International Prospectus

 Filed Pursuant to Rule 424(b)(4)
Registration No. 333-59194

115,000,000 Class A Common Shares
 

 
This is an initial public offering of Class A common shares of Accenture Ltd. This prospectus relates to an offering of 17,250,000 shares outside the United States. In addition, 97,750,000 shares are being offered in the United States. All of the 115,000,000 Class A common shares are being sold by Accenture Ltd.
 
Prior to this offering, there has been no public market for the Class A common shares. The Class A common shares have been approved for listing on the New York Stock Exchange under the symbol “ACN.”
 
Upon completion of the offering, our partners will own or control shares representing, in the aggregate, approximately 82% of the voting interest in Accenture Ltd, or approximately 80% if the underwriters exercise their overallotment option in full, and will effectively control all matters put to a vote of Accenture Ltd shareholders.
 
See “Risk Factors” beginning on page 11 to read about factors you should consider before buying the Class A common shares.
 

 
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
 

 
     Per Share
   Total
Initial public offering price    $14.50    $1,667,500,000
Underwriting discount    $  0.68    $    78,200,000
Proceeds, before expenses, to Accenture Ltd    $13.82    $1,589,300,000
 
To the extent that the international underwriters sell more than 17,250,000 Class A common shares, the international underwriters have the option to purchase up to an additional 2,587,500 Class A common shares at the initial public offering price less the underwriting discount. The U.S. underwriters have a similar option to purchase up to 14,662,500 additional Class A common shares.
 

 
The underwriters expect to deliver the shares in New York, New York on July 24, 2001.
 

 
Goldman Sachs International  
Morgan Stanley

Credit Suisse First Boston
 

Deutsche Bank
JPMorgan
Salomon Smith Barney
Banc of America Securities Limited
  Lehman Brothers  
    Merrill Lynch International
      UBS Warburg
        ABN AMRO Rothschild
 

 
Prospectus dated July 18, 2001.
 
 
[Inside Front Cover Artwork:
A photograph of one woman and two men looking at a computer occupies the full page. The following text is written across the page approximately 5.5" from the bottom of the page: “Argentina Australia Austria Belgium Brazil Canada Columbia Czech Republic Denmark Finland France Germany Greece*”. A footnote on the lower left hand corner of the page reads, “*Accenture has offices in these countries.”]
 
[Front Gatefold Artwork:
The left side of the 11x17" gatefold is solid orange except for the following text which is left justified and begins 4.5" from the bottom of the page: “Accenture Helping clients accelerate their vision from innovation to execution.” The right side of the gatefold is a full page photograph of three women looking at a document. The following text is written across the gatefold approximately 5.5" from the bottom of the gatefold: “Hungary India Indonesia Ireland Italy Japan Luxembourg Malaysia Mexico The Netherlands New Zealand Nigeria Norway People’s Republic of China The Philippines Poland Portugal Russia Saudi Arabia Singapore Slovak Republic South Africa*”. A footnote on the lower left hand corner of the gatefold reads, “*Accenture has offices in these countries.”]
        You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer to sell these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.
 

 
        The Bermuda Monetary Authority has classified us as non-resident of Bermuda for exchange control purposes. Accordingly, the Bermuda Monetary Authority does not restrict our ability to convert currency, other than Bermuda dollars, held for our account to any other currency, to transfer funds in and out of Bermuda or to pay dividends to non-Bermuda residents who are shareholders, other than in Bermuda dollars. The permission of the Bermuda Monetary Authority is required for the issue and transfer of our shares under the Exchange Control Act 1972 of Bermuda and regulations under it.
 
        We have obtained the permission of the Bermuda Monetary Authority for the issue of the Accenture Ltd Class A common shares that we may sell in the offering described in this prospectus. In addition, we have obtained the permission of the Bermuda Monetary Authority for the free issue and transferability of the Accenture Ltd Class A common shares following the offering. Approvals or permissions received from the Bermuda Monetary Authority do not constitute a guaranty by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving those approvals or permissions, the Bermuda Monetary Authority will not be liable for our performance or default or for the correctness of any opinions or statements expressed in this document.
 
        We have filed this document as a prospectus with the Registrar of Companies in Bermuda under Part III of the Companies Act 1981 of Bermuda. In accepting this document for filing, the Registrar of Companies accepts no responsibility for the financial soundness of any proposals or for the correctness of any opinions or statements expressed in this document.
 
 
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SUMMARY
 
        This summary highlights some of the information contained elsewhere in this prospectus. We urge you to read the entire prospectus carefully, including the “Risk Factors” and “Pro Forma Financial Information” sections and our historical financial statements and related notes included elsewhere in this prospectus, before making an investment decision.
 
Accenture
 
        Accenture is the world’s leading provider of management and technology consulting services and solutions. We have more than 75,000 employees based in more than 110 offices in 46 countries delivering to our clients a wide range of consulting, technology and outsourcing services. We operate globally with one common brand and business model. We work with clients of all sizes and have extensive relationships with the world’s leading companies and governments. We serve 84 of the Fortune Global 100 and more than half of the Fortune Global 500. In total, we have served more than 4,000 clients on nearly 18,000 engagements over the past five fiscal years.
 
        Our business consists of using our industry knowledge, our service offering expertise and our insight into and access to existing and emerging technologies to identify new business and technology trends and formulate and implement solutions for clients under demanding time constraints. We help clients around the world identify and enter new markets, increase revenues in existing markets and deliver their products and services more effectively and efficiently. We deliver our services and solutions through five global market units, which together comprise 18 industry groups. Our industry focus enables our professionals to provide business and management consulting, technology and outsourcing services with an understanding of industry evolution, business issues and applicable technologies, and ultimately to deliver solutions tailored to each client’s industry. Our five global market units and 18 industry groups are:
 

 
Communications
& High Tech
   Financial
Services
   Products    Resources    Government
 

Ÿ  Communications    Ÿ  Banking    Ÿ  Automotive    Ÿ  Chemicals    Ÿ  Government
Ÿ Electronics &    Ÿ Health Services    Ÿ Consumer Goods    Ÿ  Energy   
   High Tech    Ÿ  Insurance       & Services    Ÿ Forest Products   
Ÿ Media &       Ÿ  Industrial    Ÿ Metals & Mining   
   Entertainment          Equipment    Ÿ  Utilities   
        Ÿ  Pharmaceuticals &      
           Medical Products      
        Ÿ  Retail      
        Ÿ  Transportation &      
           Travel Services      

 
Percent of revenues before reimbursements for the year ended August 31, 2000   
29%    26%    19%    17%    8%

 
        We develop and deliver a full spectrum of services and solutions that address business opportunities and challenges common across industries through the following eight service lines:
 
Ÿ Strategy & Business Architecture
Ÿ Customer Relationship Management
Ÿ Supply Chain Management
Ÿ Human Performance
Ÿ Finance & Performance Management
Ÿ Technology Research & Innovation
Ÿ Solutions Engineering
Ÿ Solutions Operations
 
        Our affiliates, alliances and venture capital activities enhance our management and technology consulting services and solutions business. If a capability that we do not already possess is of strategic importance and value to us but is in an area that is best developed in a business model outside our client service business, we may form a new business, often with one or more third parties, to develop that capability. We call these businesses “affiliates.” In general, we expect the capabilities developed by these new businesses to be used by our own professionals as well as by other companies. We enter into alliances because today’s business environment demands more speed, flexibility and resources than typically exist at any single company. We seek to form alliances with leading companies and organizations whose capabilities complement our own, whether by extending or deepening a service offering, delivering a new technology or business process or helping us extend our services to new geographies. Our venture capital business, Accenture Technology Ventures, gives us insight into and access to emerging business models, products and technologies through investments in portfolio companies. Although we have not generated material revenues from our affiliates, alliances and venture capital activities, we believe that our approach, which we refer to as our “network of businesses,” provides us with a fundamental advantage in delivering value to our clients.
 
        Revenues are driven by our partners’ and senior executives’ ability to secure contracts for new engagements and to deliver products and services that add value to our clients. We derive substantially all of our revenues from contracts for management and technology service offerings and solutions that we develop, implement and manage for our clients. Substantially all of our contracts include time-and-materials or fixed-price terms.
 
        Our leading position in the management and technology consulting services and solutions markets results from the fact that we have more consulting professionals than any other consulting firm, with more than 57,000 professionals working within our global market units, complemented by more than 8,000 professionals dedicated full time to our service lines. In addition, we have deep industry knowledge in 18 distinct industry groups and broad service offering expertise through our eight service lines. In total, we have more than 75,000 employees who provide global scale and reach through more than 110 offices in 46 countries. Based on our knowledge of our business and the business of our competitors, we believe that no other consulting firm provides as broad a range of management and technology consulting services and solutions to as many industry groups in as many geographic markets as we do.
 
Our Corporate Information
 
        Accenture Ltd is organized under the laws of Bermuda. We maintain a registered and principal executive office in Bermuda at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda. Our telephone number in Bermuda is (441) 296-8262. We also have major offices in the world’s leading business centers, including New York, Chicago, Dallas, Los Angeles, San Francisco, London, Frankfurt, Madrid, Milan, Paris, Sydney and Tokyo. In total, we have more than 110 offices in 46 countries around the world. Our Internet address is www.accenture.com. Information contained on our Web site is not a part of this prospectus.
 
        We use the term “partner” in this prospectus to refer to the partners and shareholders of the series of related partnerships and corporations through which we operated our business prior to our transition to a corporate structure. These individuals have become our executive employees following our transition to a corporate structure but will retain the “partner” title. Where the context permits, the term also refers to our employees and others who have been or are in the future named as “partners” in this executive sense. In using the term “partner,” we do not mean to imply any intention of the parties to create a separate legal entity.
 
        Until August 7, 2000, we had contractual relationships with Andersen Worldwide and Arthur Andersen. Following arbitration proceedings between us and Andersen Worldwide and Arthur Andersen that were completed in August 2000, we separated from Andersen Worldwide and Arthur Andersen. On January 1, 2001, we began to conduct business under the name Accenture. See “Certain Relationships and Related Transactions—Relationship with Andersen Worldwide and Arthur Andersen.”
 
Organizational Structure
 
        Accenture Ltd is a Bermuda holding company with no material assets other than Class I and Class II common shares in our subsidiary, Accenture SCA, a Luxembourg partnership limited by shares. Each Class I common share and each Class II common share of Accenture SCA entitles its holder to one vote on all matters submitted to a vote of shareholders of Accenture SCA. Each Accenture SCA Class II common share entitles Accenture Ltd to receive a dividend or liquidation payment equal to 10% of any dividend or liquidation payment to which an Accenture SCA Class I common share entitles its holder. Accenture Ltd holds all of the Class II common shares of Accenture SCA and has a majority voting interest in Accenture SCA. When we refer to Accenture SCA Class I and Class II common shares, we are referring to partnership interests. In the opinion of our counsel, under Accenture SCA’s articles of association, shares in Accenture SCA held by Accenture Ltd are actions de commandité, or general partnership interests, and shares in Accenture SCA held by our partners are actions de commanditaires, or limited partnership interests. Accenture Ltd, as general partner of Accenture SCA, has unlimited liability for the liabilities of Accenture SCA. Accenture Ltd’s only business is to hold these shares and to act as the sole general partner of Accenture SCA. As the general partner of Accenture SCA and as a result of Accenture Ltd’s majority voting interest in Accenture SCA, Accenture Ltd controls Accenture SCA’s management and operations and will consolidate Accenture SCA’s results in its financial statements. We operate our business through subsidiaries of Accenture SCA.
 
        None of our partners will be selling shares in the offering, and, immediately following the offering, our partners will own approximately 82% of the equity in our business, or approximately 80% if the underwriters exercise their overallotment option in full. Upon completion of the offering, our partners will own or control shares representing, in the aggregate, approximately 82% of the voting interest in Accenture Ltd, or approximately 80% if the underwriters exercise their overallotment option in full. Immediately following the offering, our public shareholders (including our non-partner employees) will own approximately 18% of the equity in our business, or approximately 20% if the underwriters exercise their overallotment option in full, and will own shares representing approximately 18% of the voting interest in Accenture Ltd, or approximately 20% if the underwriters exercise their overallotment option in full.
 
        Our organizational structure immediately following the offering will be as shown in the diagram below. The diagram does not display the subsidiaries of Accenture SCA and does not reflect exercise of the underwriters’ overallotment option.
 

(1)
Includes non-partner employees.
(2)
Generally consists of our partners in countries other than Australia, Canada, Denmark, France, Italy, New Zealand, Norway, Spain, Sweden and the United States.
(3)
Generally consists of our partners in Australia, Canada, Denmark, France, Italy, New Zealand, Norway, Spain, Sweden and the United States. Our partners in Canada and New Zealand do not hold Accenture Ltd Class A common shares or Accenture SCA Class I common shares, but instead hold Accenture Canada Holdings exchangeable shares. Each of these exchangeable shares is exchangeable at the option of the holder for an Accenture Ltd Class A common share on a one-for-one basis and entitles its holder to receive distributions equal to any distributions to which an Accenture Ltd Class A common share entitles its holder.
 
        We intend to make all distributions to all of our equity holders pro rata based on economic ownership. Based on the shares outstanding immediately after the offering and assuming no exercise of the underwriters’ overallotment option, our public shareholders would receive approximately 18% of any distribution. You should read “Accenture Organizational Structure,” “Certain Relationships and Related Transactions” and “Description of Share Capital” for additional information about our corporate structure.
 
The Offering
 
Class A common shares offered in the
          offering
     115,000,000 Class A common shares.
 
Class A common shares to be outstanding
          immediately following the offering(1)
         
394,981,895 Class A common shares (or
990,439,231 Class A common shares if our partners’
holdings of Accenture SCA Class I common shares
and Accenture Canada Holdings exchangeable
shares are redeemed or exchanged for newly issued
Class A common shares on a one-for-one basis).

(1) 
Class A common shares to be outstanding immediately following the offering and the other information in the prospectus based thereon reflects:
 
Ÿ 
115,000,000 Class A common shares offered in the offering;
 
Ÿ 
212,257,238 Class A common shares held by our partners (or 807,714,574 Class A common shares if our partners’ holdings of Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares are redeemed or exchanged for newly issued Class A common shares on a one-for-one basis); and
 
Ÿ 
67,724,657 Class A common shares underlying restricted share units that are fully vested or are scheduled to fully vest prior to the end of the current fiscal year. Information in the prospectus also reflects the assumed issuance of an equivalent number of Accenture SCA Class I common shares to be issued to Accenture Ltd in connection with these restricted share units.
 
Class A common shares to be outstanding immediately following the offering and the other information in the prospectus based thereon does not reflect:
 
Ÿ 
17,250,000 Class A common shares issuable upon exercise of the underwriters’ overallotment option;
 
Ÿ 
6,695,091 Class A common shares underlying restricted share units that will not fully vest prior to the end of the current fiscal year; and
 
Ÿ 
97,270,000 Class A common shares issuable pursuant to options.
 
See “Accenture Organizational Structure” and “Management—Employee Awards.”
 
Use of proceeds:
 
          By Accenture Ltd      Accenture Ltd intends to use the net proceeds from
the offering to subscribe for Accenture SCA Class I
common shares.
 
          By Accenture SCA      Accenture SCA intends to use the proceeds it
receives from the issuance of its Class I common
shares as follows:
       Ÿ  approximately $839 million for costs and
expenses incurred in connection with our
transition to a corporate structure;
    
Ÿ  approximately $338 million to repay amounts outstanding under our revolving credit facilities; and
 
    
Ÿ  the balance for working capital, which previously was funded by our partners, and for general corporate purposes.
 
Voting rights
Each Class A common share and each Class X common share will entitle its holder to one vote per share on all matters submitted to a vote of shareholders of Accenture Ltd. Immediately following the offering, our partners will own or control Class A common shares and Class X common shares representing, in the aggregate, approximately 82% of the voting interest in Accenture Ltd, or approximately 80% if the underwriters exercise their overallotment option in full. All of our partners who hold Class A or Class X common shares have entered into a voting agreement that requires them to vote as a group with respect to all matters voted upon by shareholders of Accenture Ltd. For a discussion of the voting agreement, see “Certain Relationships and Related Transactions—Voting Agreement.” Our partners will effectively control us for as long as they continue to hold a significant block of voting rights.
 
Dividend and distribution policy
We currently do not anticipate that Accenture Ltd or Accenture SCA will pay dividends.
 
Transfer restrictions
The equity interests that our partners own are subject to transfer restrictions that generally restrict sales for one year and then permit sales in increasing amounts over the subsequent seven years. For a discussion of the terms of the transfer restrictions, see “Certain Relationships and Related Transactions—Voting Agreement” and “—Accenture SCA Transfer Rights Agreement” and “Risk Factors—Risks That Relate to Your Ownership of Our Class A Common Shares—Our share price may decline due to the large number of Class A common shares eligible for future sale.”
 
New York Stock Exchange symbol
“ACN”
 
Risk factors
For a discussion of some of the factors you should consider before buying our Class A common shares, see “Risk Factors.”
 
 
Summary Financial Data
 
        The following unaudited summary historical and pro forma financial information should be read in conjunction with “Selected Financial Data,” “Pro Forma Financial Information,” our historical financial statements and related notes included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
     Historical
   Pro forma
as adjusted

   Historical
   Pro forma
as adjusted

     Year ended August 31,
   Year ended
August 31,
2000

   Nine months
ended May 31,

   Nine months
ended May 31,
  
     1996
   1997
   1998
   1999
   2000
   2000
   2001
   2001
     (in millions, except share and per share data)
Income Statement Data:
Revenues:                           
    Revenues before reimbursements    $4,942      $6,275      $8,215      $  9,550      $  9,752      $          9,752      $7,245      $    8,666      $          8,666  
    Reimbursements    768      1,172      1,425      1,529      1,788      1,788      1,301      1,475      1,475  
    
    
    
    
    
    
    
    
    
  
        Revenues    5,710      7,447      9,640       11,079       11,540      11,540      8,546       10,141      10,141  
Operating expenses:*                           
    Cost of services:*                           
        Cost of services before reimbursable expenses*    2,678      3,470      4,700      5,457      5,486      6,138      4,000      4,509      5,243  
        Reimbursable expenses    768      1,172      1,425      1,529      1,788      1,788      1,301      1,475      1,475  
    
    
    
    
    
    
    
    
    
  
        Cost of services*    3,446      4,642      6,125      6,986      7,274      7,926      5,301      5,984      6,718  
    Sales and marketing*    532      611      696      790      883      1,192      651      771      1,065  
    General and administrative costs*    659      819      1,036      1,271      1,297      1,441      936      1,131      1,177  
    Reorganization and rebranding costs*    —        —        —        —        —        —        —        777      332  
    
    
    
    
    
    
    
    
    
  
        Total operating expenses*    4,637      6,072      7,857      9,047      9,454      10,559      6,888      8,663      9,292  
    
    
    
    
    
    
    
    
    
  
Operating income*    1,073      1,375      1,783      2,032      2,086      981      1,658      1,478      849  
Gain on investments, net    —        —        —        92      573      573      534      180      180  
Interest income    —        —        —        60      67      67      45      59      59  
Interest expense    (16 )    (19 )    (17 )    (27 )    (24 )    (35 )    (18 )    (26 )    (41 )
Other income (expense)    (4 )    4      (6 )    (5 )    51      51      32      21      21  
Equity in losses of affiliates    —        —        (1 )    (6 )    (46 )    (46 )    (9 )    (53 )    (53 )
    
    
    
    
    
    
    
    
    
  
Income before taxes*    1,053      1,360      1,759      2,146      2,707      1,591      2,242      1,659      1,015  
Provision for taxes (1)    116      118      74      123      243      636      194      420      406  
    
    
    
    
    
    
    
    
    
  
Income before minority interest and cumulative
    change in accounting*
   937      1,242      1,685      2,023      2,464      955      2,048      1,239      609  
Minority interest    —        —        —        —        —        573      —        —        365  
    
    
    
    
    
    
    
    
    
  
Income before cumulative change in accounting*    937      1,242      1,685      2,023      2,464      $            382      2,048      1,239      $            244  
                                            
                    
  
Cumulative effect of accounting change    —        —        —        —        —             —        188     
    
    
    
    
    
            
    
          
Partnership income before partner distributions* (2)    $  937      $1,242      $1,685      $  2,023      $  2,464           $2,048      $  1,427       
    
    
    
    
    
            
    
          
Earnings Per Share Data:                           
Earnings per share:                           
        —basic                   $            0.97            $            0.62  
                                            
                    
  
        —diluted                   $            0.96            $            0.61  
                                            
                    
  
Weighted average shares:                           
        —basic                   394,981,895            396,320,913  
                                            
                    
  
        —diluted                   991,108,740            992,280,381  
                                            
                    
  

*
Historical information excludes payments for partner distributions.
(1)
Provision for taxes is not the same as income taxes of a corporation. For the historical periods, we operated through partnerships in many countries. Therefore, we generally were not subject to income taxes in those countries. Taxes related to income earned by our partnerships were the responsibility of the individual partners. In other countries, we operated through corporations, and in these circumstances we were subject to income taxes.
(2)
Partnership income before partner distributions is not comparable to net income of a corporation similarly determined. Partnership income in historical periods is not executive compensation in the customary sense because partnership income is comprised of distributions of current earnings. Accordingly, compensation and benefits for services rendered by partners have not been reflected as an expense in our historical financial statements.
 
     Historical
   Historical
   Pro forma
as adjusted

     As of August 31,
   As of May 31,
   As of
May 31,
     1996
   1997
   1998
   1999
   2000
   2000
   2001
   2001
     (in millions)
Balance Sheet Data:
Cash and cash equivalents    $  438    $  325    $  736    $1,111    $1,271    $1,297    $    724      $1,871
Working capital    280    175    531    913    1,015    1,023     (1,394 )    98
Total assets     2,323     2,550     3,704    4,615    5,451    5,491    4,929      6,120
Long-term debt    226    192    157    127    99    127    31      31
Total partners’ capital    696    761    1,507    2,208    2,368    2,579    —        —  
Shareholders’ equity (deficit)    —      —      —      —      —      —      (1,255 )    140
 
RISK FACTORS
 
        You should carefully consider each of the risks described below and all of the other information in this prospectus before deciding to invest in our Class A common shares.
 
