businesses we conduct.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On December 13, 2002 and January 13, January 19 and February 21, 2003, Accenture SCA and its subsidiaries transferred an aggregate of 7,662,514 Class I common shares to Accenture Ltd in connection with

the issuance by Accenture Ltd of 7,662,514 of its Class A common shares. These Class I common shares were transferred in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, on the basis that the transaction did not involve any public officering.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibit Index:

99.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

(b)

Reports on Form 8-K.

During the quarter ended February 28, 2003, no report on Form 8-K was filed by the Registrant.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf on April 14, 2003 by the undersigned, thereunto duly authorized.

ACCENTURE SCA, represented by its general partner, Accenture Ltd, itself represented by its duly authorized signatory

		/S/ HARRY L. YOU
		Name: Harry L. You

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Joe W. Forehand, Chief Executive Officer and Chairman of the Board of Accenture Ltd, the general partner of Accenture SCA, certify that:

I have reviewed this quarterly report on Form 10-Q of Accenture SCA (the “Registrant”);

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

The Registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



		/s/ JOE W. FOREHAND
		Chief Executive Officer and Chairman of the Board (principal executive officer)

Dated: April 14, 2003

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Harry L. You, Chief Financial Officer of Accenture Ltd, the general partner of Accenture SCA, certify that:

I have reviewed this quarterly report on Form 10-Q of Accenture SCA (the “Registrant”);

evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and



		/s/ HARRY L. YOU
		Chief Financial Officer (principal financial and accounting officer)

Dated: April 14, 2003

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