Risks That Relate to Our Business
 
A significant or prolonged economic downturn could have a material adverse effect on our results of operations.
 
        Our results of operations are affected by the level of business activity of our clients, which in turn is affected by the level of economic activity in the industries and markets that they serve. In addition, our business tends to lag behind economic cycles in an industry. A decline in the level of business activity of our clients could have a material adverse effect on our revenues and profit margin. We are now seeing some evidence of an economic slowdown in some markets, including a reduction in capital expenditures and technology and associated discretionary spending by our clients, particularly in the United States. This has caused a reduction in our growth rate in the Americas and in our Communications & High Tech, Financial Services and Products global market units in the third quarter of this fiscal year as compared with the first half of this fiscal year. Revenues before reimbursements for the third quarter of 2001 for our Communications & High Tech, Financial Services and Products global market units increased by 8%, 15% and 16%, respectively, over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for these market units increased by 27%, 19% and 25%, respectively, over the first half of 2000. Revenues before reimbursements for the third quarter of 2001 for our Americas geographic area increased by 10% over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for this geographic area increased by 27% over the first half of 2000. We expect continued growth in revenues in the fourth quarter of this fiscal year, though at a slower rate of growth than in the third quarter. We will implement cost-savings initiatives to manage our expenses as a percentage of revenues. However, we may not be able to reduce the rate of growth in our costs on a timely basis or control our costs to maintain our margins.
 
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.
 
        Our success will depend, in part, on our ability to develop and implement management and technology solutions that anticipate and keep pace with rapid and continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis, and our ideas may not be successful in the marketplace. Also, products and technologies developed by our competitors may make our service or product offerings uncompetitive or obsolete. Any one of these circumstances could have a material adverse effect on our ability to obtain and successfully complete important client engagements.
 
        Our business is also dependent, in part, upon continued growth in the use of technology in business by our clients and prospective clients and their customers and suppliers. If the growth in the use of technology does not continue, demand for our services may decrease. Use of new technology for commerce generally requires the understanding and acceptance of a new way of conducting business and exchanging information. Companies that have already invested substantial resources in traditional means of conducting commerce and exchanging information may be particularly reluctant or slow to adopt a new approach that may make some of their existing personnel and infrastructure obsolete.
 
We may face damage to our professional reputation or legal liability if our clients are not satisfied with our services.
 
        As a professional services firm, we depend to a large extent on our relationships with our clients and our reputation for high-caliber professional services and integrity to attract and retain clients. As a result, if a client is not satisfied with our services or products, including those of subcontractors we employ, it may be more damaging in our business than in other businesses. Moreover, if we fail to meet our contractual obligations or fail to disclose our financial or other arrangements with our alliance partners, we could be subject to legal liability or loss of client relationships. Our contracts typically include provisions to limit our exposure to legal claims relating to our services and the applications we develop, but these provisions may not protect us or may not be enforceable in all cases.
 
Our services or products may infringe upon the intellectual property rights of others.
 
        We cannot be sure that our services and products, or the products of others that we offer to our clients, do not infringe on the intellectual property rights of third parties, and we may have infringement claims asserted against us or against our clients. These claims may harm our reputation, cost us money and prevent us from offering some services or products. Historically in our contracts, we have generally agreed to indemnify our clients for any expenses or liabilities resulting from claimed infringements of the intellectual property rights of third parties. In some instances, the amount of these indemnities may be greater than the revenues we receive from the client. Any claims or litigation in this area, whether we ultimately win or lose, could be time-consuming and costly, injure our reputation or require us to enter into royalty or licensing arrangements. We may not be able to enter into these royalty or licensing arrangements on acceptable terms. Depending on the circumstances, we may be required to grant a specific client greater rights in intellectual property developed in connection with an engagement than we otherwise do, in which case we seek to cross license the use of the intellectual property. However, in very limited situations, we forego rights to the use of intellectual property we help create and in these cases, this limits our ability to reuse that intellectual property for other clients. Any limitation on our ability to provide a service or product could cause us to lose revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future projects.
 
Our engagements with clients may not be profitable.
 
        Unexpected costs or delays could make our contracts unprofitable.    When making proposals for engagements, we estimate the costs and timing for completing the projects. These estimates reflect our best judgment regarding the efficiencies of our methodologies and professionals as we plan to deploy them on projects. Any increased or unexpected costs or unanticipated delays in connection with the performance of these engagements, including delays caused by factors outside our control, could make these contracts less profitable or unprofitable, which would have an adverse effect on our profit margin. While we have many types of contracts, including time-and-materials contracts, fixed-price contracts and contracts with features of both of these contract types, the risks associated with all of these types of contracts are often similar. 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. Our failure to meet a client’s expectations in any type of contract may result in an unprofitable engagement.
 
        Our contracts can be terminated by our clients with short notice.    Our clients typically retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts. Approximately 75% of our consulting engagements are less than twelve months in duration. While our accounting systems identify the duration of our engagements, these systems do not track whether contracts can be terminated upon short notice and without penalty. However, we estimate that the majority of our contracts can be terminated by our clients with short notice and without significant penalty. The advance notice of termination required for contracts of shorter duration and lower revenue is typically 30 days. Longer-term, larger and more complex contracts generally require a longer notice period for termination and may include an early termination charge to be paid to us. Additionally, large client projects involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for additional stages of a project or that a client will cancel or delay additional planned engagements. These terminations, cancellations or delays could result from factors unrelated to our work product or the progress of the project, but could be related to business or financial conditions of the client or the economy generally. When contracts are terminated, we lose the associated revenues and we may not be able to eliminate associated costs in a timely manner.
 
        We may fail to collect amounts extended to clients.     In limited circumstances we extend financing to our clients. A client must meet established criteria to receive financing. In the rare event that these criteria are waived, approval by senior levels of our management is required. We have extended $168 million of financing as of May 31, 2001. We do not expect financing levels to exceed $250 million, which is in line with historical levels, over the next 12 months.
 
If our affiliates, alliances or venture capital portfolio companies do not succeed, we may not be successful in implementing our growth strategy.
 
        We have invested a substantial amount of time and resources in our affiliates, alliances and venture capital portfolio companies, and we plan to make substantial additional investments in the future. We made investments of $287 million in the 12 months ended May 31, 2001. The value of affiliate and venture capital financial commitments at May 31, 2001 was $19 million and $48 million, respectively. We anticipate making additional investments of $300 million to $400 million in the 12 months ended May 31, 2002. In addition, we expect to spend over $125 million over the same period in payroll and other expenses in support of alliance agreements. The benefits we anticipate from these relationships are an important component of our growth strategy. If these relationships do not succeed, we may lose our investments or fail to obtain the benefits we hope to derive from them. Similarly, we may be adversely affected by the failure of one or more of our affiliates or alliances, which could lead to reduced marketing exposure, diminished sales and a decreased ability to develop and gain access to solutions. Moreover, because most of our alliance relationships are nonexclusive, our alliance partners are able to form closer or preferred arrangements with our competitors. In addition, our venture capital activities may suffer from the poor performance of the portfolio companies in which we invest or from our inability to obtain attractive returns on our investments or investments or to monetize these investments at all. These losses or failures could have a material and adverse impact on our growth strategy, which, in turn, could adversely affect our financial condition and results of operations.
 
Our global operations pose complex management, foreign currency, legal, tax and economic risks, which we may not adequately address.
 
        We have offices in 46 countries around the world. In fiscal 2000, approximately 54% of our revenues were attributable to activities in the Americas, 38% of our revenues were attributable to our activities in Europe, the Middle East, Africa and India, and 8% of our revenues were attributable to our activities in the Asia/Pacific region. As a result, we are subject to a number of risks, including:
 
Ÿ
the absence in some jurisdictions of effective laws to protect our intellectual property rights;
 
Ÿ
multiple and possibly overlapping and conflicting tax laws;
 
Ÿ
restrictions on the movement of cash;
 
Ÿ
the burdens of complying with a wide variety of national and local laws;
 
Ÿ
political instability;
 
Ÿ
currency fluctuations;
 
Ÿ
longer payment cycles;
 
Ÿ
restrictions on the import and export of certain technologies;
 
Ÿ
price controls or restrictions on exchange of foreign currencies; and
 
Ÿ
trade barriers.
 
The consulting, information technology and outsourcing markets are highly competitive, and we may not be able to compete effectively.
 
        The consulting, information technology and outsourcing markets in which we operate include a large number of participants and are highly competitive. Our primary competitors include:
 
Ÿ
large accounting, consulting and other professional service firms, including some of the “Big 5” accounting firms;
 
Ÿ
information technology service providers;
 
Ÿ
application service providers;
 
Ÿ
packaged software vendors and resellers; and
 
Ÿ
service groups of computer equipment companies.
 
In addition, a client may choose to use its own resources, rather than engage an outside firm for the types of services we provide.
 
        Our marketplace is experiencing rapid changes in its competitive landscape. Some of our competitors have sought access to public and private capital and others have merged or consolidated with better-capitalized partners. These changes may create larger and better-capitalized competitors with enhanced abilities to compete for market share generally and our clients specifically, in some cases, through significant economic incentives to clients to secure contracts. These competitors may also be better able to compete for skilled professionals by offering them large compensation incentives. In addition, one or more of our competitors may develop and implement methodologies which result in superior productivity and price reductions without adversely affecting the competitors’ profit margins. Any of these circumstances may impose additional pricing pressure on us, which would have an adverse effect on our revenues and profit margin.
 
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 success and ability to grow are dependent, in part, on our ability to hire and retain large numbers of talented people. We hired approximately 17,000 new employees in each of fiscal years 2000 and 2001. The cumulative rate of turnover among our employees was 19% for fiscal year 1999, 22% for fiscal year 2000 and, on an annualized basis, approximately 14% for the nine months ended May 31, 2001, excluding involuntary terminations. The inability to attract qualified employees in sufficient numbers to meet demand or the loss of a significant number of our employees could have a serious negative effect on us, including our ability to obtain and successfully complete important client engagements and thus maintain or increase our revenues. On June 7, 2001, we announced an initiative to reduce our staff in certain parts of the world, in certain skill groups and in some support positions. This initiative may adversely affect employee recruiting and retention.
 
        We regularly benchmark our employee compensation to the marketplace in all countries in which we operate. We make annual adjustments to remain competitive based on the individual markets and the demand for top talent. We also adjust compensation levels within some of our larger countries, such as the United States and the United Kingdom, to reflect different labor pools. In some cases these increases are greater than the general rate of inflation due to other market forces, including the demand for technical talent. To attract and retain the number of employees we need to grow our business, we may have to increase our compensation levels in the future. This would adversely affect our operating margins.
 
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 face additional retention risk because of our transition to a corporate structure. Our partners received our equity in lieu of the interests in the partnerships and corporations that they previously held. Our partners, on average, received approximately 329,000 Accenture Ltd Class A common shares, Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares (with a value at the time of the offering of approximately $4,770,500, at an assumed price per share of $14.50), and the median number of Accenture Ltd Class A common shares, Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares received by our partners was approximately 355,000 (with a value at the time of the offering of approximately $5,147,500, at an assumed price per share of $14.50). Their ownership of this equity is not dependent upon their continued employment. While these equity interests are subject to transfer restrictions, the transfer restrictions lapse over time, may not be enforceable in all cases and can be waived. See “Certain Relationships and Related Transactions—Voting Agreement” and “—Accenture SCA Transfer Rights Agreement.” In addition, in connection with our transition to a corporate structure, our partners have accepted significant reductions in their cash compensation. The substitution of equity, equity-based incentives and other employee benefits in lieu of higher cash compensation may not be sufficient to retain these individuals in the near or long term. There is no guarantee that the non-competition agreements we have entered into with our partners are sufficiently broad to prevent them from leaving us for our competitors or other opportunities or that these agreements will be enforceable in all cases.
 
        In connection with the offering and our transition to a corporate structure, our non-partner employees will also receive equity incentives. These incentives to attract, retain and motivate employees may not be as effective as the opportunity, which existed prior to our transition to a corporate structure, to hold a partnership interest in Accenture. If these incentives are not effective, our ability to hire, retain and motivate skilled professionals will suffer.
 
We have only a limited ability to protect our intellectual property rights, which are important to our success.
 
        Our success depends, in part, upon our ability to protect our proprietary methodologies and other intellectual property. Existing laws of some countries in which we provide services or products may offer only limited protection of our intellectual property rights. We rely upon a combination of trade secrets, confidentiality policies, nondisclosure and other contractual arrangements, and patent, copyright and trademark laws to protect our intellectual property rights. The steps we take in this regard may not be adequate to prevent or deter infringement or other misappropriation of our intellectual property, and we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights.
 
Risks That Relate to Our Financial Results and Our Lack of Experience in Managing a Public Company
 
Our profitability will suffer if we are not able to maintain our prices and utilization rates and control our costs.
 
        Our profit margin, and therefore our profitability, is largely a function of the rates we are able to charge for our services and the utilization rate, or chargeability, of our professionals. Accordingly, if we are not able to maintain the rates we charge for our services or an appropriate utilization rate for our professionals, we will not be able to sustain our profit margin and our profitability will suffer. The rates we are able to charge for our services are affected by a number of factors, including:
 
Ÿ
our clients’ perception of our ability to add value through our services;
 
Ÿ
competition;
 
Ÿ
introduction of new services or products by us or our competitors;
 
Ÿ
pricing policies of our competitors; and
 
Ÿ
general economic conditions.
 
Our utilization rates are also affected by a number of factors, including:
 
Ÿ
seasonal trends, primarily as a result of our hiring cycle and holiday and summer vacations;
 
Ÿ
our ability to transition employees from completed projects to new engagements;
 
Ÿ
our ability to forecast demand for our services and thereby maintain an appropriate headcount; and
 
Ÿ
our ability to manage attrition.
 
        Our profitability is also a function of our ability to control our costs and improve our efficiency. As we increase the number of our professionals and execute our strategy for growth, we may not be able to manage a significantly larger and more diverse workforce, control our costs or improve our efficiency.
 
Our quarterly revenues, operating results and profitability will vary from quarter to quarter, which may result in increased volatility of our share price.
 
        Our quarterly revenues, operating results and profitability have varied in the past and are likely to vary significantly from quarter to quarter, making them difficult to predict. This may lead to volatility in our share price. The factors that are likely to cause these variations are:
 
Ÿ
seasonality;
 
Ÿ
the business decisions of our clients regarding the use of our services;
 
Ÿ
the timing of projects and their termination;
 
Ÿ
the timing and extent of gains and losses on our portfolio of investments;
 
Ÿ
the timing of income or loss from affiliates;
 
Ÿ
our ability to transition employees quickly from completed projects to new engagements;
 
Ÿ
the introduction of new products or services by us or our competitors;
 
Ÿ
changes in our pricing policies or those of our competitors;
 
Ÿ
our ability to manage costs, including personnel costs and support services costs;
 
Ÿ
costs related to possible acquisitions of other businesses; and
 
Ÿ
global economic conditions.
 
The historical and pro forma financial information in this prospectus may not permit you to predict our costs of operations.
 
        The historical financial information in this prospectus does not reflect the added costs we expect to incur as a public company or the resulting changes that have occurred in our capital structure and operations. Because we historically operated through partnerships in many countries prior to our transition to a corporate structure, we paid little or no taxes on profits and no salaries to our partners who are now our employees. In preparing our pro forma financial information we deducted and charged to earnings estimated income taxes based on an estimated tax rate, which may be different from our actual tax rate in the future, and estimated salaries, payroll taxes and benefits for our partners who became our employees after our transition to a corporate structure. The estimates we used in our pro forma financial information may not be similar to our actual experience as a public corporation. For more information on our historical financial statements and pro forma financial information, see “Pro Forma Financial Information” and our historical financial statements and related notes included elsewhere in this prospectus.
 
Our management has no experience in managing a public company.
 
        Our management team has historically operated our business as a privately-owned series of partnerships and corporations. The individuals who now constitute our management have never had responsibility for managing a publicly-traded company.
 
We expect to record substantial net losses in the fiscal quarter ended August 31, 2001 due to the one-time grant of restricted share units in connection with the offering.
 
        We expect to record a substantial loss in the quarter ended August 31, 2001 primarily as the result of net nonrecurring compensation cost of approximately $1,002 million resulting from the grant of restricted share units in connection with the offering.
 
Risks That Relate to Your Ownership of Our Class A Common Shares
 
We will continue to be controlled by our partners, whose interests may differ from those of our other shareholders.
 
        Upon completion of the offering our partners will own or control shares representing, in the aggregate, an 82% voting interest in Accenture Ltd, or 80% if the underwriters exercise their overallotment option in full. These shares are subject to a voting agreement, which requires our partners to vote as a group with respect to all matters submitted to shareholders. Our partners’ voting interest in Accenture Ltd may increase to the extent additional employees we name as partners are required to become parties to the voting agreement. See “Certain Relationships and Related Transactions—Voting Agreement” for a discussion of these voting arrangements.
 
        As long as our partners continue to own or control a significant block of voting rights, they will control us. This will enable them, without the consent of the public shareholders, to:
 
Ÿ
elect the board of directors and remove directors;
 
Ÿ
control our management and policies;
 
Ÿ
determine the outcome of most corporate transactions or other matters submitted to the shareholders for approval, including mergers, amalgamations and the sale of all or substantially all of our assets; and
 
Ÿ
act in their own interest as partners, which may conflict with or not be the same as the interests of shareholders who are not partners.
 
        Furthermore, as a result of a partner matters agreement, our partners will continue to have influence with respect to a wide variety of matters over which neither shareholders nor employees of a public company typically have input. The partner matters agreement will provide mechanisms for our partners to:
 
Ÿ
select, for three to five years after the offering, five partner nominees for election to membership on the board of directors of Accenture Ltd;
 
Ÿ
make a non-binding recommendation to the board of directors of Accenture Ltd through a committee of partners regarding the selection of a chief executive officer of Accenture Ltd in the event a new chief executive officer is appointed within the first four years after the offering;
 
Ÿ
vote on new partner admissions;
 
Ÿ
approve the partners’ income plan as described below; and
 
Ÿ
hold a non-binding vote with respect to any decision to eliminate or materially change the current practice of allocating partner compensation on a relative, or “unit,” basis.
 
        Under the terms of the partner matters agreement, a partners’ income committee, consisting of the chief executive officer and partners he or she appoints, reviews evaluations and recommendations concerning the performance of partners and determines relative levels of income participation, or unit allocation. Based on its review, the committee will prepare a partners’ income plan, which then must be submitted to the partners in a partner matters vote. If the plan is approved by a 66 2 /3% partner matters vote, it is (1) subject to the impact on overall unit allocation of determinations by the board of directors or the compensation committee of the board of directors of the unit allocation for the executive officers, binding with respect to the income participation or unit allocation of all partners other than the principal executive officers of Accenture Ltd (including the chief executive officer), unless otherwise determined by the board of directors and (2) submitted to the compensation committee of the board of directors as a recommendation with respect to the income participation or unit allocation of the chief executive officer and the other principal executive officers of Accenture Ltd. See “Certain Relationships and Related Transactions—Partner Matters Agreement.”
 
        In addition, immediately following the offering, Accenture Ltd will own shares representing a 58% voting interest in Accenture SCA and certain of our partners will own shares representing a 42% voting interest in Accenture SCA. Accenture SCA is organized under Luxembourg law, and a 66  2 /3% shareholder vote is required to amend the articles of association of Accenture SCA, liquidate Accenture SCA, sell all or substantially all of the assets of Accenture SCA and to authorize the general partner to increase the issued share capital of Accenture SCA. Luxembourg law requires a unanimous shareholder vote for a migration of Accenture SCA to a different jurisdiction and for the levying of an assessment on the Accenture SCA shares. Accordingly, there is the possibility that our partners holding an equity interest in Accenture SCA could block Accenture Ltd from causing Accenture SCA to take any of these actions. See “Accenture Organizational Structure” for a discussion of our organizational structure.
 
Our share price may decline due to the large number of Class A common shares eligible for future sale.
 
        Sales of substantial amounts of Accenture Ltd Class A common shares, or the perception of these sales, may adversely affect the price of the Class A common shares and impede our ability to raise capital through the issuance of equity securities in the future. The number of Class A common shares available for sale in the public market at any time is limited by United States federal securities laws and by contractual restrictions on transfer. Our partners have agreed with us to comply with the 180-day lock-up between us and the underwriters. We have agreed not to waive this lock-up with our partners prior to the expiration of the 180 days without the consent of Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated. In addition, our partners’ equity interests are subject to contractual transfer restrictions that generally restrict sales for one year and then permit sales in increasing amounts over the subsequent seven years. Although these transfer restrictions may be waived generally by us and our partners (for example, if Accenture Ltd would permit its partners to participate as selling shareholders in an underwritten public offering) and in particular cases by committees of our partners, we have not agreed to any waiver of these restrictions and do not expect to these restrictions will be waived except in limited circumstances. For a discussion of the terms of the transfer restrictions, see “Certain Relationships and Related Transactions—Voting Agreement” and “—Accenture SCA Transfer Rights Agreement.”
 
        Upon consummation of the offering, there will be 394,981,895 Class A common shares outstanding, or 412,231,895 Class A common shares if the underwriters exercise their overallotment option in full. Of these Class A common shares, 115,000,000 Class A common shares sold in the offering, or 132,250,000 Class A common shares if the underwriters exercise their overallotment option in full, will be freely transferable without restriction or further registration under the Securities Act of 1933. The remaining 279,981,895 Class A common shares generally will be available for future sale upon the expiration or waiver of transfer restrictions or, in the case of restricted share units, following delivery of the underlying Class A common shares. Our partners will also hold 595,457,336 Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares that may be redeemed or exchanged on a one-for-one basis for Accenture Ltd Class A common shares. We expect that these Class A common shares, subject to the expiration or waiver of transfer restrictions, generally will be available for future sale. In addition, options to purchase 97,270,000 Class A common shares will generally become exercisable over the four or five years following consummation of the offering. We expect that these underlying Class A common shares will be freely transferable without further restriction.
 
        As reflected in the table below, on each of the first eight anniversaries of the consummation of the offering, Class A common shares held by our partners will become available for sale in significant numbers and Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares held by our partners will become redeemable or exchangeable for freely transferable Class A common shares in significant numbers. Our partners may be more likely to sell all or a portion of their Class A common shares to provide liquidity in response to the reduction in partner compensation in connection with our transition to a corporate structure or to diversify their portfolios.
 
Anniversary
of
offering

     Number of Class A
common shares
that become
available for sale
by our
partners(1)

     Percentage of Class A
common shares
outstanding immediately
following the offering that
become available for sale
by our partners(1)

1        80,771,458        8%
2      121,157,186      12%
3        80,771,458        8%
4        80,771,458        8%
5        80,771,457        8%
6        80,771,457        8%
7        80,771,457        8%
8 or later      201,928,643      20%

(1)
Assumes our partners’ holdings of Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares are redeemed or exchanged on a one-for-one basis. Also assumes that all partners remain our employees until the eighth anniversary of the offering.
 
        See “Shares Eligible for Future Sale” for a discussion of the Class A common shares that may be sold in the public market in the future.
 
There has been no prior market for the Class A common shares, and they may trade at prices below the initial public offering price.
 
        The price of the Class A common shares after the offering may fluctuate widely, depending upon many factors, including our perceived prospects and those of the consulting and technology industries in general, differences between our actual financial and operating results and those expected by investors and analysts, changes in analysts’ recommendations or projections, changes in general economic or market conditions and broad market fluctuations.
 
You will experience immediate and substantial dilution in the book value of your Class A common shares.
 
        The initial public offering price of the Class A common shares is substantially higher than the pro forma net tangible book value per share of our Class A common shares. Pro forma net tangible book value represents the amount of our tangible assets on a pro forma basis, less our pro forma total liabilities. As a result, you will incur immediate dilution of $14.20 per share. For more information, see “Dilution.”
 
We may need additional capital in the future, which may not be available to us. The raising of additional capital may dilute your ownership in us.
 
        We may need to raise additional funds through public or private debt or equity financings in order to:
 
Ÿ
take advantage of opportunities, including more rapid expansion;
 
Ÿ
acquire complementary businesses or technologies;
 
Ÿ
develop new services and products; or
 
Ÿ
respond to competitive pressures.
 
        Any additional capital raised through the sale of equity may dilute your ownership percentage in us. Furthermore, any additional financing we may need may not be available on terms favorable to us, or at all.
 
We are registered in Bermuda, 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.
 
        We are organized under the laws of Bermuda, and a significant portion of our assets are located outside the United States. It may not be possible to enforce court judgments obtained in the United States against us in Bermuda or in countries, other than the United States, where we have assets based on the civil liability provisions of the federal or state securities laws of the United States. In addition, there is some doubt as to whether the courts of Bermuda and other countries would recognize or enforce judgments of United States courts obtained against us or our directors or officers based on the civil liabilities provisions of the federal or state securities laws of the United States or would hear actions against us or those persons based on those laws. We have been advised by our legal advisors in Bermuda that the United States and Bermuda do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not based solely on United States federal or state securities laws, would not automatically be enforceable in Bermuda. Similarly, those judgments may not be enforceable in countries, other than the United States, where we have assets.
 
Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders.
 
        Our shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction of the United States. As a Bermuda company, we are governed by the Companies Act 1981 of Bermuda. The Companies Act differs in some material respects from laws generally applicable to United States corporations and shareholders, including the provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. See “Description of Share Capital.”
 
        Under Bermuda law, the duties of directors and officers of a company are generally owed to the company only. Shareholders of Bermuda companies do not generally have rights to take action against directors or officers of the company, and may only do so in limited circumstances. Officers of a Bermuda company must, in exercising their powers and performing their duties, act honestly and in good faith with a view to the best interests of the company and must exercise the care and skill that a reasonably prudent person would exercise in comparable circumstances. Directors have a duty not to put themselves in a position in which their duties to the company and their personal interests may conflict and also are under a duty to disclose any personal interest in any contract or arrangement with the company or any of its subsidiaries. If a director or officer of a Bermuda company is found to have breached his duties to that company, he may be held personally liable to the company in respect of that breach of duty. A director may be liable jointly and severally with other directors if it is shown that the director knowingly engaged in fraud or dishonesty. In cases not involving fraud or dishonesty, the liability of the director will be determined by the Bermuda courts on the basis of their estimation of the percentage of responsibility of the director for the matter in question, in light of the nature of the conduct of the director and the extent of the causal relationship between his conduct and the loss suffered.
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
        This prospectus contains forward-looking statements 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 factors discussed under the section entitled “Risk Factors.”
 
 
ACCENTURE ORGANIZATIONAL STRUCTURE
 
        Accenture Ltd is a Bermuda holding company with no material assets other than Class I and Class II common shares in our subsidiary, Accenture SCA, a Luxembourg partnership limited by shares. Accenture Ltd’s only business is to hold these shares and to act as the sole general partner of Accenture SCA. As the general partner of Accenture SCA and as a result of Accenture Ltd’s majority voting interest in Accenture SCA, Accenture Ltd controls Accenture SCA’s management and operations and will consolidate Accenture SCA’s results in its financial statements. We operate our business through subsidiaries of Accenture SCA. Accenture SCA will reimburse Accenture Ltd for its expenses but will not pay Accenture Ltd any fees.
 
        Prior to our transition to a corporate structure, we operated as a series of related partnerships and corporations under the control of our partners. In connection with our transition to a corporate structure, our partners have generally exchanged all of their interests in these partnerships and corporations for Accenture Ltd Class A common shares or, in the case of partners resident in specified countries, Accenture SCA Class I common shares or exchangeable shares issued by Accenture Canada Holdings Inc., an indirect subsidiary of Accenture SCA. Generally, partners who received Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares also received a corresponding number of Accenture Ltd Class X common shares which entitle their holders to vote at Accenture Ltd shareholders’ meetings but do not carry any economic rights.
 
        Our transition to a corporate structure has been accounted for as a reorganization at carryover basis as there are no changes in the rights, obligations or economic interests of our partners upon the exchange of their interests for shares in Accenture Ltd, Accenture SCA or Accenture Canada Holdings except for those applied consistently among our partners or those resulting from our transition from a series of related partnerships and corporations to a corporate structure. The Accenture SCA Class I common shares and the Accenture Canada Holdings exchangeable shares held by our partners will be treated as a minority interest in the consolidated financial statements of Accenture Ltd. However, the future exchange and/or redemption of Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares will be accounted for at carryover basis.
 
        None of our partners will be selling shares in the offering, and, immediately following the offering, our partners will own approximately 82% of the equity in our business, or 80% if the underwriters exercise their overallotment option in full. We will continue to be controlled by our partners following the offering. Upon completion of the offering, our partners will own or control shares representing, in the aggregate, approximately 82% of the voting interest in Accenture Ltd, or approximately 80% if the underwriters exercise their overallotment option in full. Immediately following the offering, our public shareholders (including our non-partner employees) will own approximately 18% of the equity in our business, or approximately 20% if the underwriters exercise their overallotment option in full, and will own shares representing approximately 18% of the voting interest in Accenture Ltd, or approximately 20% if the underwriters exercise their overallotment option in full.
 
        Evercore Partners Inc. has acted as our financial advisor in our review of capitalization strategies and options.
        Our organizational structure immediately following the offering will be as shown in the diagram below. The diagram does not display the subsidiaries of Accenture SCA and does not reflect exercise of the underwriters’ overallotment option.
 

(1)
Includes non-partner employees.
(2)
Generally consists of our partners in countries other than Australia, Canada, Denmark, France, Italy, New Zealand, Norway, Spain, Sweden and the United States.
(3)
Generally consists of our partners in Australia, Canada, Denmark, France, Italy, New Zealand, Norway, Spain, Sweden and the United States. Our partners in Canada and New Zealand do not hold Accenture Ltd Class A common shares or Accenture SCA Class I common shares but instead hold Accenture Canada Holdings exchangeable shares. Each of these exchangeable shares is exchangeable at the option of the holder for an Accenture Ltd Class A common share on a one-for-one basis and entitles its holder to receive distributions equal to any distributions to which an Accenture Ltd Class A common share entitles its holder.
 
        We intend to make all distributions to all of our equity holders pro rata based on economic ownership. Based on the shares outstanding immediately after the offering and assuming no exercise of the underwriters’ overallotment option, our public shareholders would receive approximately 18% of any distribution.
 
        Each Class A common share and each Class X common share of Accenture Ltd entitles its holder to one vote on all matters submitted to a vote of shareholders of Accenture Ltd. The holder of a Class X common share is not, however, entitled to receive dividends or to receive payments upon a liquidation of Accenture Ltd.
 
        Each Class I common share and each Class II common share of Accenture SCA entitles its holder to one vote on all matters submitted to a vote of shareholders of Accenture SCA. Each Accenture SCA Class II common share entitles Accenture Ltd to receive a dividend or liquidation payment equal to 10% of any dividend or liquidation payment to which an Accenture SCA Class I common share entitles its holder. Accenture Ltd holds all of the Class II common shares of Accenture SCA.
 
        In the opinion of our counsel, under Accenture SCA’s articles of association, shares in Accenture SCA held by Accenture Ltd are actions de commandité, or general partnership interests, and shares in Accenture SCA held by our partners are actions de commanditaires, or limited partnership interests. Accenture Ltd, as general partner of Accenture SCA, has unlimited liability for the liabilities of Accenture SCA.
 
        Subject to contractual transfer restrictions, Accenture SCA is obligated, at the option of the holder, to redeem any outstanding Accenture SCA Class I common share at any time at a redemption price per share generally equal to the market price of an Accenture Ltd Class A common share at the time of the redemption. Accenture SCA may, at its option, pay this redemption price with cash or by delivering Accenture Ltd Class A common shares on a one-for-one basis. In addition, each of our partners in the United States, Australia and Norway has agreed that we may cause that partner to exchange that partners’ Accenture SCA Class I common shares for Accenture Ltd Class A common shares on a one-for-one basis if Accenture Ltd holds more than 40% of the issued share capital of Accenture SCA and we receive a satisfactory opinion from counsel or a professional tax advisor that such exchange should be without tax cost to that partner. This one-for-one redemption price and exchange ratio will be adjusted if Accenture Ltd holds more than a de minimis amount of assets (other than its interest in Accenture SCA and assets it holds only transiently prior to contributing them to Accenture SCA) or incurs more than a de minimis amount of liabilities (other than liabilities for which Accenture SCA has a corresponding liability to Accenture Ltd). Accenture Ltd does not intend to hold any material assets other than its interest in Accenture SCA or to incur any material liabilities such that this one-for-one redemption price and exchange ratio would require adjustment. In order to maintain Accenture Ltd’s economic interest in Accenture SCA, Accenture SCA will issue common shares to Accenture Ltd each time additional Accenture Ltd Class A common shares are issued.
 
        Holders of Accenture Canada Holdings exchangeable shares may exchange their shares for Accenture Ltd Class A common shares at any time on a one-for-one basis. Accenture Canada Holdings may, at its option, satisfy this exchange with cash at a price per share generally equal to the market price of an Accenture Ltd Class A common share at the time of the exchange. Each exchangeable share of Accenture Canada Holdings entitles its holder to receive distributions equal to any distributions to which an Accenture Ltd Class A common share entitles its holder.
 
        Accenture Ltd may, at its option, redeem any Class X common share for a redemption price equal to the par value of the Class X common share, or $0.0000225 per share. Accenture Ltd may not, however, redeem any Class X common share of a holder if such redemption would reduce the number of Class X common shares held by that holder to a number that is less than the number of Accenture SCA Class I common shares or Accenture Canada Holdings exchangeable shares held by that holder, as the case may be. Accenture Ltd will redeem Accenture Ltd Class X common shares upon redemption or exchange of Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares so that the aggregate number of Class X common shares outstanding at any time does not exceed the aggregate number of Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares outstanding.
 
        You should read “Risk Factors—Risks That Relate to Your Ownership of Our Class A Common Shares—We will continue to be controlled by our partners, whose interests may differ from those of our other shareholders,” “Certain Relationships and Related Transactions” and “Description of Share Capital” for additional information about our corporate structure and the risks posed by the structure.
 
USE OF PROCEEDS
 
        The net proceeds to Accenture Ltd from the offering, at the public offering price of $14.50 per Class A common share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $1,571 million, or $1,809 million if the underwriters exercise their overallotment option in full.
 
        Accenture Ltd intends to use the net proceeds from the offering to subscribe for Accenture SCA Class I common shares.
 
        Accenture SCA intends to use the proceeds it receives from the issuance of its Class I common shares as follows:
 
Ÿ
approximately $839 million for costs and expenses incurred in connection with our transition to a corporate structure;
 
Ÿ
approximately $338 million to repay amounts outstanding under our revolving credit facilities; and
 
Ÿ
the balance for working capital, which previously was funded by our partners, and for general corporate purposes.
 
        The costs we anticipate incurring in connection with our transition to a corporate structure include indirect taxes, such as capital and stamp duty imposed on transfers of assets among our subsidiaries; income taxes imposed on transfers of assets and liabilities among our subsidiaries; and income taxes relating to mandatory changes in tax accounting methods.
 
        We expect that loans under our revolving credit facilities will be provided at the prime rate, or at the London interbank offered rate plus a spread which will vary according to a pricing grid, and that these facilities will be subject to annual commitment fees. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a description of the terms of these facilities.
 
        Pending specific application of the net proceeds, we intend to invest them in short-term marketable securities.
 
DIVIDEND POLICY
 
        We currently do not anticipate that Accenture Ltd or Accenture SCA will pay dividends.
 
        We may from time to time enter into financing agreements that contain financial covenants and restrictions, some of which may limit the ability of Accenture Ltd and Accenture SCA to pay dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
 
        Future dividends on the Class A common shares of Accenture Ltd, if any, will be at the discretion of its board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
 
CAPITALIZATION
 
        The following table sets forth our consolidated capitalization as of May 31, 2001:
 
Ÿ
on a historical consolidated basis; and
 
Ÿ
on a pro forma consolidated basis adjusted to reflect our sale in the offering of 115,000,000 Class A common shares at the public offering price of $14.50 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
 
        This table should be read in conjunction with our historical financial statements and related notes, “Pro Forma Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.
 
       As of May 31, 2001
       (Unaudited)
       Historical
     Pro forma
as adjusted

       (in millions)
Cash and cash equivalents      $    724        $  1,871  
     
       
  
Short-term bank borrowings      $    528        $    190  
Current portion of long-term debt      3        3  
Long-term debt      31        31  
Minority interests      —          209  
Shareholders’ equity (deficit):          
     Preferred shares: 2,000,000,000 shares authorized, 0 shares issued and
          outstanding, 0 shares issued and outstanding pro forma as adjusted
     —          —    
     Class A common shares, par value $0.0000225 per share, 20,000,000,000
          shares authorized, 212,335,318 shares issued and outstanding,
          327,257,238 shares issued and outstanding pro forma as adjusted
     —          —    
     Class X common shares, par value $0.0000225 per share, 1,000,000,000
          shares authorized, 591,161,472 shares issued and outstanding,
          591,161,472 shares issued and outstanding pro forma as adjusted
     —          —    
     Restricted share units (related to Class A common shares), 0 units
          issued and outstanding, 74,419,748 units issued and outstanding
          pro forma as adjusted
     —          1,079  
     Additional paid-in capital      —          1,362  
Retained earnings (deficit)       (1,178 )       (2,127 )
Deferred compensation      —          (97 )
Accumulated other comprehensive income (loss)      (77 )      (77 )
     
       
  
          Total shareholders’ equity (deficit)      (1,255 )      140  
     
       
  
                    Total capitalization      $    (693 )      $    573  
     
       
  
 
DILUTION
 
        As of May 31, 2001, our net tangible book value was $(1,275 million), or approximately $(4.56) per Accenture Ltd Class A common share. Net tangible book value per Accenture Ltd Class A common share represents total consolidated tangible assets less total consolidated liabilities, divided by the aggregate number of Class A common shares outstanding, assuming the redemption or exchange of all our partners’ holdings of Accenture SCA Class I common shares and Accenture Canada Holdings exchangeable shares for newly issued Class A common shares on a one-for-one basis. Class A common shares outstanding does not include 6,695,091 shares underlying restricted share units that are not fully vested or scheduled to fully vest prior to the end of the current fiscal year or 97,270,000 shares issuable pursuant to options. After giving effect to our sale of 115,000,000 Class A common shares in the offering, at the initial public offering price of $14.50 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of May 31, 2001 would have been approximately $120 million, or $0.30 per share. This represents an immediate increase in net tangible book value to existing shareholders of $4.86 per share and an immediate dilution to new investors of $14.20 per share.
 
        The following table illustrates this per share dilution:
 
Initial public offering price per Class A common share                  $14.50
          Net tangible book value per share as of May 31, 2001      $(4.56 )
          Increase in net tangible book value per share attributable to new investors      4.86       
     
        
Net tangible book value per share after giving effect to the offering (1)           0.30
              
Dilution in net tangible book value per share to new investors (2)           $14.20
              

(1) 
Intangible assets as of May 31, 2001 were $20 million, relating to intangible assets acquired in connection with the separation from Andersen Worldwide and Arthur Andersen, or $0.05 per share after giving effect to the adjustments for the offering described under “Pro Forma Financial Information.”
 
(2) 
Dilution is determined by subtracting net tangible book value per share after giving effect to the offering from the initial public offering price per share paid by a new investor.
 
        If the underwriters’ overallotment option is exercised in full, the net tangible book value per share after giving effect to the offering would be $0.87 per share and the dilution in net tangible book value per share to new investors would be $13.63 per share.
 
 
PRO FORMA FINANCIAL INFORMATION
 
        The following pro forma consolidated balance sheet as of May 31, 2001 and pro forma combined income statements for the nine months ended May 31, 2001 and for the year ended August 31, 2000 are based on our historical financial statements included elsewhere in this prospectus.
 
        The pro forma income statements and balance sheet give effect to the following as if they occurred on September 1, 1999 in the case of the pro forma income statements and on May 31, 2001 in the case of the pro forma balance sheet:
 
Ÿ
the transactions related to our transition to a corporate structure described under “Certain Relationships and Related Transactions—Reorganization and Related Transactions;”
 
Ÿ
compensation payments to employees who were partners prior to our transition to a corporate structure; and
 
Ÿ
provision for corporate income taxes.
 
        The pro forma as adjusted income statements and balance sheet also give effect to the offering as if it occurred on September 1, 1999 in the case of the pro forma income statements and on May 31, 2001 in the case of the pro forma balance sheet.
 
        The pro forma and pro forma as adjusted combined income statements for the year ended August 31, 2000 and the nine months ended May 31, 2001 do not give effect to one-time events directly attributable to the offering, because of their nonrecurring nature. These one-time events include:
 
Ÿ
net compensation cost of approximately $1,002 million resulting from the grant of restricted share units in connection with the offering; and
 
Ÿ
recognition of a charitable contribution of $16 million.
 
        In addition, the pro forma and pro forma as adjusted combined income statement for the year ended August 31, 2000 does not give effect to one-time events directly attributable to our transition to a corporate structure and related transactions, because of their nonrecurring nature. These one-time events, which are included in the historical combined income statement for the nine months ended May 31, 2001 and excluded from the pro forma and pro forma as adjusted combined income statement for such period, include:
 
Ÿ
approximately $839 million, including current taxes payable of $61 million and deferred tax liabilities of $333 million, for costs associated with our transition to a corporate structure; and
 
Ÿ
recognition of deferred tax assets, net of approximately $172 million.
 
        The pro forma and pro forma as adjusted combined income statement for the nine months ended May 31, 2001 excludes the effect of a cumulative change in accounting principle to implement Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.”
 
        The pro forma adjustments and the adjustments for the offering are based upon available information and assumptions that management believes are reasonable.
 
        This information and the accompanying notes should be read in conjunction with our historical financial statements and the related notes included elsewhere in this prospectus. The information presented is not necessarily indicative of the results of operations or financial position that might have occurred had the events described above actually taken place as of the dates specified or that may be expected to occur in the future.
 
PRO FORMA COMBINED INCOME STATEMENT
 
(unaudited)
 
       For the nine months ended May 31, 2001
       Historical
     Pro forma
adjustments

     Pro forma
     Adjustments
for the
offering

     Pro forma as
adjusted

       (in millions, except share and per share data)
Revenues:                                                                                                                  
    Revenues before reimbursements      $  8,666        $                  $  8,666        $              $            8,666  
    Reimbursements      1,475             1,475             1,475  
     
     
     
     
     
  
        Revenues       10,141              10,141             10,141  
Operating expenses:*
    Cost of services:*                         
        Cost of services before reimbursable expenses*      4,509        725  (a)      5,234        9  (g)      5,243  
        Reimbursable expenses      1,475             1,475             1,475  
     
     
     
     
     
  
        Cost of services*      5,984        725        6,709        9        6,718  
    Sales and marketing*      771        290  (a)      1,061        4  (g)      1,065  
    General and administrative costs*      1,131        44  (a)      1,175        2  (g)      1,177  
    Reorganization and rebranding costs*      777        (445 )(b)      332               332  
     
     
     
     
     
  
        Total operating expenses*      8,663        614        9,277        15        9,292  
     
     
     
     
     
  
Operating income*      1,478        (614 )      864        (15 )      849  
Gain on investments, net      180                    180               180  
Interest income      59                    59               59  
Interest expense      (26 )      (15 )(c)      (59 )      18  (h)      (41 )
            (18 )(d)               
Other income (expense)      21               21                    21  
Equity in losses of affiliates      (53 )                  (53 )                  (53 )
     
     
     
     
     
  
Income before taxes*      1,659        (647 )      1,012        3        1,015  
Provision for taxes (1)      420        207  (e)      405        1  (e)      406  
            (222 )(b)               
     
     
     
     
     
  
Income before minority interest and cumulative change in
    accounting*
     1,239        (632 )      607        2        609  
Minority interest             449  (f)      449        (84 )(f)      365  
     
     
     
     
     
  
Partnership income before partner distributions and cumulative
    change in accounting* (2)
     $  1,239                                             
     
                                      
Income (loss) before cumulative change in accounting             $(1,081 )      $    158        $ 86        244  
              
     
     
     
  
Earnings per share:
    Income before cumulative change in accounting applicable
        to common shareholders:
                                                    
        —basic                            $              0.62  
                                         
  
        —diluted                          $              0.61  
                                         
  
Weighted average shares:                                                       
        —basic                           396,320,913 (i)
                                         
  
        —diluted                          992,280,381 (i)
                                         
  

*
Historical information excludes payments for partner distributions.
(1)
Provision for taxes is not the same as income taxes of a corporation. For the historical periods, we operated through partnerships in many countries. Therefore, we generally were not subject to income taxes in those countries. Taxes related to income earned by our partnerships were the responsibility of the individual partners. In other countries, we operated through corporations, and in these circumstances we were subject to income taxes.
(2)
Partnership income before partner distributions is not comparable to net income of a corporation similarly determined. Partnership income in historical periods is not executive compensation in the customary sense because partnership income is comprised of distributions of current earnings. Accordingly, compensation and benefits for services rendered by partners have not been reflected as an expense in our historical financial statements.
 
PRO FORMA COMBINED INCOME STATEMENT
 
(unaudited)
 
       For the year ended August 31, 2000
       Historical
     Pro forma
adjustments

     Pro forma
     Adjustments
for the
offering

     Pro forma
as adjusted

       (in millions, except share and per share data)
Revenues:       
    Revenues before reimbursements      $ 9,752        $                  $ 9,752        $                $            9,752  
    Reimbursements      1,788                    1,788                    1,788  
     
     
     
     
     
  
        Revenues      11,540                    11,540               11,540  
Operating expenses:*
    Cost of services:*     
        Cost of services before reimbursable expenses*      5,486        641  (a)      6,127        11  (g)      6,138  
        Reimbursable expenses      1,788                    1,788                    1,788  
     
     
     
     
     
  
        Cost of services*      7,274        641        7,915        11        7,926  
    Sales and marketing*      883        304  (a)      1,187        5 (g)      1,192  
    General and administrative costs*      1,297        141  (a)      1,438        3 (g)      1,441  
     
     
     
     
     
  
        Total operating expenses*      9,454        1,086        10,540        19        10,559  
     
     
     
     
     
  
Operating income*      2,086         (1,086 )      1,000        (19 )      981  
Gain on investments, net      573               573               573  
Interest income      67                    67               67  
Interest expense      (24 )      (11 )(c)      (60 )      25 (h)      (35 )
            (25 )(d)               
Other income (expense)      51                    51               51  
Equity in losses of affiliates      (46 )                  (46 )             (46 )
     
     
     
     
     
  
Income before taxes      2,707        (1,122 )      1,585        6      1,591  
Provision for taxes (1)      243        391  (e)      634        2 (e)      636  
     
     
     
     
     
  
Income before minority interest*      2,464        (1,513 )      951        4      955  
Minority interest      —          704  (f)      704        (131 )(f)      573  
     
     
     
     
     
  
Partnership income before partner distributions* (2)      $  2,464                                        
     
                                      
Net income (loss)                  $(2,217 )      $    247        $ 135        $              382  
              
     
     
     
  
Earnings per share:                           
    Net income applicable to common shareholders:                                                       
        —basic                          $              0.97  
                                         
  
        —diluted                          $              0.96  
                                         
  
Weighted average shares:                                                       
        —basic                           394,981,895 (i)
                                         
  
        —diluted                          991,108,740 (i)
                                         
  

  *
Historical information excludes payments for partner distributions.
(1)
Provision for taxes is not the same as income taxes of a corporation. For the historical periods, we operated through partnerships in many countries. Therefore, we generally were not subject to income taxes in those countries. Taxes related to income earned by our partnerships were the responsibility of the individual partners. In other countries, we operated through corporations, and in these circumstances we were subject to income taxes.
(2)
Partnership income before partner distributions is not comparable to net income of a corporation similarly determined. Partnership income in historical periods is not executive compensation in the customary sense because partnership income is comprised of distributions of current earnings. Accordingly, compensation and benefits for services rendered by partners have not been reflected as an expense in our historical financial statements.
 
PRO FORMA CONSOLIDATED BALANCE SHEET
May 31, 2001
 
(unaudited)
 
     Historical
   Pro forma
adjustments

   Pro forma
   Adjustments
for the offering

   Pro forma as
adjusted

     (in millions)
Current assets:               
   Cash and cash equivalents    $  724      $                $  724      $1,571  (j)    $1,871  
                                  (16 )(k)     
                                  (70 )(l)     
                (338 )(m)   
   Short-term investments    —           —             —    
   Receivables from clients    1,588         1,588           1,588  
   Unbilled services    808         808           808  
   Due from related parties    3         3           3  
   Deferred tax assets    126         126      (14 )(l)    112  
   Other current assets    227         227           227  
    
    
 
    
    
  
       Total current assets    3,476         3,476      1,133      4,609  
    
    
 
    
    
  
Non-current assets:
   Due from related parties    31         31           31  
   Investments    382         382           382  
   Property and equipment, net    793         793           793  
   Deferred tax assets    145         145      79  (g)    203  
              (21 )(l)   
   Other non-current assets    102         102           102  
    
    
 
    
    
  
       Total non-current assets    1,453         1,453      58      1,511  
    
    
 
    
    
  
       Total assets    $4,929      $                $4,929      $1,191      $6,120  
    
    
 
    
    
  
Current liabilities:               
   Short-term bank borrowings    $  528      $                $  528      $  (338 )(m)    $  190  
   Current portion of long-term debt    3         3           3  
   Accounts payable    158         158           158  
   Due to related parties    1,364         1,364           1,364  
   Deferred revenues    928         928           928  
   Accrued payroll and related benefits    1,014         1,014      (35 )(l)    999  
              20  (g)   
   Taxes payable    233         233      (6 )(k)    227  
   Deferred tax liabilities    310         310         310  
   Other accrued liabilities    332         332           332  
    
    
 
    
    
  
       Total current liabilities    4,870         4,870      (359 )    4,511  
    
    
 
    
    
  
Non-current liabilities:               
   Long-term debt    31         31           31  
   Retirement benefits    345         345           345  
   Deferred tax liabilities    98         98         98  
   Other non-current liabilities    840         840      (54 )(l)    786  
    
    
 
    
    
  
       Total non-current liabilities    1,314         1,314      (54 )    1,260  
    
    
 
    
    
  
   Minority interest    —           —        209  (f)    209  
    
    
 
    
    
  
 
Shareholders’ equity (deficit)               
   Preferred shares: 2,000,000,000 shares authorized, 0 shares issued and
      outstanding, 0 shares issued and outstanding pro forma, 0 shares issued
      and outstanding pro forma as adjusted
   —           —           —    
   Class A common shares, par value $0.0000225 per share, 20,000,000,000
      shares authorized, 212,335,318 shares issued and outstanding,
      212,257,238 shares issued and outstanding pro forma, 327,257,239
      shares issued and outstanding pro forma as adjusted
   —           —             —    
   Class X common shares, par value $0.0000225 per share, 1,000,000,000
      shares authorized, 591,161,472 shares issued and outstanding,
      591,161,472 shares issued and outstanding pro forma, 591,161,472
      shares issued and outstanding pro forma as adjusted
   —           —           —    
   Restricted share units (related to Class A common shares), 0 units issued
      and outstanding, 0 units issued and outstanding pro forma, 74,419,748
      units issued and outstanding pro forma as adjusted
   —           —        982  (g)    1,079  
              97  (g)   
   Additional paid-in capital    —           —        1,571  (j)    1,362  
              (209 )(f)   
   Retained earnings (deficit)    (1,178 )       (1,178 )    (10 )(k)    (2,127 )
              (16 )(l)     
                                  79  (g)     
                                  (1,002 )(g)     
   Deferred compensation    —           —        (97 )(g)    (97 )
   Accumulated other comprehensive income (loss)    (77 )       (77 )         (77 )
    
    
 
    
    
  
       Total shareholders’ equity (deficit)    (1,255 )       (1,255 )    1,395      140  
    
    
 
    
    
  
       Total liabilities and shareholders’ equity (deficit)    $4,929      $                $4,929      $1,191      $6,120  
    
    
 
    
    
  
 
NOTES TO PRO FORMA FINANCIAL INFORMATION
 
(unaudited)
(in millions, except share and per share data)
 
        Accenture Ltd’s only business will be to hold shares in and act as the sole general partner of Accenture SCA. As the sole general partner of Accenture SCA and as a result of Accenture Ltd’s majority voting interest in Accenture SCA, Accenture Ltd will control Accenture SCA’s management and operations and will, accordingly, consolidate Accenture SCA’s results in Accenture Ltd’s financial statements. Further, our transition to a corporate structure has been accounted for on a carryover basis.
 
(a)
Adjustments reflect compensation and benefit costs totaling $1,059 and $1,086 for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively, that we would have paid to our partners had we been in a corporate structure during the historical periods. Since we have operated in historical periods as a series of related partnerships and corporations under the control of our partners, payments to our partners have generally been accounted for as distributions of partners’ income, rather than compensation expense. As a result, our net income and compensation and benefits expense have not reflected any payments for services rendered by partners. As a corporation, we will include payments for services rendered by our partners in compensation and benefits expense. The new compensation plan adopted by us is comprised of a fixed salary amount, benefits and performance-based bonuses. All elements of the new compensation plan, including bonus, have been reflected in these adjustments because our partners would have earned the bonus based on our results of operations for the historical periods. Compensation cost in the pro forma income statement does not include the fair value of restricted share units to be granted at the time of the offering to some former U.S. employees, some former partners and substantially all employees that vest upon grant or on August 31, 2001, discussed under note (g), because they are a one-time grant in connection with the offering.
 
Benefit costs are medical, dental and payroll taxes, all of which are based on estimated costs that would have been incurred had these benefits been in place during the historical periods.
 
Compensation and benefit costs of partners have been allocated 69% and 59% to cost of services, 27% and 28% to sales and marketing, and 4% and 13% to general and administrative costs for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively, based upon an estimate of the time spent on each activity at the appropriate cost rates. The percentage allocation in the nine months ended May 31, 2001 varies from the allocation in the year ended August 31, 2000 due to the admission of a significant number of new partners on September 1, 2000.
 
(b)
Reflects an adjustment to eliminate the effect of the transaction costs incurred in connection with our transition to a corporate structure. $445 relates to indirect taxes, such as capital and stamp duty imposed on transfers of assets among group members. $222 relates to the revaluation of deferred tax liabilities upon change in tax status, including income taxes relating to mandatory changes in tax accounting methods, from a partnership to a corporate structure. These amounts are excluded from the Pro Forma Combined Income Statement due to their nonrecurring nature.
 
(c)
Reflects an adjustment of $15 and $11 for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively, for the estimated interest expense on early-retirement benefits payable to partners.
 
(d)
Reflects an adjustment of $18 and $25 for the nine months ended May 31, 2001 and the year ended August 31, 2000, respectively, for the estimated interest expense on borrowings of $338 at an incremental borrowing rate of 7.5% incurred to repay partners’ paid-in capital in connection with our transition to a corporate structure.
NOTES TO PRO FORMA FINANCIAL INFORMATION—(Continued)
 
(unaudited)
(in millions, except share and per share data)
 
 
(e)
Reflects an adjustment for an estimated income tax provision as if we had operated in a corporate structure at a pro forma tax rate of 40%. Pro forma as adjusted income taxes total $406 and $636 for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively. As a series of related partnerships and corporations under the control of our partners, we generally were not subject to income taxes. However, some of the corporations were subject to income taxes in their local jurisdictions.
 
(f)
Reflects an adjustment to record the 60% minority interest ownership of partners in Accenture SCA and Accenture Canada Holdings. The minority interest percentage declined from 74% at May 31, 2001 to 60% due to shares issued and restricted share units granted on the date of the offering. However, the recorded minority interest in the historical consolidated balance sheet at May 31, 2001 was $0 because of our shareholders’ deficit position. Also reflects the assumed issuance to Accenture Ltd of the 67,724,657 Accenture SCA Class I common shares that will be issued in connection with the delivery of the 67,724,657 Accenture Ltd Class A common shares underlying 67,724,657 restricted share units which generally are considered fully vested and will be issued for no consideration solely upon the passage of time for the purpose of the pro forma earnings per share and minority interest calculation.
 
Accenture Ltd owns a 26% economic interest and a 52% voting interest in Accenture SCA prior to the offering. The remaining economic interest and voting interest are owned by some of our partners. We operate our business through subsidiaries of Accenture SCA.
 
The transition of Accenture to a corporate structure was accounted for as a reorganization at carryover basis. Partners in Accenture received shares of Accenture Ltd, Accenture SCA or Accenture Canada Holdings depending on their member firm. The shares of Accenture SCA and Accenture Canada Holdings held by partners will be treated as a minority interest in the consolidated financial statements of Accenture Ltd. However, the future exchange and/or acquisition of Accenture SCA or Accenture Canada Holdings shares will be accounted for at carryover basis.
 
Upon receipt of the proceeds of the offering, Accenture Ltd will subscribe for shares in Accenture SCA, thereby increasing its percentage of economic interest in Accenture SCA from 26% to 40%.
 
Since Accenture Ltd is the sole general partner of Accenture SCA and owns the majority of the voting shares, Accenture Ltd consolidates Accenture SCA and its subsidiaries. Although the other shareholders of Accenture SCA hold more than 50% of the economic interest in Accenture SCA, they do not have voting control and therefore are considered to be a minority interest.
 
(g)
Adjustment reflects the anticipated one-time grants of restricted share units to partners, former partners and employees. Each restricted share unit awarded will represent an unfunded, unsecured right, which is nontransferable except in the event of death, of a participant to receive a Class A common share on the date specified in the participant’s award agreement. We intend to grant restricted share units on a one-time basis on the date of the offering as follows:
 
35,000,000 to employees who are current holders of eUnits under the eUnit Bonus Plan described on pages F-15 and F-16 in replacement of outstanding eUnits which are being cancelled as described in note (l) and to all employees in good standing.
NOTES TO PRO FORMA FINANCIAL INFORMATION—(Continued)
 
(unaudited)
(in millions, except share and per share data)
 
 
15,042,077 to some of our former partners who retired or resigned prior to May 31, 2001, in respect of past services.
 
16,357,175 to some of our employees that will be promoted to partner on September 1, 2001. These restricted share units will vest on August 31, 2001.
 
8,020,496 to some of our recently admitted partners in respect of future services. These restricted share units will vest over five years and will be expensed over the vesting period as services are rendered, except for 1,325,405 restricted share units which will be fully vested.
 
We recognize compensation expense for share-based compensation awards in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Under the measurement principles of APB No. 25 and Financial Interpretation Number 44, “Accounting for Certain Transactions Involving Stock Compensation—an Interpretation of APB 25,” we will recognize compensation expense of $1,002 (51,367,482 restricted share units that vest upon grant and 16,357,175 restricted share units that vest on August 31, 2001 at the initial public offering price of $14.50 per share plus $20 of payroll taxes) in respect of the portion of restricted share units that are fully vested on the date of the grant and a deferred income tax benefit of $79. See “Management—Employee Awards.” This includes $20 of payroll tax incurred on the grant of the restricted share units which has been recorded in current liabilities. In addition, we have recognized $15 and $19 for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively, for the portion of restricted share units that will vest over a five-year period. The compensation cost of these restricted share units that will vest over a five-year period have been allocated 69% and 59% to cost of services, 27% and 28% to sales and marketing, and 4% and 13% to general and administrative costs for the nine months ended May 31, 2001 and for the year ended August 31, 2000, respectively. See note (a). The total cost of the restricted share units that vest over five years, $97 (6,695,091 restricted share units at the initial public offering price of $14.50 per share), has been recorded in the pro forma as adjusted balance sheet as deferred compensation.
 
(h)
Reflects the elimination of the adjustment described in note (d) since the proceeds of the offering eliminate the need for such borrowing.
 
(i)
For the purposes of the pro forma earnings per share calculation, the weighted average shares outstanding, basic and diluted, were calculated based on:
 
     Year ended
August 31, 2000
Pro forma as adjusted

   Nine months ended
May 31, 2001
Pro forma as adjusted

Common share issuances
   Basic
   Diluted
   Basic
   Diluted
Accenture Ltd Class A common shares    212,257,238    212,257,238    212,257,238    212,257,238
Accenture SCA Class I common shares    —      587,296,594    —      587,296,594
Accenture Canada Holdings exchangeable shares    —      8,160,742    —      8,160,742
Restricted share units—vested    67,724,657    68,394,166    69,063,675    69,565,807
New shares from offering    115,000,000    115,000,000    115,000,000    115,000,000
    
 
 
 
Weighted average shares outstanding    394,981,895    991,108,740    396,320,913    992,280,381
    
 
 
 
NOTES TO PRO FORMA FINANCIAL INFORMATION—(Continued)
 
(unaudited)
(in millions, except share and per share data)
 
 
Basic and diluted earnings per share are calculated as follows:
 
       Pro forma as adjusted
Basic earnings per share
     Year ended
August 31,
2000

     Nine months
ended
May 31,
2001

Net income (loss) available to common shareholders      $            382     
     
     
Income (loss) before cumulative change in accounting           $            244
           
Weighted average shares outstanding      394,981,895      396,320,913
     
  
Basic earnings per share      $            0.97      $            0.62
     
  
 
       Pro forma as adjusted
Diluted earnings per share
     Year ended
August 31,
2000

     Nine months
ended
May 31,
2001

Net income (loss) available to common shareholders      $            382     
Income (loss) before cumulative change in accounting           $            244
Adjustments:          
          Minority interest      573      365
     
     
Income before minority interest      $            955     
     
  
Income before minority interest and cumulative change in accounting           $            609
           
Weighted average shares outstanding      991,108,740      992,280,381
     
  
Diluted earnings per share      $            0.96      $            0.61
     
  
 
(j)
Adjustment to record net proceeds from the sale of 115,000,000 Class A common shares in the offering, resulting in net proceeds of $1,571.
 
(k)
Reflects the payment of $16 in cash to the Accenture Foundation, Inc., a New York not-for-profit corporation, or to comparable entities in other jurisdictions.
 
(l)
In connection with the grant of restricted share units, discussed in note (g), we are terminating our deferred bonus plan (the “eUnit Bonus Plan”) for employees. Adjustment reflects an extinguishment of a liability of $89, of which $70 will be paid out in cash, and elimination of the related current and long-term deferred income tax assets of $14 and $21, respectively.
 
(m)
Adjustment to reflect $338 repayment of borrowings from proceeds of the offering.
 
SELECTED FINANCIAL DATA
 
        The following selected financial data have been presented on a historical cost basis for all periods presented. The data as of August 31, 1999 and 2000 and for the years ended August 31, 1998, 1999 and 2000 are derived from the audited historical financial statements and related notes which are included elsewhere in this prospectus. The data as of August 31, 1996, 1997 and 1998 and as of May 31, 2000 and for the years ended August 31, 1996 and 1997 are derived from unaudited historical financial statements and related notes which are not included in this prospectus. The data as of May 31, 2001 and for the nine months ended May 31, 2000 and 2001 are derived from the historical unaudited financial statements and related notes which are included elsewhere in this prospectus. The selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Pro Forma Financial Information” and our historical financial statements and related notes included elsewhere in this prospectus.
 
     Year ended August 31,
   Nine months
ended
May 31,

     1996
   1997
   1998
   1999
   2000
   2000
   2001
     (in millions)
Income Statement Data:
Revenues:                     
    Revenues before reimbursements    $4,942      $6,275      $8,215      $  9,550      $  9,752      $7,245      $  8,666  
    Reimbursements    768      1,172      1,425      1,529      1,788      1,301      1,475  
    
    
    
    
    
    
    
  
        Revenues    5,710      7,447      9,640       11,079       11,540      8,546      10,141  
Operating expenses:*                     
    Cost of services:*                     
        Cost of services before reimbursable expenses*    2,678      3,470      4,700      5,457      5,486      4,000      4,509  
        Reimbursable expenses    768      1,172      1,425      1,529      1,788      1,301      1,475  
    
    
    
    
    
    
    
  
        Cost of services*    3,446      4,642      6,125      6,986      7,274      5,301      5,984  
    Sales and marketing*    532      611      696      790      883      651      771  
    General and administrative costs*    659      819      1,036      1,271      1,297      936      1,131  
    Reorganization and rebranding costs    —        —        —        —        —        —        777  
    
    
    
    
    
    
    
  
        Total operating expenses*    4,637      6,072      7,857      9,047      9,454      6,888      8,663  
    
    
    
    
    
    
    
  
Operating income*    1,073      1,375      1,783      2,032      2,086      1,658      1,478  
Gain on investments, net    —        —        —        92      573      534      180  
Interest income    —        —        —        60      67      45      59  
Interest expense    (16 )    (19 )    (17 )    (27 )    (24 )    (18 )    (26 )
Other income (expense)    (4 )    4      (6 )    (5 )    51      32      21  
Equity in losses of affiliates    —        —         (1 )    (6 )    (46 )    (9 )    (53 )
    
    
    
    
    
    
    
  
Income before taxes*    1,053      1,360      1,759      2,146      2,707      2,242      1,659  
    Provision for taxes (1)    116      118      74      123      243      194      420  
    
    
    
    
    
    
    
  
Income before cumulative change in accounting*    937      1,242      1,685      2,023      2,464      2,048      1,239  
    Cumulative effect of change in accounting    —        —        —        —        —        —        188  
    
    
    
    
    
    
    
  
Partnership income before partner distributions* (2)    $  937      $1,242      $1,685      $  2,023      $  2,464      $2,048      $  1,427  
    
    
    
    
    
    
    
  
 
   As of August 31,
   As of May 31,
     1996
   1997
   1998
   1999
   2000
   2000
   2001
     (in millions)
Balance Sheet Data:
Cash and cash equivalents    $  438      $  325      $  736      $  1,111      $  1,271      $1,297      $    724  
Working capital    280      175      531      913      1,015      1,023       (1,394 )
Total assets    2,323      2,550      3,704      4,615      5,451      5,491      4,929  
Long-term debt    226      192      157      127      99      127      31  
Total partners’ capital    696      761      1,507      2,208      2,368      2,579      —    
Shareholders’ equity (deficit)    —        —        —        —        —        —        (1,255 )

*
Excludes payments for partner distributions.
(1)
Provision for taxes is not the same as income taxes of a corporation for historical periods. We operated through partnerships in many countries. Therefore, we generally were not subject to income taxes in those countries. Taxes related to income earned by our partnerships were the responsibility of the individual partners. In other countries, we operated through corporations, and in these circumstances we were subject to income taxes.
(2)
Partnership income before partner distributions is not comparable to net income of a corporation similarly determined. Partnership income in historical periods is not executive compensation in the customary sense because partnership income is comprised of distributions of current earnings. Accordingly, compensation and benefits for services rendered by partners have not been reflected as an expense in our historical financial statements.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
        The following discussion and analysis should be read in conjunction with our historical financial statements and related notes included elsewhere in this prospectus as well as our pro forma financial information contained in the section entitled “Pro Forma Financial Information.”
 
        All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “2000” or “fiscal 2000” means the 12-month period that ended on August 31, 2000. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
 
Overview
 
        Accenture is the world’s leading provider of management and technology consulting services and solutions. We have more than 75,000 employees in more than 110 offices in 46 countries delivering to our clients a wide range of consulting, technology and outsourcing services. Our leading position in the management and technology consulting services and solutions markets results from the fact that we have more consulting professionals than any other consulting firm, with more than 57,000 professionals working within our global market units, complemented by more than 8,000 professionals dedicated full time to our service lines. In addition, we have deep industry knowledge in 18 distinct industry groups and broad service offering expertise through our eight service lines. In total, we have more than 75,000 employees who provide global scale and reach through more than 110 offices in 46 countries. Based on our knowledge of our business and the business of our competitors, we believe that no other consulting firm provides as broad a range of management and technology consulting services and solutions to as many industry groups in as many geographic markets as we do.
 
        The results of our operations are affected by the level of economic activity and 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. We are now seeing some evidence of an economic slowdown in some markets, including a reduction in capital expenditures and technology and associated discretionary spending by our clients, particularly in the United States. This has caused a reduction in our growth rate in the Americas and in our Communications & High Tech, Financial Services and Products global market units in the third quarter of this fiscal year as compared with the first half of this fiscal year. Revenues before reimbursements for the third quarter of 2001 for our Communications & High Tech, Financial Services and Products global market units increased by 8%, 15% and 16%, respectively, over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for these market units increased by 27%, 19% and 25%, respectively, over the first half of 2000. Revenues before reimbursements for the third quarter of 2001 for our Americas geographic area increased by 10% over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for this geographic area increased by 27% over the first half of 2000. We expect continued growth in revenues in the fourth quarter of this fiscal year, though at a slower rate of growth than in the third quarter. Our strategy is to anticipate changes in demand for our services and to identify cost-management initiatives in order to manage costs as a percentage of revenues. For example, on June 7, 2001, we announced an initiative to reduce our staff in certain parts of the world, in certain skill groups and in some support positions. We have generally been able to maintain our margins during past periods of volatility, such as the slowdown in technology spending that occurred in anticipation of the Year 2000 events, through similar proactive cost-management programs.
 
        We have operated as a series of related partnerships and corporations under the control of our partners for all historical periods. We will operate in a corporate structure in future periods. As a business, whether in partnership form or in a corporate structure, our profitability is driven by the same factors. Revenues are driven by our partners’ and senior executives’ ability to secure contracts for new engagements and to deliver products 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.
 
        Cost of services is primarily driven by the cost of client service personnel, which consists primarily of compensation and training costs. Cost of services as a percentage of revenues is driven by the productivity of our client service workforce. Chargeability, or utilization, represents the percentage of our professionals’ time spent on billable work. We plan and manage our headcount to meet the anticipated demand for our services. Selling and marketing expense is driven primarily by development of new service offerings, the level of concentration of clients in a particular industry or market, client targeting, image development and brand-recognition activities. General and administrative costs generally correlate with changes in headcount and activity levels in our business.
 
Presentation
 
        Until August 2000, we were associated with Andersen Worldwide. We and Arthur Andersen were two stand-alone business units linked through various agreements between us and Andersen Worldwide, a coordinating entity. Following arbitration proceedings between us, on the one hand, and Andersen Worldwide and Arthur Andersen, on the other, that were completed in August 2000, we ceased to be associated with these organizations. During our association with Andersen Worldwide and Arthur Andersen, we were controlled by our partners, and our historical financial statements have been presented on a consistent basis for all periods. On January 1, 2001, we changed our name to Accenture.
 
        Since we have historically operated as a series of related partnerships and corporations under the control of our partners, our partners generally participated in profits, rather than receive salaries. Therefore, our historical financial statements do not reflect any compensation or benefit costs for services rendered by them. Upon the consummation of our transition to a corporate structure, partner compensation will consist of salary, bonuses and benefits. The pro forma financial statements, which appear elsewhere in this prospectus, include adjustments for compensation and benefits that we would have paid to partners under the compensation program we implemented when we consummated our transition to a corporate structure. Similarly, operating primarily in the form of partnerships has meant that our partners have paid income tax on their share of the partnerships’ income on their individual tax returns. Therefore, our historical financial statements do not reflect the income tax liability that we would have paid as a corporation. Following the consummation of our transition to a corporate structure, we are subject to corporate tax on our income.
 
Segments
 
        Operating segments are defined as components of an enterprise for which separate financial information is regularly available and evaluated by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is the Chief Executive Officer.
 
        Our five reportable operating segments are our global market units, or market units, which are Communications & High Tech, Financial Services, Government, Products and Resources. The operating segments are managed separately because each operating segment represents a strategic business unit that serves different markets. Revenues of the individual global market units vary based on the results of the industry groups that comprise each global market unit. Global market units are managed on the basis of revenues before reimbursements because management believes it is a better indicator of global market unit performance than revenues. Generally, operating expenses for each global market unit have similar characteristics and are subject to the same drivers, pressures and challenges. While most operating expenses apply to all segments, some sales and marketing expenses are lower as a percentage of revenues in industry groups whose client base is concentrated, such as those in Financial Services, and higher in industry groups whose client base is more fragmented, such as those in Products. The discussion and analysis related to each operational expense category applies to all segments, unless otherwise indicated.
 
Revenues
 
        We derive substantially all of our revenues from contracts for management and technology service offerings and solutions that we develop, implement and manage for our clients. Depending on the terms of the contract, revenues 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 contracts are recognized over the contract term 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. Revenues include the cost and 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 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 are included in cost of services.
 
        Each contract has different terms based on the scope, deliverables and complexity of the engagement. While 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 have been moving away from contracts that are priced solely on a time-and-materials basis toward contracts that also include incentives related to costs incurred, benefits produced and our adherence to schedule. 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. Generally, our contracts are terminable by the client on short notice and without penalty. 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.
 
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.
 
        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 special-purpose facilities for outsourcing contracts, 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 are included in cost of services.
 
        Sales and Marketing
 
        Sales and marketing expense consists of expenses related to promotional activities, market development, including costs to develop new service offerings, and image development, including advertising and market research.
 
        General and Administrative Costs
 
        General and administrative costs primarily include costs for non-client service personnel, information systems and office space. Through various cost-management initiatives, we seek to keep general and administrative costs proportionately in line with or below anticipated changes in revenues.
 
        Reorganization and Rebranding Costs
 
        Reorganization and rebranding costs include one-time costs, beginning in September 2000, to rename our organization Accenture and other costs to transition to a corporate structure.
 
Gain on Investments
 
        Gain on investments represents primarily gains and losses on the sales of marketable securities and write-downs on investments in private securities. These fluctuate over time, are not predictable and may not recur. Beginning on September 1, 2000, they also include changes in the fair market value of equity holdings considered to be derivatives in accordance with SFAS 133.
 
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 primarily reflects interest incurred on borrowings.
 
Other Income (Expense)
 
        Other income (expense) consists of currency exchange gains (losses) and the recognition of income from vesting of options for services by our representatives on boards of directors of those companies in which we invest. In general, we earn revenues and incur related costs in the same currency. We hedge significant planned movements of funds between countries, which potentially gives rise to currency exchange gains (losses).
 
Equity in Losses of Affiliates
 
        Equity in losses of affiliates represents our share of the operating results of non-consolidated companies over which we have significant influence.
 
Provision for Taxes
 
        Prior to our transition to a corporate structure, we were generally not subject to income taxes in most countries because we operated in partnership form in those countries. Since taxes related to income earned by the partnerships were the responsibility of the individual partners, our partners reported and paid taxes on their share of the partnerships’ income on their individual tax returns. In other countries, however, we operated in the form of a corporation or were otherwise subject to entity-level taxes on income and withholding taxes. As a result, prior to our transition to a corporate structure, we have paid some entity-level taxes, with the amount varying from year to year depending on the mix of earnings among our worldwide entities. Where applicable, we have accounted for these taxes under the asset and liability method.
 
Partnership Income Before Partner Distributions
 
        Our historical financial statements reflect our organization as a related series of partnerships and corporations under the control of our partners. The income of our partners in historical periods is not executive compensation in the customary sense because partner compensation is comprised of distributions of current earnings, out of which our partners are responsible for their payroll taxes and benefits.
 
        Following our transition to a corporate structure, as part of our annual budgeting process, we set budgeted income amounts for our results and cash compensation to our partners. Since June 1, 2001 we have been paying approximately 83% of budgeted cash compensation to our partners as fixed compensation on a monthly basis during the year. Commencing September 1, 2001 we expect to pay an additional 17% as a bonus to the extent that our results meet the budgeted income amount. If our results exceed the budgeted income amount, we currently intend to distribute a portion of the excess to our partners as an additional bonus.
 
 
Historical Results of Operations
 
        The following table sets forth the unaudited percentage of revenues represented by items in our combined income statements for the periods presented.
     Year ended August 31,
     Nine months
ended
May 31,

     1998
     1999
     2000
     2000
     2001
Revenues:                       
          Revenues before reimbursements    85 %      86 %      85 %      85 %      85 %
          Reimbursements    15        14        15        15        15  
    
     
     
     
     
  
                    Revenues    100        100        100        100        100  
Operating expenses*                       
          Cost of services*:                       
                    Cost of services before reimbursable expenses*    49        49        48        47        44  
                    Reimbursable expenses    15        14        15        15        15  
    
     
     
     
     
  
                    Cost of services*    64        63        63        62        59  
          Sales and marketing*    7        7        8        8        7  
          General and administrative costs*    11        12        11        11        11  
          Reorganization and rebranding costs*                                8  
    
     
     
     
     
  
                    Total operating expenses*    82        82        82        81        85  
Operating income(1)*    18        18        18        19        15  
Gain on investments           1        5        6        2  
Interest income                         1        1  
Interest expense                                (1 )
Other income (expense)                                 
Equity in losses of affiliates                                (1 )
    
     
     
     
     
  
Income before taxes*    18        19        23        26        16  
Provision for taxes    1        1        2        2        4  
    
     
     
     
     
  
Income before accounting change*    17        18        21        24        12  
Cumulative effect of accounting change                                2  
    
     
     
     
     
  
Partnership income before partner distributions*    17 %      18 %      21 %      24 %      14 %
    
     
     
     
     
  

 *
Excludes payments for partner distributions.
(1)
Operating income as a percentage of revenues before reimbursements was 22%, 21%, 21%, 23% and 17% for the years ended August 31, 1998, 1999 and 2000 and for the nine months ended May 31, 2000 and 2001, respectively.
 
        We provide services through five global market units. The following table provides unaudited financial information for each of these market units.
 
       Year ended August 31,
     Nine months ended
May 31,

       1998
     1999
     2000
     2000
     2001
       (in millions, except for percentages)
Revenues:                         
          Communications & High Tech      $1,903        $  2,499        $  2,806        $2,061        $  2,482  
          Financial Services      2,405        2,737        2,542        1,898        2,230  
          Government      547        777        797        585        728  
          Products      1,576        1,664        1,891        1,403        1,707  
          Resources      1,702        1,812        1,661        1,251        1,457  
          Other      82        61        55        47        62  
     
     
     
     
     
  
                    Total revenues before reimbursements      8,215        9,550        9,752        7,245        8,666  
          Reimbursements      1,425        1,529        1,788        1,301        1,475  
     
     
     
     
     
  
                    Total      $9,640        $11,079        $11,540        $8,546        $10,141  
     
     
     
     
     
  
Revenues as a percentage of total:                             
          Communications & High Tech      19 %      22 %      25 %      24 %      24 %
          Financial Services      25        25        22        22        22  
          Government      6        7        7        7        7  
          Products      16        15        16        16        17  
          Resources      18        16        14        15        14  
          Other      1        1        1        1        1  
     
     
     
     
     
  
                    Total revenues before reimbursements      85        86        85        85        85  
          Reimbursements      15        14        15        15        15  
     
     
     
     
     
  
                    Total      100 %      100 %      100 %      100 %      100 %
     
     
     
     
     
  
Operating Income:                             
          Communications & High Tech      $  346        $    532        $    638        $  499        $    388  
          Financial Services      681        814        653        513        480  
          Government      20        94        71        57        56  
          Products      350        250        390        318        281  
          Resources      276        267        249        201        192  
          Other      110        75        85        70        81  
     
     
     
     
     
  
                    Total      $1,783        $  2,032        $  2,086        $1,658        $  1,478  
     
     
     
     
     
  
Operating Income as a percentage of total:                             
          Communications & High Tech      19 %      26 %      31 %      30 %      26 %
          Financial Services      38        40        31        31        32  
          Government      1        5        3        4        4  
          Products      20        12        19        19        19  
          Resources      16        13        12        12        13  
          Other      6        4        4        4        6  
     
     
     
     
     
  
                    Total      100 %      100 %      100 %      100 %      100 %
     
     
     
     
     
  
Operating Income as a percentage of total
     revenues before reimbursements:
                            
          Communications & High Tech      18 %      21 %      23 %      24 %      16 %
          Financial Services      28        30        26        27        22  
          Government      4        12        9        10        8  
          Products      22        15        21        23        16  
          Resources      16        15        15        16        13  
          Other      n/m        n/m        n/m        n/m        n/m  
     
     
     
     
     
  
                    Total revenues before reimbursements      22 %      21 %      21 %      23 %      17 %
     
     
     
     
     
  
Operating Income as a percentage of revenues      18 %      18 %      18 %      19 %      15 %
     
     
     
     
     
  

n/m = not meaningful
 
Nine Months Ended May 31, 2001 Compared to Nine Months Ended May 31, 2000
 
        Revenues
 
        Revenues for the nine months ended May 31, 2001 were $10,142 million, an increase of $1,596 million, or 19%, over the nine months ended May 31, 2000. Revenues before reimbursements for the nine months ended May 31, 2001 were $8,666 million, an increase of $1,421 million, or 20%, over the nine months ended May 31, 2000. In local currency terms, revenues before reimbursements grew by 26% in the nine months ended May 31, 2001 over the nine months ended May 31, 2000.
 
        In the nine months ended May 31, 2001, our revenues grew significantly, continuing a trend that began in the second half of fiscal 2000 as our clients began to focus on new transformation and implementation initiatives after Year 2000 disruptions proved to be minimal. In addition, demand for our services grew as clients began to explore Web-enablement and electronic commerce strategies and solutions both in the business-to-business and business-to-consumer areas. We believe that this strong revenue growth is the result of our rapid response to changes in the marketplace and our creation and refinement of relevant service offerings. In addition, by focusing on the re-training of our client service personnel during the Year 2000 slowdown, we positioned ourselves to take advantage of the growth opportunities in these new markets. We achieved this strong revenue growth in the nine months ended May 31, 2001 despite the difficult economic conditions that many of our clients’ industries are experiencing. We are now seeing some evidence of an economic slowdown in some markets, including a reduction in capital expenditures and technology and associated discretionary spending by our clients, particularly in the Americas. This has caused a reduction in our growth rate in the Americas and in our Communications & High Tech, Financial Services and Products global market units in the third quarter of this fiscal year as compared with the first half of this fiscal year. Revenues before reimbursements for the third quarter of 2001 for our Communications & High Tech, Financial Services and Products global market units increased by 8%, 15% and 16%, respectively, over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for these market units increased by 27%, 19% and 25%, respectively, over the first half of 2000. Revenues before reimbursements for the third quarter of 2001 for our Americas geographic area increased by 10% over the third quarter of 2000, while revenues before reimbursements for the first half of 2001 for this geographic area increased by 27% over the first half of 2000. We expect continued growth in revenues in the fourth quarter of this fiscal year, though at a slower rate of growth than in the third quarter. We believe we can also slow the growth of our costs and defer expenditures for discretionary items. For example, on June 7, 2001, we announced an initiative to reduce our staff in certain parts of the world, in certain skill groups and in some support positions.
 
        Our Communications & High Tech market unit achieved revenues before reimbursements of $2,482 million in the nine months ended May 31, 2001, an increase of 20% over the nine months ended May 31, 2000, primarily due to strong growth in our Communications and Electronics & High Tech industry groups in North America. Operations in Europe and Latin America also experienced significant growth. Our Financial Services market unit achieved revenues before reimbursements of $2,230 million in the nine months ended May 31, 2001, an increase of 18% over the nine months ended May 31, 2000, primarily due to strong growth in our Banking industry group in Europe and North America. Our Products market unit achieved revenues before reimbursements of $1,708 million in the nine months ended May 31, 2001, an increase of 22% over the nine months ended May 31, 2000, as the result of strong growth in our Retail, Consumer Goods & Services and Transportation & Travel Services industry groups in Europe. Our Resources market unit achieved revenues before reimbursements of $1,457 million in the nine months ended May 31, 2001, an increase of 16% over the nine months ended May 31, 2000, as the result of strong growth in the Chemicals, Forest Products and Metals & Mining industry groups in North America. Our Government market unit achieved revenues before reimbursements of $728 million in the nine months ended May 31, 2001, an increase of 24% over the nine months ended May 31, 2000, primarily driven by strong growth in Canada, the United States and the United Kingdom.
 
        Operating Expenses
 
        Operating expenses in the nine months ended May 31, 2001 were $8,664 million, an increase of $1,776 million, or 26%, over the nine months ended May 31, 2000, and an increase as a percentage of revenues from 81% in the nine months ended May 31, 2000 to 85% in the nine months ended May 31, 2001. Operating expenses, excluding one-time rebranding and reorganization costs, were $7,887 million for the nine months ended May 31, 2001, or a 15% increase over the nine months ended May 31, 2000 and a decrease as a percentage of revenues from 81% in the nine months ended May 31, 2000 to 78% in the nine months ended May 31, 2001.
 
        We continue to implement long-term and short-term cost-management initiatives aimed at keeping overall growth in operating expenses less than the growth in revenues. The long-term initiatives focus on global reductions in infrastructure costs. In addition, the costs of delivering training have been reduced by moving toward Web-enabled and other lower-cost distribution methods. The short-term initiatives focus on reducing variable costs, such as headcount in select administrative areas, and limiting travel and meeting costs.
 
        Cost of Services
 
        Cost of services was $5,985 million in the nine months ended May 31, 2001, an increase of $684 million, or 13%, over the nine months ended May 31, 2000, and a decrease as a percentage of revenues from 62% in the nine months ended May 31, 2000 to 59% in the nine months ended May 31, 2001. Cost of services before reimbursable expenses was $4,509 million in the nine months ended May 31, 2001, an increase of $510 million, or 13%, over the nine months ended May 31, 2000 and a decrease as a percentage of revenues before reimbursements from 55% in the nine months ended May 31, 2000 to 52% in the nine months ended May 31, 2001. This decrease as a percentage of revenues and revenues before reimbursements resulted from increases in chargeability due to increased demand for our services and lower employee compensation costs resulting from the promotion of 1,286 employees to partner effective September 1, 2000. The increase in partner admissions was designed to incentivize our professionals at an earlier stage in their careers with us.
 
        Sales and Marketing
 
        Sales and marketing expense was $771 million in the nine months ended May 31, 2001, an increase of $120 million, or 18%, over the nine months ended May 31, 2000, and a decrease as a percentage of revenues from 8% in the nine months ended May 31, 2000 to 7% in the nine months ended May 31, 2001. The 2001 percentage is consistent with 1998 and 1999 levels. The percentage in 2000 was slightly higher due to higher than normal business development and market-development activities following the Year 2000 slowdown and the reduction in compensation costs related to the promotion of 1,286 employees to partner effective September 1, 2000.
 
        General and Administrative Costs
 
        General and administrative costs were $1,131 million in the nine months ended May 31, 2001, an increase of $195 million, or 21%, over the nine months ended May 31, 2000, and remained constant as a percentage of revenues at 11% in the nine months ended May 31, 2000 and in the nine months ended May 31, 2001. Our short-term cost-management initiatives in this period of significant growth in revenues enabled us to maintain a constant level of general and administrative costs as a percentage of revenues.
 
        Reorganization and Rebranding Costs
 
        Reorganization and rebranding costs were $777 million, or 8% of revenues, in the nine months ended May 31, 2001, and included amortization of intangible assets, acquired in connection with the Memorandum of Understanding with Andersen Worldwide, of $138 million. The remaining $19 million of intangible assets will be amortized in the fourth quarter of 2001. Reorganization and rebranding costs, which resulted from changing our name and other costs relating to our transition to a corporate structure, are expected to continue to be incurred at similar levels during the remainder of 2001.
 
        Operating Income
 
        Operating income was $1,478 million in the nine months ended May 31, 2001, a decrease of $181 million, or 11%, over the nine months ended May 31, 2000, and a decrease as a percentage of revenues from 19% in the nine months ended May 31, 2000 to 15% in the nine months ended May 31, 2001. Operating income decreased as a percentage of revenues before reimbursements from 23% in the nine months ended May 31, 2000 to 17% in the nine months ended May 31, 2001. Operating income, excluding one-time rebranding and reorganization costs, was $2,255 million for the nine months ended May 31, 2001, an increase of $597 million, or a 36% increase over the nine months ended May 31, 2000 and an increase as a percentage of revenues from 19% in the nine months ended May 31, 2000 to 22% in the nine months ended May 31, 2001. Operating income, excluding one-time rebranding and reorganization costs, increased as a percentage of revenues before reimbursements from 23% in the nine months ended May 31, 2000 to 26% in the nine months ended May 31, 2001.
 
        Gain on Investments
 
        Gain on investments totaled $180 million for the nine months ended May 31, 2001, compared to a gain of $534 million for the nine months ended May 31, 2000. This gain in 2001 represents the sale of $382 million of a marketable security purchased in 1995 and $10 million from the sale of other marketable securities, net of other than temporary impairment investment write-downs of $81 million, and unrealized investment losses recognized according to SFAS 133 of $131 million. Other than temporary impairment write-downs consisted of $19 million in publicly-traded equity securities and $62 million in privately-traded equity securities. The write-downs relate to investments in Internet or e-commerce companies where the market value has been less than our cost for an extended time period, or the issuer has experienced significant financial declines or difficulties in raising capital to continue operations.
 
        Interest Income
 
        Interest income was $60 million for the nine months ended May 31, 2001, an increase of $14 million, or 31%, over the nine months ended May 31, 2000. The increase resulted primarily from the investment of cash generated by the sale of a portion of a marketable security purchased in 1995 and an increase in the deferral of partner distributions.
 
        Interest Expense
 
        Interest expense was $25 million for the nine months ended May 31, 2001, an increase of $7 million, or 40%, over the nine months ended May 31, 2000. The increase resulted primarily from the increase in short-term bank borrowings.
 
        Other Income (Expense)
 
        Other income was $21 million in the nine months ended May 31, 2001, a decrease of $11 million from the nine months ended May 31, 2000.
 
        Equity in Losses of Affiliates
 
        Equity in losses of affiliates was a $53 million loss in the nine months ended May 31, 2001, compared to a $9 million loss in the nine months ended May 31, 2000. This increase was primarily due to $38 million in losses related to our investment in Avanade, a company we jointly own with Microsoft that focuses on large-scale technology integration surrounding Microsoft’s enterprise platform.
 
        Provision for Taxes
 
        Taxes were $420 million in the nine months ended May 31, 2001, an increase of $226 million over the nine months ended May 31, 2000. This increase was due to tax costs of our transition to a corporate structure, net of an adjustment for deferred taxes, and an increase in taxable income in some of our entities that were subject to entity-level tax.
 
        Cumulative Effect of Accounting Change
 
        The adoption of SFAS 133 resulted in cumulative income of $188 million on September 1, 2000, which represents the cumulative unrealized gains resulting from changes in the fair market value of equity holdings considered to be derivatives by that statement.
 
Year Ended August 31, 2000 Compared to Year Ended August 31, 1999
 
        Revenues
 
        Revenues for 2000 were $11,540 million, an increase of $461 million, or 4%, over 1999. Revenues before reimbursements for 2000 were $9,752 million, an increase of $202 million, or 2%, over 1999. Exchange rate fluctuations, specifically with respect to the euro, negatively affected revenue growth as measured in U.S. dollars. In local currency terms, revenues before reimbursements grew by 6% over 1999. Our revenue growth was achieved in the face of a challenging economic environment, which began in the second half of 1999 and was primarily related to Year 2000 events. Specifically, we experienced a slowdown in information technology spending by large companies as they completed large enterprise business systems installations in anticipation of the Year 2000. In addition, there was reluctance by large companies to commit to major new transformation and implementation projects until the impact of Year 2000 concerns was fully understood. However, at the same time, we experienced an increase in demand in the electronic commerce area. Accordingly, we focused on developing capabilities and new service offerings to meet the growing opportunities in these new areas. We retrained our workforce to maintain market relevance to meet the demands of our clients in the emerging new economy. During the second half of 2000, following the realization by our clients that Year 2000 disruptions were minimal, we experienced increased demand for our services, which led to stronger revenue growth beginning in the third quarter. Specifically, revenue growth was (1%), 0%, 7% and 11% in the first through fourth quarters of the year over the corresponding quarters in the previous year.
 
        Our Communications & High Tech market unit achieved revenues before reimbursements of $2,807 million in 2000, an increase of 12% over 1999, primarily due to growth in Europe and Asia, which was partially offset by slower growth in our North American operations because of the Year 2000-related slowdown. Our Financial Services market unit achieved revenues before reimbursements of $2,542 million in 2000, a decrease of 7% from 1999, primarily driven by decreasing levels of business activity in North America as a result of clients focusing on Year 2000 concerns, as well as the effects of an unfavorable interest rate environment and reduced client merger activity. Our Products market unit achieved revenues before reimbursements of $1,891 million in 2000, an increase of 14% over 1999, primarily driven by growth in North America from the Retail and Transportation & Travel Services industry groups, as well as additional growth in the Retail industry group in Europe. Our Resources market unit achieved revenues before reimbursements of $1,661 million in 2000, a decrease of 8% from 1999, primarily as the result of delayed merger activity as several proposed mergers were delayed by regulatory concerns, and the completion of a number of large enterprise resource planning implementation projects before Year 2000. Our Government market unit achieved revenues before reimbursements of $797 million in 2000, an increase of 3% over 1999. The 2000 increase was lower than in 1999, primarily as a result of government clients postponing large implementation projects until Year 2000 concerns were resolved.
 
        Operating Expenses
 
        Operating expenses in 2000 were $9,454 million, an increase of $406 million, or 4%, over 1999, and remained constant as a percentage of revenues at 82% in 1999 and 2000. In anticipation of slower growth, we formed a special task force in the second half of 1999 to identify cost drivers, raise cost consciousness and reduce non-payroll cost structures, the results of which were reflected in cost savings during 2000. In 2000, we began a training initiative that focused on building electronic commerce skills and knowledge quickly. The advent of electronic commerce also facilitated a move from traditional classroom training toward Web-enabled distributed training that is designed to deliver the same or better-quality training in fewer hours at lower cost. We expect this move toward Web-enabled and other distributed training to continue.
 
        Cost of Services
 
        Cost of services was $7,274 million in 2000, an increase of $288 million, or 4%, over 1999, and remained constant as a percentage of revenues at 63% in 1999 and 2000. Cost of services before reimbursable expenses was $5,486 million in 2000, an increase of $30 million, or 1%, over 1999 and a decrease as a percentage of revenues before reimbursements from 57% in 1999 to 56% in 2000. We were able to maintain overall cost of services as a percentage of revenues and revenues before reimbursements at relatively constant levels through periods of slow growth in the first half of 2000, followed by periods of accelerated growth in the second half of 2000.
 
        Sales and Marketing
 
        Sales and marketing expense was $883 million in 2000, an increase of $93 million, or 12%, over 1999 and an increase as a percentage of revenues from 7% in 1999 to 8% in 2000. The increase was primarily related to our employees spending larger portions of their time on business- and market-development activities coupled with an increase in advertising to communicate our electronic commerce capabilities to existing and potential clients. The increased business- and market-development activities were directed toward increasing demand for our services and products after the Year 2000 slowdown.
 
        General and Administrative Costs
 
        General and administrative costs were $1,296 million in 2000, an increase of $25 million, or 2%, from 1999 and a decrease as a percentage of revenues from 12% in 1999 to 11% in 2000. As signs of slowing demand became apparent in the first half of 2000, we launched initiatives to better manage our general and administrative costs, including controlling facilities, services and support costs. This reduction as a percentage of revenues was due in part to the elimination of temporary duplicate costs incurred in 1999 associated with the transition to us of internal support systems and other functions previously shared with Andersen Worldwide.
 
        Operating Income
 
        Operating income was $2,086 million in 2000, an increase of $54 million, or 3%, over 1999, and remained constant as a percentage of revenues at 18% in 1999 and 2000. Operating income remained constant as a percentage of revenues before reimbursements at 21% in 1999 and 2000.
 
        Gain on Investments
 
        Gain on investments totaled $573 million for 2000, compared to a gain of $93 million in 1999. $476 million of gain on investments were related to the sale of a portion of our investment in a marketable security purchased in 1995.
 
        Interest Income
 
        Interest income was $67 million in 2000, an increase of $7 million, or 12%, over 1999. The increase in interest income in 2000 resulted primarily from an increase in our cash balance, which was generated by the sale of a portion of our investment in a marketable security purchased in 1995.
 
        Other Income (Expense)
 
        Other income was $51 million in 2000, an increase of $56 million over 1999. This increase was primarily attributable to the recognition of income from vesting of options for services by our representatives on boards of directors of those companies in which we invest, coupled with income resulting from foreign exchange translations.
 
        Equity in Losses of Affiliates
 
        Equity in losses of affiliates was a loss of $47 million in 2000 compared to a loss of $6 million in 1999, primarily due to a loss of $32 million related to our investment in Avanade.
 
        Provision for Taxes
 
        Taxes were $243 million in 2000, an increase of $120 million over 1999. This increase was due to increased taxable income in some of our entities that were subject to entity-level tax.
 
Year Ended August 31, 1999 Compared to Year Ended August 31, 1998
 
        Revenues
 
        Revenues for 1999 were $11,079 million, an increase of $1,440 million, or 15%, over 1998. Revenues before reimbursements for 1999 were $9,550 million, an increase of $1,335 million, or 16%, over 1998. In local currency terms, revenue before reimbursements grew by 17% over 1998. During the first half of 1999, revenue growth was primarily a result of continued increases in large-scale enterprise business systems solutions implementations, which had also fueled the strong growth in 1998. During the second half of 1999, a portion of the demand for our services moved from large-scale, complex transformation and implementation projects to scalable electronic commerce solutions. In addition, our clients were increasingly focusing on Year 2000 issues, which delayed large-scale implementation projects.
 
        Our Communications & High Tech market unit achieved revenues before reimbursements of $2,498 million in 1999, an increase of 31% over 1998, primarily due to rapid growth in the communications and electronics and high tech industries which presented new challenges for our clients, thus increasing the demand for our services. The most significant increase was experienced in Europe, which had revenue before reimbursements growth of 60% over 1998, primarily fueled by robust growth in telecommunications outsourcing work. Our Financial Services market unit achieved revenues before reimbursements of $2,736 million in 1999, an increase of 14% over 1998, primarily as a result of strength in Europe offset by information technology spending reductions by several clients in anticipation of Year 2000 concerns. Our Products market unit achieved revenues before reimbursements of $1,664 million in 1999, an increase of 6% over 1998, primarily due to strong growth from the Pharmaceuticals & Medical Products industry group, which was partially offset by slower growth in North America in the second half of the year, particularly due to Year 2000 concerns in the Automotive and Industrial Equipment industry groups. Our Resources market unit achieved revenues before reimbursements of $1,812 million in 1999, an increase of 7% over 1998, primarily as a result of growth in the Utilities industry group, which was partially offset by slowdowns from the Forest Products and Metals & Mining industry groups, as these clients faced challenging economic conditions with depressed oil and base metal prices. Our Government market unit achieved revenues before reimbursements of $777 million in 1999, an increase of 42% over 1999, primarily as the result of strong growth in the global postal marketplace as well as a significant expansion of work undertaken for the United States federal government.
 
        Operating Expenses
 
        Operating expenses in 1999 were $9,048 million, an increase of $1,191 million, or 15%, over 1998, and remained constant as a percentage of revenues at 82% in 1998 and 1999. In March 1999, as a result of changes occurring in the marketplace and the slowdown in demand for large-scale systems implementation, we implemented cost-saving initiatives that resulted in a cost level consistent with the anticipated lower growth in demand. In addition, due to the increased demand for electronic commerce services and products, we began to retrain client service personnel to be better equipped to meet the change in the nature of services being demanded as the market moved from requirements for enterprise business systems skills to electronic commerce skills.
 
        Cost of Services
 
        Cost of services was $6,986 million in 1999, an increase of $861 million, or 14%, over 1998, and a decrease as a percentage of revenues from 64% in 1998 to 63% in 1999. Cost of services before reimbursable expenses was $5,457 million in 1999, an increase of $756 million, or 16%, over 1998 and remained constant as a percentage of revenues before reimbursements at 57% in 1998 and 1999.
 
        Sales and Marketing
 
        Sales and marketing expense was $790 million in 1999, an increase of $94 million, or 14%, over 1998, and remained constant as a percentage of revenues at 7% in 1998 and 1999. Included in sales and marketing expense was a comprehensive marketing and identity initiative that we undertook at the beginning of 1999. We launched a new signature trademark and visual identity based on our former name and increased related media efforts. This required the worldwide reissuing of all our communications, marketing and media materials. We also made significant investments in new electronic commerce-related service offerings to establish a leadership position in this emerging market space.
 
        General and Administrative Costs
 
        General and administrative costs were $1,271 million in 1999, an increase of $236 million, or 23%, over 1998, and an increase as a percentage of revenues from 11% in 1998 to 12% in 1999. The major driver of this increase was the transition of the provision of internal support services from Andersen Worldwide to us. As a result, we established separate financial systems and support, data and voice networks, and treasury management, credit and partnership accounting functions that were previously handled by Andersen Worldwide. During the transition period, we temporarily incurred duplicate costs for these services from Andersen Worldwide.
 
        Operating Income
 
        Operating income was $2,032 million in 1999, an increase of $249 million, or 14%, over 1998, and remained constant as a percentage of revenues at 18% in 1998 and 1999. Operating income decreased as a percentage of revenues before reimbursements from 22% in 1998 to 21% in 1999.
 
        Gain on Investments
 
        Gain on investments totaled $93 million for 1999, primarily related to the sale of a portion of our investment in a marketable security purchased in 1995.
 
        Interest Income
 
        Interest income was $60 million in 1999. In 1998, Andersen Worldwide managed all interest income and expense activities on behalf of Accenture and Arthur Andersen and the interest cost was allocated on a net basis by a formula based on net assets employed and resulted in no interest income being allocated to Accenture.
 
        Other Income (Expense)
 
        Other expense was an expense of $5 million in 1999 and an expense of $6 million in 1998.
 
        Equity in Losses of Affiliates
 
        Equity in losses of affiliates was a loss of $6 million in 1999 compared to a loss of $1 million in 1998.
 
        Provision for Taxes
 
        Taxes were $123 million in 1999, an increase of $49 million over 1998. This increase was due to increased taxable income in some of our entities that were subject to entity-level tax.
 
Quarterly Results
 
        The following tables present unaudited quarterly financial information for each of our last seven fiscal quarters on a historical basis. We believe the quarterly information contains all adjustments, consisting only of normal recurring adjustments, necessary to fairly present this information. As a professional services organization, we anticipate and respond to demand from our clients. Accordingly, we have limited control over the timing and circumstances under which our services are provided. Typically, we show slight increases in our first-quarter revenues as a result of billing rate increases and the addition of new hires. We typically experience minor declines in revenues for the second and fourth quarters because of an increase in vacation and holiday hours in those quarters. For these and other reasons, we can experience variability in our operating results from quarter to quarter. The operating results for any quarter are not necessarily indicative of the results for any future period.
 
     Three months ended
     November 30,
1999

   February 29,
2000

   May 31,
2000

   August 31,
2000

   November 30,
2000

   February 28,
2001

   May 31,
2001

     (in millions)
Revenues:                                                                                                                
     Revenues before
          reimbursements
   $2,412      $2,272      $2561      $2,507      $2,831      $2,882      $2,953  
     Reimbursements    364      436      501      487      407      502      566  
    
    
    
    
    
    
    
  
          Revenues    2,776      2,708      3,062      2,994      3,238      3,384      3,519  
Operating expenses*                     
     Cost of services:*   
          Cost of services before
               reimbursable
               expenses*
   1,356      1,304      1,340      1,487      1,384      1,560      1,566  
          Reimbursable
               expenses
   364      436      501      487      407      502      566  
    
    
    
    
    
    
    
  
          Cost of services*    1,720      1,740      1,841      1,974      1,791      2,062      2,132  
     Sales and marketing*    199      222      230      232      202      251      318  
     General and
          administrative costs*
   318      322      296      360      376      389      365  
     Reorganization and
          rebranding costs*
   —        —        —        —        30      159      588  
    
    
    
    
    
    
    
  
               Total operating
                    expenses*
   2,237      2,284      2,367      2,566      2,399      2,861      3,403  
    
    
    
    
    
    
    
  
Operating income*    539      424      695      428      839      523      116  
Gain (loss) on investments,
     net
   68      200      266      39      218      (30 )    (9 )
Interest income    14      13      18      22      23      20      17  
Interest expense    (7 )    (5 )    (6 )    (6 )    (4 )    (6 )    (16 )
Other income (expense)    6      14      12      19      7      17      (3 )
Equity in losses of
     affiliates
   (4 )    (3 )    (2 )    (37 )    (20 )    (21 )    (11 )
    
    
    
    
    
    
    
  
Income (loss) before
     taxes*
   616      643      983      465      1,063      503      94  
Provision for taxes    42      71      81      49      53      83      285  
    
    
    
    
    
    
    
  
Income before cumulative
     change in accounting*
   574      572      902      416      1,010      420      (191 )
Cumulative effect of
     accounting change
   —        —        —        —        188      —        —    
    
    
    
    
    
    
    
  
Partnership income (loss)
     before partner
     distributions*
   $  574      $  572      $  902      $  416      $1,198      $  420      $  (191 )
    
    
    
    
    
    
    
  

Excludes payments for partner distributions.
 
        Revenues in the second quarter of 2000 were seasonably down from the first quarter, as were fourth-quarter revenues compared to third-quarter revenues. However, the decrease in revenues during the fourth quarter of 2000 was not as pronounced as would normally be the case because of the increase in demand that occurred after Year 2000 concerns proved to be minimal. Similarly, while revenues in the first quarter of 2001 were seasonally up, revenues in the second quarter of 2001 were slightly above the first quarter as strong growth overcame the typical seasonal decline. The increase in revenues in the third quarter of 2001 was seasonably up over the second quarter but less than would be typical due to the strong growth experienced in the second quarter and the beginning of a slowdown in demand experienced in the third quarter.
 
        Cost of services as a percentage of revenues in the first through fourth quarters of 2000 and the first three quarters of 2001 was 62%, 64%, 60%, 66%, 55%, 61% and 61%, respectively. The decrease in cost of services as a percentage of revenues in the third quarter of 2000 resulted from significantly higher chargeability and a higher number of workdays in the quarter.
 
        The increase in cost of services as a percentage of revenues in the fourth quarter of 2000 as compared to the prior three quarters resulted from increased vacation time and fewer available workdays in the quarter. In addition, subcontractor, training, legal and other costs were higher than in prior quarters.
 
        The decrease in cost of services as a percentage of revenues in the first and second quarters of 2001 from the first and second quarters of 2000 resulted from increased chargeability and lower compensation costs resulting from the promotion of 1,286 employees to partner effective September 1, 2000. This lower compensation cost also resulted in lower sales and marketing expense in the first and second quarters of 2001, although in the second quarter of 2001 additional spending on new strategy-development initiatives, particularly in the Communications & High Tech market unit, partially offset these reductions. The increase in cost of services from 55% of revenues in the first quarter of 2001 to 61% in the second quarter of 2001 resulted primarily from lower chargeability levels as we increased headcount to meet increased client service demand. The increase in cost of services as a percentage of revenues in the third quarter of 2001 over the third quarter of 2000 is primarily the result of lower chargeability, partially offset by lower employee compensation costs resulting from the promotion of 1,286 employees to partner effective September 1, 2000.
 
        In the first quarter of 2001, we also began incurring one-time costs to rebrand our organization as required by the arbitration and other costs related to our transition to a corporate structure. These non-recurring costs totalled $30 million, $159 million and $588 million in the first, second and third quarters of 2001, respectively.
 
        Our strategy is to limit the growth in general and administrative costs below the growth in revenues through cost-management initiatives.
 
        Operating income in the second quarter of 2001 was $523 million, a 23% increase over the second quarter of 2000. Excluding one-time rebranding and reorganization costs, operating income would have been $682 million, or a 61% increase over the second quarter of 2000. Partnership income before partner distributions was $420 million in the second quarter of 2001, or a 27% decrease from the second quarter of 2000. Excluding these one-time rebranding and reorganization costs and gains (losses) on investments, partnership income before partner distributions would have been $609 million, or a 64% increase over the second quarter of 2000.
 
        Operating income in the third quarter of 2001 was $116 million, an 83% decrease from the third quarter of 2000. Excluding one-time rebranding and reorganization costs, operating income would have been $703 million, a 1% increase over the third quarter of 2000. Partnership income before partner distributions was a loss of $191 million in the third quarter of 2001 compared to income of $902 million in the third quarter of 2000. Excluding one-time rebranding and reorganization costs, gains (losses) on investments and a one-time restructuring income tax charge of $222 million in 2001, partnership income before partner distributions would have been $628 million, or a 1% decrease from the third quarter of 2000.
 
        The adoption of SFAS 133 resulted in cumulative income of $188 million on September 1, 2000, which represents the cumulative unrealized gains resulting from changes in the fair market value of equity holdings considered to be derivatives under SFAS 133.
 
        We expect to record a substantial net loss in the fiscal quarter ended August 31, 2001, primarily as a result of the net nonrecurring compensation cost of approximately $1,002 million resulting from the grant of restricted share units in connection with the offering.
 
Liquidity and Capital Resources
 
        We have historically relied on cash flow from operations, partner capital contributions and bank credit facilities to satisfy our liquidity and capital requirements. However, each year a portion of the partner distributions have been made on a deferred basis, which significantly strengthened our working capital and limited our external borrowings. In the future, we may need to raise additional funds through public or private debt or equity financings in order to:
 
Ÿ
take advantage of opportunities, including more rapid expansion;
 
Ÿ
acquire complementary businesses or technologies;
 
Ÿ
develop new services and products; or
 
Ÿ
respond to competitive pressures.
 
        Our balance of cash and cash equivalents was $724 million at May 31, 2001. The balance of cash and cash equivalents was $1,111 million at August 31, 1999 and $1,271 million at August 31, 2000, an increase of $160 million, or 14%, due to increased year-over-year earnings, including earnings from the sale of marketable securities, which was partially offset by increases in distributions to partners, purchases of equity investments and escrow of amounts due pending the final resolution of the arbitration with Andersen Worldwide and Arthur Andersen. In addition, our market units continued to effectively manage the timing of billings to and collections from clients, resulting in a relatively low net investment in the working capital components most directly affected by our client service operations: receivables from clients, unbilled services and deferred revenue.
 
        Net cash provided by operating activities was $1,994 million for the nine months ended May 31, 2001, an increase of $402 million from the nine months ended May 31, 2000. Net cash used by investing activities was $233 million for the nine months ended May 31, 2001, an increase of $496 million from the nine months ended May 31, 2000, as proceeds from the sale of investments of $422 million were offset by purchases of new investments and by capital expenditures. Net cash used in financing activities was $2,301 million for the nine months ended May 31, 2001, an increase of $673 million from the nine months ended May 31, 2000. This included normal distributions to partners of $1,950 million, repayment of partners’ capital totaling $524 million, and a payment of $314 million to Andersen Worldwide and Arthur Andersen as partial payment of amounts due related to the final resolution of the arbitration, offset in part by a net increase in proceeds from short-term bank borrowings of $360 million. See “Certain Relationships and Related Transactions—Relationship with Andersen Worldwide and Arthur Andersen.”
 
        Net cash provided by operating activities was $2,131 million for 2000, a decrease of $63 million from 1999. Net cash provided by investing activities was $107 million for 2000, an increase of $337 million over 1999 as proceeds from the sales of investments of $576 million were partially offset by purchases of new investments and by capital expenditures. Net cash used in financing activities was $2,034 million for 2000, an increase of $464 million over 1999 due primarily to an increase in partner distributions and cash transfers into an escrow account pending final resolution of the arbitration. Until August 7, 2000, the date the arbitration award became effective, Andersen Worldwide, as agent for the Accenture and Arthur Andersen member firms, facilitated the cost-sharing provisions of various member firm agreements between the individual Accenture and Arthur Andersen member firms. Amounts due to Andersen Worldwide under these member firm agreements were $233 million, $280 million and $314 million in 1998, 1999 and 2000, respectively.
 
        The balance of paid-in capital was $352 million at August 31, 1999, $403 million at August 31, 2000, and $0 at May 31, 2001. All paid-in capital was returned to partners as of May 31, 2001.
 
        Since we have historically deferred the distribution of a portion of our partners’ current-year earnings into the subsequent fiscal year, these earnings have been available for a period of time to meet liquidity and working capital requirements. These distributable earnings, temporarily retained and distributed in the subsequent fiscal year, totaled $896 million, $1,130 million and $1,306 million at August 31, 1999, 2000 and May 31, 2001, respectively. At May 31, 2001, we reclassified the final distributable earnings from the capital accounts to current liabilities. We expect to distribute to our partners any pre-incorporation earnings undistributed as of the date of the consummation of our transition to a corporate structure in one or more installments by December 31, 2001.
 
        On August 31, 1998, we entered into a $450 million unsecured multi-currency revolving credit facility with a syndicate of banks led by Morgan Guaranty Trust Company of New York for general working capital purposes. The syndicated facility, available through August 31, 2003, provides committed financing and/or letters of credit in the Group of Seven currencies and bid option financing in a number of other currencies. Committed financing is provided at the prime rate or at the London interbank offered rate plus a spread, which varies according to a pricing grid, and is subject to annual commitment fees. At May 31, 2001, we had $338 million in borrowings and $19 million in letters of credit outstanding under the syndicated facility.
 
        Our syndicated facility requires 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 maximum debt to cash flow ratio of one to one. We are in compliance with the terms of this facility. We have amended the syndicated facility and our other credit facilities in connection with our transition to a corporate structure to maintain our existing credit capacity. As a corporation, we expect to have greater access to debt capital markets and may replace or supplement current credit capacity with other sources of debt financing.
 
        Additionally, on June 22, 2001 we entered into a $420 million unsecured 364-day revolving credit facility with a syndicate of banks led by Bank of America, N.A. for general working capital, capital expenditures and other business purposes. The terms of the Bank of America facility are substantially similar to the terms of the Morgan Guaranty facility.
 
        We maintain four separate bilateral, uncommitted, unsecured multi-currency revolving credit facilities. As of May 31, 2001, these facilities provided for up to $369 million of local currency financing in countries that cannot readily access our facilities. We also maintain local guaranteed and non-guaranteed lines of credit. As of May 31, 2001, amounts available under these facilities totaled $299 million. At May 31, 2001, we had $190 million outstanding under these various facilities. Interest rate terms on the bilateral revolving facilities and local lines of credit are at market rates prevailing in the relevant local markets.
 
        Accenture LLP, our United States subsidiary, was also the obligor under a collateral trust note in the principal amount of $18 million, which financed our Northbrook, Illinois, technology campus. The principal amount was payable in varying annual installments through 2007 and was secured by a guarantee from Andersen Worldwide. We prepaid this obligation on May 31, 2001.
 
        In addition, we have been co-obligors with Arthur Andersen on term debt obligations of approximately $109 million consisting of $75 million of unsecured debt due before the end of May 2002 and a $34 million collateral trust note, secured by Arthur Andersen’s training center in St. Charles, Illinois, due in installments through 2011. Arthur Andersen has made principal and interest payments with respect to these obligations in the past, and we expect them to continue making these payments. Arthur Andersen has agreed with us to prepay the $34 million collateral trust note on or before August 1, 2001, and they have eliminated us as a co-obligor on the $75 million of unsecured debt as of May 31, 2001.
 
        During 1998, 1999 and 2000, and for the nine months ended May 31, 2001 we incurred $271 million, $305 million, $315 million and $301 million in capital expenditures, respectively, primarily for technology assets, furniture and equipment and leasehold improvements to support our operations. We expect fiscal 2001 capital expenditures for technology assets, furniture and equipment and leasehold improvements for existing and new office space to be in the range of $350 million to $450 million. During November 1999, we formed Accenture Technology Ventures to select, structure and manage a portfolio of equity investments. Accenture has made equity investments of $18 million, $153 million and $215 million during 1999, 2000 and the nine months ended May 31, 2001, respectively. As of May 31, 2001, we had commitments for investments of $67 million. We expect to invest up to $340 million in fiscal 2001. We also received $111 million and $110 million in fiscal 2000 and the nine months ended May 31, 2001, respectively, in equity from our clients as compensation for current and future services. Amounts ultimately realized from these equity securities may be higher or lower than amounts recorded on the measurement dates.
 
        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 August 31, 1998, 1999, 2000 and May 31, 2001, $232 million, $232 million, $223 million and $168 million were outstanding for 18, 16, 14 and 14 clients, respectively. These outstanding amounts are included in unbilled services and other non-current assets on our historical balance sheets.
 
        We do not expect that our transition to a corporate structure will materially change our working capital requirements. Prior to the consummation of our transition to a corporate structure, we deferred the distribution of a substantial portion of our earnings to our partners into the subsequent fiscal year. This deferral enabled us to fund the capital requirements of our business without significant external financing. We expect to replace this deferral through retained earnings which will result from the substantial reduction in partner compensation in our corporate structure. We expect our liquidity needs on a short- and long-term basis to be satisfied by cash flows from operations, increased debt capacity under existing and/or new credit facilities, the net proceeds of the offering and increased financial flexibility that will result from our transition to a corporate structure. We expect to repay approximately $338 million of amounts outstanding under our revolving credit facilities with the net proceeds from the offering. This increase in debt capacity will replace working capital historically funded through the deferral of the distribution of partnership earnings and the contribution of capital by our partners. We are not dependent on the proceeds of the offering to meet normal operating liquidity requirements over the next 12 months. We believe our change to a corporate structure will provide financing flexibility to meet ongoing and future capital resource needs, which include implementing our strategy, driving business initiatives and providing equity for investment and acquisitions.
 
Market Risk
 
Foreign Currency Risk
 
        We are exposed to foreign currency risk in the ordinary course of business. We hedge cash flow exposures for our major countries using a combination of forward and option contracts. Principal currencies hedged are the Australian dollar, Canadian dollar, euro currencies, Japanese yen, Norwegian krone, Swedish krona, Swiss franc and British pound. These instruments are generally short-term in nature, with typical maturities of less than one year. From time to time, we enter into forward or option contracts of a longer-term nature.
 
        For purposes of specific risk analysis, we use sensitivity analysis to determine the effects that market risk exposures may have on the fair value of our hedge portfolio. The foreign currency exchange risk is computed based on the market value of future cash flows as affected by the changes in the rates attributable to the market risk being measured. The sensitivity analysis represents the hypothetical changes in value of the hedge position and does not reflect the opposite gain or loss on the underlying transaction. As of August 31, 1999, a 10% decrease in the levels of foreign currency exchange rates against the U.S. dollar with all other variables held constant would result in a decrease in the fair value of our financial instruments of $10 million, while a 10% increase in the levels of foreign currency exchange rates against the U.S. dollar would result in an increase in the fair value of our financial instruments of $24 million. As of August 31, 2000, a 10% decrease in the levels of foreign currency exchange rates against the U.S. dollar with all other variables held constant would result in an increase in the fair value of our financial instruments of $6 million, while a 10% increase in the levels of foreign currency exchange rates against the U.S. dollar would have almost no effect on the fair value of our financial instruments due to the fact that our long and short forward positions almost completely offset each other. As of May 31, 2001, a 10% decrease in the levels of foreign currency exchange rates against the U.S. dollar with all other variables held constant would result in a decrease in the fair value of our financial instruments of $15 million, while a 10% increase in the levels of foreign currency exchange rates against the U.S. dollar would result in an increase in the fair value of our financial instruments of $15 million.
 
Interest Rate Risk
 
        During the last three years, the majority of our debt obligations have been short-term in nature and the associated interest obligations have floated relative to major interest rate benchmarks, such as the London interbank offered rate. While we have not entered into any derivative contracts to hedge interest rate risks during this period, we may do so in the future.
 
        The interest rate risk associated with our borrowing and investing activities at August 31, 2000 and at May 31, 2001 is not material in relation to our combined and consolidated financial position, results of operations or cash flows. We have not used derivative financial instruments to alter the interest rate characteristics of our investment holdings or debt instruments.
 
Equity Price Risk
 
        We have marketable equity securities that are subject to market price volatility. The investments are classified as available-for-sale securities and are recorded in the balance sheet at fair value with unrealized gains or losses reported in the accumulated other comprehensive income within partners’ capital. We have not entered into any derivative contracts to hedge the risks associated with the portfolio of equity investments.
 
        Our investment portfolio also includes warrants in both publicly-traded and privately-held companies. The privately-held investments are inherently risky because the markets for the technologies or products they develop are less established than those of most publicly-traded companies and because we may be unable to liquidate our investments if desired. Beginning September 1, 2000, warrants in publicly-traded companies and certain warrants in privately-held companies are deemed derivatives by SFAS 133. As such, they are recorded in the balance sheet at fair value with unrealized gains or losses recorded in the income statement. The following analysis presents the hypothetical change in the fair value of our marketable equity securities classified as available-for-sale at August 31, 1999 and August 31, 2000, assuming the same hypothetical price fluctuations of plus or minus 10%, 20% and 30%.
 
     Valuation of investments assuming
indicated decrease

   August 31,
1999 fair
value

   Valuation of investments assuming
indicated increase

     -30%
   -20%
   -10%
   +10%
   +20%
   +30%
       (in thousands)
Marketable Equity
     Securities
     $211,713      $241,958      $272,202      $302,447      $332,692      $362,936      $393,181
 
     Valuation of investments assuming
indicated decrease

   August 31,
2000 fair
value

   Valuation of investments assuming
indicated increase

       -30%
     -20%
     -10%
     +10%
     +20%
     +30%
       (in thousands)
Marketable Equity
     Securities
     $528,016      $603,446      $678,877      $754,308      $829,739      $905,170      $980,600
 
        The following analysis presents the hypothetical change in the fair value of our marketable equity securities classified as available-for-sale and warrants in privately-held companies deemed to be derivatives by SFAS 133 at May 31, 2001, assuming the same hypothetical price fluctuations of plus or minus 10%, 20% and 30%.
 
     Valuation of investments assuming
indicated decrease

   May 31,
2001
fair value

   Valuation of investments assuming
indicated increase

       -30%
     -20%
     -10%
     +10%
     +20%
     +30%
       (in thousands)
Marketable Equity Securities
     and Warrants Deemed
     Derivatives by SFAS 133
     $109,770      $125,451      $141,133      $156,814      $172,495      $188,177      $203,858
 
Recently Issued Accounting Pronouncements
 
        Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” was adopted as of September 1, 1999. This statement addresses how to distinguish internal-use software from software to be sold, which costs are to be capitalized, when capitalization begins and ends, and guidelines for amortization and evaluating impairments. Under SOP 98-1, general and administrative costs are not capitalized. Adoption of this statement did not have a material effect on our results of operations or financial condition.
 
        In June 1998, the Financial Accounting Standards Board issued SFAS 133 which, as amended, establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. We adopted SFAS 133 in the first quarter of 2001, which ended on November 30, 2000. The adoption of SFAS 133 resulted in cumulative income of $188 million on September 1, 2000, and investment losses of $131 million during the nine months ended May 31, 2001.
 
        In December 1999, the Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, which summarizes the Staff’s views in applying generally accepted accounting principles to revenue recognition in financial statements. Our revenue recognition principles are consistent with the guidance set forth in SAB 101.
 
BUSINESS
 
Overview
 
        Accenture is the world’s leading provider of management and technology consulting services and solutions. We had approximately $13.1 billion of revenues for the 12 months ended May 31, 2001. We have more than 75,000 employees based in more than 110 offices in 46 countries delivering to our clients a wide range of consulting, technology and outsourcing services. We operate globally with one common brand and business model designed to enable us to serve our clients on a consistent basis around the world. We work with clients of all sizes and have extensive relationships with the world’s leading companies and governments. We serve 84 of the Fortune Global 100 and more than half of the Fortune Global 500. In total, we have served more than 4,000 clients on nearly 18,000 engagements over the past five fiscal years.
 
Industry Background
 
        The global business environment is changing at an accelerating pace, presenting opportunities and challenges for companies around the world. A heightened focus on productivity, increased competition and the commercialization of the Internet and other emerging technologies are among the forces driving this change. To succeed, businesses must identify and respond rapidly to market trends; develop new products, services, skills and capabilities; use technology effectively; and, in some cases, restructure or reinvent themselves. In this dynamic, competitive environment, decisions with respect to technology have become increasingly important and complex. This has created a growing need for professionals with experience in using technology to help drive business strategy.
 
        In the 1980s and early 1990s, businesses worldwide focused on improving their internal operational efficiency through the use of technology, automating functions such as accounting, human resources management and manufacturing planning. Today, enterprises seek to deploy a more far-reaching set of technological initiatives across business functions, organizations, customers, business partners and suppliers. For example, businesses are increasingly using relationship-management tools and technologies such as data mining, which search large databases to extract relevant information and synthesize data, to gain insight into and improve interactions with customers and alliance partners; virtual research and development to accelerate new product development efforts; business exchanges to manage demand; outsourcing of business functions to transform and efficiently manage business processes; and collaborative software tools to facilitate product design and development among geographically dispersed teams. In addition, technologies such as wireless and broadband promise to fundamentally change the customer experience for businesses and individual customers alike.
 
        In this environment, information technology services projects are becoming more complex in scale and scope. At the same time, successful implementation of major new enabling technologies has become critical to organizations to achieve growth or improvements in efficiency and productivity. As a result, management and information technology consulting services providers have an increasingly important role in helping business leaders create value. Businesses and governments are increasingly turning to these service providers for access to specialized expertise and services that are either not readily available from internal resources or not in their core competency. The worldwide business consulting and information technology services market, excluding hardware support and processing services, is expected to grow from $284 billion in 2000 to $411 billion in 2003, a compound annual growth rate of 13.2%, according to IDC (International Data Corporation). Key drivers of this market growth are expected to include demand for supply chain management, customer relationship management and Internet services, which IDC has estimated will grow at compound annual rates of 36%, 30% and 38%, respectively, over the next four years.
 
        Clients increasingly demand that comprehensive solutions to their business challenges be delivered on an accelerated basis because of increasingly complex and competitive market conditions. The management consulting and information technology services providers who will succeed in this environment will be those who undertake the research and development necessary to identify key trends, invest significant human and financial capital in the development of market-ready solutions at the beginning of major industry and technological cycles, and create innovative, cost-effective means to deliver services in a predictable manner. To deliver value to clients, these service providers must continuously develop and expand their expertise in new technologies, maintain a global presence and offer a full range of expertise and services. They must also have access to capital to fund technology research and development and to create market-ready solutions.
 
Our Solution and Competitive Strengths
 
        As the world’s leading provider of management and technology consulting services and solutions, we believe that we are well positioned for continued growth in a marketplace characterized by an increasing pace of technological change and complex business challenges. Our approach is to create value for clients through our network of businesses by leveraging our industry knowledge, service offering expertise and insight into and access to emerging technologies. With this comprehensive approach, we are able to move clients forward in every part of their business, from strategic planning to day-to-day operations. This often includes helping clients identify and enter new markets, increase revenues in existing markets and deliver their products and services more effectively and efficiently. We believe that our approach, together with the following competitive strengths, distinguishes us in this marketplace.
 
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Seamless Execution on a Global Scale.    We operate globally with one common brand and business model designed to allow us to serve our clients on a consistent basis around the world. We believe that our global network of more than 75,000 employees in 46 countries provides us with a significant advantage in developing and delivering solutions to the most complex strategic, technological and operational opportunities and challenges that our clients face. Our consulting professionals around the world share skills, insight, knowledge of local markets and service line expertise, and receive a common base of extensive training to ensure the same high-quality services and solutions for clients globally.
 
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Deep Industry Expertise.    We have developed specialized expertise and experience in the 18 industry groups in which our professionals work. Our industry focus enables our professionals to provide services with a thorough understanding of industry evolution, business issues and applicable technologies, and ultimately to deliver solutions tailored to each client’s industry.
 
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Broad and Evolving Service Offerings.    We offer our clients what we believe is the broadest and deepest service offering expertise in the industry. Our eight service lines, which span the global market units, are Strategy & Business Architecture, Finance & Performance Management, Human Performance, Customer Relationship Management, Supply Chain Management, Solutions Engineering, Technology Research & Innovation, and Solutions Operations. More than 8,000 Accenture professionals are dedicated full time to a specific service line, helping to develop knowledge, assets and innovative solutions for clients across all of the industries we serve. These subject matter experts complement the more than 57,000 professionals working within our global market units who apply their knowledge of a specific service line to clients within an industry group.
 
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Enduring Relationships with the World’s Leading Corporations and Governments.    We work with chief executive officers and other senior management at many of the world’s largest and most successful organizations, including the top companies in virtually every industry sector, and governments worldwide. We serve 84 of the Fortune Global 100 and more than half of the Fortune Global 500. Our partners and senior executives are responsible for both winning client engagements and delivering service to clients, ensuring continuity between what we promise to our clients and what we deliver. We believe that our commitment to client satisfaction serves to strengthen and extend our relationships. For example, more than 80% of our top 100 clients in fiscal year 2000, ranked by revenues before reimbursements, have been our clients for each of the last five years, and more than 50% have been clients for at least 10 years. Our clients typically retain us on a non-exclusive basis.
 
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Technology Innovation and Implementation.    Technology is part of our heritage and is fundamental to our service offerings. We are a leader in the development and implementation of technology-based business solutions that create value for our clients. In addition, our innovative tools, methodologies, software and other intellectual property enhance our ability to deploy technical solutions, particularly across large-scale, global platforms.
 
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Distinctive People and Culture.    Our most important asset is our people. We are deeply committed to the long-term development of our employees, whom we recruit from universities and industry. Each professional receives extensive and focused technical and managerial skills development training throughout his or her career with us, including 750 hours of training for our entry-level professionals in their first five years. In fiscal year 2000, we spent $580 million, or nearly 5% of our revenues, on training and development. We seek to reinforce our employees’ commitment to our clients, culture and values through a comprehensive performance review system and a competitive compensation philosophy that reward individual performance and teamwork. In addition, in connection with the offering, we intend to grant equity awards to our employees in order to promote employee ownership of our company and improve retention. After the offering, we will preserve the management practices, including the continued use of the “partner” title, that reinforce our partnership culture and the collaboration, motivation, alignment of interests and sense of ownership and reward that our partnership culture has sustained.
 
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Proven, Tenured and Highly Motivated Management Team.    Our more than 2,400 partners manage our day-to-day activities and client relationships and have an average of 14 years of experience with us. In addition to establishing and supporting enduring client relationships, our partners focus on mentoring our professionals at all levels to develop the next generation of firm leadership. None of our partners will be selling shares in the offering and, immediately following the offering, our partners will own approximately 82% of the equity in our business, or 80% if the underwriters exercise their overallotment option in full.
 
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Highly Diversified Business by Industry, Geography and Technology.    Our global business is highly diverse. We operate across virtually every industry and geography, delivering a wide range of business and technology solutions and services to address the strategic and functional business challenges that organizations face. As a result, we can deploy our professionals anywhere in the world in response to evolving marketplace opportunities or challenges. Not only does our diversification enable us to take advantage of changing business, technological and economic conditions worldwide, it also allows us to manage through geographic and industry market cycles.
 
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History of Staying Ahead of Industry Trends.    Throughout our history, we have reinvented ourselves to capitalize on evolving management trends and technologies for the benefit of our clients. We pioneered systems integration and business integration; we led the deployment of enterprise resource planning, customer relationship management and electronic services; and we have established ourselves as a leader in today’s marketplace. We constantly adapt our service offerings in anticipation of future industry trends.
 
Our Strategy for Growth
 
        We strive to be a global “market maker, architect and builder of the new marketplace, developing innovations to improve the way the world works and lives.” We intend to help create new markets, design new business models, and deliver business and technology solutions that provide value to our clients. We believe that our network of businesses approach provides us with a fundamental advantage in executing our strategic plans. Our global market units and service lines develop offerings and provide expertise to clients. Our affiliates, alliances and venture capital portfolio companies provide us with insight into and access to emerging business models, products and technologies, enhancing the ability of our global market units and service lines to deliver value to clients.
 
        To serve our clients and grow our business, we aggressively pursue the following strategic imperatives:
 
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Deliver “Value@Speed” for Our Clients.    Successful client relationships depend on our ability to help clients quickly deliver more value to their customers and shareholders. We have implemented a global initiative, called Value@Speed, to help clients accelerate development of top- and bottom-line growth. Through this initiative we develop proprietary offerings aimed at creating value within specific industries. We do this by developing an in-depth understanding of how the industries are structured and operate, key trends within the industries and how companies are affected by these trends, and how companies can create or destroy value. Our strategy is to work closely with client executives to implement value-generating solutions that contribute to superior financial performance and enhance productivity on an accelerated basis.
 
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Accelerate and Ride the “Waves of Change.”    Industry today is characterized by ongoing waves of technological and business change that present our clients with significant value-creation opportunities. We leverage our network of businesses to help organizations apply business and technology solutions that create value by realizing the opportunities presented by these waves of change. We believe that our significant scale and access to capital will enable us to continue to make the investments in research and development, tools and methodologies and intellectual property necessary to anticipate these waves and rapidly develop and deliver business and technology solutions based on them.
 
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Create Asset-Based Solutions to Drive Superior Results.    To deliver value to our clients more quickly, we create assets, such as software and business architectures and methodologies for business processes, that enable us to rapidly implement market-ready solutions for our clients. One example is the 24-hour online multi-channel transaction processing software asset we developed for the banking industry, which has been installed in 89 financial institutions in 16 countries. We recognize the value of intellectual property in the new marketplace and vigorously create, harvest and protect our intellectual property. We have filed more than 600 patent applications in the United States and other jurisdictions in the last two years and have received more than 40 United States patents.
 
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Leverage Our Expertise in Transformational Outsourcing.    We are helping our clients create value by leveraging information technology to reinvent and transform fundamental business operations. Using our knowledge of consulting, business process infrastructure and applications outsourcing, we believe we are well positioned to develop and implement new business models and operate critical business functions for clients around the world. We refer to the creation of new and innovative ways to manage and operate business functions in a manner that helps refocus the cost base around the business’ strategic goals as transformational outsourcing. We pursue transformational outsourcing opportunities, which require a combination of consulting and outsourcing skills. Our strategy is to leverage our industry expertise and technology and business process skills to help clients discover and create new business models and, in many cases, transform entire business functions.
 
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Aggressively Grow in Attractive Geographic Markets.    Demand for the services we provide is growing rapidly in both established and emerging economies, such as parts of Asia and Latin America. We have offices in 46 countries around the world and, while we are a leader in the majority of markets in which we operate, we believe there are significant opportunities for us to grow in multiple geographies, including by way of investment. Given the fragmented nature of the worldwide business consulting and information technology services market, and based on our market knowledge of the markets in each of the 46 countries in which we operate, we believe there is room for us to increase our market share on a global basis.
 
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Foster a Great Place to Work.    We derive our success from the ability of our professionals to help our clients succeed in today’s complex business environment. Our ability to hire, train, develop and retain our professionals is critical to our enterprise. To attract and retain these professionals, we have a “great place to work” program, which includes performance metrics to hold our leadership accountable for employee satisfaction and retention. In an early initiative in this program, we promoted 1,286 new partners in September 2000 to further incentivize our professionals at an earlier stage in their careers with us. Our goal is to create an environment in which we can:
 
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develop inspiring leaders;
 
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cultivate a diverse workforce;
 
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create interesting work;
 
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provide continuous learning;
 
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support flexible workstyles; and
 
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provide competitive rewards.
 
The marketplace for high-caliber consulting professionals has become very competitive in many parts of the world, and we are committed to providing attractive current compensation and significant long-term incentives for our employees.
 
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Enhance Our Operational Efficiency.    As experts in operational efficiency, we plan to provide value to our clients as well as our shareholders by maintaining our organization as a cost-effective, technology-enabled company with strong financial discipline. This includes continuous improvement in our client delivery capabilities and cost structure. We intend to continue to electronically enable our own business processes in areas such as human resources, training, recruiting, performance management and finance and operations management. Our continued focus on efficiency is intended to optimize the performance of our organization as we increase our scale and scope.
 
Management and Technology Consulting Services and Solutions
 
        Our management and technology consulting services and solutions business is structured around five global market units, which together comprise 18 industry groups. Eight service lines support the global market units and provide access to the full spectrum of business and information technology solutions. Client engagement teams typically consist of industry experts, service line specialists and consultants with local market knowledge. Our client teams are complemented by our solution centers, which allow us to capture replicable components of methodologies and technologies and use these to create tailored solutions for our clients quickly and cost-effectively.
 
Global Market Units
 
        The following table shows the organization of our five global market units and 18 industry groups.
 
Global Market Units
 
 
Communications
& High Tech
   Financial
Services
   Products    Resources    Government
 
Industry Groups
   Industry Groups
   Industry Groups
   Industry Groups
   Industry Groups
 
Ÿ Communications
Ÿ Electronics &
   High Tech
Ÿ Media & Entertainment
   Ÿ Banking
Ÿ Health Services
Ÿ Insurance
   Ÿ Automotive
Ÿ Consumer Goods &
   Services
Ÿ Industrial Equipment
Ÿ Pharmaceuticals &
   Medical Products
Ÿ Retail
Ÿ Transportation &
   Travel Services
   Ÿ Chemicals
Ÿ Energy
Ÿ Forest Products
Ÿ Metals & Mining
Ÿ Utilities
   Ÿ Government
 
 
        Communications & High Tech
 
        We are a leading provider of management and technology consulting services and solutions to the communications, high technology and media and entertainment industries. We offer services that help our clients stay ahead of major technology and industry trends, including the proliferation of wireless devices, next-generation networks, digital content services, Web-enabled platforms and the industry restructuring brought about by the convergence of these technologies. In addition, we have established mobile commerce labs in Europe and the United States. At these research and development facilities we explore how new mobile technologies, such as wireless, can be integrated with existing legacy and Internet systems and applied in new and innovative ways.
 
        The table below sets forth information about our Communications & High Tech global market unit, including information about revenues before reimbursements and number of employees, as well as a partial list of some of our largest clients for this global market unit:
 
Communications & High Tech
 
 
     Year ended
August 31, 2000

   Nine months ended
May 31, 2001

Revenues before reimbursements (in millions):    $2,807      $2,482  
Percent of revenues before reimbursements:    29 %    29 %
Number of employees as
of May 31, 2001:
 
16,503

 


                                                      Clients
Ÿ  AT&T Corp.
Ÿ  BellSouth Corporation
Ÿ  Cable & Wireless PLC
Ÿ  Compaq Computer Corporation
Ÿ  Deutsche Telekom AG
Ÿ  Electronic Arts
Ÿ  France Telecom
Ÿ  Infostrada S.p.A.
Ÿ  LM Ericsson AB
Ÿ  Microsoft Corporation
Ÿ  Nokia Corporation
Ÿ  Nortel Networks Corporation
Ÿ  Sony Corporation
Ÿ  Sprint Corporation
Ÿ  Sun Microsystems, Inc.
Ÿ  Telecom Argentina
Ÿ  Telecom Italia S.p.A.
Ÿ  Telenor AS
Ÿ  Texas Instruments, Incorporated
Ÿ  Verizon Communications
 
 
        Our Communications & High Tech global market unit comprises the following industry groups:
 
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Communications.    Our Communications industry group serves many of the world’s leading wireline, wireless, cable and satellite communications companies. In fiscal year 2000, we served 19 of the 21 telecommunications companies in the Fortune Global 500. We provide a wide range of services designed to help our communications clients increase margins and market share, improve customer retention, increase revenues, reduce overall costs and accelerate sales cycles. For instance, communications companies have extremely complex billing systems, and we believe that our industry knowledge and experience have made us the industry leader in developing, implementing and operating billing systems tailored to our communications clients’ needs. We have expertise in next-generation networks, as demonstrated by our numerous patent applications in areas such as high-speed networks, system architectures and bandwidth trading. Over the last decade, we have worked with many of the world’s leading communications companies on a number of strategic, operational and systems consulting projects. For example, since 1998 we have been managing many of BellSouth’s applications as part of one of the largest information technology outsourcing arrangements in the telecommunications industry.
 
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Electronics & High Tech.    Our Electronics & High Tech industry group serves the aerospace, defense, electronics, high technology and network communications industries. In fiscal year 2000, we worked with 37 of the 47 aerospace, computer services and software, computer, office equipment, electronics, electrical equipment, network communications, scientific, photo and control equipment companies in the Fortune Global 500. This industry group provides services in such areas as electronic commerce and strategy and supply chain management. For instance, we helped Sharp build a Web-based system that enables the company’s large network of office-products dealers and corporate customers to configure and purchase products online, ultimately improving order accuracy and reducing order cycle time. By providing up-to-the-second order information, the new system enables Sharp’s customers to track the status of their orders online, greatly reducing costly telephone inquiries. We also helped Dell Computer upgrade its already world-class manufacturing infrastructure as part of an accelerated supply-chain solution. A key element was a rigorous process-reengineering program that enables Dell to keep no more than a few hours of inventory of parts and supplies on hand, substantially reducing inventory and carrying costs at its manufacturing facilities.
 
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Media & Entertainment.    Our Media & Entertainment industry group serves entertainment, print and publishing companies, as well as innovative new ventures and Internet companies. In fiscal year 2000, we worked with five of the nine entertainment, printing and publishing companies in the Fortune Global 500. Our Media & Entertainment industry group provides an array of services ranging from customer relationship management to digital content infrastructure. For instance, we have helped several media and entertainment clients design and build electronic business solutions. We worked with Electronic Arts to design and develop their advanced gaming portal, EA.com. Additionally, we have helped our media and entertainment clients use digital content services and exploit mobile and broadband commerce. For example, we played a central role in the launch of Qpass, a start-up backed by Accenture Technology Ventures that provides an end-to-end commerce infrastructure for processing transactions across the Internet, wireless and broadband platforms.
 
        Financial Services
 
        Our Financial Services global market unit focuses on the growth opportunities being created by sophisticated customer relationship management, increased consolidation, business-to-business exchanges, mobile commerce and the electronic enabling of front and back offices of financial, health care and insurance services companies.
 
        The table below sets forth information about our Financial Services global market unit, including information about revenues before reimbursements and number of employees, as well as a partial list of some of our largest clients for this global market unit:
 
Financial Services
 
 
    Year ended
August 31, 2000

  Nine months ended
May 31, 2001

Number of employees as
of May 31, 2001:
Revenues before reimbursements (in millions):    $2,542      $2,230    
Percent of revenues before reimbursements:    26 %    26 %
15,108

 

 


Clients
Ÿ  Allianz
Ÿ  Allstate Insurance Company
Ÿ  AMP Limited
Ÿ  AXA Group
Ÿ  Banco Bilbao Vizcaya Argentaria
Ÿ  Barclays Bank plc.
Ÿ  BSCH
Ÿ  Clearstream International
Ÿ  Credit Suisse Group
Ÿ  Deutsche Bank AG
Ÿ  Dresdner Bank Group
Ÿ  E*TRADE
Ÿ  The Goldman Sachs Group, Inc.
Ÿ  J. P. Morgan Chase & Co.
Ÿ  Lloyds TSB
Ÿ  London Stock Exchange
Ÿ  UnitedHealth Group
Ÿ  Visa USA
Ÿ  Washington Mutual, Inc.
Ÿ  Zurich Financial Services
 
 
        Our Financial Services global market unit comprises the following industry groups:
 
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Banking.    In fiscal year 2000, our Banking industry group worked with 49 of the 75 commercial and savings banks, diversified financials and securities companies in the Fortune Global 500. We also work with a variety of new entrants and innovators, such as on-line banks and brokerages. We help these organizations develop and execute strategies to target, acquire and retain customers more effectively, expand product and service offerings, and leverage new technologies and distribution channels. For example, we helped E*TRADE define and implement its customer relationship management strategy, which included developing the technology infrastructure and business processes required to generate customer insights. As a result, E*TRADE is able to develop targeted marketing campaigns and strengthen its customer relationships. We consulted with Visa USA, one of the world’s largest consumer payment systems, as it modernized its core infrastructure, which supports clearing, settlement and authorization transactions between member banks and merchants. This solution, called Visa Direct Exchange, allows transactions to be processed over a single, flexible, reliable and secure network and messaging architecture. This capability gives Visa USA the flexibility to grow its business to support more than 40 billion transactions annually, with peak capabilities of 10,000 transactions per second.
 
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Health Services.    Our Health Services industry group serves integrated healthcare providers, health insurers, managed care organizations, biotech and life sciences companies and policy-making authorities. In fiscal year 2000, our Health Services industry group served five of the seven health care companies in the Fortune Global 500. We are helping our clients in the health plan and health insurance area in North America accelerate their business by connecting consumers, physicians and other stakeholders through electronic commerce. For example, we helped Highmark Blue Cross Blue Shield develop and execute an electronic consumer health management strategy, including separate portals for consumers, providers, groups and agents. In Europe, we are helping create new connections between governments, physicians and insurers.
 
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Insurance.    Our Insurance industry group helps property and casualty insurers, life insurers, reinsurance firms and insurance brokers improve business processes, develop Internet insurance businesses and improve the quality and consistency of risk selection decisions. In fiscal year 2000, we served 25 of the 53 insurance companies in the Fortune Global 500. For example, we have been helping Pacific Life design and implement an innovative service capability for its agent network. Components of the solution include automated document management and workflow and a knowledge management application. These components, coupled with a new technology infrastructure, are designed to enable Pacific Life to continue its high-end product and services strategy while enhancing the capabilities of its employees to service Pacific Life’s multiple distribution systems and complex product suite. We also help insurers take advantage of the opportunities provided by convergence within the financial services industry. For instance, we helped AMP, one of Australia’s leading insurance and investment institutions, create a direct bank within just eight months of AMP’s decision to proceed. In conjunction with AMP staff, we designed and delivered a solution that supports secured and unsecured lending, deposit-taking and credit cards. In addition, our Insurance industry group has also developed a claims management capability that enables insurers to provide better customer service while optimizing claims costs.
 
        Products
 
        Our Products global market unit comprises six industry groups: Automotive, Consumer Goods & Services, Industrial Equipment, Pharmaceuticals & Medical Products, Retail, and Transportation & Travel Services.
 
        The table below sets forth information about our Products global market unit, including information about revenues before reimbursements and number of employees, as well as a partial list of some of our largest clients for this global market unit:
 
Products
 
 
     Year ended
August 31, 2000

   Nine months ended
May 31, 2001

Revenues before reimbursements (in millions):    $1,891      $1,708  
Percent of revenues before reimbursements:    19 %    20 %
Number of employees as
of May 31, 2001:
 
10,347

 


Clients
Ÿ  Adecco SA
Ÿ  AstraZeneca
Ÿ  Auchan
Ÿ  Best Buy
Ÿ  British American Tobacco
Ÿ  Carrefour
Ÿ  Daimler Chrysler
Ÿ  Exel
Ÿ  Fiat S.p.A.
Ÿ  Ford Motor Company
Ÿ  GlaxoSmithKline
Ÿ  JCPenney Company, Inc.
Ÿ  Johnson & Johnson
Ÿ  Marriott International, Inc.
Ÿ  Retek, Inc
Ÿ  Ryder System Inc.
Ÿ  Takeda Chemical Industries, Ltd.
Ÿ  Toys “R” Us, Inc.
Ÿ  United Parcel Service, Inc.
Ÿ  Volvo
 
 
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Automotive.    Our Automotive industry group works with auto manufacturers, suppliers, dealers, retailers and service providers. In fiscal year 2000, we served 15 of the 25 motor vehicles and parts companies in the Fortune Global 500. Our automotive industry professionals work with our clients to develop and implement solutions focused on customer service and retention, channel strategy and management, branding, buyer-driven business models, cost reduction, customer relationship management and integrated supplier partnerships. For instance, we helped Ford Motor Company design, build and manage a Web-based eLearning solution to deliver technical education to the company’s suppliers. Designed and built in 14 weeks, the netsourced solution allows suppliers’ employees to register for, purchase and complete courses and to take tests to demonstrate competency in a specific subject area. By delivering training directly to employees’ desktops, the system gives participants the flexibility to learn on their own time.
 
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Consumer Goods & Services.    Our Consumer Goods & Services industry group helps food, beverage, tobacco, household products, cosmetics and apparel companies move beyond incremental cost cutting and establish bolder innovation and growth agendas. In fiscal year 2000, we worked with 12 of the 21 beverage, food, soap, cosmetics and tobacco companies in the Fortune Global 500. This industry group adds value to companies through innovative service offerings that address, among other things, new ways of reaching the retail trade and consumers through precision consumer marketing, maximizing brand synergies and cost reductions in mergers and acquisitions, and improving supply chain efficiencies through collaborative commerce business models. For example, we are working with CPGmarket.com, a Europe-based global business-to-business marketplace that includes 30 leading packaged goods companies. We have helped CPGmarket.com with business planning and building an information technology infrastructure that enables member companies to access the exchange’s services. We also provide management consulting services to North America-based Transora, which was established by more than 50 of the world’s largest consumer packaged goods manufacturers to develop a global electronic marketplace for the industry. In addition, we are a preferred integrator to help companies across the consumer products supply chain adopt, integrate and use Transora’s services. We also helped Earthgrains, a $2.6 billion bakery and refrigerated dough manufacturer, reduce costs by developing an Internet-based procurement process and system that enables the company to leverage the collective purchasing power of its operations in 32 states.
 
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Industrial Equipment.    Our Industrial Equipment industry group serves the industrial and electrical equipment, construction, consumer durable and heavy equipment industries. In fiscal year 2000, we served six of the 12 building materials, glass, and industrial and farm equipment companies in the Fortune Global 500. We help our clients increase operating and supply chain efficiency by improving processes and leveraging technology. For example, we implemented a sophisticated enterprise-wide technology solution for Komatsu to help the company significantly increase the efficiency of its back- and front-office functions in the United States. We also work with clients to generate value from strategic mergers and acquisitions. For instance, as part of the merger of BTR and Siebe to create Invensys, an automation and controls company, we helped manage the integration of more than 200 workstreams covering human resources, finance, procurement and supply chain management. Our Industrial Equipment industry group also develops and deploys innovative solutions in the area of channel management, collaborative product design, remote field maintenance, enterprise application integration and outsourcing.
 
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Pharmaceuticals & Medical Products.    Our Pharmaceuticals & Medical Products industry group serves pharmaceuticals, biotechnology, medical products and other industry-related companies. In fiscal year 2000, we served all 14 of the pharmaceuticals companies in the Fortune Global 500. With knowledge in discovery, development, manufacturing, supply chain, and sales and marketing issues, we help companies identify and exploit opportunities for value creation, such as reducing the time it takes to develop and deliver new drugs to market through process improvements and implementation of technology. For example, we helped Glaxo Wellcome (now GlaxoSmithKline) significantly increase their clinical trial capacity while reducing their cycle time, and we helped the Medicines Control Agency in the United Kingdom use electronic commerce technologies to improve their efficiency in submitting and processing regulatory applications. In addition, we worked with Takeda Pharmaceuticals America to help the company build a comprehensive set of business capabilities, including product development, supply chain management, and sales and marketing. Our Pharmaceuticals & Medical Products industry group also helps clients integrate new discovery technologies, realize the potential of genomics and biotechnology, become more patient-centric, and create new business models that deliver medical breakthroughs more rapidly.
 
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Retail.    Our Retail industry group serves a wide spectrum of retailers ranging from convenience stores to destination stores, including supermarkets, specialty premium retailers and large mass-merchandise discounters. In fiscal year 2000, we served 21 of the 52 food and drug stores, general merchandisers and specialty retailers, as well as four of the trading companies, in the Fortune Global 500. Our Retail industry group professionals work with clients to improve operational performance, increase advertising and merchandising effectiveness, and enhance supply chain and customer relationship management capabilities. For example, Best Buy engaged us for a two-year program, called Process to Profits, designed to drive shareholder value and enhance the retailer’s capabilities through improved assortment planning, pricing, inventory management, product sourcing and advertising effectiveness. The program’s success led Best Buy to publicly credit Accenture with playing a strong role in the company’s return to profitability. More recently, we entered into a long-term contract with J Sainsbury PLC to assist the company with a full-scale transformation of its business and technology to improve its customers’ shopping experiences.
 
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Transportation & Travel Services.    Our Transportation & Travel Services industry group serves clients in the airline, freight transportation, third-party logistics, hospitality, gaming, car rental, passenger rail and travel distribution industries. In fiscal year 2000, we served 14 of the 25 airline, railroad, mail, package, and freight delivery companies and postal services in the Fortune Global 500. We help clients develop and implement strategies and solutions to improve customer relationship management capabilities, operate more-efficient networks, integrate supply chains, develop procurement and electronic business marketplace strategies and more effectively manage maintenance, repair and overhaul processes and expenses. We recently helped Finnish Rail, the largest transportation company in Finland, reduce costs and improve customer service by creating an advanced ticketing sales system that integrates multiple sales channels and streamlines processes for ticket sales, railway station back-offices and corporate headquarters. Our industry experience and knowledge drive innovation, and we often leverage our intellectual property to develop effective solutions for multiple clients. For instance, while working for Northwest Airlines in the early 1990s we recognized an industry-wide need for a revenue accounting and billing system and developed a comprehensive solution to address the unique needs of the airline industry. That solution, which was later expanded to include distribution and reservation system services, is operated by Navitaire Inc., an Accenture affiliate, which today serves more than 50 airlines worldwide.
 
        Resources
 
        Our Resources global market unit serves the energy, chemicals, utilities, metals, mining, forest products and related industries. With market conditions creating incentives for major investment by energy companies, deregulation fundamentally reforming the utilities industry, major globalization and strategy shifts in the chemicals industry and an increasing focus on supply chain management, we are working with clients to create innovative solutions that are designed to help them differentiate themselves in the marketplace and gain competitive advantage.
 
        The table below sets forth information about our Resources global market unit, including information about revenues before reimbursements and number of employees, as well as a partial list of some of our largest clients for this global market unit:
 
Resources
 
 
     Year ended
August 31, 2000

   Nine months ended
May 31, 2001

Revenues before reimbursements (in millions):    $1,661      $1,457  
Percent of revenues before reimbursements:    17 %    17 %
Number of employees as
of May 31, 2001:
 
10,713

 


Clients
Ÿ  Ameren Corporation
Ÿ  BP
Ÿ  Centrica plc
Ÿ  Conoco Inc.
Ÿ  The Dow Chemical Company
Ÿ  E.I. du Pont de Nemours and Company
Ÿ  EDF
Ÿ  Electrabel
Ÿ  Eni
Ÿ  Entergy Corporation
Ÿ  Equilon Enterprises LLC
Ÿ  Exelon Corporation</